ANNUAL REPORT 2015
ANNUAL REPORT 2015
ANNUAL REPORT 2015
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 3
EXECUTIVE SUMMARY
The GET FiT Uganda Program was formally launched in May 2013. The Program is designed
to target the key barriers confronting investors looking at potential investments in small
renewable energy projects (1-20 MW) in Uganda and thereby fast-track up to 20 projects
1
,
representing up to 170 MW and 830 GWh/year. The main feature of the Program is a front-
loaded results-based premium payment designed to top-up Uganda’s own Renewable
Energy Feed in Tariff (REFiT) and be paid out over the rst ve years of operation.
The initiative is being spearheaded and implemented by Uganda’s Electricity Regulatory
Authority (ERA), the Government of Uganda (GoU) and the German Development Bank
KfW, with funding contributions from the Governments of Norway, Germany, UK and
the European Union (EU). The World Bank supports the Program through a Partial Risk
Guarantee facility.
In 2015, six GET FiT hydropower projects started construction. Following a series
of delays, this represents an important milestone for the Program. The remaining
projects in the portfolio are expected to break ground in 2016, which is vital to meet
the time-bound targets of the Program. Moreover, the rst and only biomass (bagasse)
project was ofcially commissioned in July, resulting in the rst premium payment
being disbursed by the Program. Finally, the solar PV projects awarded support in late
2014 are progressing and one of the two 10 MW solar projects has reached nancial
close and will commence construction in early 2016.
The third and nal RfP round was completed in July, resulting in approval of six
additional hydropower projects. While funds are currently available to support up
to ve projects, the last project is placed on a reserve list. Should projects within
the current portfolio dropout or, preferably, additional funds become available, this
project may still be supported. Unfortunately, few biomass/bagasse projects applied
in this nal tender, and none were approved. GET FiT will thus remain with only one
biomass power plant in its portfolio.
As a result of intense efforts to overcome legal and regulatory issues, which caused
severe project delays throughout 2014, a range of projects have signed Power Purchase
Agreements (PPA) and Implementation Agreements (IA) during the past year. Despite
the delays, the discussion process has resulted in more viable agreements that will
benet future small RE developers in Uganda. With legal issues largely resolved, most
developers can now concentrate fully on technical aspects. Hopefully this will enable
1) The estimate has increased from previous estimates of up to 15 projects. Mainly due to smaller average
project size and introduction of four solar projects to portfolio.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 4
As a result of intense efforts to overcome legal and regulatory issues, which caused
severe project delays throughout 2014, a range of projects have signed Power Purchase
Agreements (PPA) and Implementation Agreements (IA) during the past year. Despite
the delays, the discussion process has resulted in more viable agreements that will
benet future small RE developers in Uganda. With legal issues largely resolved, most
developers can now concentrate fully on technical aspects. Hopefully this will enable
swift progress towards construction starts in the upcoming year.
Despite progress in 2015, challenges still remain. Issues relating to grid interconnection
for several GET FiT projects have emerged as the most critical external risk to Program
success. Comprehensive efforts are being made by GET FiT development partners
to mitigate these risks, through i) nancing critical power grid infrastructure, and
ii) nancing technical assistance to ERA for grid regulation. Furthermore, KfW and
the GET FiT Secretariat are facilitating dialogue and coordination to achieve timely
progress in line with implementation of the GET FiT portfolio.
Overall, GET FiT Uganda has so far managed to establish a promising project portfolio,
with about one third having started or completed construction. A range of technical,
legal and regulatory issues have been solved or at least highlighted, paving the way
for future RE developers. Going forward, continuous efforts will be made to ensure
that more projects break ground and that interconnection issues are resolved as soon
as possible. 2016 is likely to become another interesting and challenging year for GET
FiT.
Finally, we are encouraged to see that the GET FiT concept is likely to be rolled out
in other countries. In 2015, 10 countries in Sub Sahara Africa have been assessed as
potential partners for GET FiT implementation. Assessments are still on-going, and
decisions to proceed towards programme establishment are expected in the second
quarter of 2016.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 5
The Electricity Regulatory Authority (ERA)
has noted tremendous progress in the year
2015 with respect to the implementation
of the Global Energy Transfer Feed-in-
Tariff (GET FiT) Program.
This progress is demonstrated by the
increase in the number of projects that
have commenced construction works
bringing the total number to six (6).
During the same period, eleven (11) projects have executed Power Purchase Agreements.
It is on this backdrop that the Electricity Regulatory Authority continues to recognize
the role the GET FiT program plays in the integration of least-cost renewable energy
sources into the generation mix of Uganda.
Following successful conclusion of the third round of the GET FiT, the ERA gratefully
notes that the program has to-date committed to support 17 projects with a combined
capacity of 157 MW.
As we usher in 2016, the ERA will focus on monitoring projects under construction
and ensure that the power evacuation lines are completed in time to ensure timely
commissioning of the projects.
The GET FiT inventiveness has more than raised awareness in the private sector
worldwide and has propelled private rms to invest in renewable energy in Uganda
today and it is evident that this innovation will contribute to the economic development
of the country.
With the above substantial milestones achieved, ERA will continue to cooperate with
Development Partners, Government institutions and the private sector to license
renewable energy generation projects in Uganda.
MESSAGE FROM THE CEO OF THE
ELECTRICITY REGULATORY AUTHORITY
Dr. Benon Mutambi, CEO of ERA Uganda
Dr. Benon Mutambi, CEO of ERA Uganda
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 6
Dear readers,
we are looking back on an exciting and
eventful year 2015, which has seen the
expansion of the GET FiT portfolio as well as
substantial progress in project
implementation.
The third and last round of proposals for GET
FiT Uganda was concluded in June 2015, and 6
promising projects were selected for support.
Due to limited funding, unfortunately only 5
can be supported at this point.
This brings the portfolio up to 17 projects with an installed capacity of 157 MW of
clean and renewable solar, bagasse and hydro power energy. Interest in GET FiT is still
high, which could be witnessed through the high number of applications as well as
continued inquiries about the programme by developers.
Project progress has been visible: 2015 saw commissioning of the rst GET FiT project.
The bagasse cogeneration plant at Kakira Sugar is now delivering 20 MW of reliable
power to the national grid and received the rst GET FiT premium payment. Six hydro
projects started construction this year and several will start construction in early
2016. Two GET FiT projects reached full nancial close, and a number of others will
do so very soon.
Last year I mentioned the challenge of grid interconnection of GET FiT projects. I am
proud to report that we have sourced additional funding from DFID and Financing
Agreements with the Government of Uganda have been signed already. More funding
from the German government (and potentially the EU) has been made available
for additional critical transmission lines, which will assist in evacuating the power
generated by GET FiT supported power plants.
Some challenges in the regulatory environment regarding grid-connected solar
projects, such as the applicable tax treatment for solar projects as well as standard
contractual agreements agreed under GET FiT, emerged last year. I encourage the
Government of Uganda and ERA to continue seeking solutions to overcome regulatory
MESSAGE FROM KFW
Helmut Gauges, KfW Development Bank
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 7
challenges to retain Uganda’s reputation as a stable, reliable and attractive
environment for private sector investment.
The reputation of GET FiT as an innovative and effective programme to increase
generation capacity and power supply while at the same time addressing barriers to
private investment and improving the regulatory framework has not gone unnoticed.
I believe the continuous efforts of Government of Uganda, Government of Germany,
KfW and other stakeholders have taken GET FiT from a promising concept to a role
model facility for leveraging private sector investment into small scale renewable
energy projects in Sub-Saharan Africa. GET FiT today is a permanent reference and
subject of discussions at international investor conferences more than three years
after its launch. This can only mean that something about GET FiT has “hit a nerve” in
the sector and the tool box offered under the facility has been an appropriate response
to current market challenges. This opinion is underpinned by the World Bank short
stories essay award for “innovative solutions through public private partnerships”
given to a submission by GET FiT.
To respond to this continued interest, we have commissioned a series of regional
roll-out studies for similar support schemes with funding from the UK, and will
create specic project proposals for a number of countries. We are also pleased that
Zambia, supported by Germany through KfW, has been actively developing a GET FiT
programme of their own and we were delighted to see the fruitful exchange between
the Zambian delegation and the ERA team during their 2015 study tour to learn from
the Ugandan experience.
Last year I mentioned Uganda’s rank in the Bloomberg New Energy Finances
Climatescope report. 2015, Uganda has moved up again and is currently ranked 9th
globally among emerging economies for clean technology investments. With this
positive news I would like to conclude and wish us all a successful and exciting GET
FiT year 2016.
Helmut Gauges, Member of the Management Committee
KfW Development Bank
ANNUAL REPORT 2015
GET FiT UGANDA
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 9
The GET FiT Uganda Program was ofcially launched on May 31st 2013. The Program,
which has been jointly developed by the Government of Uganda, ERA and KfW, is
designed to leverage private investment into renewable energy generation projects in
Uganda. GET FiT is being supported by the Government of Norway, the United Kingdom,
the Government of Germany and EU through the EU Africa Infrastructure Fund as well
as the World Bank through their IDA Partial Risk Guarantee (PRG) instrument.
The main objective of the GET FiT Program is to assist Sub-Saharan African nations
in pursuing a climate resilient low-carbon development path resulting in growth,
poverty reduction and climate change mitigation. Roll-out of the Program has started
in Uganda. In Uganda, GET FiT intends to fast-track a portfolio of up to 20 small-
scale renewable energy (RE) generation projects, promoted by private developers.
Depending on funding situation and progress of the individual progress, the portfolio
may yield a combined installed capacity of up to 170 MW. This will correspond to up to
approximately 830 GWh of energy production per year, transforming Uganda’s energy
mix within a period of 3-5 years, and resulting in:
emission reductions of roughly 11M tons of CO2 over the 20-year lifespan of
PPAs;
an increase in Uganda’s energy production by about 20%, and thus a
contribution to tackling an anticipated supply shortage in 2016;
facilitating (or signicantly improving) access to energy for at least 200,000
additional households (approximately 1.2M people), also in rural areas due to
strengthening of regional grids;
leveraging of close to USD 400M in private investments for renewable energy
generation projects with a limited amount of results-based grant funding.
GET FiT UGANDA
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 10
There is a looming short term power-supply shortage for the Ugandan national power
grid. As a result of power and fuel supply shortages during the power crisis between
2006-2009, Uganda saw its GDP growth reduced from 6-6.5 % to 4.5 %, costing the
economy hundreds of millions of dollars. According to ERA (2015), a new supply-
demand gap is now emerging. Unless new renewable power sources are brought
online, the sector will again face load-shedding or become reliant upon expensive
thermal generation. The emerging supply-demand gap is expected to grow steadily
until the commissioning of the larger hydropower plants including Muzizi (46MW),
Isimba (183MW) and Karuma (600MW). Even if these plants are commissioned on time
(around 2020), thermal power generation will put a high cost on the system unless
new sources are developed.
While the thermal capacity available to the Ugandan grid is still sufcient as to meet
the current peak demand and avoid considerable load shedding, the utilization of
these capacities represents high costs. ERA expects a signicant increase in demand
also throughout 2016. The GET FiT Program’s ability to introduce additional renewable
energy production is critical in order to avoid increased use of thermal power
generation and eventually more frequent load shedding due to supply shortage.
