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Annual Report 2017

SUPPORTED BY
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GOU and KFW | Multiconsult
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This report including all content and
illustrations has been prepared by
In cooperation with:
MESSAGE FROM ERA
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T
he year 2017 has seen the Ugandan Electricity
Supply Industry continue to shine as a perfect
example of how best to leverage support from
development partners to attract and harness
private sector capital for infrastructure development.
Through the GET FiT Programme, an installed capacity
of 158 MW of clean renewable energy shall be added
to the National Grid from 17 projects. The projects utilise
various technologies for electricity generation, that is,
hydropower, grid connected solar P.V and bagasse. I
am happy to note that all projects in the portfolio have
reached nancial closure, with the exception of two
hydropower projects which are expected to complete
early during 2018, and have either been commissioned
or are under construction.
To-date, six (6) of the seventeen (17) projects have been
commissioned with signicant construction progress
registered on the majority of the remaining projects.
The commissioned projects include three (3) hydropower
plants of total installed capacity 18.1 MW, the two grid
connected solar PV projects totalling 20MW, and 20MW
of the Kakira Co-generation plant.
The technical assistance offered by the GET FiT
Programme to the Electricity Regulatory Authority (ERA)
has continued to bear fruit in form of a clear and well
elaborated licensing framework with simplied and
well explained licence and permit application forms
which have eased the application and due-diligence
processes. Project monitoring and evaluation continues
to make signicant steps of improvement. Capacity
has also been enhanced in the financial and tariff
modelling function of the ERA. The enhanced capacities
and largely improved processes will ensure sustainability
of the several achievements registered under the GET
FiT Programme.
It is notable that the implementation of the GET FiT
Programme saw Uganda become one of the best
Renewable Energy investment destinations and
gain international recognition. The Bloomberg ratings
of 2016 rated the country 2nd best with regard to
Renewable Energy investments in Africa. In an eort
to maintain the favourable Renewable Energy investment
climate, the Authority with support from the GET FIT
Programme revised the Renewable Energy Feed in
Taris in July 2016 in order to sustain the level of
nancial viability of the potential projects, to ensure
that the country remains one of the best investment
destinations on the African continent beyond the GET
FiT Programme.
In a special way, the Authority appreciates the continued
support from development partners towards the
construction of evacuation infrastructure for the GET
FIT projects. As we approach the peak of construction
and commissioning of the projects, the Authority
shall continue to prioritise the proper monitoring
and coordination of the construction activities for
the evacuation infrastructure. This will enable a
harmonized commissioning of the power plants and
the evacuation arrangement.
The GET FiT Programme has further provided direct and
indirect job opportunities across the local communities
where the plants are being built as well as professional
jobs for experts in the urban centres. Due to the skills
constraints within the power and energy sectors, ERA
has allocated funds aimed at training more engineers
to enhance engineer retention within the sector.
With there now being a potential short-to-medium
term surplus in energy supply in the Uganda electricity
sector, and associated eects on the tari path, there
is a need moving forward to focus on coordinating and
planning investments across the entire electricity
supply industry value chain, including the transmission
and distribution infrastructure.
The ERA is committed to ensuring ecient and eective
implementation of the GET FIT Programme and shall
continue to make every eort to achieve sustainable
electricity supply for social economic transformation.
The Authority looks forward to supporting development
partners in sharing the experiences and lessons learned
during the implementation of the Programme, as similar
programmes are rolled out in other countries.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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“The GET FiT Programme has further provided
direct and indirect job opportunities across
the local communities where the plants are
being built as well as professional jobs for
experts in the urban centres. Due to the skills
constraints within the power and energy
sectors, ERA has allocated funds aimed at
training more engineers to enhance engineer
retention within the sector.“
Eng. Ziria Tibalwa Waako,
Chief Executive Ocer
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MESSAGE FROM UK
I
n 2017, the GET FiT Programme has gone from
strength to strength, securing its place as a leading
private investment programme in Uganda’s
burgeoning renewable energy sector. With a growing
portfolio of small-scale renewable energy generation
projects promoted by private developers, GET FiT is
moving ever closer to its objective of climate resilient,
low-carbon energy generation, resulting in growth,
poverty reduction and climate change mitigation.
In the last year, three hydropower plants have been
commissioned - the rst in the portfolio - as well as a
second solar plant at Tororo. All GET FiT projects now
have Power Purchasing Agreements and technical
support. This, alongside the rigour of the Ugandan
Electricity Regulatory Authority checking compliance
and viability, means that the majority of projects are
advancing well towards reaching commercial operation
in 2018.
The UK is proud to be the largest donor within the
GET FiT Programme. Alongside stable investment, the
key to the lasting success of the Programme has been
eective collaboration and support. Together, the EU
and the governments of Uganda, Germany, Norway
and the UK have ensured that Uganda is working
towards stabilising, diversifying and securing its energy
production.
Despite the strides taken over the past four years, there
are further obstacles to overcome. The success of the
GET FiT Programme has highlighted wider issues within
the energy sector. Including the new high power output
hydroelectric generation being developed in Uganda,
electricity generation programmes are likely to result
in an electricity surplus in the short to medium term,
whilst currently over 80% of Ugandans still lack access
to electricity.
It’s vital that this gap is bridged by opportunities to
drive private sector development. Solutions, both
on and o-grid, are at the heart of meeting the ever
increasing demand for access to electricity in Uganda.
There needs to be an increase in connectivity, access,
and employment opportunities. Using innovation,
continued collaboration, and by harnessing Uganda’s
young and growing population, the GET FiT Programme
is well positioned to further increase the strength and
sustainability of the ever more crucial renewable energy
sector in Uganda.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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Peter West, British High
Commissioner To Uganda
“Using innovation, continued collaboration,
and by harnessing Uganda’s young and
growing population, the GET FiT Programme
is well positioned to further increase the
strength and sustainability of the ever more
crucial renewable energy sector in Uganda.”
8
EXECUTIVE SUMMARY
T
he year 2017 has been eventful, with substantial
on the ground progress for the renewable
energy projects supported by GET FiT Uganda.
Commissioning of the rst three hydropower
plants in the GET FiT portfolio represented a major
milestone, introducing a combined generation capacity
of 18.1 MW. Furthermore, Uganda’s second grid
connected solar PV plant was successfully completed in
2017, and hence the two solar plants developed under
the GET FiT Solar Facility are both operational, with a
combined generation capacity of 20 MW.
The remaining eleven hydropower projects have
commenced construction activities and although the
majority of GET FiT supported projects are expected to
be delivering power to the grid by the end of 2018 – the
original Programme window – several projects are likely
to overrun. Five projects are likely to achieve commercial
operation within the rst half of 2019 and one project
is delayed until 2020. The causes of delays have varied,
with some delays a result of external factors, beyond
the control of developers and the Programme, and
other delays rmly in the developer’s control. For these
projects, the continued support of GET FiT in 2018 will
be contingent on the developers intensifying eorts,
achieving considerable progress on the ground, and
demonstrating a capacity and willingness to achieve
commercial operation in a timely manner.
Implementation oversight of projects during 2018 will
be, more than ever, critical to achieving Programme
targets. GET FiT has introduced several tools to
minimise the risk of further delays, including increased
follow up on individual projects through additional
supervision visits and nancial penalties in the form
of subsidy reductions. Eorts will be maintained and
intensied in 2018 to bring as many projects as possible
to completion within the year. With all projects now
under construction and most having achieved nancial
close, the overall risk for delays or project cancellations
is somewhat reduced. This is strengthened by all
remaining projects having executed PPAs with UETCL
during 2017, which is yet another key achievement for
the Programme. Only two projects are yet to achieve
nancial close, which is reportedly on track for the rst
half of 2018.
The need for intensied eorts in reaching Programme
goals also applies to other sector stakeholders,
particularly UETCL and REA. Critical grid infrastructure
required to connect GET FiT projects to the national
grid have experienced severe delays throughout 2017.
There is currently a high risk that new generating plants,
both within GET FiT and beyond, will be commissioned
without adequate connection facilities in place in the
coming one to two years. Unfortunately, this is likely to
increase deemed energy obligations on the Ugandan
Government. To minimise these impacts, GET FiT has
provided additional funds for critical grid reinforcements
and will continue to oer assistance, monitor progress,
and attempt to facilitate a higher level of coordination
for timely implementation of these investments.
Finally, it is encouraging to see that the technical
assistance provided to ERA via the GET FiT TA Facility
is indeed contributing to strengthening ERAs capacity
as a regulator and the Ugandan investment climate
as a whole. In 2017, a new grid connection code
and framework for regulating wheeling of power
(transmission through a third-party network) was
established. An improved framework for compliance
monitoring of transmission and distribution licensees is
currently being put in place, and ERA recently launched
a new GET FiT knowledge transfer programme that
will aim to institutionalise experience and competence
gained throughout implementation of the GET FiT
portfolio. Adding to this, a new electronic regulatory
system will be commissioned by ERA in 2018, further
strengthening their position as one of Africa’s most
forward leaning and modern electricity regulators!
2018 promises to be a momentous year for the GET
FiT Programme, with a signicant proportion of the
Programme’s aims and objectives being realised in
the form of installed power and the supply of clean,
renewable energy to Uganda. Needless to say, the
Programme is in for yet another exciting year!
Get Fit Uganda | Annual Report 2017
Jody Lenihan, Managing Director Of
Africa Ems Nyamwamba Ltd.
GOU and KFW | Multiconsult
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“As we are successfully concluding the
development and construction of 9.2MW
Nyamwamba and preparing for the operations
phase, we have been extremely pleased with the
technical collaboration by our assigned GET FiT
team. The abundance of information sharing
and mutual respect, in both directions, among
the GET FiT team, the SAEMS team, and our
lender has resulted in a level of enrichment of
all involved, and certainly in a facility of superb
quality in all vital categories – environmental,
social,technical, humanitarian, and economic.”
773
GW
6800
jobs
17
Pr jects
158 mw
11 UNDER-CONSTUTION
6 Commissioned
Actual progress
on goals*
*based on projects with financial close
28.1 Mw
commissioned
in 2017
104 GWh
commissioned
in 2017
1 PPAs signed
in 2017
2950 jobs
created in 2017
80
2
82
100
USD in GET FiT
premiums
Leveraging a
total investment
of over USD
Public
financing
Private
financing
65
36
439 M
104 M
16
58
commissioned AND ABOUT
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Get Fit Uganda | Annual Report 2017
ABOUT GET FiT UGANDA
PROJECT PORTFOLIO PROGRESS
OTHER ACTIVITIES AND ACHIEVEMENTS
CONNECTING TO THE GRID
THE LEGACY OF GET FiT
GET FiT ‘ACADEMIC CORNER’
FINANCIAL STATUS
OUTLOOK FOR 2018
STATUS OF GET FiT ROLL-OUT TO OTHER COUNTRIES
PROGRAMME MONITORING & RISK MANAGEMENT
MANAGEMENT OF ENVIRONMENTAL
&SOCIAL PERFORMANCE
1
2
3
4
5
6
7
8
9
10
11
GOU and KFW | Multiconsult
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LIST OF ABBREVIATIONS
/ ACRONYMS
COD Commercial Operation Date
CP Condition Precedent
BEIS Department for Business, Energy & Industrial Strategy
DFA Developer Finance Agreement
DFID Department for International Development
ERA Electricity Regulatory Authority
GFPPM GET FiT Premium Payment Mechanism
GoU Government of Uganda
IA Implementation Agreement
IC Investment Committee
IDA International Development Association
IFC International Finance Corporation
MEMD Ministry of Energy and Mineral Development
MoFPED Ministry of Finance, Planning and Economic Development
M&E Monitoring & Evaluation
PPA Power Purchase Agreement
PRG Partial Risk Guarantee
RFP Request for Proposal
SC Steering Committee
SHP Small Hydropower Project
TA Technical Assistance Facility
UETCL Uganda Electricity Transmission Company Limited
Get Fit Uganda | Annual Report 2017
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T
he GET FiT Uganda Programme was ocially
launched on May 31st 2013. The Programme,
which has been jointly developed by the
Government of Uganda, the Electricity Regulatory
Agency (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.
The main objective of the GET FiT Programme is
to assist East African nations in pursuing a climate
resilient low-carbon development path resulting
in growth, poverty reduction and climate change
mitigation. In Uganda, GET FiT is fast-tracking a
portfolio currently of 17 small-scale renewable
energy (RE) generation projects, promoted by private
developers and with a total installed capacity of 158
MW. This will yield approximately 773 GWh of clean
energy production per year, transforming Uganda’s
energy mix within a period of 3-5 years, and resulting
in:
ABOUT
GET FiT UGANDA
1
A more comprehensive description of the specic
tools and approaches applied by GET FiT to address
the challenges faced in the Ugandan power sector, the
governance structure of the Programme and key activities
and achievements so far, is found in the GET FiT Annual
Reports produced since 2013 (www.gett-reports.com).
• emission reductions of roughly 10M tons of
CO2 in the 20-year lifespan of Power Purchase
Agreements (PPAs);
• an increase in Uganda’s energy production by
about 20%, and thus a contribution to tackling
anticipated supply shortage in the period up to
2020;
facilitating (or signicantly improving) access
to energy for at least 200,000 additional house
holds (approximately 1.2M people), also in rural
areas due to strengthening of regional grids;
• leveraging of close to MEUR 400 in public and
private investments for RE generation projects
with a limited amount of results-based grant
funding.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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T
he year 2017 was another landmark year
for the GET FiT Programme. Following the
successes of 2016, another four projects
supported by GET FiT were commissioned in
2017, providing a combined power output of 28.1 MW.
These comprised the rst three hydropower projects
to commence operations – Siti 1 Small Hydropower
Project (SHP), Muvumbe SHP, and Rwimi SHP – and the
second, and nal, solar project – Tororo SPV.
In total, six of the projects supported by GET FiT are
now operational, with a combined installed capacity
of 58.1 MW, and evacuated approximately 100 GWh
of energy to the grid during 2017. This corresponds
to around 2.5 percent of the total energy supplied in
Uganda in 2017. As the newly commissioned projects
all started delivering power during the year, and some
have been running at reduced capacity, this percentage
is expected to increase signicantly during 2018.
