• Introduction

Uganda rolled-out her Energy Transition Plan (ETP) at the 28th Session of the United Nations Conference on Climate Change (COP 28) in Dubai, UAE. The ETP is a strategic roadmap for the development and modernization of Uganda’s Energy Sector. It seeks to chart and explore an ambitious, yet feasible pathway to achieve universal access to modern energy and power the country’s economic transformation in a sustainable and secure manner. The ETP is a visionary blueprint poised to revolutionise Uganda’s Energy Sector. The goal is to spur unprecedented transformation in Uganda’s energy landscape, transition 94% of the population from biomass to renewable energy by 2030, boost the country’s renewable energy capacity to an impressive 52 GW by 2040 and ultimately chart a pivotal path towards environmental sustainability and economic development in Uganda and in the East African region. The ETP was developed by the Ministry of Energy and Mineral Development, with support from the International Energy Agency (IEA), and provides the groundwork for the government’s upcoming Integrated Energy Resource Master Plan. Fundamentally, the ETP holds the promise of not only reducing carbon emissions but also safeguarding Uganda’s lush forests. By transitioning from biomass, the plan seeks to protect lives and to address the stark reality of 50,000 annual deaths attributed to indoor air pollution from traditional biomass use.

• Overview

The objectives of the ETP, as stated by the Ministry of Energy and Mineral Development (MEMD) are five-fold. They include:

 

1. To provide universal access to electricity and cleaner cooking by 2030.
2. To modernise and diversify Uganda’s energy mix and promote its efficient use across all sectors to support industrial growth, poverty reduction and socioeconomic transformation.
3. To ensure secure and affordable energy supply.
4. To mitigate energy emissions in line with Uganda’s conditional climate commitments, which imply a 20% reduction compared to baseline emissions in 2030.
5. To position Uganda as an energy hub for the East African region.

At present, electricity and clean cooking access rates in Uganda remain low, at around 45% and 15%, respectively. This is in spite of recent progress driven by targeted government programmes. Modern energy consumption per capita remains low, around 30 times lower than the average in advanced economies. Solid biomass, largely firewood, charcoal, and bagasse used in buildings and industry, accounts for over 90% of the country’s final energy consumption today.

Incidentally, Uganda is heavily endowed with a great deal of domestic energy and mineral resources that can help realise the energy transition. She has profound potential for solar, hydroelectric and geothermal power resources. Uganda recently commissioned graphite and rare earth projects in Orom and Makuutu under development and holds important deposits of other critical minerals pivotal in the just energy transition. These resources, if harnessed well, could reinforce the transition and greatly contribute to Uganda’s economic growth.

 

• Uganda’s Energy Systems Today

Uganda’s current energy system has been the subject of a great deal of modernisation efforts in recent years but remains underdeveloped. Over 90% of Uganda’s final energy consumption is still met by burning solid bioenergy, largely wood and charcoal. Bioenergy, mostly solid biomass, dominates energy supply and total final consumption, although electricity is starting to gain a foothold. Buildings are the primary demand sector.

In the last two decades, Uganda has had Gross Domestic Product (GDP) and population annual growth rates of around 6% and 3%, respectively, both among the highest across the globe. Over the same time period, the final consumption of modern energy grew by about 10% per year, though mainly in urban and peri-urban areas where new industries are emerging and 220 000 people are moving each year. However, despite electricity consumption growing more than fivefold over the last 20 years, electricity still accounted for less than 2% of Uganda’s energy demand in 2021. Progress on electricity access has led to some of these changes, but large gaps remain. Access rates climbed from less than 5% in 2000 to roughly 45% in 2022.

Progress on access to clean cooking has also picked up in response to recent programmes, but still remains staggering at 15%. Only 5% of users rely on Liquefied Petroleum Gas (LPG) or electricity, largely in urban centres, while the other 10% have access to improved biomass cookstoves (ICS), which burn biomass more efficiently, delivering some of the health and time-saving benefits of clean cooking. In the services sector, solid biomass accounts for nearly 95% of demand, primarily for cooking and water heating in public buildings such as schools and restaurants.