While the Ugandan power sector has undergone considerable reform over the past
decade, several challenges remain in terms of attracting investments, particularly in
small renewables:
Patchy enabling environment for investment in small renewables. Uganda was ranked
122 out of 189 in the World Bank’s Doing Business index (2015), which is a small, yet
notable climb from the 132 ranking in 2014. Nonetheless, an up-hill battle still lies
ahead for a Government and energy sector eagerly seeking foreign investment. Despite
signicant potential, especially in small hydropower and biomass, developers and
investors have expressed frustration in terms of ensuring predictability, consistency
and transparency in bringing their projects from concept to protable investment.
Insufcient incentives to encourage investment in small renewables. While ERA has
introduced (2007) a Renewable Energy Policy and a multi-generation type REFiT
policy for promoting small-scale renewables, the proposed tariff levels have been
widely viewed by investors as insufcient to unlock investments in the sector. These
relatively low tariff levels combined with uncertain and often prolonged development
processes have provided inadequate nancial incentives especially for early-stage
equity investment towards project development.
WHAT IS THE CHALLENGE?
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 11
1) http://global-climatescope.org/en/
2) Eberhard, A, Gratwick, K, Morella, E, Antmann, P (2015). Independent Power Producers in Africa. World
Bank, Washington, DC
High demands on GoU as a counterpart in the timely realization of small renewables.
The demands and expectations placed on public authorities in light of private
investment in renewables, especially those that are part of project non-recourse
nancing, is considerable. There are high demands especially from nancial investors
in terms of predictable policies and actions, transparency, responsiveness, analytical
capabilities, coherent negotiations and ultimately guarantee backup for payments and
defaults. Like in most countries in the region, Ugandan authorities are in a constant
process to meet these expectations and generally require international expertise to
complement their efforts.
Promoting renewables while minimizing public/end-user nancial burden. The
Government of Uganda and ERA are committed to full cost-reectiveness in the energy
sector. However, balancing actual costs and the ability of Ugandan consumers to pay
for their power is one of the key challenges faced by the sector. With an average of
about EURc 15 per kWh, Ugandan consumers are already paying a high price for power,
in comparison with neighboring countries. Supporting investments in renewables has
long term nancial impact and, while there is a clear economic incentive to promote
small renewable generation with its relatively short lead times, ERA must take a
closely considered and balanced approach to ensure an efcient level of support. The
relatively weak enabling environment and perceived risk levels make the achievement
of this balance particularly challenging for a regulator.
However, GET FiT has contributed signicantly towards a better investment climate
in the renewable energy sector. While one power plant has been commissioned so far
under the Program, GET FiT has played a key role in e.g.
i. improving the regulatory framework (standardized PPA and increased
capacity at ERA, among other issues),
ii. highlighting of interconnection bottlenecks and facilitating grid
reinforcements, and
iii. supporting developers toward nancial close and construction start.
The positive developments in the sector in recent years was underlined by Uganda
being ranked the 3rd best country in Africa for clean energy investments in 2015
1
. It
was ranked 9th worldwide among developing countries. Notably, Uganda now has the
second highest number of IPPs in Africa south of Sahara, only beaten by South Africa
2.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 12
The main purpose of the GET FiT Uganda Program is to fast-track a portfolio of about
up to about 20 small-scale renewable energy generation projects (1 MW - 20 MW hydro
and biomass/bagasse projects) promoted by private developers with a total installed
capacity of up to 150 MW. An additional 20 MW was approved in the solar tender
of late 2014, which has been implemented by ERA under the GET FiT Solar Facility.
With the expected supply gap gradually increasing until commissioning of several
large hydropower plants, GET FiT will represent a timely intervention, particularly
through the supported bagasse plant commissioned and delivering electricity
already combined with the range of hydropower plants in the GET FiT portfolio being
commissioned from 2016 and solar PV capacity expected on-grid in mid-2016/early
2017. The multiple support levers of the Program, described below, are designed to
address (simultaneously and somewhat exibly) the specic challenges described
above.
A successful Program will be characterized by: i) timely commissioning of up to 170
MW of renewable energy capacity (until 2018) representing approximately 20 percent
increase relative to current installed capacity; ii) avoidance of signicant costs for the
sector and emissions from fossil fuel generation; iii) improved sector performance and
investment attractiveness; iv) a sustainable exit, with cost-reective and REFiT levels;
HOW DOES GET FIT ADDRESS THESE
CHALLENGES?
Figure 1: The GET FiT toolbox is designed to meet the primary challenges
and barriers to energy sector investments
CHALLENGES
AND BARRIERS
TO INVESTMENT
GET FIT
TOOLBOX
Insufficient
Incentives
- GFPPM
- Solar Facility
Patchy Enabling
Environment
- PPA and IA.
- WB PRG.
High demands
on GoU
- TA Facility
Prevent power
supply shortage.
Sustainable support, limiting
public subsidies and ensuring
exit strategy.
Critical grid
bottlenecks
- GET FiT inter-
connection support
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 13
Each of the support and funding levers are critical contributions towards this success:
A. The GET FiT Premium Payment Mechanism. The primary support component
of the GET FiT Program is the top-up payment provided to projects in terms
of USDc/kWh (USDc 1.4/kWh for hydropower and USDc 1.0/kWh for biomass
and USDc 0.5/ kWh for bagasse) for actual delivery of energy to the national
grid over 20 years. However, the total support is front-loaded by discounting
the total support over the 20 years and disbursing these funds through the
rst ve years of operation. The intention behind this payment ow setup is
to enable commercial lending to projects, by providing additional cash ow to
project owners during critical (early) debt repayment periods.
Figure 2: The GET FiT Premium Payment Mechanism provides additional cash to
project owners in the critical, early phase of debt repayment
REFiT
USc/kWh 8 for bagasse
USc/kWh 8.5 – 11.5 for hydro
USc/kWh 11 for solar
50% of total GET FiT
premium on COD
REFIT
GET FIT
mechanism
50 % of total GET FiT premium
disbursed over 5 first years of
operation.
GET FiT Premium Payment (top-up)
20 years
20 years
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 14
B. GET FiT Solar Facility. Technology costs for solar PV have plummeted in recent
years, while investors show increasing interest for investment in solar PV in
East Africa. The vast potential, the short lead-time and geographic exibility of
solar PV technology led ERA to approach KfW in 2013 to include a component
targeting on-grid solar PV under the GET FiT Solar Facility. The funds for this
additional component of the GET FiT Program are provided by the EU. The GET
FiT Solar Facility involves a reverse auction approach, whereby ERA has dened
a tariff of USDc 11 for its contribution per KWh and GET FiT will provide the
required top-up / gap payments to the tariffs offered by successful bidders.
Thus, the amount (MW) of PV installations supported by the available GET FiT
budget is a function of the reverse auction outcome. The facility benets from
the design and administrative set-up of the overall GET FiT Program and is
implemented under its umbrella. The rst tender resulted in the selection of
4x5MWp installations in Eastern Uganda. Figure 3 illustrates the prioritized
geographic areas of the country, as determined by UETCL, UMEME and ERA.
Figure 3: Priority regions under the GET FiT Solar Facility
(based on insolation conditions, demand and grid readiness)
KENYA
TANZANIA
DEM.REP
OF CONGO
SUDAN
Kampala
CAPTION
PRIORITY A
PRIORITY B
PRIORITY C
NON ELIGIBLE AREA
Kampala
LAKE VICTORIA
LAKE
EDWARD
LAKE KYOGA
LAKE ALBERT
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 15
1) An Independent Power Producer (IPP) is a non-public utility who owns a power generating facility,
producing electric power for sale to utilities and end users.
C. Support to Standardization of legal documents. Bankable Power Purchase
Agreement and Implementation Agreements as well as the related Direct
Agreements are key for successful structuring of independent power producers
1
,
especially when they are project nanced. While Uganda already had a standard
set of legal documents before GET FiT, developers and their banks were not
comfortable with the drafts leading to lengthy negotiations and case by case
amendments. With the support of GET FiT an experienced law rm (Trinity
International LLP) was contracted in 2012 to support UETCL, GoU and ERA
in the review and standardization of PPA, IA and Direct Agreements for small
independent power producers. In a consultative process, developers, their banks
and lawyers were able to provide input, ensuring broad acceptance of the revised
documents. By standardizing the documentation, transaction costs are reduced
for both public and private stakeholders.
D. World Bank IDA Partial Risk Guarantee Facility. On March 18th, 2014, a PRG facility
in support of small scale renewable projects in Uganda was approved by the
World Bank Group Executive Board. The PRG Program design and implementation
are critically dependent upon the systems in place to implement, manage and
monitor the GET FiT portfolio. The USD 160M committed for the PRG facility will
specically be deployed as three complimentary risk-mitigating components;
i. Facilitate the provision of short term liquidity support to the benet of
UETCLs Power Purchase Agreement obligations.
ii. Termination compensation for events of governmental/utility default
under the PPA / IA.
iii. Commercial debt guarantee.
The World Bank PRG team utilizes the application and appraisal documents of
GET FiT Premium Payment Mechanism for their PRG approval process and closely
work with the GET FiT Secretariat. Both application and appraisal processes are
synchronized in terms of timing, thus reducing transaction costs for independent
power producers interested in both components.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 16
E. GET FiT Technical Assistance Facility. The Technical Assistance Facility for ERA
includes measures ensuring the long term sustainability of the arrangements
for support to renewable energy in Uganda, including enhancement of skills for
REFiT tariff modelling, least cost development planning, project due diligence
expertise, strategic communication and negotiation. The Technical Assistance
Facility nances targeted training for selected staff members and groups through
external as well as on-the-job training.
F. GET FiT Interconnection Support. As the GET FiT portfolio of projects has increased,
bottlenecks in the Ugandan transmission/distribution grid have emerged as
an increasing risk to the Program. Construction of new grid infrastructure, as
well as reinforcement of existing infrastructure, is needed to ensure adequate
interconnection and power evacuation for several GET FiT projects. As a response,
GET FiT development partners have committed nancial support to the required
grid investments, as well as associated Technical Assistance to ERA. The support
has been designed to complement ongoing grid infrastructure programmes by
several donors and intends to ll identied gaps in existing support. KfW and
the GET FiT Secretariat are actively coordinating between the Ugandan entities,
donors and GET FiT developers, to facilitate timely implementation.
Norway is proud to be a partner in the
GET FiT Uganda program. Its success in
leveraging private investments in the
Ugandan renewable energy sector using
limited donor funding is a model example of
how smart development assistance can be
done. Through its stimulation of private
investments the program fits perfectly with
the Norwegian strategy for development
assistance to renewable energy.
Hans Peter Christophersen, Energy
Councillor, Royal Norwegian Embassy in Uganda
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 17
Uganda has one of the most liberalized power sectors in Africa. In 2007, GoU introduced
the Renewable Energy Policy and a multi-generation type REFiT policy for promoting
small-scale renewables. This REFiT policy provided a particularly attractive entry
point and exit strategy for the GET FiT Program. Specically, it was widely viewed
in the market that the initial REFiT was slightly low to stimulate private investment in
renewables in Uganda. Balancing end-user ability to pay and industry requirements,
GoU and ERA committed to gradually increase the REFiT to a truly cost reective level.