Progress on the Ground
Good construction progress was made during 2017 on
most of the remaining hydropower projects. Whereas
ve projects commenced construction, three projects
were nearing completion with the aim of achieving
commercial operation early during 2018, and a
further two projects anticipated achieving commercial
operation in Q3 of 2018.
There was, however, notable variation in progress across
the portfolio. One project was subjected to an enforced
construction stop for several months in order to cure
a series of deciencies and address health, safety,
and welfare issues across the site. Another project,
located on the border between Uganda and Tanzania,
experienced substantial delays due to transboundary
issues but had, nonetheless, mobilised to site.
All projects were on the ground before the end of
the year – a substantial milestone for the GET FiT
Programme – allowing the focus to shift predominantly
to construction related activities and setting-up an
exciting upcoming year.
A Challenging Year Ahead
Despite the many achievements and progress of
the Programme during 2017, 2018 will indeed be a
challenging year for many of the hydropower projects
under construction. Key challenges include particularly
demanding construction schedules and the timely
implementation of the power evacuation infrastructure
necessary to connect the projects to the grid. For
a number of projects, these issues will most likely
seriously impact their ability to achieve commercial
operation within the 2018 calendar year.
The table below provides a summary on the status of
key project milestones across the portfolio. Light grey
cells indicate that a milestone has been achieved. The
expected dates for key milestones that have not yet
been achieved are otherwise shown. Only two projects
have yet to achieve nancial close, which is expected to
be closed-out early during 2018. With the exception of
the Kikigati SHP, which experienced substantial delays
PROJECT
PORTFOLIO PROGRESS
Portfolio Status
2
2.1
Another Landmark Year
No.
1 Rwimi
Nyamwamba
Waki
Siti I
Siti II
Lubilia
Kakira Cogen
Sindila
Muvumbe
Soroti Solar
Tororo Solar
Kikagati
Ndugutu
Kyambura
Q1 2018
Q2 2018
Q1 2018
Q1 2018
Q2 2020
Q4 2018
Q4 2018
Q4 2018
Q2 2018
Q4 2018
Q3 2018
Q3 2018
Q1 2018
Q1 2018
Q2 2020
Q2 2019
Q2 2018
Q1-Q2 2019
Q1-Q2 2019
Q1-Q2 2019
Q1-Q2 2019
Q4 2018
Q4 2018
Q4 2018
Nkusi
Nyamughasani I
Nyamughasani II
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Project DFA PPA
Financial
Close
Construction
start
Commissioning
Developer
estimate
GET FiT
estimate
Generation
License
due to transboundary issues – further details provided
in section on Project Status - the developers for all
remaining projects are aiming to achieve commercial
operation by the end of the 2018 calendar year. Based
on the experience of the GET FiT implementation
16
1
GET FiT recognises the unique challenges experienced by the Kikagati SHP as a result of transboundary issues and the impact this has had on the implementation time-
frame. The timing of key Project milestones and their acceptability to GET FiT, ERA, and the donor organisations will be discussed further early in 2018.
team and the observed progress and capacity of the
developers during 2017, however, some projects are
likely to overrun into 2019, which is reected in the
table below.
Table 1 – Project milestones overview
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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18
PROJECTS
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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Operational
projects
Hydro Projects
2.2
T
he Siti I SHP is a run-of-river plant with an
installed capacity of 6.1 MW and estimated
29 GWh annual production, located in Bukwo
District, Eastern Uganda. The Project secured
investments of USD 14.8M, with USD 3.6M in GET FiT
commitments. The Project has the longest waterway
in the GET FiT portfolio at more than 5 km in length,
comprising a short section of canal, nearly 3 km of
headrace pipeline, and 2 km of penstock.
Construction commenced in March 2015 and concluded
in March 2017, with the power station synchronised
and evacuating power to the grid by April 2017 – the
rst GET FiT hydropower project to achieve commercial
operation. However, due to issues with respect to
the stability and quality of the power evacuation
line, the Project was only able to evacuate power to
the grid at between 2-3 MW. Improvements to the
power evacuation infrastructure were subsequently
implemented during October 2017, allowing the Project
to evacuate power to the grid at full capacity. However,
as evident in Figure 1 and 2 below, substantial grid
outages continued throughout October and November
and, to a lesser extent, December, with outages in
December being partly attributable to planned grid
maintenance activities.
Grid failures and outages amounted to more than
127 days since achieving commercial operation and
were approximately equivalent to more than 53% of
actual production, which is excessively high. The new
33 kV power evacuation line between the Project and
Kapchorwa, and the existing line from Kapchorwa,
experienced extensive faults. UETCL has since
upgraded the line in sections and in September the line
was able to hold the performance tests by the Project
at 5 MW. The grid outages have gradually reduced, with
the lowest outages experienced thus far occurring in
December. Nevertheless, further improvements to
the evacuation infrastructure are required to minimise
outages and the potential for further deemed energy
claims.
By the end of 2017, the Project had delivered 11.4 GWh of
energy to the grid during its 8 rst months of operations.
An estimated 6.1 GWh could not be produced due to
grid failures and outages out of the plant operator’s
control (deemed energy). Without these losses, the
cumulative energy output would have been 17.5
GWh, based on available water and the plant’s overall
performance
2
. This is approximately 75% of the average
production estimated at GET FiT application stage for
the same 8 month period, indicating that ows during
the production period were less than estimated. It is,
however, too early to conclude if the energy production
estimates are overly optimistic based on less than one
year of production data and without any available
analysis of the regional hydrology for 2017.
2
The plant availability for the same 8 month period was on average 97.3%, which is considered good performance for the rst year of operation.
Siti I
Grid failures / Outages (GWh)
20
Figure 1 Siti I SHP actual versus estimated energy output. Generation data shown from the rst
full month of operation – May 2017
Figure 2 – Siti I SHP – plant versus grid availability
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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The Muvumbe SHP is a run-of-river hydropower
project with an installed capacity of 6.5 MW and
estimated 31 GWh annual production, located in Kabale
District, South-Western Uganda. The Project secured
investments of USD 14.1M and USD 4.5M in GET FiT
commitments, under the second request for proposals
for the GET FiT Premium Payment Mechanism (GFPPM)
in Uganda.
Construction works commenced in September 2015
and were signicantly ramped-up during early 2017
in order to achieve the construction programme.
Commissioning tests of the power station commenced
during March 2017 but due to logistical and coordination
issues with UETCL the Project did not formally achieve
commercial operation until mid-May 2017, 20 months
following the start of construction.
By the end of 2017, the Project had delivered 16.0 GWh
of clean energy to the grid. Taking account of grid
failures and outages, the cumulative energy output
would have been 18.2 GWh, which is approximately
72% of the average production estimated at application
stage for the same 9 month period. This is partly
attributable to the availability of the plant, which was
on average available for 98.7% of the time during the
Muvumbe
Grid failures / Outages (GWh)
22
rst 9 full months of operation (April-December 2017)
considered good for the rst year of operation but
mainly due to 2017 being a statistically drier year. It is,
however, too early to conclude if the energy production
estimates are overly optimistic based on one year of
production data and without any available analysis of
the regional hydrology for 2017.
Figure 3 - Muvumbe SHP actual versus estimated energy output.
The grid failures and outages amounted to more than
28 days since achieving commercial operation and were
approximately equivalent to nearly 14% of production,
which is relatively high. Lower grid failures and
outages are expected following the implementation
of transmission network upgrades anticipated in the
region.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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The Rwimi SHP is a run-of-river hydropower project with
an installed capacity of 5.5 MW and estimated 27 GWh
annual production, located in Kasese district, western
Uganda. The Project secured investments of USD
20.8M and USD 3.9M in GET FiT commitments, under
the rst request for proposals for the GET FiT Premium
Payment Mechanism (GFPPM) in Uganda. The Project
achieved nancial close and commenced construction
during July 2015.
The Project includes one of the largest concrete gravity
dam structures in the portfolio, at approximately 13 m
in height to spillway level, the construction of which
had been severely impacted and delayed by unusually
high ows during the dry season. Nonetheless, the
Developer made good progress during the last 6 months
of construction to enable commissioning of the power
station and commercial operation during October
2017, following 27 months of construction. The Project
is located near to the Hima Cement plant, which is a big
otaker of electricity in the area and will benet from
the improved reliability in electricity supply.
By the end of 2017, the Project had delivered 6.9 GWh
to the grid, which reects the relatively short period of
operation. Taking account of grid failures and outages,
Rwimi
Grid failures / Outages (GWh)
24
the cumulative energy output would have been 7.5 GWh.
The last two months in 2017 was approximately 101% of
the average production estimated at application stage
for the same 2 month period, while November was
wetter and December dryer than average. The plant
Figure 4 – Rwimi SHP actual versus estimated energy output.
availability for the rst two full months of operation was
approximately 99.4%, which is very high. Grid failures
and outages for the same period was approximately
0.4 GWh, which was approximately equivalent to 8% of
production.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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26
Solar Projects
O
n September 3, 2017, the developer
Tororo Solar North Ltd. (majority-owned
by the multinational company Building
Energy, a global integrated independent
power producer) announced the commencement of
commercial operations of the Tororo Solar Power Plant,
located just outside Tororo Town in Tororo District,
Eastern Uganda. The 10 MW plant (32,240 solar modules
on 14 hectares) became the second grid-connected
solar power plant in Uganda. The Tororo Solar Power
Plant will produce around 16 GWh each year.
Tororo: The Second Grid-connected Solar Power
Plant in Uganda Starts Operations
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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It took approximately eight months to build and
commission the 10 MW plant. During construction
350 jobs were created on site, of which 300 jobs were
lled by Ugandan citizens. Four permanent jobs have
since been created to assist with the operation and
maintenance of the facility with training undertaken on
a range of issues.
The Developer and EPC Contractor placed considerable
priority on environmental and social (E&S) compliance
and performed well in this respect. The E&S challenges
were only moderate at this project site, but the
approach and performance on E&S issues is among the
best in the GET FiT portfolio and a good example for
E&S practice in Uganda.
The Solar Power Plant is connected to one of Uganda’s
largest electricity substations (close to large load
centers), in order to reduce electricity loss that can
occur with long-distance transmission.
The plant is generating largely according to forecasted
output, and has already produced approximately 5.9 GWh
of clean energy in 2017.
28
Minister of State for Mineral Development H.E. Peter Lokeris (right) and Matteo Brambilla, Managing Director Building Energy South Africa (left)
during the inauguration. (photo: Building Energy)
The inauguration ceremony on October 16, 2017, was attended by Uganda’s Minister of State for Mineral
Development, H.E. Peter Lokeris, together with; EU Ambassador, Attilio Pacici; German Ambassador, Dr. Albrecht
Conze and Norwegian Ambassador Susan Eckey, as well as representatives of other stakeholders including ERA
and KfW.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
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Soroti: A successful rst operational year
Commissioned in November 2016, the Soroti Solar
Power Plant has been injecting power to the national
grid for more than a year now. The 10 MW plant (32,680
solar modules on 13 hectares) developed by Access
Uganda Solar Ltd. was, at the beginning of commercial
operation, the rst grid-connected Solar Power Plant in
Uganda but also East Africa’s largest (now challenged
by Tororo, the second Solar Power Plant commissioned
under GET FiT and also 10 MW).
From December 2016 to November 2017 inclusive (one
year), the plant produced approximately 16.5 GWh.
The deemed energy due to failures from the grid was
0.7 GWh (corresponding to approximately 6.5 days of
power outage), meaning that the plant should have
produced 17.2 GWh in theory (no failures from the grid)
which is at the level of the expected 17.5 GWh per year.
The local Operation and Maintenance team (4 men
and 1 woman) did not report any major events since
achieving commercial operation, and was mostly
following normal operating procedures, both preventive
and corrective.
30
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
31
Kakira
Kakira is a 20 MW biomass (bagasse from sugar
production) plant in Jinja District, Eastern Uganda. The
plant is designed to deliver 147 GWh/year to the grid.
Over the past two-three years, Kakira has been faced
with a considerable reduction in availability of sugar
cane, caused mainly by increased local competition in
the sugar cane market due to additional sugar factories
in the region. This has severely reduced fuel supply to
the generation facility, as a signicant share of the sugar
cane is purchased from outgrower farmers. In 2016,
approximately 60 GWh was delivered from the plant. The
availability of cane has seen a further decrease in 2017,
where delivered energy accumulated only to 43.5 GWh.
This is less than one third of planned annual production.
The low production level currently experienced at
Kakira results in accumulation of undisbursed funds on
the associated nancing agreement with GET FiT. Only a
limited share of this could be retrieved through potential
production above the stipulated level in later years.
Therefore, money previously allocated to Kakira will be
reallocated to projects within the programme that have
so far not been allocated a full premium amount due
to funding shortages. To increase cane supply, Kakira
owners have invested in a new irrigation system and
acquired additional land for sugar cane production.
This will increase own supply and reduce dependency
on outgrower farmers. On this basis, Kakira reportedly
expects to be back at normal production levels by 2020.
The future annual production levels for Kakira will
also depend on the outcome of ongoing discussions
regarding regulatory issues for the sugar industry and
the level of competition for sugar cane among sugar
factories.
32
Projects
under construction
2.3
Run-of-river SHP with a planned installed capacity of
9.6 MW and 46 GWh in annual production, located in
the Kibaale and Hoima districts. The Project secured
investments of USD 23M, with USD 6.5M in GFPPM
commitments, and commenced construction in
June 2015. The Nkusi SHP is the only GET FiT project
designed with a tunnel that carries the full length of
waterway. The tunnel breakthrough during Q1 2017
was a signicant achievement for the Project, providing
an improved, easier construction access between the
dam/intake and power station sites for the remainder
of the construction phase. The original access to the
weir and intake was one of the most challenging in the
portfolio, with pedestrian access only possible from
steep escarpments from above the weir or from Lake
Albert below.
The Project is on track to achieve a COD in Q2 2018.
However, the interconnection solution remains a
critical issue, with the previous option abandoned due
to UETCL’s lack of funds. A new 3 km line will now be
constructed by REA to connect the plant to the existing
grid. However, due to weaknesses of the general
distribution grid in the project area, this grid extension
will only have capacity to evacuate a maximum of
45% of the generated power from the Project. For a
permanent solution that minimises the risk of deemed
energy and associated payments by GoU, the Developer
successfully solicited additional funding to construct
a new 88 km line from the Project to Fort Portal. The
timeline for implementation is 6 months, which will
help to reduce the magnitude of deemed energy.