 

The vast majority of Uganda’s electricity needs are met by low-carbon sources, largely hydroelectric generation. Since 2000, several major hydroelectric dams have been brought on board, which has helped raise total generation capacity from 290 MW to nearly 1350 MW. Uganda currently generates more electricity than it consumes from its hydropower, and exports around 8% of its total generation to its neighbours. Most of these facilities are run-of-river hydropower plants, except for the 200 MW Kiira plant and the 180 MW Nalubaale plant at the outflow of Lake Victoria. Bagasse and other agricultural wastes are widely used in combined heat and power (CHP) systems at auto production plants in Uganda, accounting for around 7% of electricity supply.

 

• Guiding Principles of the Energy Transition Plan

 

1. Achieve universal energy access in line with SDG 7

The ETP’s first priority is to reach every household with energy access by 2030. More robust connections and alternative modern cooking fuels are prioritised where possible, but smaller, transitional and affordable solutions that can deliver immediate benefits by 2030 are deployed where needed. Beyond 2030, the objective is to continue to provide higher levels of access to facilitate the replacement of transitional solutions so that by 2040 everyone has access to at least the IEA’s basic bundle for electricity and to ISO Tier 4 stoves for clean cooking. Under the IEA’s Stated Policies Scenario (STEPS), which reflects current policy settings, electricity access rates reach 60% (of which 18% with MLS) and clean cooking access rises to 28% (of which half with ICS) by 2030. These important improvements notwithstanding, 22 million people still have no access to electricity and 42 million to clean cooking by 2030 in the scenario, with household affordability, availability of finance and distribution infrastructure remaining significant barriers to development.

2. Modernise the energy system to support economic growth

Uganda’s growth is forecast to move apace, underpinning the urgency of the ETP. Population growth trends are projected to continue over the next several decades, almost doubling to 88 million in 2050. Urbanisation will increase the share of towns and cities inhabitants to almost 45% by mid-century, up from around 25% today. Over the same period, economic growth is expected to increase sevenfold, putting Uganda’s GDP per capita on track to reach the status of a middle-income economy by 2040. Also underpinning this expansion is a shift in the composition of Uganda’s economy, increasingly moving to heavy-industry, manufacturing and the services sectors, and away from agriculture. Accordingly, Uganda’s energy systems must be developed in lockstep with these emerging industries, with many of them having specific energy requirements. Supporting these industries while providing higher levels of energy services to a growing population is the core driver of energy trends in the ETP.

 

3. Improve energy security and affordability

Improving energy security and affordability are key priorities of the ETP. All oil products sold today in Uganda are imported. This dependence has increased over the past two decades, with per capita imports rising consistently from 145 thousand barrels (kb) per million people in 2000, to around 320 kb per million people in 2021, with a notable annual rise in LPG (9%) followed by diesel oil (5%) and gasoline (5%). Domestic consumption in 2021 consisted of approximately 18 kb/d each of petrol and diesel, which combined, accounted for almost all imported oil products. Smaller quantities of jet fuel, kerosene, and an even smaller amount of LPG (which accounts for around 1% of total product imports) were also consumed. The ETP also looks to enhance efficiency and electrification to avoid rising import needs, as well as taking steps to diversify Uganda’s energy mix to limit reliance on any single source of energy. Affordability is another key concern for the ETP. Uganda has some of the highest electricity prices in the East African region, which has had a substantial impact on residential consumers.