This introduced a time-bound opportunity for cooperation to ensure fast-tracked
promotion of new renewables in the light of the looming generation crisis.
There is increasing interest by a diverse range of investors in renewable energy
in Eastern Africa. The 17 projects thus far approved by the Program all have more
or less formal commitments for full investment needs totaling some USD 400M.
The observed interest by local and international developers, Development Finance
Institutions, international equity investors and to a limited extent commercial banks
in the GET FiT Program has been overwhelming, culminating with 35 applications from
independent power producers in three RFP rounds (for hydro, biomass and bagasse)
and 24 Expressions of Interest for the on-grid solar power tender launched by ERA
under the GET FiT Solar Facility.
Given the above and the results-based design of the support, development partners
have been highly positive and provided full support - matched by considerable
expectations regarding results. The design ensures that donors will provide project-
level payments only once projects are delivering increased production of renewable
energy, coupled by reduced emissions and socio-economic benets. The results-based
design ensures alignment of incentives for all parties involved.
WHAT ARE THE OPPORTUNITIES FOR
SUCCESS IN UGANDA?
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 18
Recognizing the prevailing challenges and opportunities facing the sector, GoU and
ERA worked actively together with KfW to put the targeted and time-bound support
to work. In order to ensure rapid and efcient implementation, GoU provided KfW
with delegated authority in terms of implementing the Program. As the implementing
agency, ERA has fully embraced the Program and maintained high expectations in
terms of timely results. ERA participates in the Steering Committee as well as a
range of critical discussions concerning implementation, often represented by senior
management. In order to achieve sustainability of the GET FiT Program and full
engagement by ERA staff, considerable effort is made to ensure full compatibility
of the Program’s governance, support, procedures, etc. with ERAs own systems and
planning. ERA is actively utilizing the support and efforts provided by GET FiT in their
daily operation.
Provided with delegated authority from GoU, KfW continues to operate as the
dedicated implementing entity of the GET FiT Program in Uganda. KfW has invested
considerable time, effort and reputation into the Program, ensuring proper nancial
management systems, developing and signing the required agreements with GoU,
developers and consultants and actively engaging in the overall development of the
Ugandan power sector.
The Development Partners of Government of Norway, Germany (BMUB and BMZ), UK
(DECC and DFID) and the European Union are recognized for providing predictable
funding commitments towards this innovative results-based funding scheme. Together,
these partners have committed approximately EUR 94M thus ensuring full funding of
the Program in order to meet the key targeted outputs.
The World Bank has contributed to the development and implementation of the
Program and approved its IDA PRG facility which offers valuable risk mitigation tools
to developers.
Finally, the Program will only prove as successful as the developers and investors
promoting and implementing the projects. Thus, GET FiT has actively engaged in
providing support, networks, opportunities, etc. to developers that are following the
GET FiT Program. With 17 approved projects, these developers are everything from
industrial to nancial actors and generally include both domestic and international
shareholders.
WHO HAS RALLIED BEHIND GET FIT?
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 19
The governance structure of GET FiT is illustrated in Figure 4. As indicated here,
underpinning this structure is the delegated authority given to KfW by GoU regarding
all aspects of implementation of the Program. This ensures that KfW can run the
tender process, sign the required agreements, manage funding commitments and
disbursements from development partners and generally promote the Program. KfW
is implementing GET FiT together with ERA, ensuring policy-conformity and consistent
implementation of the Program.
GET FIT UGANDA GOVERNANCE STRUCTURE
Figure 4: The governance structure of GET FiT is designed to ensure a fair tender/proposal process,
thorough selection, high quality follow-up and efcient monitoring of approved projects
GET FiT Steering
Committee (SC)
Investment
Committee (IC)
Implementation
Consultant
GET FiT
Secretariat
Project selection and
payment commitment
decisions.
Appraisals,
recommendations,
supervision.
Staffing and day-to-day
management.
Developer follow-up, reporting
and communication, overall
program coordination.
KfW’s delegated authority from GoU and subsequent contractual
relationships underpins each layer of the governance structure.
Development Partners
(Norway, Germany,
UK and EU)
KfW, ERA,
MEMD, WB
Facilitators
and Observers
SC Members
GoU: MEMD,
MoFPED
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 20
The main governing body of the GET FiT Program is the Steering Committee,
which comprises of one representative from each development partner and two
representatives from the Government of Uganda (Ministry of Energy and Mineral
Development (MEMD) and Ministry of Finance, Planning and Economic Development
(MoFPED)). KfW, the World Bank, ERA and the GET FiT Secretariat have non-voting
representation. The Steering Committee has the responsibility for determining all
policy-related principles of the GET FiT Program, which includes amendments or
changes to guidelines on all operational levels of the facility.
The Investment Committee, consisting of seven international (renewable) energy
sector and infrastructure investment experts, is the body in charge of the nal
appraisal and investment decision for projects applying under the GET FiT Program.
Additionally, the Investment Committee makes proposals for changes and adaptions
of GET FiT policies and guidelines for the consideration of the Steering Committee.
The Secretariat is tasked with day-to-day management, coordination and supervision
of the Program’s implementation. The Secretariat facilitates meeting points for
relevant stakeholders, ensures smooth and timely running of the RfPs and subsequent
appraisals and IC meetings, maintains a dialogue with developers, coordinates the
Technical Assistance Facility, and follows up on action points from GoU, KfW, the SC
and IC.
Table 1: Steering committee members, facilitators and observers of the GET FiT Program
SC MEMBERS SC FACILITATORS AND OBSERVERS
Ministry of Finance KfW
Ministry of Energy and Mineral
Development
GET FiT Secretariat
Government of UK (DFID and DECC)
Ugandan Electricity
Regulatory Authority
European Delegation
World Bank
Government of Norway Invited Consultants
Government of Germany
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 21
The Implementation Consultant namely Multiconsult of Norway, manages the day-
to-day business of the Secretariat, performs independent appraisals during the RfP
process, carries out supervision of the individual projects, assists KfW in managing
actual and projected disbursements and cash balances, and provides regular reporting
upon Program implementation.
The GET FiT project cycle is as illustrated by Figure 5. The selection of renewable energy
projects to be considered for support by the GET FiT Premium Payment Mechanism
and the GET FiT Solar Facility follows an open and transparent RfP. Projects need
to be sufciently advanced in project preparation (e.g. feasibility (pre-feasibility for
solar), Environmental & Social Impact Assessment (screening for solar), Resettlement
Action Plan, interconnection study concluded) to be eligible to apply. Projects have to
demonstrate that they
a. are nancially and economically sustainable,
b. technically sound,
c. developed by a developer/sponsor with a reliable project record and
d. comply with International Finance Corporation (IFC) Performance Standards
on Environmental and Social Sustainability (2012).
In addition, a comprehensive legal due diligence is performed. Project Proposals
under the GET FiT Program are appraised by the Implementation Consultant. Support
under GET FiT is provided on a competitive, rst-come-rst-serve basis until funds are
exhausted.
Figure 5: The GET FiT Project Cycle aims to efciently bring projects from approval to operation,
by providing a streamlined and transparent process with a set of distinct milestones.
ANNUAL REPORT 2015
KEY ACTIVITIES
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 23
In 2015, the GET FiT portfolio grew through the third and nal RFP Round, despite the
exclusion of three projects approved in RFPs 1 and 2 (see chapter 3.1 for details). The
portfolio now totals 17 projects: fourteen hydro, one bagasse and two solar PV power
projects.
Overall, one project has been commissioned, six are under construction and four projects
have reached nancial close. Most other developers are on the verge of nancial close
and/or construction start. Nonetheless, continued progress and construction start
for additional projects within 2016 is vital to ensure timely achievement of overall
objectives.
The exit of the three projects totalling 15 MW and 140 GWh is unfortunate in terms of
reaching the overall target for annual energy production. Further the exit of the only
project using gasied maize farm waste for electricity generation takes the number of
supported technologies down from four to three.
PORTFOLIO DEVELOPMENT IN 2015
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 24
Of the 18 projects applying, six promising hydropower projects were approved by
the Investment Committee. Five of these can currently be funded through GET FiT,
representing a total installed capacity of approximately 42 MW and 200 GWh of
annual production.
Five of the six hydropower projects approved through the third GET FiT RFP round are
located in Western Uganda, while one is located in Gulu district in the north. While
funding is currently available (partly or fully) for the Nyamaghasani I, Nyamaghasani
II, Ndugutu, Kyambura and Nkusi projects, Achwa III is currently considered a reserve,
and will receive funding if any becomes available.
SIX NEW PROJECTS APPROVED, NO BIOMASS
APPLICANTS
PROJECT NAME
CAPACITY (MW)
ANNUAL PRODUCTION (GWh)
Nyamaghasani II
Nyamaghasani I
Ndugutu
Kyambura
Nkusi
Achwa 3
TOTAL
5
15
4.8
7.5
9
9.9
52
26
64
22
37
51
46
245
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 25
Notably, out of the 18 applicants in RfP 3, only two projects were reapplying (after a
previous rejection through GET FiT), reecting the signicant uptake in activity in the
small hydro sector in Uganda in the last years.
It should be noted that only one biomass (bagasse based) power project applied for
GET FiT support in RfP 3. Unfortunately, the application was decient and thus rejected
and no bagasse projects were among the appraised projects. The reasons for the lack
of biomass applications are not known. However, developers could have refrained
from applying due to (i) the increased REFiT for bagasse or (ii) the very high and
demanding standards associated with the IFC Performance Standard for projects with
an agricultural supply chain. The Consultant currently carrying out the Evaluation and
Performance Review of the Program is investigating the reasons for the low numbers
of biomass-related applications.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 26
During the course of 2015, the rst six GET FiT hydropower projects commenced
construction activities. Representing a planned combined generation capacity of 37
MW and an annual energy production of 177 GWh, these groundbreakings represent
a considerable step towards meeting the GET FiT capacity targets. In particular, the
Siti I project (6.1 MW) in Eastern Uganda is moving quickly and seems to be on track
for commissioning in Q2 2017. Western region projects Waki, Nyamwamba, Rwimi
and Muvumbe have also commenced works and should be commissioned within the
next two years. Other projects anticipated to begin construction in early 2016 are the
Western Uganda hydropower projects Sindila and Lubilia, and solar PV project Soroti
in Eastern Uganda.
In another milestone for 2015, the bagasse-based power plant Kakira (20 MW) was
ofcially commissioned as a GET FiT-supported project and has received the rst Get
Fit premium payment.
CONSTRUCTION START FOR SIX PROJECTS
Initial construction work at the dam site location of the Siti I hydropower project.
Photo: GET FiT
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 27
Initial construction work at Muvumbe hydropower project. Photo: GET FiT
Bridge at Nyamwamba project site reconstructed (right)
after the severe ood damages in 2014 (left).