Nkusi
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
33
Run-of-river hydropower plant with a planned installed
capacity of 9.2 MW and estimated 39 GWh annual
production, located in Kasese district. The Project
secured investments of USD 26.8M, with USD 5.8M in
GET FiT commitments, and commenced construction
in Q4 2015. Construction progressed well during 2017,
with the Developer working on multiple construction
faces and within a relatively constrained footprint.
Most of the civil engineering structures were completed
and the electromechanical installations in the power
station were relatively advanced by the end of the year.
Construction of the 17 km long power evacuation line
was completed by REA during 2016, well in advance of
the commissioning phase for the Project. The Project
is now nearing completion and expects to achieve
commercial operation early during Q1 2018.
Nyamwamba
34
Run-of-river hydropower plant with a planned installed
capacity of 5.4 MW and expected 25 GWh annual
production, located in Kasese district. The Project
secured investments of USD 18.7M, with USD 3.2M in
GET FiT commitments, and commenced construction in
March 2016.
Construction progress was generally good and the site
team demonstrated a capacity during 2017 to manage
critical construction activities and resources to full key
programme dates. The Developer, also responsible
for the Siti 1 SHP, adopted an alternative approach at
Lubilia SHP with respect to the penstock: a bespoke
workshop was established at the Contractor’s yard for
the purpose of sandblasting and applying protective
coatings to the pipe sections, to reduce mechanical
damage to the coatings in transit and to improve
overall quality. Completion of the penstock installation,
powerhouse construction, and electromechanical
installations in the powerhouse were critical activities
to achieving the COD.
REA completed construction of the relatively short 3.2
km long evacuation line, which will allow the Project to
evacuate power once the COD is achieved, currently
planned for early Q1 2018. However, improvements
to the existing transmission infrastructure to improve
reliability are not anticipated until later in Q1 2018,
which may result in outages in power evacuation in the
interim.
Lubilia
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
35
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. The Project secured investments of
USD 18.1M, with USD 3.6M in GET FiT commitments,
and commenced construction during 2015.
This is only one of two projects in the portfolio with a
tunnel section, through which a small portion of the
headrace pipeline will pass, and the only project to
attempt fabrication of the steel pipeline on site. For
this purpose, the Developer established a bespoke
workshop with steel plate rolling facilities on site, as well
as facilities for sand blasting and applying protective
coatings. Unlike most other GET FiT projects, the
Developer has beneted from the power evacuation
line to the site already being completed, allowing
the site to utilise grid-supplied electricity during the
construction phase.
Construction progress was slow during the rst half of
the year, particularly at the weir site, where successfully
implementing the river diversion works had taken
substantially longer than planned. Slow progress
and issues of non-compliance with IFC Performance
Standards and Ugandan regulations resulted in an
enforced construction stop by both ERA and GET FiT
of several months during the year. The Developer
addressed key issues and resumed construction works
during Q4 2017 and is aiming to achieve commercial
operation during Q3 2018.
Waki
36
Run-of-river hydropower plant with a planned installed
capacity of 16.5 MW and estimated 72 GWh annual
production, located in Bukwo District, Eastern Uganda.
The Project secured investments of USD 33M, with
USD 10.2M in GET FiT commitments, and commenced
construction during August 2016.
The Project has the largest installed capacity of the GET
FiT projects and is the downstream part of the cascade
with the already commissioned Siti I SHP, one of only
two cascades in the portfolio.
Following commissioning of the upstream Siti I SHP,
the Developer diverted all available resources to the
Siti II SHP, allowing improved focus on construction
progress. The key challenge to resolve during 2018 is
the power evacuation solution. Umeme will construct
an interim 33 kV line, which will follow the Siti I line
corridor and extend to Mbale substation. Construction
of the line is expected to commence in Q1 2018 and
be completed in less than 12 months. A permanent 132 kV
evacuation solution is being developed from Mbale-
Bulambuli and is described later in this report in the
chapter Connecting to the Grid.
The Project is aiming to achieve commercial operation
by Q3 2018, although the risk of deemed energy is a
real possibility given the uncertainties surrounding the
power evacuation infrastructure.
Siti II
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
37
Run-of-river SHP with a planned installed capacity of
7.6 MW and 36.7 GWh in annual production, located in
the Rubirizi district. The Project secured investments
of USD 24M, with USD 5.4M in GET FiT commitments.
The design of the Project changed markedly during
2017, with the originally proposed headrace tunnel
being replaced with a headrace canal, realignment of
the penstock, and the introduction of a pebble tank and
desilting basin.
Only limited construction activity was undertaken
prior to September 2017, following which access road
construction and excavation works for the headrace
canal commenced in earnest. The Developer made good
progress during Q4 2017 and was making arrangements
to engage multiple sub-contractors and to construct the
Project on multiple faces from early 2018. The supply
and installation of the electromechanical equipment
was expected to be on the critical path. The Developer
plans for a COD in Q4 2018 but, given the aggressive
construction schedule, Q1-Q2 2019 seems more likely.
Kyambura
38
Run-of-river hydropower plant with a planned installed
capacity of 5 MW and 27 GWh expected annual
production, located in Bundibugyo district. The Project
secured investments of USD 17M, with USD 3.3M
in GET FiT commitments. The design of the Project
changed considerably during 2017, including changes
to the location, size, and form of key project structures,
such as relocating the weir and changing the form of
construction of the headrace waterway.
The EPC Contractor for the Project is also constructing
the adjacent Ndugutu SHP, which shares the same
penstock corridor and power station site. The
Contractor therefore benets from sharing facilities
and resources across both Projects, such as the main
construction yard, construction plant, and some of the
access roads. The steel pipe delivery and installation
methodology are unique to the Sindila and Ndugutu
SHPs, based on the Contractor’s experience of installing
many kilometres of steel pipeline in South Africa.
Construction activities commenced during early 2017
and the Developer plans to achieve the COD during
Q3 2018. However, the construction programme and
terrain are challenging and a COD during Q1-Q2 2019
appears more realistic at this stage.
Sindila
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
39
Run-of-river SHP with a planned installed capacity of
5.9 MW and 26.5 GWh in annual production, located
in the Bundibugyo district. The Project secured
investments of USD 15M, with USD 3.2M in GFPPM
commitments.
The Project designs changed signicantly during 2017.
The most notable changes were the relocation of the
power station adjacent to the Sindila SHP power station,
which will now share the same station facilities including
loading bay and power station crane, and substantial
changes in the waterway arrangement and alignment.
As a result, the Project now has the shortest headrace
section, at 0.1 km in length, and the longest penstock of
any of the GET FiT Projects, with nearly 4 km of pipeline!
As a result, the Developer had to acquire more land,
as well as update and obtain new permits, licences
and approvals necessary to proceed. The changes
were introduced to improve constructability, achieve
construction eciencies, and reduce Project costs.
As well as substantial delays due to changes in Project
designs, the Developer has also consistently and
repeatedly failed to comply with deadlines with respect
to project development and environmental and social
requirements. As a consequence, a nancial penalty
was imposed on the Project to incentivise the Developer
to address the issues outstanding and to increase
eorts to comply with Programme requirements. The
penalty was applied by reducing the GET FiT subsidy
allocated to the Project and is the rst occasion during
the implementation of the Programme that such a
contractual mechanism has been utilised.
The EPC Contractor is common to both the Sindila and
Ndugutu SHPs and, as mentioned earlier, benets from
sharing facilities and resources across both Projects.
Construction activities commenced during Q2 2017,
with the Developer aiming for commercial operation
during Q4 2018. However, in addition to the ongoing
Developer performance issues, the construction
programme and terrain are challenging and a COD
during Q1-Q2 2019 appears more realistic at this stage.
Ndugutu
40
Run-of-river SHP with a planned installed capacity of
15 MW and 64 GWh in annual production, located in
the Kasese district. The Project secured investments
of USD 36.7M, with USD 9.4M in GFPPM commitments.
The Project experienced substantial delays during
2017, in part due to changes in design, which included
relocating the intake at the weir site and the rst few
hundred metres of headrace waterway, where there
is particularly challenging terrain. Having nally
achieved nancial close at the end of Q4, however, the
Developer plans to substantially scale-up resources
and construction operations early during 2018.
The EPC Contractor for the Project is also constructing
the Nyamagasani II SHP – the second cascade of
schemes in the portfolio and therefore benets from
sharing facilities and resources across both Projects,
such as the main construction yard and construction
plant. The Contractor also has the benet of sharing the
bespoke penstock workshop established for the Lubilia
SHP for the purpose of sandblasting and applying
protective coatings to the pipe sections. Nonetheless,
the Project will face many logistical challenges during
2018 with respect to being able to deliver, install, weld,
and apply protective coatings to the nearly 5 km of steel
pipeline – the second longest waterway in the portfolio!
Construction commenced during Q1 2017 and the
Developer is aiming for commercial operation during
Q4 2018. However, given the size of project structures
and the challenging nature of the site and construction
programme, a COD during Q1-Q2 2019 appears more
realistic.
One of the key challenges for the Nyamagasani projects
is the timely implementation of the power evacuation
infrastructure, which is being implemented by REA, and
will include the construction of a new 33 kV evacuation
line. The procurement of an EPC Contractor for line
construction was substantially delayed during 2017
and is now expected to conclude in January 2018. Line
construction is expected to commence in Q1 2018, with
an optimistic completion date estimated in March 2019.
Further delays in concluding the procurement of an
EPC Contractor and in implementing the infrastructure
will substantially increase the risk of deemed energy for
these projects.
Nyamagasani I
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
41
Run-of-river SHP with a planned installed capacity of
5 MW and 25.5 GWh in annual production, located in the
Kasese district just downstream of the Nyamagasani I
SHP. The Project secured investments of USD 19.8M,
with USD 3.7M in GFPPM commitments. Similar to the
Nyamagasani I SHP, the Project experienced substantial
delays during 2017, in part due to changes in design,
which included changing the location of the intake to
the right bank to avoid the need for a siphon across
the river. The form of penstock was also changed from
steel to GRP pipes, which has the benet of substantially
reducing competing pressures on skilled welders that
are shared across the two Nyamagasani Projects. This
is important given the remaining timescale available for
construction within the GET FiT window.
The Developer plans to substantially scale-up resources
and construction operations early during 2018, having
nally achieved nancial close at the end of Q4. The
Contractor also has the benet of sharing the concrete
batching plant, which has been established to supply
concrete to both Nyamagasani projects. Construction
commenced during Q1 2017 and the Developer is
aiming for commercial operation during Q4 2018.
Many of the challenges, key programme dates, and
ambitious construction programme are similar to the
Nyamagasani I SHP and, therefore, a COD during Q1-
Q2 2019 appears more realistic. The Nyamagasani
projects will share the power evacuation infrastructure
and, therefore, as for Nyamagasani I SHP, there is a real
risk of deemed energy for this Project once the COD is
achieved.
Nyamagasani II
42
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 with Tanzania. Investment of USD 51.1M with
USD 12.3M in GFPPM commitments. The Kikagati SHP
is unlike any other hydropower project in the GET FiT
portfolio, being situated on the biggest river of any of
the projects – the Kagera River – and in the location of a
previous hydropower station, which had been destroyed
many years previous as a result of civil unrest between
the two countries. With the largest design ows and
one of the largest power outputs of the projects in the
portfolio, it also has the longest dam at approximately
170 m in length and the lowest design head, with a
dam of approximately 6 m in height. There are also no
waterways (headrace structures or penstocks), which
means that the project structures are all located in the
vicinity of the dam, giving the smallest footprint in the
portfolio!
Following substantial delays due to transboundary issues
and in executing a bilateral agreement between the
Governments of Uganda and Tanzania, the Project
mobilised to site during Q4 2017 – the last of the
projects in the portfolio to commence site works and
a substantial achievement for the GET FiT Programme.
The Project plans to achieve commercial operation
in stages, with the rst unit reaching Commercial
Operation Date (COD) on 14 April 2020; and the third
unit achieving COD on 18 September 2020. The Project
will substantially benet from this site previously having
been used for the purpose of hydropower generation
as the power evacuation infrastructure is already in
place, which means that the Contractor will be able to
use grid-supplied electricity during construction.
Kikagati
Get Fit Uganda | Annual Report 2017
170 MW
MW
GWh/year
SOLAR
BAGASSE
HYDRO
830 GWh
158.4 MW
Current
portfolio
SOLAR
BAGASSE
HYDRO
773 GWh
Current
portfolio
/year
/year
TARGETTARGET
GOU and KFW | Multiconsult
43
W
ith six GET FiT power plants commissioned
by the end of 2017, the total capacity
added to the Ugandan grid by the
Programme now totals 58.1 MW (20
MW bagasse, 20 MW solar and 18.1 MW hydro). This
corresponds to a planned annual production of
approximately 269 GWh. Thus, portfolio commissioning
currently stands at 37 percent in terms of installed
capacity and 35 percent on annual production.
Figure 5 below provides an overview of the total
planned installed capacity of the portfolio and how it
is distributed across the supported technologies. The
overall planned capacity actually increased slightly in
2017 due to a design change in one of the hydropower
plants, raising the total to 158.4 MW. This is equivalent
to approximately 93 percent of the original Programme
target of 170 MW. The dierence between the planned
and original targets is partly due to a reduction in the
overall Programme funding in earlier years combined
with a lower share of bagasse/biomass than originally
anticipated. Nonetheless, adding an installed capacity
of nearly 160 MW to the Ugandan electricity supply
network is a signicant achievement and truly reects
the successful impact of the GET FiT Programme.
Expected
portfolio output
2.4
Figure 5 - GET FiT portfolio build up and original targets.
200
180
160
140
120
100
80
60
40
20
0
900
800
700
600
500
400
300
200
100
20
0
Installed capacity
(MW)
Planned annual production
(GWh)
2019 2020
Q4Q4Q4Q4Q4 Q3Q2Q2Q2Q2Q2 Q1Q1Q1Q1 Q3Q3Q3Q3
201820172016
Kakira
Muvumbe
Nyamwamba
Waki
Kyambura
Soroti solar
Tororo solar
Ndugutu
Lubilia
Siti II
Nyamagasani I
Siti I
Rwimi
Kikagati
Nkusi
Sindila
Total annual productionNyamagasani II
44
Figure 6 below provides an illustration of the anticipated
portfolio build-up with time. It is noted that although
the majority of GET FiT supported projects are expected
to reach commercial operation by the end of 2018 – the
original Programme window – several projects are likely
to overrun into 2019. One of the projects – the Kikagati
SHP – is also not expected to achieve commercial
operation until later in 2020 due to substantial delays.
