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SMALL INDEPENDENT POWER PRODUCERS

This article provides an overview of small independent power producers (IPPs) in Uganda and their role in promoting sustainable energy development. It discusses the government's support for renewable and non-renewable IPPs, PPA arrangements, incentives offered, and the process for initiating IPP projects.

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SMALL INDEPENDENT POWER PRODUCERS

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  1. SMALL INDEPENDENT POWER PRODUCERS IN UGANDA BY BARBARA ASIIMWE KASULE REA

  2. BACKGROUND • In 1997, the Government of Uganda through the Ministry of Natural Resources then, drew up a Strategic Plan for the power sector in Uganda. • The objective was to strengthen and enlarge the power sector, so that it is able to provide adequate and reliable energy in order to ensure sustainable social and economic development.

  3. BACKGROUND (Contd) • This plan resulted into the enactment of the Electricity Act of 1999. • The Act ushered in changes like the unbundling of Uganda Electricity Board (the Government owned parastatal that had a monopoly in electricity operations), liberalization of the power sector and the introduction of competition in the sector, a regulatory framework for players in the sector and rural electrification.

  4. SMALL IPPS As part of the Renewable Energy Policy framework, the Government promotes the development of small electricity generation projects. Renewable Energy Sources Co-generation - Bagasse • Kakira Sugar Works (1985) Ltd – Generates 20MW, sells 12MW to the main grid (UETCL) and consumes 8MW internally. • Kinyara Sugar – Generates 2 to 4MW consumes some and sells to UETCL.

  5. SMALL IPPS (Contd) Mini hydros • Kilembe Mines Ltd – Generates 3 to 5MW depending on the hydrology and sells to the main grid. • Kasese Cobalt Limited – Generates 10.5MW (Mostly for own use and sell 2MW surplus to the main grid). • Tronde Power (Bugoye) – Has a capacity of 13MW. Is currently producing 6 – 10 MW depending on the hydrology and sells to the main grid.. • .Kisiizi Hospital – Generates 374KW, uses some and distributes and sells surplus in neighboring environs.

  6. SMALL IPPS (Contd)Non-Renewable Energy Sources Thermal • Electromax (Heavy Fuel Oil plant) – capacity 17.5MW but is currently producing 8MW cause of technical problems. It is connected to the main grid and sells power to UETCL. • WENRECO (Heavy Fuel Oil plant) – Not connected to the main grid. It generates 1.5MW and distributes to consumers in West Nile.

  7. SMALL IPPS (Contd) Mini –hydros in the Pipeline • Mpanga– Capacity of 18MW , has signed a PPA with UETCL. Commissioning scheduled July 2010. • Ishasha – Capacity of 6.5MW, has signed a PPA with UETCL. Commissioning scheduled Aug 2010. Early production in April 2010 of 3 to 4 MW. • Buseruka, Hoima– Capacity of 9MW, connected to the main grid and under construction. • Nyagak – Not connected to the main grid. Is to generate 3.5MW and distributes to consumers in West Nile.

  8. PPA ARRANGEMENTS • Under the Electricity Act there is the single buyer model. • UETCL is designated as the bulk supplier of power and has a license to perform this functions. It transmits and sells electricity in bulk to distribution and sales companies. • All the IPPs that are connected to the main grid sell electricity to UETCL • The IPPs that are not interconnected to the main grid are licensed by the Regulator to generate, distribute and sale electricity.

  9. INCENTIVES OFFERED BY THE GOVERNMENT • A subsidy was initially extended to small IPPs to buy down the cost of generation. So the feed in tariff was low. The situation was such that the feed in tariff and PPA were negotiated on a case by case basis. • This increased the transaction time, costs and resulted into low investor turn out. In some instances investors abandoned at the negotiation stage.

  10. INCENTIVES OFFERED BY THE GOVERNMENT (Contd) • The subsidy was replaced by published standardized feed in tariffs that give a certain Internal Rate of Return of about 15%. (Go to Table for Standardized Tariffs)

  11. Published feed-in-tariffsUganda Electricity Transmission Company Ltdin consultation with the Electricity Regulatory Authorityfor capacities under 20 MW

  12. INCENTIVES OFFERED BY THE GOVERNMENT (Contd) • With the removal of the subsidy the tariff is higher but the business environment has become more predictable and actually investments have increased. Most of the above IPP’s have been done after the event of subsidy. • A standard PPA for all IPPs to have uniformity. • An interconnector to evacuate electricity from the generation source is constructed by the Government.

  13. HOW IPPs ARE INITIATED According to the Electricity Act there are two ways: 1) An investor notifies the Regulator in writing about project. Notice contains aspects like description of project, technical and industrial competence of investor plus financial and legal status. The Regulator invites public to give comments about notice. After receipt of comments a permit can be issued by Regulator for investorto conduct studies. After studies an investor can proceed to apply for a generation license from Regulator.

  14. HOW IPPs ARE INITIATED (Contd) 2) Through solicitation. A project is packaged and advertised through a fair, open and competitive process by the Regulator.

  15. THANK YOU

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