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 28
1) For more details regarding some of these issues, please have a look at the GET FiT annual reports for
2013 and 2014.
2) In particular to replace potential use of thermal power. Use of thermal plants may increase due to
the emerging supply/demand gap, while awaiting large hydropower projects (Karuma, Isimba) to be
commissioned around 2020.
Due to various technical, environmental and legal reasons, several projects have
delayed groundbreaking beyond what was expected upon entering the Program
1
.
In order to utilize the window of opportunity for GET FiT to supply clean energy to
the Ugandan grid, supported plants need to move steadily and efciently towards
commissioning
2
. Most delays are legitimate but they still present a risk to achieving
the Program goals. Hence, while all stakeholders are delighted to have seen several
projects accelerate in 2015, more groundbreakings must follow in 2016 to secure
progress against capacity targets.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 29
1) Promoting Solar Energy through Auctions: The Case of Uganda (PDF)
In November 2014, ERA and the GET FiT Secretariat announced the approval of two
10 MW solar PV projects to be developed under the GET FiT Solar Facility. This EU ITF-
funded facility was launched as an additional component under the GET FiT program
in order to include solar PV as a new, quickly implementable generation source to the
Ugandan energy mix.
The projects were selected after the rst-of-its-kind donor-subsidized competitive
tender process, which attracted global interest from solar developers, renewable
energy investors and development cooperation stakeholders
1
.
In early 2016, the Soroti Solar project developed by Access Power reached nancial
close and announced immediate construction start. Unforeseen regulatory and
nancial obstacles restrained further progress on the second solar PV project in
Tororo, implemented by a consortium of Ugandan Simba and Building Energy of Italy.
However, ERA, the GET FiT Secretariat and the developer have been working actively
on a solution throughout 2015 and hope to resolve pending issues in the rst quarter
of 2016. The envisaged policy solution would also benet the sector as a whole by
providing a level playing eld for different renewable technologies, which are currently
attracting different tax treatments.
FIRST GRID
-
CONNECTED SOLAR PLANT IN
UGANDA WILL BE COMMISSIONED IN 2016
The GET FIT program illustrates that once
you have a sound policy framework in place it
becomes a lot less difficult to bring to life rene-
wable energy projects. The Uganda model pro-
vides a compelling and successful template for
other countries to replicate.
Vahid Fotuhi, Access-Power
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 30
2015 has been a catalyst year for signing of Power Purchasing Agreements (PPAs) and
Implementation Agreements (IAs). A total of eleven PPAs and ten IAs have been signed
between GET FiT-supported IPPs, UETCL and Government of Uganda respectively. It is
expected that the remaining six PPAs and 7 IAs will be signed during the rst half of
2016.
After the challenges with unclear taxation of small hydro projects were resolved in
late 2014, developers quickly concluded the pending negotiation processes. Final
approvals through the respective executive bodies of the Ugandan counterparties,
as well as the Solicitor General, then followed. During 2015, it was observed that
the negotiation process for new” PPAs and IAs became increasingly time efcient as
conclusion of key transaction documents in general did not require more than four to
eight weeks, depending on the availability of the relevant executives of the Ugandan
counterparties. While the solar IPPs were able to benet from established negotiation
procedures, they usually required additional time due to lack of a previous structured
coordination and consolidation procedure for the technology-adapted standardized
PPA.
Despite the overall success in 2015, the PPA and IA conclusion process also experienced
a number of setbacks and difculties due to bureaucratic procedures. GET FiT has
facilitated exchange between Ugandan authorities and developers to fast track the
process.
A further critical issue for all pending PPA negotiations is the stand UETCL has
taken with regard to the letter of credit which the offtaker has to facilitate as a risk
mitigating instrument under the PPA. To avoid providing the cash collateral required
by banks for issuance of the letter of credit, UETCL instead urges developers to
make use of the World Bank PRG payment component or other available guarantee
instruments expecting that this would bypass the collateral requirement. While the
potential impacts on developer nancing and timing of this policy change still have
to be evaluated, it is likely that it will result in delays. Together with ERA, the GET FiT
Secretariat aims to coordinate the required process efciently to minimize potential
impacts on envisaged timelines.
SIGNING BOOM FOR PPAS AND IAS
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 31
Steady progress by several developers throughout the year has taken the Program
a long way towards achieving its long term targets. However if we look at the
composition of the current GET FiT portfolio, it has become unlikely that the initial
capacity and annual production targets of 170 MW and 830 GWh can be met (gure
6). This is primarily due to the reduced value of existing commitments (due to foreign
exchange rate developments), covered in more detail in chapter 4.2.
Secondly, as the Program has attracted a lower share of biomass power projects than
originally expected, the estimated portfolio energy output has reduced. Due to the
more stable energy generation of biomass power facilities, the energy produced
(GWh) per unit of installed capacity (MW) is considerably higher than for hydro and
solar power plants. As the original production target for the Program was based on a
higher expected share of biomass/bagasse generation, the production target is now
more difcult to achieve.
With the current portfolio, the Program is set to achieve approximately 85 percent of
initial production capacity targets. This will equate to a similar percentage of GET FiTs
emission reduction targets.
EXPECTED PORTFOLIO OUTPUT BASED ON
2015 DEVELOPMENTS
Figure 6: Overall status of the GET FiT portfolio vs. original capacity targets. With full
utilization of the current portfolio and additional funding for reserve list projects, original
targets may still be largely achieved
100
90
80
70
60
50
40
30
20
10
0
GWh
% of target
acheived
MW
Target: 170 MW Target: 830GWh
(reserve projects)
SOLAR
RFP 3
RFP1&2
(reserve projects)
RFP 3
RFP1&2
769GWh
Current
portfolio
157GWh
Current
portfolio
SOLAR
SOLAR
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 32
1) The Joint Task Force (JTF) is comprised of technical experts from ERA, UETCL, Uganda’s Rural Electri-
cation Agency (REA), and the private distribution company Umeme, with the GET FiT Secretariat in an
observatory role. The JTF is chaired by ERA.
To secure full power evacuation from all the projects approved under GET FiT, it is vital
to address the critical grid bottlenecks identied through the Joint Interconnection Task
Force
1
prior to commissioning of several of the projects. The task force has proposed
a range of interventions, and several development partners have committed support
to both infrastructure investments and related TA support. The total investment need
amounts to some USD 90M. It is important to note that the proposed investments
are in line with Ugandas overall long term power system development plan, and
generally provide benets to the national grid in addition to serving the GET FiT
directly. Financing for most of the interconnection components has now been secured,
following the comprehensive assessments carried out in 2014.
A. The following investments are made in a wider grid development perspective
outside the GET FiT programme umbrella but benet interconnection of GET FiT
projects:
The EU has nanced the feasibility study of the Mbale Bulambuli 132
kV transmission grid extension through KfW, which commenced end of
January 2016. Additionally, in December 2014, Germany committed to
provide a concessionary loan of up to EUR 40M to the project (subject to
positive appraisal by KfW based on the feasibility study). To ensure the
full nancing of the estimated EUR 50M investment costs, KfW intends
to apply for additional grant funding from the EU for the transmission
line and associated access-to-energy measures. The line is critical for
power evacuation from the hydropower projects Siti I and Siti II in the
GET FiT portfolio, but also for development of the regional grid in a wider
perspective. In order to facilitate the timely evacuation of Siti I and II
power plants, the Government of Uganda through REA has agreed to fund
the upgrade of the 33 kV infrastructure in the vicinity of the power plants
to Mbale substation. The more robust 132 kV line is expected in 2020.
The World Bank is in principle prepared to provide funding for the upgrade
of transformer capacity at Nkenda Substation from the existing 40 MVA to
120 MVA. This upgrade is required for interconnection of several GET FiT
hydropower schemes in Western Uganda.
GRID INTERCONNECTION SUPPORT
PROVIDED THROUGH GET FIT
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 33
Additionally, the Governments of Norway, Germany and the World Bank are
already involved in various transmission line extension projects in Uganda
together with other development partners.
B. While also benecial for the broader grid development, the following
investments are to a large extent directed towards interconnection of GET FiT
projects (GET FiT interconnection Support Component).
UK DFID has approved and committed funding through KfW for
i. 33 kV grid reinforcements in Western Uganda (USD 13M) critical to ensure
adequate interconnection of several GET FiT hydropower schemes in Western
Uganda. Award for supervision engineer is expected in February, followed by EPC
tendering. Construction start is expected within 2016.
ii. Opuyo transmission substation upgrade (USD 5.8M). This is a key substation
for development of the vast solar power potential in the Soroti area of Eastern
Uganda, where the Soroti I and II solar PV plants are being developed under
GET FiT. Tender documents for a design and supervision consultant and as well
required works are currently being developed by UETCL with help of a tender
agent.
iii. TA support to ERA (USD 3.7M) under the GET FiT TA facility. Evaluation of
consultant bids for the development of an interconnection code and wheeling
agreement is completed and contract award expected by early February 2016.
Another tender on assisting ERA in improving the compliance monitoring of
distribution companies is ongoing. See sections 2.3.2 and 2.3.3 below for more
details.
The GET FiT Secretariat will continue in its role as an observing member of the Joint
Task Force, and support ERA, UETCL, REA and distribution companies in the coordinated
and timely implementation of grid upgrades. An important task for the Secretariat
in the coming year will be to monitor progress of grid investments, and facilitate
communication and coordination between all stakeholders.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 34
Implementation of the GET FiT Technical Assistance (TA) Facility (see chapter 1.2
for a general description) has progressed well in 2015. Notably, the components of
the initial TA toolbox have nearly been completed and new components have been
introduced as part of the interconnection support. TA activities conducted throughout
the year include:
A. Tariff modelling
The Tariff Modelling TA provided by UNEP - Frankfurt School of Management
and Finance was perceived very positively by ERA, in particular due to the
broader aspects of tariff modelling and economic regulation addressed by the
consultant experts. The remaining component Review of Financial Models for
Large Hydro projects will be implemented in February 2016.
B. Interconnection Code and Wheeling Agreement
Upon inclusion and launch of the Interconnection Component under GET FiT,
additional funds were allocated for associated technical assistance. Based on
discussions with ERA, it was decided that a consultant should be procured
for the development of an interconnection code and a wheeling agreement.
Both components are integral steps for the further consolidation of the
Uganda electricity supply industry. The interconnection will address technical
requirements for the interconnection of small-scale generators, which are
insufciently covered by the existing grid code. The wheeling agreement will
dene responsibilities and associated costs for the wheeling of electricity
through distribution networks to the offtaker UETCL. The consultant will be
procured in the rst quarter of 2016 and commence activities shortly thereafter.
TECHNICAL ASSISTANCE PROVIDED
UNDER GET FIT
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 35
C. Compliance monitoring
An additional consultancy currently under procurement is technical assistance
for optimization of license compliance monitoring for distribution companies
and the transmission company (UETCL). This activity is also nanced under
the GET FiT interconnection support component. The consultancy is of utmost
importance to ERA as the regulator does not possess reliable data on the
status and performance of distribution and transmission networks. This inhibits
effective regulation of these sectors. The particular focus of this consultancy
will therefore be the technical assessment of the network and the collection of
actual performance data. The consultant is expected to develop a compliance
monitoring framework, which will ensure efcient maintenance, operation and
investments into these networks in the future. Targeted capacity building for
ERA staff in aspects of technical and economic regulation of the transmission
and distribution sector will also be provided. Considering ERA´s challenges
concerning increasing access and reliability of the networks, this training will be
an important step for further development and consolidation of the electricity
supply industry.