To improve implementation oversight of the remaining
projects and minimise the risk of further delays,
GET FiT introduced several tools to more closely
monitor progress and incentivise the Developers.
For selected projects, this included increasing the
frequency of supervision visits at the cost of the
developer; undertaking unannounced site visits to check
that developers were complying with Programme
requirements; enforcing stops in construction where
there were clear deciencies in the developers’
capacity to plan and implement the projects safely;
and imposing reductions in the overall subsidy amount
allocated to the project where there was continued
non-compliance with Programme requirements or poor
performance. Finally, a penalty mechanism for delayed
commissioning after 2018 has also been introduced to
limit further delays across the portfolio.
Figure 6 - GET FiT implementation timeline.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
45
I
n early 2017, three projects which had previously
applied for GET FiT without being granted support
were re-appraised. This limited Request for Proposals
(RfP) was conducted as a pro-active measure
aimed at qualifying reserve projects which could be
included in the GET FiT portfolio at short notice to
maintain MW targets. Several projects that had already
been approved for GET FiT support were performing
unsatisfactorily and were considered at risk of losing
support. Two projects, Bukinda SHP (6.5 MW) and
Mahoma SHP (2.7 MW) were approved as reserve
projects by the GET FiT Investment Committee. The
third project, Kakaka SHP (4.5 MW), was considered to
be not suciently developed to receive GET FiT support
and was not approved.
Thus far, the projects that were at risk of being dropped
prior to the re-appraisals have all managed to increase
eorts and remain part of the portfolio. Although
there remains a risk that certain projects may still be
excluded, none of the reserve projects are now likely to
qualify for support due to the GET FiT time-frame and
potential grid connection issues.
Re-appraisal
of projects
2.5
46
MANAGEMENT OF ENVIRONMENTAL &
SOCIAL PERFORMANCE
Environmental
and Social Benchmark
3
3.1
S
ound management of environmental and
social (E&S) risks protects the environment
and safeguards project-aected people and
workers. Sound risk management also secures
a social licence to operate, a broad social acceptance
within the project communities, and therefore guards
against a variety of social risks during construction and
operation.
Projects supported by GET FiT are required to comply
with Ugandan regulations and 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
and private investors, also making these a convenient
common reference point in multi-donor funded
initiatives like GET FiT. It is important to note that
the Ugandan regulations and the IFC PS have many
similarities, though there are also some important
dierences. For example, the IFC PS require that
compensation for loss of assets is based on full
replacement cost (market value + transaction costs)
rather than Uganda’s requirement of using the lower
depreciated value. The IFC PS also requires biodiversity
osets when a project impacts a protected area such as
a national park. The current Ugandan legislation does
not require such osets.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
47
GET FiT follow-up
and support
3.2
A
s highlighted in previous GET FiT Annual
Reports, the capacity of developers to
manage environmental and social risks,
including health and safety, has been
considerably lower than expected. Weak capacity
was reected in the low E&S scores during appraisals
of applications for GET FiT support, also resulting in
numerous conditions precedent (CPs) dened by the
Investment Committee. An anonymous survey among
developers in 2015 conrmed that few of the developers
had experience from implementing projects in line with
the IFC Performance Standards prior to GET FiT.
The GET FiT Investment Committee dened more than
50 environmental and social CPs across the three RfPs in
2013, 2014 and 2015. The large number of CPs reected
the overall low environmental and social capability
of project developers and their consultants and in
particular gaps in environmental and social impact
assessments (ESIAs), resettlement action plan (RAPs),
environmental and social management or action plans
(ESMPs or ESAPs) and livelihood restoration plans (LRPs).
No E&S CPs were cleared in 2017. Cumulatively across
the portfolio to date, about 70 % of the environmental
and social CPs have been cleared.
GET FiT has spent considerable time advising developers
on E&S issues, for instance revisions of studies and
management plans and later when implementing
plans during construction. Support from GET FiT also
included environmental and social workshops for small
hydropower, biomass and solar developers and their
consultants in June 2014 and October 2015. In 2017,
developers continued to express a demand for GET FiT
engagement on the management of environmental and
social risks. Additional resources have been provided
by KfW, and GET FiT in cooperation with ERA continued
to support developers in this respect.
With all projects having moved into construction and
some entering operation, most of the E&S follow-
up in 2017 was in the form of supervision visits to
construction sites and preparation for achieving
commercial operation and entering the operation
phase. The GET FiT Implementation Consultant normally
undertook a semi-annual one-day supervision visit to
each project under construction to monitor and advise
on environmental and social as well as engineering
issues. Action points were identied in each visit.
The supervision visits continue to prove useful and a
necessary part of managing environmental and social
risks. A total of 32 project supervision visits to 15
projects were undertaken in 2017. In addition, the rst
post-COD visit was made in 2017. For several projects,
GET FiT shared information and coordinated feedback
to developers with the lenders.
48
“The close follow up and support from GET
FiT of our project has greatly contributed
to improving project quality, both in
terms of planning and execution.”
Asa Katama, Project Manager,
Nkusi Hydropower Project
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
49
Performance – improvements
and remaining challenges
3.3
O
verall, most projects saw further
improvements in environmental and
social performance during 2017. But as
in previous years, progress was uneven
between projects. Most improvements were observed
where the developers’ internal environmental and
social capacity was substantially strengthened, and
where environmental and social standards were
rmly embedded in developers’ strategies and seen
as a priority at senior management level. During the
GET FiT Programme, some developers have made
impressive improvements in their capacity to manage
environmental and social risks and undertake practical
measures to safeguard people and nature. As a result
of the Programme, there is now a considerably higher
degree of compliance with Ugandan regulations and
international standards than would otherwise have
been observed.
Prior to GET FiT, most developers had not gone through
full project cycles from project development to operation
following international E&S standards. This means new
challenges arise as the projects move into the next stage
of the project cycle. With all projects having reached
construction, developers experience new challenges in
the form of practical implementation of environmental
and social management plans, including ensuring
contractors understand and adhere to the developers’
plans and standards. As projects move into operation,
operation phase issues arise combined with challenges
of a construction team handing over responsibility to
an operations team, the latter who tend not to have
been exposed to the project’s E&S issues. It is positive
to note that developers with multiple projects in the
portfolio learn from one project to the next.
While each project has its unique challenges, the
supervision visits documented some common issues
across the portfolio. Among others, these included
damage during excavations, delays in compensation
payments triggered by construction damage, workers’
health and safety risks, inappropriate handling of
minimum ow releases, and insucient management
of risks to national parks. Developers’ monitoring of
E&S issues during construction has also been a distinct
weakness in most projects. In addition, resource
constrained Ugandan government lead agencies have
not been able to full their intended roles in monitoring
compliance.
Poor excavation methods and inappropriate handling
of spoil material have been prevalent and resulted
in damage to people’s crops and other property as
well as natural vegetation and rivers. Substantial
compensation for damage has been triggered, and
delays in compensation payments result in frustration
among project-aected people. This led to legal
proceedings against the developer and contractor in
one project as well as a local community briey blocking
an access road in another project. Workers’ health and
safety risks remain a concern and additional measures
have been required across the portfolio.
Virtually all projects have struggled to dene appropriate
minimum ows to be released into the river section that
will experience reduced ow during operation (between
intake and power house) and had to undertake design
modications to improve the minimum ow release
arrangements (see next section). Management of
risks to national parks remained a challenge for some
projects. One project is located partly inside a national
park and three projects are located close to another
national park. New approaches to prevent negative
impacts on protected areas and to monitor risks are
under development and can provide a learning ground
for future infrastructure projects that may impact
protected areas in Uganda.
50
GET FiT sees environmental and social sustainability as
key to overall project sustainability. Where a forceful
response to persistent non-compliance is required,
GET FiT has several tools available including increasing
the frequency of supervision visits at the cost of the
developer, unannounced site visits, construction stop,
subsidy reduction, and even revoking the subsidy in
extreme cases.
One approved project had its support revoked by
the GET FiT Steering Committee in 2015 due to
consistent serious environmental and social non-
compliances. In 2016, two projects were requested to
suspend construction until corrective measures were
implemented, and one project was requested to do
the same in 2017. All projects resumed construction
following substantial improvements. While only one
project was subject to quarterly supervision visits in
2016, ve projects were covered by quarterly visits in
2017, mostly due to E&S non-compliances and partly
due to limited construction progress. One unannounced
inspection was undertaken by GET FiT in 2017. Some
projects still had substantial non-compliances at the end
of 2017 and may face actions by GET FiT unless urgent
corrective measures are implemented. Consequently,
one project faced a subsidy reduction event in early
2018.
Get Fit Uganda | Annual Report 2017
s discussed in previous GET FiT Annual Reports,
GOU and KFW | Multiconsult
51
Minimum ow – an
unresolved issue
3.4
A
there have been major improvements in
the regulatory frameworks and investment
climate for renewable energy in Uganda
in the past. There are, however, issues where further
work is required to establish clear expectations on
developers and clear frameworks for decision-making
that balance various societal interests in a predictable
and transparent manner. Assessing and determining
minimum ow
3
requirements for hydropower projects
is one such issue.
Fourteen (14) out of seventeen (17) projects approved
under GET FiT are hydropower projects. By design, these
projects result in a major reduction of the natural river
ow between the intake and the power house. In the
GET FiT projects, this river section is typically 3-4 km long.
The release of a minimum ow is a normal mitigation
measure to reduce impacts on people and ecosystems
along the aected river section. The volume of the
minimum ow also directly impacts on the economic
viability of a hydropower project, as water that could
otherwise be used for power generation remains in the
natural river channel. Minimum ows have therefore
been a challenging issue in all hydropower projects
supported by GET FiT, with developers struggling
to derive a clearly justied minimum ow level and
develop appropriate designs to release and monitor it.
The inadequate guidance from government agencies
and lack of clarity on which methodologies should
be applied to arrive at minimum ow releases have
complicated the assessment of minimum ows for
developers. This may have resulted in the inecient
allocation of water among competing societal interests
(power production, ecosystems, other human water
uses) and unequal requirements on developers.
A simple comparison between the GET FiT supported
projects can be made by calculating the minimum
ow requirement dened by the Government as a
proportion of the mean annual ow of the aected
river. Figure 7 below shows that there was substantial
variation between projects in terms of the minimum
ow requirement as a proportion of the mean annual
ow. Expanding the sample of projects to non-GET FiT
supported hydropower projects in Uganda increases
the variation further. The minimum ow requirements
would normally include consideration of issues such as
loss of power production, human water use interests
along the aected river section (domestic water use,
water supply schemes, irrigation, etc.), sh and other
ecological concerns as well as whether any tributaries
downstream of the hydropower intake contribute
water to the aected river section, or the presence
of alternative water sources. It is therefore important
that minimum ow requirements are identied on a
project-specic basis, so that the characteristics of the
project setting are accommodated for. As a result, the
minimum ow requirements will vary between projects.
Looking at the variation in minimum ow requirements
within the GET FiT portfolio and the characteristics
of the aected river sections, it is dicult to see any
clear correlation between the level of the minimum
ow requirement and the water use interests along
the aected river sections. For all parties involved,
it would be benecial is there is greater clarity on
the methodologies to be applied in assessing the
level of minimum ow, including data requirements,
assessment methods and procedures to be followed,
including key stakeholders to be consulted. Without
greater clarity on the above issues, developers will
continue to struggle to derive sound minimum ows on
a consistent basis. Furthermore, the allocation of water
3
We refer to ‘minimum ow’ rather than the often-used concept of ‘environmental ow’ as the minimum ow requirements dened in Uganda (by the Directorate of Water
Resources Management) usually do not have the characteristics of a true environmental ow, namely a description of the quantity, timing and quality of water ows required
to sustain freshwater ecosystems and human livelihoods that depend on these ecosystems.
14%
12%
10%
8%
6%
4%
2,7%
12,3%
2%
0%
52
between competing water uses (power production,
local water users, ecosystems) may not be the result
of a predictable and fair process, where hydropower
developers and other stakeholders can engage in an
ecient manner to support balanced decisions.
Figure 7 - Minimum ow requirements for GET FiT supported projects dened by Ugandan authori-
ties. The minimum ow requirements are shown as a proportion of the estimated mean annual ow.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
53
OTHER ACTIVITIES AND
ACHIEVEMENTS
GET FiT Visibility
4
4.1
G
ET FiT arranged a visit by GoU and
development partners to the Nkusi SHP on
8 February 2017. The objective of the site visit
was to witness the progress on one of the
supported hydropower projects during construction.
Nkusi SHP was selected due to its unique design that
includes a 900 m long tunnel and its strategic location
on the shores of Lake Albert in Western Uganda.
The GoU was represented by the Ministry of Finance
and Economic Development (MoFPED) whereas the
development partners represented were Norway and
DFID (London and Kampala). The visit was accompanied
by KfW and it provided valuable insights for the annual
review of GET FiT by DFID as well as roll out planning by
the London-based team.
Tororo Commissioning Ceremony
The commissioning of Tororo PV, as Uganda’s second
on-grid solar plant, attracted several high level
representatives from the Programme sponsors and
good media coverage. See the chapter on Project
Status for more details.
Uganda’s Minister of State for Mineral Development, H.E. Peter Lokeris (no. six from the left), together with: EU Ambassador, Attilio Pacici (no.
4 from the right); German Ambassador, Dr. Albrecht Conze (no. 5 from right) and Norwegian Ambassador Susan Eckey (no. 4 from left), as well
as representatives of other stakeholders. Photo: KfW.
Donor Visit to Nkusi
54
GET FiT at International Conferences
The GET FiT Secretariat was invited to give keynote
speeches on the Programme at two international
conferences during the reporting period. The
Programme was presented at the Africa Renewable
Energy Leaders’ Summit held in Nairobi from 4-5 April
2017, as well as at the agship utility conference Africa
Utility Week – held in Cape Town from 16-18 May 2017.