 

4. Mitigate emissions from the energy sector

As a signatory to the Paris Agreement on Climate Change, Uganda has committed to implementing policies to curb emissions growth and meeting her Nationally Determined Contribution (NDC). Concomitantly, the country needs to significantly expand energy access, infrastructure and demand to unlock economic growth and development. To balance these two goals, the ETP prioritises approaches which curb emissions growth without negatively impacting development, while creating opportunities for attracting international climate finance. In 2021, Uganda emitted roughly 115 Mt CO2-eq of greenhouse gas (GHG) emissions, of which the bulk are from agriculture, forestry, and other land use. Only around 20 Mt CO2-eq of emissions come from the Energy Sector, which includes transport, buildings and industry. Uganda’s updated NDC, submitted in 2022, indicates that baseline energy sector emissions (combustion and process) for all GHGs could double by 2030. The conditional emissions target, which is dependent on financial support from the international community, is 17.8 Mt CO2-eq, a decrease of 23% compared to the baseline scenario. Uganda’s conditional NDC is met in the ETP, and beyond 2030 further action is pursued to mitigate emissions towards a peak in 2040, leveraging international progress on low-emission technologies. The ETP also recognises the importance of climate action in attracting needed international financial support, and therefore places it as a top priority.

 

 

5. Position Uganda as a regional energy hub.

Uganda recognises her rich energy resources endowment and strategic location in the East Africa region. Uganda’s Energy Sector development has the potential of supporting rising demand in neighbouring countries. This includes the build out of her electricity sector and possibly critical minerals for other countries that have operations and demand for them. Accordingly, steps are taken in the ETP to position Uganda to play a larger role in the region’s energy systems. Through realizing her ETP, Uganda can deploy more renewable energy, export more electricity and act as a benchmark for other emerging and developing economies in the region and beyond.

 

• The Uganda Energy Transition Plan Scenario

 

In the ETP Scenario, Uganda modernises its energy supply while meeting growing demand, pivoting from bioenergy as the primary source of energy supply to low-emissions power inputs in 2050.

 

Share of total energy supply:	2021 (925 PJ)	2050 (2790 PJ)
Bioenergy & Waste	89%	15%
Other Renewable Energy sources	2%	75%
Oil	9%	8%
Other fossil fuels	0.4%	2%

*PJ – Petajoule

In the ETP Scenario, electricity demand grows faster than any fuel with generation accelerating from 5 TWh today to 200 TWh in 2050, substituting for biomass use and providing 56% of total final consumption by the end of the period. Uganda also harnesses its abundant renewable energy resources which include solar, geothermal, hydro, modern bioenergy and wind to supply its domestic electricity system in a low-emissions manner. These rich renewable sources will enable a decoupling of greenhouse gas (GHG) emissions and energy production in line with her climate commitments. Across all sectors, the ETP sees rising demand for modern energy. Industry sector demand more than doubles by 2050, accounting for nearly 40% of the country’s final energy demand compared with just over 20% in 2021. More than three-quarters of this growth is driven by electrification, predominantly in light industries where electrified end-use technologies are well developed and cost effective. In addition, several major industries take off in the coming decades, notably steel, cement and critical mineral mining. Each industry has unique energy demand profiles, which are reflected in the ETP.

 

Clean cooking transforms the composition of energy demand in the residential sector. Behind a pivot away from solid biomass for cooking, modern energy demand rises consistently to 2050 since increment in incomes, living standards, and appliances ownership means households access higher energy services. The adoption of cleaner stoves and fuels eliminates the use of traditional biomass, typically in the form of wood or charcoal, by 2030. Electricity replaces bioenergy as the major energy source in households by 2040.