In general, it is prudent that TA to ERA is adapted more towards grid issues given
their increased importance for the GET FiT programme. A sustained political
focus on generation has most likely left grid development underprioritized to
some extent. While grid infrastructure is now a major component of GET FiT
support, the capacity of ERA to monitor operational compliance will be equally
important to ensure a successful lifetime for the interconnected projects.
Uganda ranked 3
rd
in Africa on clean energy
By late 2014, it seemed that the Ugandan energy sector had overcome the most demanding
phase of market transition and was sufciently prepared for future challenges, in particular
with regard to the procurement of generation capacity. The increase in investor interest in
Uganda is considerable, and Sub-Saharan African partners and stakeholders closely monitor
ERAs activities. Notably, Bloomberg New Energy Finance in 2015 ranked the country 9
th
in
a 2013 global survey of investment climate in 55 emerging economies. Uganda was also
ranked 3
rd
in Africa, just behind the signicantly larger African economies of South Africa
and Kenya (http://global-climatescope.org/en/).
Undoubtedly, GET FiT has played an important role in this achievement, both in terms of
facilitating private investment through a tailor-made support mechanism, but also through
comprehensive technical assistance to ERA and continuous technical support to project de-
velopers. Most of GET FiT’s work with developers has centred on achieving compliance with
high environmental and social standards. Hopefully this will contribute to a sustainable
utilization of Uganda’s vast potential for small-scale renewables.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 36
GET FiT expectations
Projects are expected to comply with national regulations as well as international
standards, particularly the environmental and social Performance Standards (PS) of
the International Finance Corporation (IFC). The IFC PS act as a global benchmark and
are widely applied by international nancing institutions, which also make these a
convenient common reference point in multi-donor funded initiatives. The standards
are widely applied by private investors seeking international nance. Importantly,
the Ugandan regulations and the IFC PS overlap greatly. GET FiT acknowledges that
compliance with these requirements is a demanding process.
Environmental and social performance
GET FiT has experienced that most of its project developers have limited practical
experience with both Ugandan regulations and particularly IFC PS. Also, developers
have often been unable to scrutinise and recruit capable consultants and thereafter
guide the consultants.
It is important to note that some developers have made considerable progress over
the past 1-2 years. This progress illustrates that commitment to integrate these issues
into projects can produce benecial results for local people and for nature. However,
there is still considerable variation in terms of internal developer capacity to manage
environmental and social issues, as well as variation among the competence of their
consultants.
The rst GET FiT request for proposals (RfP1) saw an average score of 57 % on
environmental and social issues. Several projects scored below the 50 % cut off and
were not approved. RfP2 saw an average score of only 45 %, probably because some
of the more mature projects were approved in RfP1, while some less mature projects
with poor project documentation applied in RfP2. The average score of 61% in RfP3
was a thus a positive surprise.
MEASURES TO IMPROVE ENVIRONMENTAL
AND SOCIAL PERFORMANCE
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 37
It is worth noting that some applicants (developers) in RfP3 had experience from
projects in RfP1 or RfP2, as did their consultants. Some of these developers addressed
environmental and social risks more competently and proactively in their RfP3
projects, which resulted in higher scores. At the same time it should be noted that some
technically and economically attractive projects in RfP3 failed on the environmental
and social score and were therefore not approved by the GET FiT Investment Committee.
Conditions precedent
Low environmental and social scores resulted in GET FiT approvals with extensive
conditions precedent (CPs). CPs were most frequently concerned with preparing
more practical and specic environmental and social management plans, including
resettlement action plans and livelihood restoration plans. Aquatic ecology studies,
including assessments of environmental ows, were another recurring weakness in
the project documentation. In total, more than 50 environmental and social CPs have
been dened by the GET FiT Investment Committee across the three RfPs. Slightly
more than half of these CPs had been cleared by the end of 2015.
The large number of CPs and the overall moderate environmental and social capability
of project developers continue to require more resources from the Program than
anticipated, as projects require considerable follow up.
Figure 7 Average E&S scores in RFP round 3.
100
90
80
70
60
50
40
30
20
10
0
Average scores in RfP 1-3
n= 11 projects
RfP1 ENV
RfP1 Social
57%
58%
57%
n= 8 projects
RfP2 ENV
RfP2 Social
42%
48%
45%
n= 12 projects
RfP3 ENV
RfP3 Social
58%
63%
61%
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 38
Environment and social workshop
Building on experiences from the two GET FiT environment and social workshops in
June 2014, GET FiT organised a very well attended two-day workshop for hydropower
developers and their consultants in Kampala, 19-20 October 2015. The Electricity
Regulatory Authority (ERA) and the Directorate of Water Resources Management
(DWRM) also participated in the workshop and gave valuable advice to projects.
The purpose of the workshop was to improve developers’ ability to manage a selection
of priority environmental and social issues during project construction, the project
phase most projects are now going into. Ultimately, this increases the chances of
projects reaching the commercial operation date in a timely manner. Issues covered in
the workshop were informed by a small survey among project developers prior to the
workshop. Some ndings from this survey are included in the text box below. Back-to-
back with this workshop, developers were offered bilateral meetings with the GET FiT
Implementation Consultant to discuss project specic issues in more depth.
In addition to the workshop, the GET FiT Implementation Consultant has continued
to follow up developers through document reviews, discussions, meetings and
supervision visits.
Some results from an environmental and social survey among GET FiT project developers
The majority of developers did not have pre-GET FiT experience from external due
diligence with reference to IFC Performance Standards.
Developers need support to develop good ToRs for baseline studies, ESIA, ESAP, RAP,
LRP and monitoring plans.
Developers need support to manage community expectations and relations.
GET FiT technical support through reviews, comments and at times assistance in
resolving specic issues beyond review and comments had been helpful to developers.
Due diligence processes by lenders had been facilitated and aided due to GET FiT.
Progress could have been faster if GET FiT had adopted more of a facilitation role and
engaged with developers beyond review and comments.
There is considerable variation among projects in terms of the degree to which
lenders do environmental and social due diligence.
Rough budget estimates indicate very large variations in budget for environmental
and social studies between projects.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 39
Revocation of support on environmental and social grounds
One of the bagasse co-generation projects had their GET FiT approval of support
revoked in second half of 2015. This 6.9 MW project was approved by the Investment
Committee in March 2014 with several associated conditions precedent.
After a lengthy process of trying to improve management of a range of environmental
and social risks, and despite external support provided to the project through the
KfW-supported UECCC project preparation facility in form of studies and development
of various management plans, the developer failed to adequately integrate important
measures into project operation and ensure compliance with regulations and standards.
At the time when the recommendation to revoke support was made, not all the
necessary Ugandan approvals related to environment and water resources were in
place. For some of the approvals that had been secured, important conditions had not
been met. Compliance with the IFC Performance Standards was not a management
priority when it came to the actual operation of the project. GET FiT did not see
adequate engagement and commitment by the developer to address the practical
and operational aspects and considered it unlikely that the project would become
compliant with the expected standards in the relatively near future.
The GET FiT Steering Committee thus decided to revoke the GET FiT support.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 40
On May 26
th
, 2015, World Bank hosted a workshop on the Partial Risk Guarantee
(PRG) component available to project developers and investors under GET FiT. The
workshop was well-attended and received by the developer community and other
GET FiT stakeholders. World Bank experts offered extensive guidance on the available
guarantee options as well as procedural and nancial requirements. The World Bank
emphasised that their appraisal of applications for components of the PRG would
overwhelmingly rely on project assessments and gap analysis undertaken by the
Implementation Consultant’s team.
So far, only one developer has opted for the payment component of the PRG. However,
due to UETCL´s potential shift in policy regarding the letter of credit requirement
under the GET FiT PPA, the PRG might take a more important role in the GET FiT tool
box in the course of 2016.
STATUS OF THE PRG FACILITY PROVIDED BY
THE WORLD BANK
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 41
In September 2015, Castalia LLC was selected as consultant for the Evaluation
& Performance Review of the GET FiT program. The procurement process for this
consultancy was implemented by KfW on behalf of ERA, in close cooperation with the
M&E experts of DfID and DECC. The expert team of Castalia will conduct a total of
three performance reviews until 2019.
The overarching goal of the performance reviews will be to establish a better
understanding of the outcomes and impacts of GET FiT in Uganda and to propose
potential adjustments to the facility for eventual future rollout of the Program to other
countries. In order to obtain reliable data on which to base their analysis, Castalia LLC
will use a mix of qualitative and quantitative research tools including interviews and
surveys of multiple stakeholders interacting with or impacted by GET FiT.
EVALUATION AND PERFORMANCE REVIEW
ANNUAL REPORT 2015
PROJECTS
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 43
The GET FiT project portfolio has grown during 2015. While two biomass and one
hydro power projects unfortunately have dropped out, new hydropower projects have
been brought on board. Although dominated by hydro, the portfolio still comprises
one biomass and two solar PV projects. The portfolio also remains diverse in terms
of geography, now featuring 17 projects across 5 of the 10 Ugandan sub-regions. This
section provides a brief status for each project.
UPDATED PROJECT STATUS
Figure 8: Geographic distribution of projects in the GET FiT portfolio
KENYA
TANZANIA
DEM.REP
OF CONGO
SUDAN
UGANDA
LAKE VICTORIA
LAKE
EDWARD
LAKE KYOGA
LAKE ALBARR
GULU
SAIL Cogen
(11.9 MW)
Waki HPP
(4.8 MW)
Nyamawaba
(9.2 MW)
Nengo Bridge
HPP(6.7 MW)
Kakira
(20 MW)
Muvumbe HPP
(6.5 MW)
Kikigati HPP
(16 MW)
Siti II HPP
(16.5 MW)
Siti I HPP
(6.1 MW)
Lubilia HPP
(5.4 MW)
Rwimi HPP
(5.5 MW)
Kampala
Soroti I & II solar
PV(10 MW)
Tororo North & South
solar PV(10 MW)
Sindila HPP
(5.3 MW)
KENYA
TANZANIA
DEM.REP
OF CONGO
SUDAN
UGANDA
LAKE VICTORIA
LAKE
EDWARD
LAKE KYOGA
GULU
Waki HPP
(4.8 MW)
Nyamawaba
(9.2 MW)
Ndugutu HPP
(4.8 MW)
Kakira
(20 MW)
Muvumbe HPP
(6.5 MW)
Kikigati HPP
(16 MW)
Siti II HPP
(16.5 MW)
Siti I HPP
(6.1 MW)
Lubilia HPP
(5.4 MW)
Rwimi HPP
(5.5 MW)
Kampala
Soroti I & II solar
PV(10 MW)
Tororo North & South
solar PV(10 MW)
Sindila HPP
(5.3 MW)
Nyamughasani
I HPP (15 MW)
Nyamughasani
II HPP (5 MW)
Kyambura HPP
(7.6 MW)
Nkusi HPP
(9.6 MW)
LAKE ALBERT
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 44
Nyamwamba. Run-of-river hydropower plant with a planned installed capacity of 9.2
MW and estimated 39 GWh annual production, located in Kasese district. Investment of
USD 26.8M with USD 5.8M in GET FiT commitments. The project started construction in
Q4 2015, and the expected commercial operation date is Q4 2017. While construction
start was planned for June 2014, the project experienced signicant delays due to
ooding which damaged critical access infrastructure (road and bridge) and required
redesign of the scheme. Nyamwamba will require a 17 km dedicated medium voltage
line for interconnection to the national grid which REA is committed to construct. The
project still has outstanding environmental and social issues.