The events provided a platform from which to share
knowledge on GET FiT, increase visibility of Programme
implementation by the GoU and development partners,
and enhance awareness of a wider GET FiT rollout
across Africa. An interview of the Secretariat with ESI
Africa at the Africa Utility Week can be viewed (here).
GET FiT in the Media
GET FiT attracts media attention on a regular basis,
mainly in relation to progress on individual projects.
Among others, a New Vision article covered ERA’s visit
to several GET FiT projects (commissioned or under
construction) in August 2017. The article focused on
progress and completion of multiple projects and their
importance in terms of national and local power supply,
local job creation etc. It also focused on the opportunity
provided by the portfolio for ERA sta to increase their
competence on development of renewable energy
projects, and how this was duly utilised by ERA through
the eld visits.
In order to document and promote GET FiT in a
visually appealing manner, ERA in 2016 prepared a
27 minutes long video/documentary that provides a
comprehensive presentation of the Programme. The
documentary can be viewed (here). In addition to this,
a video was prepared on the GET FiT Forum arranged
in 2016. While summarising the Forum, the video also
includes a general introduction to the Programme (5
minutes long). The Forum video can be viewed (here).
Joint stakeholder ribbon cutting at Tororo commissioning ceremony. Front from the left: Norwegian Ambassador Susan Eckey; Managing
Director Building Energy South Africa, Matteo Brambilla; Uganda’s Minister of State for Mineral Development, H.E. Peter Lokeris; EU
Ambassador, Attilio Pacici; MP for Tororo South County, Fredrick Angura; ERA Board member, Eng. Oteng Otogo. Photo: KfW.
Get Fit Uganda | Annual Report 2017
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55
Development of GET FiT
Lessons Learned
4.2
A
fter three years of implementing GET FiT
Uganda, the Programme is widely recognised
as a successful mechanism in attracting
private investment to the development
of IPPs at a national scale. Throughout this period,
experience has accumulated within the Programme
community and among stakeholders. Many important
lessons have been learned, which in turn should serve
as critical input to developing the GET FiT concept and
rolling out similar programmes in other countries.
While the main issues, challenges and success factors
of the Programme are outlined in the annual and
semi-annual reports, the GET FiT team felt it would be
benecial to clearly present and summarise lessons
learned specically. Not only will this help to develop the
GET FiT concept and potentially improve performance in
other countries, but also ensure that the key elements
of unique institutional memory from GET FiT Uganda
is well documented, shared and transferred to future
policy makers. The Lessons Learned are also aimed
at providing more general learning to Private-Public
Partnership (PPP) programs – and it is believed that
these could apply in other sectors as well.
Under the overarching title “Lessons learned from
implementation of a successful PPP programme” a
series of seven lessons learned brieng notes will be
prepared. The brochures will cover the following areas
of GET FiT implementation:
1. Leveraging Commercial Investments
2. Setting the Stage: The building blocks of a
successful PPP programme
3. Program Implementation
4. Mobilizing Developers and Investors
5. Complying with Environmental and Social
Performance Standards
6. Making the Impact Stick: Design of Technical
Assistance and Capacity Building
7. Monitoring for Results
Lessons 1-3 are completed and will be published in
Q1 2018. The remaining lessons are under development
and are planned for publishing in Q2.
56
Cancellation of contract
for performance review
4.3
I
n 2015 a Consultant was procured to conduct an
independent evaluation and performance review of
the GET FiT Programme. The rst deliverable under
the Terms of Reference was the First Performance
Review and Baseline Report, due in 2016. An advisory
group was assigned to review the technical quality
of the evaluation and to ensure that the design and
implementation were robust and credible and would
stand up to external scrutiny. The advisory group
comprised of representatives from KFW, the UK
Department of Business, Energy and Industrial Strategy
(BEIS) and the UK Department for International
Development (DFID). Included in this group were
evaluation specialists, economists and programme
managers.
The advisory group provided feedback to the
contracted evaluation team on their deliverables
(October 2015 August 2016), including specically
on the ‘Evaluation and Performance Review of the
GET FiT Uganda Program, Inception Report’ and ‘First
Performance Review and Baseline Report for GET FiT
Uganda’. Overall, the advisory group concluded that the
report did not meet the minimum quality standards as
outlined in the terms of reference. Although the report
was published for transparency reasons, the contract
with the engaged Consultant was cancelled. The full
report is available on the GET FiT website. Thus, the
issue of further evaluation of the Programme and how
and when this would be undertaken, remains subject
to discussion.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
57
GET FiT Knowledge transfer
4.4
T
hrough GET FiT a sizeable and diverse sample
of small RE projects are being developed and
constructed within a limited time-frame. ERA
acknowledges that this provides a unique
opportunity for highly relevant and practical on-the-
job training and has requested knowledge transfer in
areas closely linked to the implementation of the GET
FiT portfolio. The knowledge transfer will draw on the
experience of the GET FiT implementation team. ERA has
also requested technical assistance in operational areas
which are not as directly linked to the on-the-ground
implementation of the GET FiT projects, but focusing
more on strengthening the enabling framework for
RE development. The knowledge transfer is funded by
DFID through the GET FiT interconnection component.
A Concept Note outlining a range of potential
activities was prepared by ERA with support from
the Implementation Consultant during 2017, and the
following areas of knowledge transfer were selected:
1. Management of renewable energy projects
under construction.
2. Follow up of environmental & social compliance
for renewable energy projects.
3. Design optimisation for small hydropower
plants.
4. Benchmarking the costs and performance
of power producers.
5. Determination of Return on Equity in the
Uganda Electricity Supply Industry.
The training on the economic regulation components
(no. 4 and 5 above) will be implemented in Q1 2018,
with a one week training in Kampala in February.
The remaining components (1-3 above) relate to
technical, and environmental and social aspects of
developing renewable energy projects (in particular
hydropower) and will be carried out as part of the ongoing
joint GET FiT construction supervision visits conducted
by ERA and the Implementation Consultant. This will
allow the supervision team to go into greater depth
on selected issues, based on their joint experiences
from implementing the GET FiT portfolio. A process
of selecting specic subjects and activities is ongoing.
Activities will to the extent possible be combined with
the quarterly supervision visits. The activities may
include various forms of workshops, joint preparation
of papers/publications, preparation/revision of internal
ERA guidelines, seminars, presentations to broader ERA
sta, etc.
58
CONNECTING TO
THE GRID
The Challenge
5
5.1
Since commissioning of the Programme in 2013,
connection to the grid of GET FiT power plants has
emerged as the major risk to successful implementation.
The vast majority of the power plants are located in
remote rural areas, particularly in the mountainous
regions of Eastern and Western Uganda, where existing
grids, if any, were designed to supply low demand.
Additionally, the distribution grids in the project areas
are often operated by dierent concessionaires and
the evacuated power needs to be wheeled through
these intermediate networks (transmitted through a
third party network).
To facilitate full evacuation of the power plants under
development, new grid infrastructure needed to
be built and existing distribution grids suciently
reinforced. This required the eective coordination of
Government agencies, private developers, utilities, and
development partners for successful implementation.
It was also necessary to develop new standards for grid
connection and wheeling, as well as enhance regulatory
capacity to ensure compliance by all the sector players.
In 2017, the overall risk relating to grid connection
across the portfolio has increased. This is due to
continued delays in implementation of required grid
infrastructure managed by Government Agencies.
T
he success of a renewable energy feed-in tari
programme, such as GET FiT Uganda, critically
depends on the eciency of connecting new
power plants to the main grid for timely and
adequate power evacuation. Since its inception, the GET
FiT Programme has supported the Government in the
development of policies and standards for connecting
small renewable energy projects to the main grid. There
have been challenges and lessons learned. This article
highlights the challenges, mitigation measures, status
update and experiences from 2017 of grid connection
for GET FiT projects.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
59
Addressing the Challenge
5.2
I
n order to proactively address the anticipated
risks of delayed grid connection, the Government,
through the ERA, established a Joint Task Force
comprised of ERA, UETCL, Umeme and REA in 2014.
The objective of the task force was to plan for adequate
infrastructure to enable proper and full evacuation of
the proposed GET FiT generation projects, in order to
mitigate power shortages in the medium to long term
and also avoid situations of deemed energy. The task
force identied the key bottlenecks, infrastructure
requirements and estimated budgets. The Government
had previously committed to funding new lines longer
than 5 km from a project’s location to the nearest grid;
shorter lines would be built by project developers. In
all cases, developers were required to conduct detailed
grid connection studies for each project.
The work of the joint task force enabled GET FiT
development partners to identify areas of support for
the implementation of critical grid infrastructure. Some
of the grid infrastructure investments support was
the result of direct sourcing through GET FiT, such as
the reinforcement of the 33 kV networks in Western
Uganda and the upgrade of the Opuyo substation,
both supported by UK DFID. The remainder of the grid
infrastructure investments were provided by dierent
development partners as part of the wider sector
support, also benetting GET FiT projects, such as the
planned Mbale Bulambuli transmission line nanced
by KfW; and Nkenda substation upgrade nanced by
the World Bank, to mention a few.
The lead agencies in the implementation of the
infrastructure reinforcements have been REA and
Umeme for the 33 kV networks, and UETCL for the high
voltage (132/220 kV) infrastructure. ERA has played
a coordinating role and facilitated regular high level
meetings with the implementing agencies. KfW and the
GET FiT Secretariat have also maintained close follow
up with implementing agencies and developers to
ensure that grid reinforcements are well aligned with
expected project commissioning. The sections below
give an update on the status of implementation for the
dierent grid projects.
Item
1
2
3
Total investment need 22.5
Required
Intervention
Opuyo Substation reinforcement
TA Support to ERA
UETCL UK DFID 5.8
13
3.7
UK DFID
UK DFID
ERA
UETCL
Reinforcement of 33 kv networks
in Western Uganda
Project
owner
Source
of funding
Estimated
investment
need (MUSD)
60
Interventions through GET FiT
5.3
Distribution Grid Reinforcements in
Western Uganda
The technical simulations work undertaken by the
Joint Task Force revealed deciencies in the capacity
of the pre-existing 33 kV distribution grids in Western
Uganda to fully evacuate power from the planned
GET FiT hydropower projects in the area. Following
the task force’s recommendations, GET FiT proceeded
to source and secure funding from DFID to support
the government in the implementation of selected
infrastructure developments. Under this initiative, new
33 kV lines and associated gear will be constructed to
evacuate power from ve projects, namely Lubilia
4
SHP
(5.4 MW), Nyamagasani I SHP (15 MW) and Nyamagasani
2 SHP (5 MW) in Kasese, and Sindila SHP (5.3 MW) and
Ndugutu (5.9 MW) in Bundibugyo and Kabarole districts.
This initiative will therefore connect a total capacity of
close to 38 MW to the national grid.
The implementing agency for the line works is REA,
which procured a Supervision Consultant to undertake
detailed line designs and prepare tender documents
Funding sourced through GET FiT for grid infrastructure development and Technical Assistance to ERA has been
provided by UK DFID. The table below shows the considered interventions and budgeted investments, followed
by a brief status update on each as of January 2018.
for the procurement of the EPC contractors. This
activity was completed in 2017, albeit with delays. REA
subsequently launched the EPC tender in Q3 2017 to
have the lines constructed in two lots, i.e. Lot A for
evacuation lines for Sindila and Ndugutu SHPs, and Lot B
for lines to evacuate Lubilia, Nyamagasani I and II SHPs.
The best evaluated bidders for both lots were selected
in December 2017. The EPC contracts are expected to
be concluded in March 2018, with construction works
commencing in Q2 2018. The estimated construction
timeline is 12 months.
The timely implementation of the lines is critical
to the Programme. Due to extensive delays in the
procurement processes, the current timelines indicate
a heightened risk of deemed commissioning, given
that the said projects are already under development.
All the agencies concerned are working concertedly
to minimise the risk of further delays and to expedite
construction of the line. A potential risk of further
delay is the ability of the GoU to allocate the necessary
resources for timely compensations to project aected
persons along the lengths of the lines.
4
Lubilia will initially be evacuated through the existing network, but an overall upgrade of the existing evacuation line under the planned reinforcements will ensure more
stable evacuation.
Table 2 - Critical grid infrastructure investments and TA implemented under GET FiT governance
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
61
Opuyo Substation
The Opuyo high voltage substation evacuates power
from the Soroti solar power plant, and is strategically
located for the grid integration of a potential pipeline
of solar projects in the Teso area in Eastern Uganda.
The planned reinforcements include the replacement
of the current single 10 MVA transformer with two
new 32 MVA transformers and associated high voltage
equipment. The upgrade will subsequently improve the
grid reliability and provide exibility for the substation,
TA Support to ERA
The capacity building support to ERA in 2017 through
the grid connection support component (funded by
DFID) was comprised of three components, as briey
described below. Although funded as part of the grid
support initiative, these components are not restricted
to grid related issues only, but also introduce wider
strengthening of ERAs regulatory systems. Additional TA
activities supported by GET FiT which were undertaken
and completed prior to 2017 are outlined in previous
annual reports.
whose single transformer is a risk to continued
evacuation in case of failure.
The UETCL procurement processes for engaging a
supervising consultant and EPC contractor for the
project have been completed after substantial delays.
The project kick-o meeting was held in December
2017 and the substation works are expected to start in
Q1 2018 for a planned duration of 16 months.
Figure 1 - Opuyo Substation (credit ERA)
1. Interconnection Code and Wheeling Agreement: This
involved the procurement of a Consultant to support
ERA in the development of an interconnection code and
a wheeling agreement for the integration of small-scale
renewables and the wheeling of electricity through
the concession areas of various distribution and
transmission licensees. The Consultant procured was
Intec GOPA. This TA component kicked o in July 2016
and was successfully concluded in mid-2017.
62
2. Compliance Monitoring of Distribution and Transmission
Licensees: Under this TA component, GET FiT aims
to support ERA in enhancing its capacity in technical,
economic and environmental aspects of regulating
operational distribution and transmission licensees
and to establish comprehensive licence compliance
monitoring benchmarks and frameworks. The
monitoring benchmarks and frameworks will be based
on an assessment of the actual status of all individual
licences and the respective power system networks.
The consultant procured to implement this assignment
was Azorom, and completion is expected in Q1 2018.