 

• Realising the Energy Transition Plan

Achieving Uganda’s ETP requires a robust and comprehensive implementation strategy to mobilise the needed investment. The ETP calls for a soaring increase in annual investment in the Energy Sector, reaching around USD 8 billion annually by the second half of the decade, with around USD 7.2 billion of this going to access related investments. The high levels of investment remain constant after 2030, as demand for energy-related projects, both to maintain and further expand energy infrastructure, continues apace to meet the country’s ambitious economic and social objectives. Over the next three decades, Uganda would require nearly USD 325 billion in the ETP, underscoring the need for building a sustainable investment model. The country will need to prioritise and commit to significant annual investments of around USD 850 million per year if it is to achieve universal access to electricity and clean cooking by 2030, in line with UN Sustainable Development Goal 7 (SDG7). Almost 90% of the funding is for electricity provision. For electricity access, an estimated 25% of the required investments target grid infrastructure extensions and improvements, while off-grid solar home systems (SHSs) and multi-light systems (MLS) each account for nearly 30%, with mini-grids making up the rest. After 2030, there is still significant spending on improving electricity access, particularly to transition remote communities to mini-grids or grid connections as demand increases.

Clean cooking annual investments would need to reach USD 100 million in the ETP from now to 2030. Roughly one-third goes to e-cooking and another one-third to developing infrastructure for LPG, including refilling and storage units and cylinders. Biogas and bioethanol from local resources, such as agricultural waste and outputs from the sugar industry, account for around one-quarter of the annual investments in clean cooking solutions. Spending on improved biomass cookstoves are estimated at just USD 7 million (7%) per year. Attracting investment for clean cooking can be facilitated through the use of carbon markets, which provide an important revenue stream to that type of projects, rendering them more bankable for investors and affordable for end users. Power generation investment rises to around USD 2.8 billion per year from 2026 to 2030 in the ETP. Solar generation accounts for over 30% of the total clean energy yearly investment by 2030. However, post-2030, spending diversifies, and the share of investment for solar generation declines to 5% as Uganda’s first nuclear facility comes online. Concurrently, other renewable energy sources, such as geothermal, hydro, bioenergy and wind power, each consistently account for less than 7% of investment in 2030.  This timeline reflects Uganda’s current engagement in the preparatory phases under the International Atomic Energy Agency’s (IAEA) Milestone Approach for the country’s first nuclear plant. Following 2030, the investment in nuclear energy ramps up, with an allocation of a cumulative USD 6 billion from 2030 to 2040, and a further increase of USD 18 billion in the subsequent decade. This escalation in investment is in line with Uganda’s ambitious plan to expand its nuclear capacity to 5.9 GW by 2050, with the goal to supply 20% of the nation’s electricity. This capacity expansion not only reflects Uganda’s focus on improving energy security and grid reliability, but also indicates a potential shift towards incorporating advanced nuclear technologies like small modular reactors in the future. Approximately USD 2.1 billion each year is allocated to extending, refurbishing, and upgrading electricity transmission and distribution grids.

• Financing

Development finance institutions accounted for around 80% of power financing over the last ten years, whereas the private sector provided just 10% of capital, with the remainder coming from domestic state-owned enterprises. By 2030, the split between finance providers in the ETP moves towards the regional average. Concessional support needs to be used to mobilise this level of private finance. Across Africa as a whole, the IEA estimates nearly USD 30 billion of concessional finance will be necessary to mobilise a total of USD 90 billion in private finance to Energy Sector related investments by 2030. This concessional funding is particularly important to target pre-development activities to create a pipeline of bankable projects via the use of technical assistance and capacity building grants or funding feasibility studies and project preparation. Concessional support also plays a significant role in de-risking projects, through instruments such as subordinated debt and equity or guarantees, as well as providing cheap capital for on-lending. For the ETP to deliver a just energy transition, it must make the economics of the transition competitive and cost-effective.

 

• Conclusion

By and large, Uganda’s ETP is a pivotal step in the right direction. Much is being done and more is yet to be done. Uganda finds herself at such a defining moment in her history. With steady increase in industrialization and population growth, the ETP promises to serve as a potent blueprint to enable the country strike the delicate and often elusive balance between economic development and fidelity to emissions reduction commitments. Given her handsome renewable energy asset endowment, Uganda can leverage her ETP to chart a sustainable pathway for socio-economic transformation for her citizens and for the entire East African region.

 

ENERGY, ENVIRONMENT & SUSTAINABILITY DEPARTMENT