Rwimi. Run-of-river hydropower plant with a planned installed capacity of 5.5 MW and
estimated 27 GWh annual production, located in Kasese district. Investment of USD
20.8M with USD 3.9M in GET FiT commitments. Expected commercial operation date
is Q2 2017. The project reached nancial close and has initiated early construction
works, with ofcial groundbreaking in September 2015. The project is actively trying
to clear some remaining environmental and social issues.
Kakira Cogeneration. 20 MW biomass (bagasse from sugar production) plant in Jinja
District, Eastern Uganda. The plant is expected to deliver up to 147 GWh/year to the
grid. Total investment is USD 60.7M with about USD 7.1M in GET FIT commitments.
Kakira Sugar Ltd. signed the GET FiT nancing agreement in April 2015, and reached
ofcial COD when the PPA was signed in mid-2015. Consequently, Kakira Sugar Ltd.
became the rst recipient of GET FiT premium payment in September.
Muvumbe. Run-of-river HPP with a planned installed capacity of 6.5 MW and 31
GWh annual production. The project located is in Kabale district. Investment of USD
14.1M with USD 4.5M in GFPPM commitments. Throughout early 2015, the developer
Vidullanka struggled with the condition precedent compliance process. However,
the project has now signed a nancing agreement with GET FiT and the developer
commenced construction works in September 2015. Expected COD is Q2 2017. The
PPA and IA for the plant have been signed and project nancing has reportedly been
secured.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 45
Lubilia. Run-of-river hydropower plant with a planned installed capacity of 5.4 MW
and expected 25 GWh annual production, located in Kasese district. Investment of
USD 18.7M with USD 3.2M in GET FiT commitments. The developer has signed all
agreements and nalized negotiations with the EPC contractor. While some minor
issues remain to be addressed, the project is expected to reach nancial close
and commence construction within the rst half of 2016 after clearing the nal
environmental and social CPs. Expected commercial operation date is Q4 2017. In
terms of interconnection, Lubilia is ideally placed only 3.2 km from the existing grid,
and grid interconnection is not likely to represent any challenges.
Waki. Run-of-river hydropower plant with a planned installed capacity of 4.8 MW
and estimated 25 GWh annual production located in Hoima and Bulisa District,
Western Uganda. Investment of USD 18.1M with USD 3.6M in GET FiT commitments.
All agreements for the project have been signed and the developer launched early
construction activities in May 2015. The project struggled to clear environmental
and social CPs and the early construction phase has seen environmental issues that
require further follow up.
Siti I. Run-of-river hydropower plant with a planned installed capacity of 6.1 MW
and estimated 29 GWh annual production located in Bukwo District, Eastern Uganda.
Investment of USD 14.8M with USD 3.6M in GET FiT commitments. Construction was
commenced in March 2015. Siti I is the most advanced hydropower project in the GET
FiT portfolio, and expected commercial operation date is Q4 2016. The developer has
faced environmental and social challenges, in particular concerning displacement/
compensation and the Mount Elgon National Park. Notably, the developer has made
considerable efforts to overcome these challenges.
Siti II. Run-of-river hydropower plant with a planned installed capacity of 16 MW
and estimated 72 GWh annual production located in Bukwo District, Eastern Uganda.
Investment of USD 33M with USD 10.2M in GET FiT commitments. Both DFA and
PPA has been signed and all required legal documentation for the project has been
executed. However, expected commercial operation date is uncertain, as construction
will need to be aligned with the progress of the Mbale Bulambuli transmission
project, which is required for the power evacuation. An interim medium voltage
solution to be constructed by REA has been proposed to ensure timely interconnection
of the power plant (see section 2.5 for details).
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 46
Kikigati. Run-of-river hydropower plant with a planned installed capacity of 16
MW and 115 GWh annual production located in Isingiro district, Southern Uganda
on the border to Tanzania. Investment of USD 51.1M with USD 12.3M in GFPPM
commitments. After two years standstill, the Governments of Tanzania and Uganda
signed the bilateral agreement for implementation of the project in July 2015. This
enabled the new owner, Berkeley Energy, to resume preparatory work. Both the SC and
IC have emphasized the importance of quick advancement of the project after the
signing of the agreement, which GET FiT will aim to safeguard through imposition of
strict deadlines for project advancement and CP compliance. A strict timeline with
milestones has been imposed to get the project back on track, with construction start
in within rst half of 2016 and COD in rst half of 2018.
Sindila. Run-of-river hydropower plant with a planned installed capacity of 5 MW and
27 GWh expected annual production located in Bundibugyo district. Investment of
USD 17M with USD 3.3M in GET FiT commitments. Sindila was the last project to be
selected from the second RFP round, after a re-appraisal of the project was conducted
in October 2014. The developer signed the DFA with GET FiT in August 2015. Expected
commercial operation date is in Q4 2017, with construction start expected in Q1 2016.
Reinforcement of the 87 km long 33 kV line from Bundibugyo to Fort Portal will be
required to ensure viable power evacuation from the power plant. This reinforcement
is an item under the GET FiT interconnection support component, which will also
benet the recently GET FiT approved and neighboring project Ndugutu HPP. Funding
for this reinforcement has been secured from development partners.
KMRI LLC, the developer of Sindila SHP, was recently awarded
a fellow from the Acumen Fund, a US-based non-prot
organization.
This fellow will be based in the Bundibugyo District of Uganda
and fully dedicated to the creation of a comprehensive
infrastructure access program that will be implemented
alongside the hydropower project.
This program will entail the creation of a business model,
funded by impact investors, to provide services such as lighting,
cell phone charging, clean drinking water, medicine storage
and information access points. Once implemented, this program will provide these services
at a fraction of the cost to the local community while also enabling a low positive return on
investment to the impact funds. After this proof of concept is proven in Bundibugyo, KMRI
intends to scale this program throughout the rest of its portfolio in Uganda.
Javier Olaguibel,
Acumen Fellow for KMRI LLC
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 47
Soroti I & II. Ground mounted solar PV power plants, located in Soroti district , with a
planned peak capacity of 10 MWp (5MWp each) and average annual energy production
of 17.6 GWh. Investment USD 27M with USD 9.5M in GET FiT Commitments. The
developer has signed all agreements, and nancial close was obtained in early 2016.
Construction start is planned for beginning of February 2016 with commissioning
in Q4. Funding has been secured from development partners to upgrade the Opuyo
substation, through which this and other pipeline solar projects in the Soroti area will
interconnect to the grid.
Tororo South & North. Ground mounted solar PV power plants, located in Tororo
district, with a planned peak capacity of 10 MWp (5 MWp each) and average annual
energy production of 16.7 GWh combined. Investment USD 32M with USD 8.6M
in GET FiT Commitments. If all permits and licenses as well as PPA and IA can be
concluded within Q1 of 2016, nancial close and construction start is expected in Q3,
with commissioning during second half of 2016. DFA is in nal stages of negotiation.
However, unclaried regulatory issues concerning taxation are delaying progress.
Nyamagasani I. Run-of-river HPP with a planned installed capacity of 15 MW and 64
GWh in annual production. The project is located in the Kasese district. Investment of
USD 36.7M with USD 9.4M in GFPPM commitments. Approved for GET FiT support in
June 2015.
Nyamagasani II. Run-of-river HPP with a planned installed capacity of 5 MW and 25.5
GWh in annual production. The project is located in the Kasese district. Investment of
USD 19.8M with USD 3.7M in GFPPM commitments. Approved for GET FiT support in
June 2015.
Ndugutu. Run-of-river HPP with a planned installed capacity of 4.8 MW and 22 GWh
in annual production. The project is located in the Bundibugyo district. Investment of
USD 15M with USD 3.2M in GFPPM commitments. Approved for GET FiT support in
June 2015.
Kyambura. Run-of-river HPP with a planned installed capacity of 7.6 MW and 36.7
GWh in annual production. The project is located in the Rubirizi district. Investment
of USD 24M with USD 5.4M in GFPPM commitments. Approved for GET FiT support in
late 2015.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 48
Nkusi. Run-of-river HPP with a planned installed capacity of 9.6 MW and 50.8 GWh
in annual production. The project is located in the Kibaale district. Investment of
USD 23M with USD 6.5M in GFPPM commitments. Approved for GET FiT support in
late 2015.
Dropped projects
PH Industrial Farm’s. The SC decided to withdraw support for the 1 MW biomass (gasied
maize farm waste) plant in Gulu in 2015. The decision was based on information from
the project developer that the project would be severely delayed due to fuel supply
insecurity. The funds allocated to PH Industrial Farm were reallocated to the RfP3
projects.
SAIL Cogen. The GET FiT Steering Committee decided to withdraw support for the
6.9 MW biomass (bagasse from sugar production) plant in Kaliro district in 2015,
and reallocate it to RfP3 projects. Despite additional funding provided through the
KfW-funded project preparation facility administered by UECCC, the project was
unfortunately not able to reach timely compliance with IFC Performance Standards
on environmental and social issues. This was conrmed through a supervision visit in
June 2015.
Nengo Bridge. The Nengo Bridge Hydropower Project unfortunately did not reach
nancial close within the November 21st, 2015 deadline stipulated in the Developer
Financing Agreement. The risk of the project not being able to reach COD before the
end of 2018 GET FiT window was eventually considered too high. It was therefore
decided to terminate the Developer Financing Agreement and reallocate funding to
other projects on the reserve list.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 49
All the approved projects are expected to reach commercial operation by 2018 latest.
Figure 9 illustrates the expected build-up of installed capacity and annual generation
from the GET FiT portfolio. These estimates include; i) all approved GET FiT projects
and ii) estimates reecting expectations for additional funding and realization of
reserve list projects. It should be noted that the presented projection is subject to the
uncertainty of one or more projects dropping out of the portfolio.
TIME
-
FRAMES AND PORTFOLIO
IMPLEMENTATION
Figure 9: Implementation of the GET FiT project portfolio
200
180
160
140
120
100
80
60
40
20
0
2016 2017
2018
900
800
700
600
500
400
300
200
100
0
Q2 Q3 Q4
Q2Q1 Q3 Q4
Q2Q1 Q3 Q4
Annual energy
production (GWh)
Installed
Capacity (MW)
Lubilia
Tororo solar
Si II
Nyamwamba
Soro solar
RFP 3 projects
Waki
Kakira
Sindila
Rwimi
Si I
Kikaga
Muvumbe
Total annual
producon
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 50
Kyambura Hydropower plant is the first
project of Ziba and Hydroneo-Omnicane in
Uganda. Our goal is therefore to successfully
commission the Kyambura project in order to
inject 7.6 MW on Bushenyi local grid.