Planned and ongoing grid investments by development
partners in the wider power sector will be important
for the eective grid integration of selected GET FiT
projects. Key among these are the Nkenda substation
upgrade and the Mbale – Bulambuli 132 kV transmission
line whose status update is summarised below. Aside
from the investments presented below, the ongoing
implementation of the Nkenda – Hoima 220 kV line,
nanced by the Governments of Norway and France,
will further strengthen the national grid in Western
Uganda and stabilise the performance and evacuation
of several GET FiT projects in this area. Additionally, the
planned 132 kV transmission grid extensions from Lira
to Arua, funded by the World Bank, and Gulu to Agago,
funded by the German Government, will strengthen the
national grid in the Eastern and Northern regions.
Nkenda Substation
The World Bank has committed to fund the upgrade of
the Nkenda substation from the current transformation
capacity of 40 MVA to 120 MVA at an estimated budget
of MUSD 16. Given that six GET FiT projects with a
combined maximum capacity of 48 MW will be evacuated
through Nkenda after commissioning, between 2017
and 2019, the upgrade should ideally be ready within
that time frame. However, according to estimates by
UETCL, the implementation of the substation works will
not be completed before 2020, which presents a risk of
deemed energy to the GoU.
3. Regulatory Information Management System (RIMS):
This TA component will support ERA to implement a
state of the art Regulatory Information Management
System (RIMS) to enhance its information collection
and processing, automate regulatory analysis and
compliance monitoring as well as an automatization of
interaction with its licensees. A RIMS will ensure that
data are collected at required intervals in a consistent
format that allows for automated data analysis and
improved eciency of regulatory processes at ERA.
The procurement of the consultant is ongoing that will
subsequently develop the specications of the system
to be acquired.
A consultant, AF Consult, was procured to prepare
detailed designs and prepare tender documents for
the EPC contractor. ERA and the System Planning
Coordination Committee (SPCC) are currently discussing
interim measures to ensure that the power plants are
adequately evacuated when commissioned.
Mbale – Bulambuli Transmission Line
The Mbale – Bulambuli transmission line will be
important for the grid integration of the Siti 1 and 2
SHPs, as well as a host of other small hydropower
projects in the Mountain Elgon area. The nancing of
the line will be provided by Germany through KfW at an
estimated total budget of MUSD 40. EU ITF through KfW
nanced the feasibility study which was undertaken
by Lahmeyer and completed in December 2017. EU
ITF through KfW nances the feasibility study which is
undertaken by Lahmeyer and will be completed in April
2018. The line is not expected to be completed before
2021.
In order to evacuate the 16 MW Siti 2 SHP, expected
to commission in Q3 2018, ERA has approved the
implementation of an interim 33 kV line from the
project to Mbale substation. The line implementation
will be led by Umeme which has undertaken eld
surveys and prepared a detailed cost estimate for the
required works. The objective is to have the line ready
in time for the Siti 2 SHP COD in August 2018.
Wider Sector Interventions
5.4
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
63
GET FiT project experiences
from 2017
5.5
S
ome of the risks of timely and adequate
grid connection across the portfolio were
realised as the rst hydropower projects
were commissioned in 2017. There were wide
variations in the ease of grid connection for the projects
commissioned in the past year. Rwimi SHP in Kasese
and Tororo Solar were connected to the grid without
delays or incident. In Tororo, line outages throughout
December 2017 amounted to only 46 minutes in total,
an indication of relatively strong grid performance in
Eastern Uganda.
We present here some of the challenges faced by
selected projects commissioned during the reporting
period. It is hoped that these experiences and lessons
learned will benet other projects yet to commission.
Muvumbe SHP
The construction of the 6.5 MW Muvumbe SHP in
Kabale was completed in March 2017 when the project
successfully synchronised to the national grid. Prior
to that, the project required the construction of a new
33 kV line to connect the plant to the existing grid,
approximately 6 km away. The line construction was
implemented by REA. However, the implementation of
the line was plagued by serious challenges that required
proactive engagements by the developer, ERA, KfW and
the GET FiT Secretariat.
The main challenge came from the local population
who demanded, through their local leadership and the
area Member of Parliament, that villages in the path of
the evacuation line be electried before the line can be
built. Indeed, line construction was halted for a while
as discussions and sensitisation of the community
were ongoing. The community was informed that the
developer’s generation licence did not give mandate
for construction of distribution infrastructure. The line
works only proceeded after assurances from REA that
distribution transformers would be installed to supply
the villages in the near future.
As more projects proceed towards commissioning,
this scenario is likely to be played out again in the
local communities. Discussions between REA and GET
FiT development partners are underway on how rural
communities close to renewable energy projects could
be electried.
Siti I SHP
The 33 kV power evacuation line for the 6.1 MW Siti
1 SHP was completed well before the project was
commissioned in April 2017. However, challenges
emerged thereafter when the line could not fully
evacuate power from the generating plant. Under
voltages were recorded at the point of grid connection
causing problems of uctuating reliability so that less
than 50% of the plant’s capacity could be evacuated.
Through the work of the SPCC, technical simulations of
the distribution network in the project area identied
the necessary interventions, including the installation
of switch-in capacitor banks and the improvement of
the protection scheme of the backbone network. The
required installations were successfully completed
by UEDCL and Umeme, with coordination by ERA. By
December 2017, the project was able to evacuate at
full capacity. The eective coordination by the dierent
stakeholders was crucial towards reaching solutions for
the network challenges faced by the Siti I and Muvumbe
SHPs. Developer proactivity was equally important in
highlighting the issues.
Nkusi SHP
The 9.6 MW Nkusi SHP is expected to be commissioned
during Q2 2018. A new 3 km line is being constructed by
REA to connect the plant to the existing grid. However,
due to weaknesses of the general distribution grid in the
project area, this grid extension will only have capacity
to evacuate a maximum of 45% of the generated power
from the project. This will result in potential deemed
energy obligations to GoU.
In order to mitigate the anticipated deemed energy,
the developer has taken initiative to solicit additional
No.
1
2
4
6
8
10
3
5
7
9
11
Project
Nyamwamba 9.2 Q1 2018 On track. Line built by Umeme
On track. Line to be built by
developer
On track. Line built by REA. Requires
upgrade of protection scheme.
Delayed. Line to be expedited
by REA
Delayed. Line to be expedited
by REA
Delayed. Line to be expedited
by Umeme
On track. Line built by REA. Requires
upgrade of protection scheme.
Potential Delay. Upgrades to
existing line needed
Delayed. Line to be expedited
by REA
Inadequate evacuation
On track. Line built by REA
7.6 Q2 2019
5.4 Q1 2018
16 Q2 2019
5.9 Q2 2019
16.5 Q3 2018
16.0 Q2 2020
4.8 Q4 2018
5.3 Q2 2019
5 Q2 2019
9.6 Q2 2018
Kyambura
Lubilia
Nyamagasani I
Ndugutu
Siti II
Kikagati
Waki
Sindila
Nyamagasani II
Nkusi
Capacity
(MW)
Expected
COD
Deemed Energy
Risk
Low
Low
Low
Medium
Medium
Medium
High
High
High
High
High
Status (January 2018)
64
Connection status – project
under construction
5.6
funding for the construction of new lines to strengthen
the grid in the project area, to facilitate full evacuation.
The preliminary line designs have been completed for
approval by the responsible agencies. If approved, the
developer will be responsible for the construction of
the planned distribution infrastructure. Discussions
with funding agencies and the GoU are ongoing to
conrm the plans. The timeline for implementation
is approximately 6 months. The proactive problem
solving by the private developer will most likely reduce
According to a study undertaken by Multiconsult in
2017, the delayed implementation of critical power
evacuation infrastructure could lead to potential
deemed energy obligations estimated at USDM 30 per
the magnitude of deemed energy obligations to GoU
due to the weak local grid. While this case is certainly
an exception, in light of the challenges currently
experienced, a discussion on shifting obligations for
grid connection away from government agencies
to developers may be interesting for the future - to
determine the advantages and pitfalls of such a policy
change.
year for selected projects. The table below highlights the
status of grid connection for dierent GET FiT projects
and the associated level of risk for deemed energy if
evacuation infrastructure is not fast-tracked.
Table 3 - Status of interconnection of GET FiT projects still under construction
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
65
New approaches needed to address
grid connection risks?
GET FiT Uganda’s approach to addressing the grid
connection risks has mainly been to assist Government
agencies to the extent possible in planning for the
required infrastructure and timelines relating to
the projects. Continuous eorts have been made to
push progress and facilitate improved planning and
coordination. Additional funding has also been solicited
for implementation of grid infrastructure projects.
While these eorts will contribute to reducing the level
of deemed energy generation across the portfolio, the
overall risk remains high due to extensive delays, as
outlined above.
Based on the experiences from GET FiT Uganda, future
roll-out of similar programmes should discuss and
consider alternative approaches to addressing and
mitigating grid connection risks. One GET FiT developer
has already taken initiative towards soliciting nancing
and undertaking construction of local network
reinforcements far beyond the regulated responsibility
of the developer
5
. While this may facilitate a more
timely connection, successful delivery of power to end
consumers will eventually require satisfactory grid
planning and operations at a regional or national level.
Adequate performance of government agencies is
vital and cannot be bypassed. Therefore, mapping and
identication of alternative models will require careful
consideration of the existing regulatory framework
and long term development targets for the sector.
Nonetheless, there should be ways to adjust current
arrangements in a given country to address grid
connection more eciently. Shifting more responsibility
for construction of grid connection to developers might
be one way to reduce pressure on government agencies
and associated delays, without relaxing the need for
sector-wide planning and coordination.
5
In GET FiT, developers with a connection distance to the existing grid of less than 5 km are required to construct their own grid connection, while connection lines exceeding
5 km would be Government responsibility.
66
THE LEGACY OF GET FiT
6
A
key purpose of GET FiT Uganda is to leverage
commercial investment in small- and
medium sized renewable energy projects in
Uganda. The Programme is widely viewed
as an emerging success, with Uganda now among the
top destinations for renewable Independent Power
Producers on the African continent. The Programme has
demonstrated the success of simultaneously targeting
the framework, legal documentation, incentives and
processes in a concerted eort to pave the way for
an entire infrastructure portfolio. The programmatic
strategy taken in GET FiT Uganda has overall been key
to the successful nancing of a signicant RE project
portfolio.
However, during the implementation of GET FiT,
electricity demand in Uganda has not yet increased
to the extent that was anticipated. With the GET FiT
portfolio well underway and the large hydropower
projects (Karuma, Isimba) reportedly on track for 2020
commissioning, Uganda is now facing a power surplus in
the medium term. From the Government’s perspective
this represents a major nancial risk, as excess power
will generate deemed energy payment obligations to
plant owners. As a result, UETCL has become reluctant
to executing new PPAs with project developers in the
wake of GET FiT, and new investments into on-grid
renewable energy has slowed down.
How do these developments aect the impact and
legacy of the GET FiT Programme? Here we discuss
the GET FiT legacy and argue that impacts are likely
to stick, regardless of shorter term uctuations in the
investment climate and political trends.
Looking back: The Ugandan
Power Crisis
In the years that followed the Ugandan power market
reforms and the 1999 Electricity Act, the newly
established ERA and the sector as a whole experienced
major challenges. Private investment in power
production and distribution did not occur as quickly or
to the degree that had been hoped for, meaning that
the sector remained dependent on state budgetary
support to maintain existing power production. This
resulted in a power crisis emerging in the mid-2000s.
In 2006 the crisis deepened due to poor regulation
of hydropower plants on the Nile and critically falling
water levels in Lake Victoria. Consequently, existing
hydropower plants could no longer generate at full
capacity. In order to help maintain a reasonable level
of electricity supply, the Ugandan Government with
support from development partners were forced to
invest in heavy fuel oil power plants. These thermal
plants provided nearly 40 per cent of Uganda’s total
electricity production in the period 2009–2011 (gure 8).
Get Fit Uganda | Annual Report 2017
GWh
3000
2500
2000
1500
500
0
2005
Large hydro (public) Therma ydro and bio (IPP)
2006 2007 2008 2009
2010
2011
2012 2013 2014
1000
Hl
GOU and KFW | Multiconsult
67
Figure 8 – Total electricity supply in Uganda by technology, 2005-2014.
In 2012 the Bujagali 250 MW hydropower plant was
commissioned, enabling Uganda to signicantly
reduce consumption of expensive fossil fuels for
electricity generation. Nonetheless, electricity demand
projections for Uganda indicated that the country
would face a steady and signicant demand increase
in the period 2013-2020. With new large hydropower
schemes on the river Nile (Karuma, Isimba) expected
to achieve commissioning around 2020, a gradually
increasing production shortfall was again anticipated
to arise within this period. How would Uganda mitigate
the risk of entering into a new power crisis, and further
investment into costly thermal power?
The introduction of GET FiT
As a response to the anticipated capacity gap, the GET
FiT Programme was introduced to bring a targeted
170 MW and 830 GWh/year of renewable energy to the
Ugandan grid, gradually commissioning in the period
2014-2017. This would increase the national production
capacity by some 20 per cent, and was expected to
displace most of the thermal production needed to
meet the expected demand increase towards 2020.
After nearly 5 years of implementing the GET FiT,
despite overall delays in its portfolio implementation,
the Programme is well on track to achieving its targets,
with nearly 60 MW of new capacity (solar, bagasse and
hydropower) installed by 2017 and another 45.5 MW
due for commissioning in 2018. To what extent GET FiT
will actually contribute to displacing thermal power still
largely depends on when the new, large hydropower
plants will start generating power, as well as the
development of electricity demand
6
.
6
So far, according to UETCL, all energy delivered by the commissioned GET FiT projects have directly contributed to displacing thermal energy production. The latter is
conrmed also by feedback from operations at GET FiT power plants; the UETCL dispatch centre generally take all the power they can get. This is due to a general supply
shortage in Uganda occurring over the past few years; although the installed capacity on the Ugandan system may be higher than peak demand, the overall plant availability
is generally signicantly lower. GET FiT power plants have thus far countered the gap between plant availability and demand, a gap that otherwise would have to be met with
thermal power. This situation is expected to be maintained until commissioning of additional GET FiT plants, and the new, large hydropower plants.
68
Modest demand increase causes
investor reluctance
With a looming power surplus commercial RE
investments are indeed showing signs of slowing
down. While Uganda was impressively rated the 2nd
best renewable energy investment destination in Africa
in 2016 by Bloomberg, the investment reluctance
was reected by the country dropping to 5th place in
2017, now by-passed by Rwanda, Senegal and Kenya.
More importantly, the overall investment climate score
dropped by nearly 30 per cent.
The fall in the Bloomberg rating can largely be
attributed to the reduction in new RE investments
following GET FiT, which is a direct consequence of
the anticipated short-medium term power surplus.
Importantly, the fall is not caused by any decrease
in regulatory performance or policy. The regulatory
framework for RE investments in Uganda is improving
by the day, with ERA working to further streamline and
standardize key regulatory aspects of RE development
and overall sector performance as we speak. In the
long term power sector development, this is far more
important than uctuations in the demand vs. supply
balance. One could also argue that developing a power
sector is a stepwise process. The inevitable chicken-
and-egg nature of electricity supply and demand makes
it challenging, particularly in a context with political
uncertainty, to maintain a continuous and perfect
balance. Whereas power generation is characterised by
large up-front investment and provides instant capacity
increase once commissioned, growth in electricity
demand is more incremental in nature. In a small
power system like Uganda this imbalance is particularly
visible. For example, the Karuma hydropower project
will likely represent more than a 50 percent increase in
installed capacity if commissioned as planned in 2020.
What will be the legacy of GET FiT in
Uganda?
Looking beyond these short- to medium term
uctuations in the overall electricity supply and demand
balance, GET FiT represents a considerable boost in
the maturity of Uganda’s power sector. The impacts
of constructing 17 small renewable energy generation
plants in a 5-7 year period go far beyond the mere power
capacity added to the grid. The overall competence lift
within government institutions and other stakeholders
is considerable. While some results can be measured
(such as number of jobs created), it is fair to assume
that there are also several benets which cannot be
measured quantitatively.
Uganda has, through GET FiT, established and tested a
solid institutional framework for development of grid
connected RE generation for the future. Whether the
Uganda demand growth requires new RE generation
investments in the short- or medium term, future
investors and developers will benet greatly from the
established institutional framework and standardisation
of procedures and documents. Sponsors will also benet
from dealing in a more experienced and competent
sector with substantially stronger institutions than
before GET FiT was implemented.
One should also keep in mind that the GET FiT projects
are built to last at least in the order of 30 years. The
signicant de-centralised power production capacity
that they provide will be a key feature of the Ugandan
power mix for decades to come. The GET FiT portfolio
will thus signicantly improve national supply security
with reduced dependency on Lake Victoria and the
Nile. It will also contribute to strengthening of the
overall power system performance through reduced
transmission losses and improved grid stability. The
eects of these technical improvements are outlined in
more detail in our Academic Corner (see below).
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
69
GET FiT ‘ACADEMIC CORNER’
Decentralised renewable energy production
- Impact on national supply security and grid stability
7
T
his article investigates the potential benets of
combining the new GET FiT distributed power
plants with the existing large centralised
hydropower stations. It also considers the
benets of combining a diverse generation mix,
including run-of-river hydro, bagasse and solar power,
with regulated hydropower.
Please note that this article only aims to illustrate the
general advantages of adding decentralized generation to
the Ugandan power mix grid in a long term perspective, but
does not document the specic impact of GET FiT projects
on the grid in its current state. This would require more
comprehensive studies, which would be more accurate
following full implementation of the portfolio. While
such studies may be undertaken in the future, this article
can provide some general insight and basis for further
discussion. The theory presented here is highly simplied
for the readability of a wider audience.
Figure 9 shows the transmission lines and substations
in Uganda that form the backbone of the country’s
power system.
70
Figure 9 - Map of the transmission lines and substations in the Ugandan power system
7
7
Energy GIS Working Group, 2017, “Transmission Lines and Substations 2017”, located at: http://www.energy-gis.ug/
Get Fit Uganda | Annual Report 2017
Demand
Frequency
50 Hz
Supply
GOU and KFW | Multiconsult
71
ABC of power system stability
7.1
I
n an electrical power system, loads
8
are switched on
and o continuously and the power system must
maintain a balance between supply and demand at
all times. The ability of a power system to maintain
this power balance is key to system stability. Electrical
energy, once generated, cannot be practically stored
within a supply grid and must be consumed the
instant it is generated in real time. Available storage
technologies involve the conversion of electricity into
other energy forms, e.g. chemical energy in batteries.
Historically, battery storage technologies have generally
been prohibitively expensive on a grid scale, though
the recent installation of a 100 MW battery system in
Australia illustrates that this might be about to change.
Power system stability can be viewed in terms of voltage
or frequency. With regard to voltage stability, the system
voltage should be maintained within acceptable limits
(±10% of the nominal voltage) under normal operating
conditions. At more than 10% deviation, the voltage
will eventually “collapse” and cause instability in the
power system. This article focuses mainly on frequency
stability.
Frequency Stability
The frequency of a synchronous power system
should be maintained as close to 50 Hz (or 60 Hz in
North and South America) as possible. A synchronous
power system is one where all power producers and
consumers are connected to each other through
transformers and transmission and distribution lines.
Figure 10 below illustrates the balance between power
supply and demand, where the balance is measured in
terms of frequency. From the gure, we observe that
an instantaneous increase in demand causes a drop
in frequency, whereas a drop in demand increases the
frequency. Excessive imbalance causes the acceptable
frequency limits to be exceeded, resulting in instability
and potential damage to important system components,
unless load shedding or other mitigation measures are
implemented immediately.
8
An electrical load is a component in the power system that consumes electrical power. Hence, the opposite of a generator, which supplies power.
Figure 10 - Illustration of the balance between supply and demand in a power system
9
9
ETH Zurich, “Price of Power System Stability”, 2016. Located at: http://www.esc.ethz.ch/news/archive/2016/11/price-of-power-system-stability.html
Generator
Turbine
Shaft
Stator
Rotor
Wicket
gate
Blades
72
Assume that at one moment, a power system is in
balance, that is, electricity generation and consumption
are equal. What happens if more loads (power
consumption) are suddenly added to the power
system, while generation remains the same? In order
to maintain the balance between generation and
consumption, the generators will compensate for the
load increase by using their rotational energy. The
generator rotation will decelerate as a result and the
system frequency will likewise drop. In order to restore
the nominal system frequency after the change in
load, more mechanical power is added to the turbines,
increasing the generators’ rotational speed, and
hence grid frequency. Generators that can increase
their generation when frequency decreases are called
primary controlled units. Not all connected generators
are primary controlled. The primary controlled units
must have sucient “spinning reserve”, which is the
It is important to understand the relationship between
frequency and the operation of synchronous generators.
Generators in a power system are directly connected
to a turbine by a shaft, and they convert mechanical
energy from the rotating turbine into electrical energy
(Figure 11). There is rotational energy stored in all
instantaneous available capacity from the online
generators.
The above scenario assumes that a load increase
triggered the frequency change. A similar course of
events will occur if a generating unit in the system stops
or fails while the consumption remains constant. Then
the remaining generators will have to increase their
generation. If the failed unit is too large, the available
spinning reserve will be insucient to cover the lost
generation. In this case the frequency will drop below
the acceptable limits and cause load shedding or black
out to protect system components. This scenario was
played out in reality on 9th January 2018
11
when the
loss of a generating unit in Kenya caused widespread
blackouts in Uganda and Kenya whose synchronous
power systems are interconnected. On the other hand,
a load decrease or generation increase will cause the
synchronous generators connected to the system, more
specically in the rotors and connected turbine shafts.
The power system frequency has a strong connection
to the rotational speed of the connected synchronous
generators. In principle, all generators in a synchronous
grid rotate at the same average speed.
10
Wikipedia. Water turbine. URL:http://en.wikipedia.org/wiki/File:Water_turbine.jpg
11
https://www.independent.co.ug/east-african-blackout-uganda-disconnected-kenyan-grid/
Figure 11 - Main Parts of a Turbine-Generator, here using a Kaplan turbine
10
Get Fit Uganda | Annual Report 2017
Turbine and Generator
Protection
Turbine Control
System Control Center Action
Generator Voltage Control
1/10 11 0 100 Time (s)
GOU and KFW | Multiconsult
73
other generators to compensate by reducing their
generation through increased rotational energy, hence
an increase in system frequency.
Power system stabilizing functions and
sequences
Primary control is not the only action performed to
stabilize a power system. Figure 12 shows the four
dierent control actions that are needed for system
stability, in the order and time scales in which they
are implemented. “Spinning reserve” described above
is part of Turbine Control, and “non-spinning reserve”
is part of System Control Centre Action. Non-spinning
reserve means power plants that are not rotating
(oine), but are ready to start when needed. In Uganda
it takes 5 minutes for hydropower and 30 minutes for
thermal power to start producing power
12
. This overall
system control is very complex but due to the dierent
time scales, the dierent control actions are virtually de-
coupled from each other and can be viewed separately
(Andersson, 2007)
13
The rst three control actions are located at each
power plant, including plant protection, voltage control
and turbine control. The overall frequency control
is done by the System Control Centre Action which is
responsible for production planning and operation, as
well as automatic safety systems in the grid, such as
load shedding. This action is performed by the System
Operator which is UETCL in the Ugandan power system.
12
UETCL GDP (Grid Development Plan) 2015
13
ANDERSSON, G. 2007. Dynamics and control of electric power systems. ETH Zurich.
Figure 12 - Dierent time scales of power system controls (Andersson, 2010)
74
14
The GET FiT hydropower projects are «run-of-river», meaning that they do not have signicant reservoir/storage capacity, and thus cannot be used for energy storage.
Benets of Distributed
Power Generation
7.2
T
here are several benets of combining small
decentralised power plants - such as the 17
small 5 – 20 MW plants being implemented
under GET FiT – within the power generation
mix. These include reduced power losses as a result
of having more generating plants with a greater
geographical coverage, improved security of supply,
and improvements in the power system stability, both
locally and nationwide.
Improved power system stability
As mentioned above, a sudden load change that is
larger than can be accommodated by the spinning
reserves within a few seconds can cause serious grid
instability. For example, consider that a major power
line supplying towns in Western Uganda from Kampala
disconnects due to a fault, and the spinning reserves of
the distributed power plants in the West are limited. In
this case, the Kampala area will suddenly have a power
surplus and the generators in this area will quickly
reduce power production to compensate for reduced
consumption, as described above. On the other side of
the faulty line, the loads of the Western grid will start
to disconnect as local load shedding starts after the
frequency goes below a certain limit. Load shedding
will continue until the loads are low enough to be
balanced out by the available local power production in
the ‘islanded’ (isolated) part of the system. Hence, the
distributed generation will continue to provide power
to parts of the islanded grid until the faulty main line
has been xed and re-connected.
When, on the other hand, the distributed power plants
produce power in excess of the load of the nearby towns,
a dierent scenario ensues. Consider, for example,
Western Uganda, where the GET FiT hydropower
plants Sindila (5.25 MW), Ndugutu (5.9 MW), Rwimi
(5.45 MW), Nyamwamba (9.2 MW), Lubilia (5.4 MW)
and Kyambura (7.6 MW) and the Nyamagasani
plants (20 MW total) are being developed. In many
cases, this area will have a power surplus, due to lots
of hydropower production located in a relatively lightly
populated area. If the transmission line supplying this
area were disconnected due to a fault, these power
plants would have sucient capacity to supply the local
demand, and the inhabitants would not notice the fault.
In addition, local power production improves the
local grid stability with regard to voltage levels. The
distributed power plants in the GET FiT portfolio are all
equipped with their own voltage controllers, which help
to control the voltage levels in the local grids. This will
contribute to improved local grid stability in many rural
areas.
Reduced power loss
Another benet of GET FiT distributed power is the
reduced power loss in power lines. In 2018, the expected
total power loss target is 18.1%
5
in Uganda. Power loss
increases with the length of the lines and varies with
the line voltage level. Higher voltage levels result in
lower losses and vice versa. Take for instance the GET
FiT supported 6.5 MW Muvumbe hydro power plant in
Kabale, South Western Uganda. Since its commissioning
in Q2 2017, the plant supplies part of the demand in
Kabale town. Therefore, it is no longer necessary to
transmit the full power required for Kabale town all the
way from Mbarara over the existing long 33 kV line. This
directly reduces the line losses. Power plants with a
greater geographical distribution generally contribute
to a large reduction of the grid power losses.
Improved security of supply
GET FiT increases security of power supply in Uganda.
Mixing decentralised run-of-river hydropower
14
and
solar power production with regulated hydropower
makes it possible to improve the utilization of stored
potential energy in the water reservoirs, like Lake
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
75
Victoria. After commissioning of the additional large
hydropower plants on the Nile, Karuma and Isimba
(totalling some 780 MW), more than 75% of power
production in Uganda will come from large Nile-fed
hydropower plants. This means that the Ugandan power
system will be increasingly exposed to hydrological
variations, making the country more vulnerable to the
potential eects of future dry periods.
The GET FiT power plants are spread across dierent
parts of the country, and thereby contribute to reducing
the pressure on Lake Victoria as Uganda’s main source
of energy. As mentioned in the above sections, they
contribute to this both through reducing losses and
stabilizing the grid. However, they also contribute to
increasing supply security by being able to displace
power production from large hydropower plants on the
Nile if needed.
For example, when solar energy is being produced
and can supply the grid in preference to regulated
hydropower, the water that would otherwise be
used for hydropower generation can be stored and
used later, either during periods when solar power
cannot be harnessed or during drier periods. In this
way, storing the water, and the potential energy, in a
reservoir is analogous to the power stored in a battery.
With respect to bagasse thermal power plants, such as
Kakira in the Get FiT portfolio, this type of generation
makes it possible to use cheap bio waste from sugar
production to produce power. This additional source of
power further contributes to balance of power sources
and complements the supply of power to the grid from
e.g. hydro and solar.
Uganda well on track with VRE approach
Solar power plants are categorized as Variable
Renewable Energy (VRE). It is benecial to have VRE’s
located in dierent geographical areas, as has been
done in Uganda so far, because dierent parts of the
country are likely to experience dierent weather
conditions at a given time. For example, it may be
cloudy in Tororo but sunny in Kabulasoke on the same
day. The total solar power production will then have
a smoother overall output, which makes VRE plants
easier to manage. In Uganda, the GET FiT solar projects,
Soroti (10 MW) and Tororo (10 MW) Solar in the East,
as well as the planned Xsabo solar plant (20 MW) in
Kabulasoke, Central Uganda, are good examples of this
geographical spread.