In that perspective, GET-FiT contributes to
make the project viable while notably ensuring
it to meet the required standards in terms of
Environmental and Social issues.
Hydroneo-Omnicane and our local partner
Ziba are not only committed to face with the
numerous challenges of developing such a
project but also to act like a reliable and
dedicated developer for Ugandan hydropower
sector/industry.
Thomas Forgue,
Hydroneo-Omnicane
ANNUAL REPORT 2015
FUNDING
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 52
The results-based nature of the GET FiT Program is dependent upon predictable funding
commitments. Four development partners provide GET FiT with the necessary funding;
Government of Norway, Government of UK (through DECC and DFID), Germany (BMZ,
BMU) and the EU (through EU ITF).To date some EUR 94.5M (subject to exchange rate
uctuations, as the Norwegian and the UK DECC funding are provided in Norwegian
Krone and British Pounds respectively) have been committed to the Program. These
funds are to be used towards the main overarching objectives.
FUNDING COMMITMENTS
Table 2: Overall donor commitments to GET FiT. Net amounts are based on funding disbursed to the Pro-
gram thus far, projected exchange rates for undisbursed funds and deduction of management fees
DONOR
TOTAL
94 400 000
500 000 500 000
15 900 000
28 900 000
14 100 000
15 000 000
20 000 000
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 53
As mentioned in chapter 2.4 and outlined in the GET FiT Annual Report for 2014, the
ability of GET FiT to provide nancial support has been reduced compared to what
was planned. This is due to:
i. depreciation of the Euro (in which GET FiT funding is available) versus the US
dollar (in which developers receive their premium payments).
ii. depreciation of the Norwegian Krone (in which funding from Norway is received)
versus the Euro
Overall, exchange rate uctuations have reduced the initial budget (in US dollars)
available for GET FiT premiums by approximately 13 percent. This has resulted in a
similar reduction in the generation capacity (planned MW and GWh) of the GET FiT
portfolio.
Most importantly, the EUR/USD rate has depreciated by around 20 percent over
the last two years. Effectively, since the developers are paid in USD, the Euro-based
GET FiT budget can now support fewer projects than what was originally estimated.
Furthermore, the NOK/EUR rate has depreciated in a similar manner, reducing the
value of Norwegian contributions to the budget. This effect is limited to the Norwegian
funds and thus less critical, but nonetheless signicant.
FOREIGN EXCHANGE RATE ISSUES
Figure 10 - Illustrated depreciation of the Euro relative to the US dollar
since original budgeting. Source: XE.com
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 54
To eliminate the risk of further depreciation of the Euro versus the US dollar and
strengthen the programs ability to reach its targets, the GET FiT Investment Committee
xed the EUR/USD exchange rate for all remaining projects that had not yet signed
DFAs in mid-2015.
On the other hand, GBP (in which UK funding to GET FiT is received) has appreciated
versus the Euro within the same period, thus increasing the value of UK funds relative
to initial budgets. Moreover, efforts by the UK and Norwegian partners to exchange
currency earlier than planned has contributed to reducing the uncertainty related to
future uctuations. This also resulted in a funding gain for the Program, compared to
original estimates for these funds.
Some level of uncertainty remains due to undisbursed donor commitments and
pending decisions on additional funding. Nonetheless, overall budget uncertainty is
signicantly reduced as a result of efforts and progress made throughout 2015.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 55
As a result of the currency depreciation, current funding commitments will not enable
GET FiT to fully achieve several of its key output indicators including MW, GWh and
emission reductions. In order to fully achieve the overarching targets additional
funding will be needed.
The gure below illustrates the allocation of the current GET FiT premium budget.
It also estimates the additional funding needed to support all reserve list projects,
assuming full utilization of the current budget. These estimates are highly uncertain
due to the risk of projects not materializing. Notably, should one or more projects
within the existing allocation drop out, the reserve list project may be supported (at
least partially) within the existing budget.
ADDITIONAL FUNDING NEEDED TO SUPPORT
RESERVE PROJECTS
Figure 11 - While some funds are expected to be available for reserves list projects, additional
funding is needed to provide full support. Provided that these and the current portfolio fully
materializes, it is possible to achieve original GET FiT targets.
Cost (MEUR)
MW
Reserve list
SOLAR
RFP 3
RFP1&2
SOLAR
RFP 3
RFP1&2
180
160
140
120
100
80
60
40
20
0
MW/ million Euro
Premium budget
85 MEUR
Original target
170 MW
Funding need
~8,5 MEUR
reserve list
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 56
The currently available funding would allow the program to achieve support for up
to approximately 157 MW of installed capacity and 769 GWh of renewable energy
production per year. Combined with timely implementation of the portfolio, this
amount of installed capacity is expected to allow for full utilization of the funding
commitments by 2023. Moreover, if additional funds are provided for reserve list
projects, the program could potentially approach the original 170 MW capacity target,
and annual production of more than 800 GWh. However, this also depends on the
successful implementation of projects already being supported.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 57
Figure 12 illustrates the actual (up to and including 2015) and expected distribution of
committed payments for the rst years of the Program. Payments under the Technical
Assistance Facility and to consultants represent a high share of total disbursements
in the early years. However payments to project support are expected to take up the
lion’s share of the disbursements going forward. Given the expected timing of the
current portfolio, most COD payments are expected in 2017-2018. Due to result-based
structure of disbursements during rst ve years of operation, the nal payments from
GET FiT cannot be expected before 2023.
DISBURSEMENT PROJECTIONS
Figure 12: Projected annual payments (premium payments and consultants) under GET FiT.
Projections are subject to uncertainty, mainly related to individual project progress.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 58
Figure 13 shows the relative shares of the various cost components under the
GET FiT Program. Roughly 10 percent of the overall funds are tied to management,
implementation and the Technical Assistance Facility, while the rest is expected to be
disbursed as premium payments.
Figure 13 - Approximately 90 % of commitments to GET FiT are projected
to be disbursed as premium payments
2%
9%
TA Facility
Consultants
17%
Solar Premium Payments
73%
GET FiT Premium Payments
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 59
In projections for the cumulative cash balance of the Program, funds are fully utilized
by 2023 (when nal premium payments will be made). The reason for the high cash
balance of the GET FiT Program in early years, is due to the fact that commitment
to developers cannot be made before funding is made available (disbursed to the
Program) by donors.
CASH FLOW PROJECTIONS
Figure 14 - Projections of cash ow and cumulative cash balance indicate that GET FiT will be able
to maintain a positive, healthy cash balance until funds are exhausted by end of 2023. The high
positive cash balance in early years is due to DFA signing with developers, requiring that funds
are disbursed to the Programme by donors.
Million EUR
35
30
25
20
15
10
5
0
-5
-10
-15
NET CASH FLOW CUMULATIVE CASH BALANCE
2015 2016 2017 2018 2019 2020 2021 2022 2023
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
ANNUAL REPORT 2015
PROGRAM
MONITORING
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 61
The GET FiT Monitoring and Evaluation framework monitors the outputs, outcomes
and impacts generated by the Program (table 3). Achievement of these is determined
through one or several quantitative indicators, which are collected from project
developers and key sector stakeholders semi-annually. On this basis and through
additional data collection, bi-annual performance reviews and evaluations are
conducted by an independent consultant. The objective of these reviews is to
critically and independently assess whether GET FiT is meeting its output targets and
milestones. The rst performance review started in Q3 2015 and is currently on-going
(see section 2.6 for more details).
PROGRAM MONITORING
Table 3: Outputs, outcomes and impact of GET FiT
While awaiting commissioning of projects, the actual results attributed to GET FiT in
terms of installed capacity and electricity production are still uncertain. However, with
one project commissioned and six now under construction, the portfolio has taken
a considerable step towards achieving targets. This is further strengthened by the
nancial close obtained by four projects, and the many PPAs now signed.
The overall progress of the Program in 2015 is presented in table 4 below.
OUTCOMES
1. Improved private sector
investment environment for
renewable energy in Uganda.
3. Improved local grid
stability.
OUTPUTS
1. Increased small scale RE
capacity & generation.
2. Balanced portfolio of RE
technologies.
3. Reduced GHG
emissions.
4. Increased number of
Ugandan national jobs.
5. Increased capacity of ERA.
6. Finance mobilised for
GET FiT portfolio.
IMPACT
Uganda pursues a low carbon,
climate resilient development
path, resulting in growth,
poverty reduction and climate
change mitigation.
2. Improved financial
stability of energy sector.
Time Between Inputs And Observable Results
Impacts On Lives And Poverty Reduction
Degree Of Direct And Measurable Influence Of Program
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 62
Table 4: GET FiT log-frame showing status on overarching primary Program targets
along with efforts made and results achieved in 2015
OUTPUTS
Indicator
Target
2018
OUTCOMES
Indicator
Target
2018
Status 2015Status 2015
1.1 MW installed 170
1.2 GWh delivered to
national grid
830
GET FiT portfolio now
at 769 GWh/year (esti-
mated average)
5
1.2 No. of development
permits and generation
licenses issued by ERA
per year
8 permits /
4 licenses
6 licenses issued in 2015,
a natural slow down is
now observed, following
a high pressure in recent
years
3 private banks invol-ved
in the current port-folio
for financing of hydro,
bagasse and biomass
projects
1.1 Number of com-
mercial banks that
invest in renewable
energy with project
finance
GET FiT portfolio (17
projects) now at 157
MW with third and
final RFP concluded
2.1 Number of
tech-nologies supported
by GET FiT.
4
3 Techs now in port-
folio – hydro, bagasse
and solar, following
the exit of the only
maize waste plant
2.2 Number of
sub-regions with
GET FiT projects.
5
The current portfolio
has projects located
in 5 Ugandan sub-
-regions.
3.1 Net change
in GHG emissions
(Cumulative MtCO2e)
4
Current portfolio
estimated to yield a
3.5 MtCO2e reduction
through displacement
of thermal generation
4.1 Number of direct
national construction
and O&M jobs created
in relation to the power
plants
4200
Current portfolio
(17 projects) estimated
to some 3900 jobs
5.1 Time taken by
ERA to review genera-
tion licence for 1-20
MW RE application
1 month
Based on 8 latest
reviews in 2014 and
2015. Notably this
may be partly due to a
reduction in number
of applications during
the past year
1.3 Occurrence of
annual UETCL event
of default'None
None
N/A. WB PRG liquidity
guarantee now available
to GET FiT projects.
1.4 Average time for
PPA negotiation and
signing.
3 mths
Current average time is
estimated to 5 months.
With standardized PPA in
place, average time was
considerably reduced. 10
GET FiT projects now
have igned PPAs
1.5 REFiT adjusted to be
cost-reflective (%)100
100%
Adjustment was made in
2013 to est 92%, speci-
fically to increase impact
of GET FiT
2.1 Subsidy paid (ex-
cluding capacity) by
Ugandan Gov.for
UETCL to cover thermal
power use
0
No subsidies paid in
2015
2.2 GWh purchased by
UETCL from thermal
stations (NOTE: 2023
target)
319
Approximately 90 Gwh
purchased by UETCL in
2014.
GET FiT implementation
to reduce expected
medium term growth
The status for 2015 is based on i) expectations for the current portolio of approved GET FiT projects and ii) the most
recent status updates from developers and other stakeholders through the Programme monitoring. Thus, results
below are not yet based on commissioned projects (as few projects have been commissioned under GET FiT yet), but
what we expect them to deliver once operative.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 63
OUTPUTS
Indicator
Target
2018
OUTCOMES
Indicator
Target
2018
Status 2015Status 2015
6.Private investements
(MUSD) leveraged by
GET FiT
500 Currently at 453 MUSD
(estimate, several
projects not yet
financially closed).
6.1 Private finance
mobilised for GET FiT
(MUSD)
200
300
Current portfolio set
up for 184 MUSD in
private financing
Leverage ratio at 1:5
as targeted, based
on associated GET
FiT premiums
6.2 Public finance
mobilised for GET
FiT (MUSD)
Current portfolio set
up for 270 MUSD in
public financing
2.3 Cost reflective
retail tariffs in place.
100%
100%
Reduction
100%
Reduction
Currently at 92 %, as
capacity payments to
thermal stations remain
part of GoU subsidy
3.1 % of time (in hours)
local voltage level is
outside Grid Code
vol-tage standards at
local substations
N/A - as no voltage
devia-tions has been
observed at Kakira
substation
3.2 Load lost in MWh
at local substation100
N/A - as no suppressed
demand has been
observed at Kakira
sub-station
The status for 2015 is based on i) expectations for the current portolio of approved GET FiT projects and ii) the most
recent status updates from developers and other stakeholders through the Programme monitoring. Thus, results
below are not yet based on commissioned projects (as few projects have been commissioned under GET FiT yet), but
what we expect them to deliver once operative.
ANNUAL REPORT 2015
RISK MANAGEMENT
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 65
Risk management is a continuous process running through the lifetime of the Program
where risks are identied and categorized, and measures introduced to reduce or
eliminate the risks. Risks are categorized according to the risk assessment table below.
Probability of the risk occurring on the x-axis (low, medium of high probability) and
level of potential (negative) impact on the y-axis combined determine the risk category
i.e. : a) acceptable risks; b) ensure follow-up of risk; or c) reduce the risk.
RISK MANAGEMENT
Table 5 Risk categorization tool
The full risk matrix for the Program can be provided by the GET FiT Secretariat upon
request. The risk assessment is subject to regular review and update. In 2015, no new
major risks emerged but some were re-categorized. The following risks have been
added and/ or re-assessed over the past year:
1. Risk of not achieving adequate and timely grid interconnection for GET FiT
projects (High impact, high probability). As outlined in chapter 2.5, progress has
been made in terms of securing nancing and moving towards implementation for
critical grid infrastructure investments. However, progress on certain components
remain uncertain due to nancial or regulatory obstacles. Consequently, the
risk of not being able to provide adequate grid interconnection for full power
evacuation for some GET FiT projects has increased during 2015. The highest
risk rating is thus maintained. Ensuring progress on these interventions will be
a key priority of GET FiT going forward, to avoid severe negative implications for
the portfolio and overall success.
POTENTIAL IMPACT
(NEGATIVE)
PROBABILITY
HIGH
HIGH
MEDIUM
MEDIUM
LOW
LOW
B
Ensure follow-up
of risk
B
Ensure follow-up
of risk
B
Ensure follow-up
of risk
C
Reduce the risk
C
Reduce the risk
C
Reduce the risk
A
Acceptable risk
A
Acceptable risk
A
Acceptable risk
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 66
2. Exchange rate risk (Medium impact, medium probability). As outlined in
Chapter 4, exchange rate uctuations have had a negative impact on the funds
available for GET FiT premium payments. Exchange rate risks related to future
disbursements is now reduced (from high impact) due to i) xed DFA exchange
rates for remaining projects and ii) early disbursements from donors to the
Program. Nonetheless, a limited share of undisbursed donor commitments
are still subject to uctuations. KfW and the GET FiT Secretariat thus monitor
developments and update budgets regularly.
3. Lack of developers’ capacity to implement projects according to IFC environmental
and social standards (High impact, high probability). This risk has increased
from its original medium-to-low rating through several rounds of revision as it
has become increasingly clear that the majority of developers lack experience
and competence to manage their projects according to the IFC environmental
and social performance standards. In 2015, GET FiT has maintained an active
approach to enable developers to meet the IFC performance standards (see
Chapter 2.9 for details). Nevertheless, E&S issues remain with a high risk rating.
As an increasing number of projects are moving into construction, the nature
of E&S related risks will gradually shift from capacity gaps in studies and
planning, to challenges related to implementation during construction. The GET
FiT Implementation Consultant will oversee implementation of E&S measures
through regular supervision visits to the construction sites.
4. Delayed implementation of projects (medium impact, high probability). Several
GET FiT projects have already faced delays in reaching nancial close and
construction start. While these delays can partly be attributed to developers (i.e.
failure to meet IFC Performance Standards), others are related to bottlenecks
in the legal, regulatory and/or political framework. The latter includes delays
related to signing of key agreements (IA, PPA). As several projects started
construction during 2015, the overall pre-construction risk for the portfolio has
been somewhat reduced. Notably, such risks appear to have been reduced as a
result of the efforts made by GET FiT, Ugandan authorities and project developers
to establish standardized agreements (see the GET FiT Annual Report 2014 for
more details).
Furthermore, delays in CP clearance as set out in the DFA is a key driver to
project delays. As mentioned above, E&S related CPs in particular have caused
project delays thus far.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 67
OUTLOOK FOR 2016
As an increasing number of projects are now moving into construction, the focus of the
GET FiT implementation team will gradually shift towards construction supervision.
Efforts will be directed towards overcoming technical, environmental and social
challenges arising throughout construction, in order to achieve timely commissioning.
The latter is vital to maximize the economic benets and achieving the time targets
of the Program. Timely construction of grid interconnection infrastructure to evacuate
power still present a signicant risk for several projects. Although these issues must
be solved by the relevant GoU entities, KfW and the GET FiT Secretariat are prepared
to take an active role facilitating dialogue and progress.
Key focus areas in 2015 will be:
1. Continued facilitation of dialogue, coordination and concrete solutions to the
challenge of interconnection and integration of the GET FiT portfolio into the
national grid.
2. Intensication of construction supervision visits.
3. Follow up preparation and construction phase for solar PV projects.
4. Facilitation of progress for the projects which have not started construction, in
dialogue with developers and authorities, including signing of remaining DFAs
and following up of conditions precedents for each project.
5. Follow up the Program funding situation, including potential support for reserve
list projects.
6. Follow-up the implementation of the various Technical Assistance Facility
components, including the up-coming REFiT review and proposed additional TA
support components to ERA.
7. Support the on-going Performance Review and Evaluation of GET FiT, and ensure
follow up of recommendations.
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 68
Recognizing the positive experiences with the GET FiT Program in Uganda, public
sector stakeholders in other parts of the continent have indicated interest to explore
the potential of similar programs in their countries. Private developers, investors,
nancing institutions and technology providers have conrmed that the approach
applied in Uganda has been particularly valuable and should be rolled out to other
markets.
Accordingly, with nancial support from the UK Government, KfW initiated market
assessment studies to consider the interest and potential for a GET FiT intervention
in 10 countries in Eastern, Southern and Western Africa in 2015. Thus, a consultancy
consortium comprising Multiconsult ASA and the FS-UNEP Collaborating Centre for
Climate and Sustainable Energy Finance, undertook market assessments in Ghana,
Malawi, Mali, Nigeria, Kenya, Rwanda, Mozambique, Namibia, Tanzania and Ethiopia.
The overarching aims of the 10-country market assessment and comparative analysis
were:
Independently assess the readiness, political-will and economic justication
which could motivate and underpin a GET FiT program implementation in each
individual country.
Prepare recommendation as to prioritization of the countries, based on a
comparative analysis framework and consideration of funders’ priorities.
Based on the above, gain insight into the key barriers and provide a tentative
outline for a GET FiT program, including potential country-specic tool-box and
timeframes.
The studies showed that although there are some clear sector commonalities across
most of the markets, there exists signicant variation with regards to the rational,
appropriate tool-box and optimal implementation design. These ndings conrm that
a “one-size-ts-all” approach would not be appropriate as GET FiT expands to other
countries.
STATUS OF GET FIT ROLL
-
OUT TO
OTHER COUNTRIES
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 69
During 2016, Programme Concept Notes will be developed for those markets that were
identied as most suitable for GET FiT. KfW will lead this process in close collaboration
with the respective governments, donors and local stakeholders. These PCNs will test
the hypothesis that the programme is sufciently exible so as to effectively address
key barriers in different markets and contexts.
In Zambia, preparations for the GET FiT Programme are advancing well. The basic
framework of the Programme has been agreed with the Zambian Government. The
GET FiT Zambia Programme aims at supporting small RE projects (1-20 MW; solar PV,
hydro and biomass) with a total capacity target of 200 MW. It contains the following
components: 1) Tariff Support, 2) Standardised legal documentation, 3) Risk Mitigation,
4) TA Facility and 5) Support for Grid Integration. Due to the current electricity crisis in
Zambia, it is envisaged to fast track a Solar PV auction under the GET FiT Programme
in 2016.
A GET FiT Coordinator has been engaged to support the further preparation and
implementation of the GET FiT Programme in 2016 and to be a rst point of contact
for any interested stakeholders.
Finally, in Vietnam, KfW on behalf of the German Government (BMZ) is nancing
studies to assess the feasibility of a renewable energy development facility following
the GET FiT model.
ANNUAL REPORT 2015
END
GET FiT UGANDA | ANNUAL REPORT 2015 PAGE 71
BMZ Federal Ministry for Economic Cooperation and Development
BMUB Federal Ministry for the Environment, Nature Conservation,
Construction and Nuclear Safety
CP Conditions Precedent
DECC Department of Energy & Climate Change
DFID Department for International Development
DFI Development Finance Institution
DFA Developer Finance Agreement
ERA Electricity Regulatory Authority
EUR Euro
EURc Eurocent
GBP British Pound
GET FiT Global Energy Transfer Feed-in Tariffs
GHG Greenhouse gas
GoU Government of Uganda
IA Implementation Agreement
IC Investment Committee
IFC International Finance Corporation
M&E Monitoring & Evaluation
MEUR Million Euros
MUSD Million United States Dollars
NOK Norwegian Krone (Norwegian currency)
PPA Power Purchase Agreement
PRG Partial Risk Guarantee
REFiT Renewable Energy Feed-in Tariff
RfP Request for proposal
UETCL Uganda Electricity Transmission Company Limited
USD United States Dollar
USDc United States Dollar cents
VAT Value-added tax
WB World Bank
LIST OF ABBREVIATIONS & ACRONYMS
www.gett-reports.com/2015/
ANNUAL REPORT 2015