DONOR
Norway (NOK) 15 590 475
14 128 113
496 605
28 394 469
15 000 000
20 000 000
93 609 662TOTAL
UK DFID (GBP)
Germany BMU (EUR)
UK BEIS (GBP)
Germany BMZ (EUR)
EU ITF (EUR)
NET AMOUNT COMMITTED
(EUR)
76
FINANCIAL STATUS
8
G
ET FiT Uganda is a results-based programme
– that is, a subsidy is paid following the
successful installation of power capacity
and the delivery of power – and is therefore
dependent on predictable commitments from
sponsors to be successful. Since commencement
of the Programme in 2013, several changes to the
portfolio structure and signicant project delays have
necessitated active follow-up and exibility from all
stakeholders. This requirement has indeed also been
met by the GET FiT funders to date, enabling the
Programme to deal with any arising uncertainties and
risks in a relatively comfortable and pro-active manner.
To this end, four development partners have taken up
the challenge and provided GET FiT with the necessary
funding: Government of Norway, Government of UK
(through BEIS and DFID), Germany (BMZ, BMU) and the
EU (through EU ITF).
To date, EUR 93.6 million has been committed to the
Programme.
Funding commitments
8.1
Table 4 - Overall donor commitments to GET FiT. Net amounts are based on funding disbursed to the
Programme thus far, projected exchange rates for undisbursed funds and deduction of management
fees
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
77
Foreign exchange
rate developments
8.2
F
oreign exchange rate developments reduced
the overall budget within the nancial structure
of the Programme by approximately 13 % as
of mid-2015. Subsequently, a 1.5 million Euro
budget buer was introduced to cushion future decline
in the EUR/GBP rate until remaining disbursements
were made to KfW and converted in EUR. Reference
is made to previous GET FiT annual reports for more
details on these issues. A limited amount of donor funds
remains undisbursed at this stage, currently equivalent
to approximately 8% of the total GET FiT budget, and
are therefore still subject to forex risk. GET FiT regularly
monitors the relevant forex developments to allow for
proactive action if needed.
78
Disbursement
projections
8.3
C
ommitted disbursements from the GET FiT
Programme go towards four purposes: i)
payments to approved projects, with 50% paid
at commercial operation date and 50% paid in
the form of results based support over the rst ve years
of operation, subject to actual production; ii) payments
to consultants under the Technical Assistance Facility
for ERA; iii) advisors and consultants for the overall
management and monitoring of the Programme; and
iv) management fee to KfW.
For the disbursement projections, the main uncertainty
relates to actual COD for the various projects. Delayed
implementation of the portfolio has already shifted the
disbursement prole of the Programme considerably.
With most projects now nancially closed and under
construction, future changes in the disbursement
prole will be linked predominantly to construction
related risks. There is also some uncertainty tied to
the annual result-based payments for each project.
Since the developers will only be paid for what they
Figure 13 illustrates the actual (up to and including 2017)
and projected disbursements from the Programme.
The projections are based on the status of the project
portfolio and expected progress. The majority of
commercial operation date payments are expected
within the 2017-2019 period. Due to the provision of
results-based disbursements during the rst ve years
of operation for each project, the nal payments from
GET FiT will not occur before 2024.
are producing (with a cap at their planned average),
signicant under-production across the portfolio may
lead to accumulation of excess funding. Figure 14 shows
the relative shares of the various cost components
under the GET FiT Programme, based on current budget
reservations. Overall, approximately 10 percent of the
overall funds are tied to management, implementation
and the Technical Assistance Facility, while 90 percent
of the total commitments are expected to be disbursed
as premium payments.
Figure 13 - 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 2017
Hydro Premium
Payments
68,2 %
Consultants
6,7 %
TA Facility
1,1 %
Solar Premium
Payments
17,0 %
Bagasse Premium
Payments
7,0 %
GOU and KFW | Multiconsult
79
Figure 14 - Approximately 90 % of commitments to GET FiT are projected to be disbursed as
premium payments.
Time Between Inputs And Observable Results
Impacts On Lives And Poverty Reduction
Degree Of Direct And Measurable Inuence Of Program
OUTPUTS OUTCOMES IMPACT
1. Increased small scale RE
capacity & generation.
1. Improved private sector
investment environment for
renewable energy in Uganda.
Uganda pursues a low carbon,
climate resilient development
path, resulting in growth,
poverty reduction and climate
change mitigation.
2. Balanced portfolio of RE
techologies.
2. Improved nancial
stability of energy sector.
4. Increased number of
Ugandan national jobs.
6. Finance mobilised for
GET FiT portfolio.
3. Reduced GHG emissions.
3. Improved local grid
stability.
5. Increased capacity of ERA.
80
PROGRAMME MONITORING
& RISK MANAGEMENT
9
The GET FiT Monitoring and Evaluation framework monitors the outputs, outcomes and impacts generated by the
Programme through one or several quantitative indicators, which are collected from project developers and key
sector stakeholders semi-annually.
Programme monitoring
9.1
Table 5 - GET FiT targeted outputs, outcomes and impact
Get Fit Uganda | Annual Report 2017
OUTPUTS
Indicator
MW installed
GWh delivered to
national grid
Private investments
(MUSD) leveraged
by GET FiT
Private nance
mobilised for GET
FiT (MUSD)
Public nance
mobilised for GET
FiT (MUSD)
Number of technologies
supported by GET FiT
Net change in GHG
emissions
(Cumulative MtCO2e)
Number of commercial
banks that invest in
renewable energy with
project nance
No. of development
permits and generation
licenses issued by ERA
per year
Number of sub-regions
with GET FiT projects
Subsidy paid (excluding
capacity Charge) by
GoU for UETCL to
cover thermal
power use
GWh purchased by
UETCL from thermal
stations (2018 target)
Cost reective retail
taris in place
REFiT adjusted to be
cost-reective (%)
Number of direct
national construction
and O&M jobs created
in relation to the
power plants
Time taken by
ERA to review
generation license
for 1-20 MW RE
application
170 4
3
5
0
319
100 %
100 %
100 %
92 %
8 permits
/ 4 licenses
5 permits
/ 5 licenses
830
4
4200 6803
632
137 0.27
4
4
0
231
3 months
2,5
months
500
200
300 225
128
353
Leverage
ratio
1: 4.2
Status 2017 Status 2017
Target
2023
Target
2023
Indicator
OUTCOMES
GOU and KFW | Multiconsult
81
In the early years of Programme implementation,
the focus of the reporting was mainly on expected
results based on the current portfolio status, since
results could not be attributed at early development
stages. With a range of projects now at nancial close
and under construction, it is encouraging to present
considerable progress on a range of indicators following
a progressive period over the last two years. The logical
framework table below presents the progress achieved
over the past year
15
. For historical progress, refer to the
previous GET FiT annual reports.
Table 6 - GET FiT targets and results – status after 2017
15
Reported outputs based on projects that have commissioned or achieved nancial close.
16
Counting commissioned projects and projects with nancial close
17
Based on commissioned projects
18
Taris adjusted to be cost reective after a tari review in mid-2016. The review was carried out by ERA with technical assistance provided through the GET FiT TA Facility.
Next tari review is due in 2018.
19
Since GoU still pays capacity charges to thermal generation facilities, retail taris are not fully cost reective.
82
Risk management
9.2
R
isk management is a continuous process
running through the lifetime of a programme,
where risks are identied and categorised, and
measures introduced to reduce or eliminate
the risks. For more information and detail on the risk
matrix and methodology adopted for categorising risks
for he GET FiT Programme, please refer to earlier GET
FiT reports.
The semi-annual monitoring undertaken by GET FiT
measures progress on key indicators for the Programme.
Eectively, this contributes to identifying and
addressing risks as it helps the ERA, KfW, development
partners, and other stakeholders to keep track of
progress and see periodical development. However,
the day-to-day management of the Programme is the
primary source for risk identication and follow up.
Close communication with project developers and
power sector institutions and stakeholders, access to
key ERA sta via the GET FiT secretariat (which is hosted
by the ERA), active participation in joint power sector
planning by KfW and the secretariat and engagement
of development partners are all key arenas that enable
GET FiT to continuously identify and assess risks
to Programme implementation. This approach has
proved vital to achieve progress, as it has allowed the
Programme to proactively address and mitigate risks
across a wide range of issues and areas of the sector.
These include both nancial, legal and regulatory risks.
However, this close interaction and follow-up has also
contributed to increased management costs by KfW
and need for additional consultant support.
In terms of the ability to follow up on project specic
technical, environmental and social risks, the
supervision of construction is the key tool, focusing
on pro-active and exible support and follow up of all
projects until they reach commercial operation.
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
83
Based on the overall developments throughout 2017,
GET FiT risk management eorts are currently largely
focused within the following main areas of concern:
Grid connection remains the key risk and barrier to
reaping the full benets and impacts of the GET FiT
portfolio. Despite comprehensive eorts undertaken
by GET FiT over the past 2-3 years in the form of i)
infrastructure nance, ii) technical assistance, iii)
studies on deemed energy implications and iv) eorts
to facilitate improved sector coordination, the risk
remains high in 2017. The risk of failure to achieve GET
FiT targets due to lack of timely grid connection remains
with high probability and high consequence in 2017,
and requires continued follow up. More details on this
risk and associated eorts are found in the chapter on
Connecting to the Grid.
Project construction delays is the other main risk
towards achieving GET FiT capacity targets in a timely
manner. While some developers have shown dedicated
eorts and impressive progress on outstanding issues
(E&S or technical), others have failed to address key
issues and meet deadlines tied to the GET FiT support.
As highlighted throughout this report, GET FiT has
introduced additional construction supervision at
developer cost, and other penalty mechanisms to
limit further delays. Certain projects are still at risk of
losing their GET FiT support. The risk of further delays
occurring in 2018 is rated with high probability and
high consequence for the overall portfolio output. The
latter high rating is due to remaining projects under
construction representing a high share (more than 60
percent) of total portfolio capacity in MW.
Health, safety and environment (HSE) risks across the
portfolio have become increasingly real over the past
year, with all projects now under construction. Despite
projects being pushed on maintaining timelines, it is
absolutely crucial that this does not compromise HSE
in any way. GET FiT is not positioned to supervise or
control the quality of developers’ HSE work on a daily
basis, and therefore not formally part of the GET FiT risk
control framework. Nonetheless, GET FiT supervision
visits focus on monitoring general HSE performance
to the extent possible, discussing HSE with developers
and creating awareness around potential risks.
Key risks and ongoing GET FiT eorts
84
D
espite the many achievements and
considerable progress during the past two
years, challenges lie ahead for the upcoming
year. Several projects are still presenting
construction delays and failing to address outstanding
environmental and social compliance issues, with ve
projects likely to achieve commercial operation within
the rst half of 2019 and one project delayed until 2020.
For these projects, the continued support of GET FiT in
2018 will be contingent on the developers intensifying
eorts, achieving considerable progress on the ground,
and demonstrating a capacity and willingness to achieve
commercial operation in a timely manner.
Implementation oversight of projects during 2018 will
be critical to achieving Programme targets. Projects
will continue to be closely monitored through the
ongoing construction supervision visits. Eorts will
be maintained and intensied during 2018 to help
developers further and to bring as many projects
as possible to completion within the year. Where
appropriate, this may include increased follow up on
individual projects through additional supervision visits
and by incentivising developers through contractual
tools, such as nancial penalties in the form of subsidy
reductions.
Construction of critical grid infrastructure for power
evacuation of GET FiT projects will be key. To safeguard
GET FiT targets and ensure viable grid interconnection
for all projects, KfW and the GET FiT Secretariat will
further intensify pressure on the implementation
of components within the interconnection support
scheme. This includes the comprehensive infrastructure
reinforcements and TA support which require a high
level of coordination between all stakeholders. The
GET FiT team will support GoU entities and project
developers by facilitating joint planning and continuous
dialogue throughout the process. Continued eorts in
this regard will be critical to avoid project delays and
legal issues related to grid interconnection for the
range of projects.
If the challenges outlined above are addressed through
joint eorts by all stakeholders, 2018 indeed has the
potential to be another momentous year for the GET
FiT Programme. All of the biomass and solar technology
projects from the GET FiT portfolio are now operational,
and therefore all remaining projects under construction
are hydropower. Of these, at least ve projects are
expected to achieve commercial operation before the
end of the 2018 calendar year, adding a further
45.5 MW of installed capacity and raising the total
installed capacity of GET FiT projects to 103.6 MW. In
terms of energy output, this translates to an estimated
increase in 2018 of 202 GWh to a total energy supply to
the grid from GET FiT projects of 470 GWh. Hence, it is
expected that a large proportion of the Programme’s
aims and objectives will be realised in the form of
installed power and the supply of clean, renewable
energy to Uganda.
OUTLOOK FOR 2018
10
Get Fit Uganda | Annual Report 2017
GOU and KFW | Multiconsult
85
G
ET FiT Zambia is designed to assist the
Zambian Government in the implementation
of its REFiT Strategy which was adopted by
Cabinet in October 2017. In line with this
strategy, GET FiT Zambia aims to procure 200 MW of
renewable energy projects within the next three years.
GET FiT supports small- to medium-scale Independent
Power Producer (IPP) projects up to 20 MW, in line
with the REFiT Strategy.
The initial phase of the GET FiT Zambia Programme will
be a tender for up to 100 MW of solar PV capacity, to
be launched before the end of Q1 2018 (the pre-bid
meeting has been scheduled for 7 February 2018). The
REFiT Strategy has also allocated 100 MW of capacity
to small hydro projects. GET FiT intends to launch the
hydro tender in late 2018. Subsequent tenders could
call for other technologies including biomass and
geothermal.
In addition to diversifying Zambia’s power mix, GET
FiT Zambia aims to strengthen the Zambian power
market by encouraging private sector participation
by a wider range of developers, construction rms
and nancial institutions. In partnering with Zambian
stakeholders, GET FiT Zambia also strives to boost
institutional capacity and the policy and regulatory
framework for renewable energy IPPs in Zambia. The
German Government through KfW has committed EUR
31 million in support of GET FiT Zambia. KfW will be
approaching other development partners during the
course of 2018 to raise additional capital in support of
the Programme.
The Interim Renewable Energy Feed-in Tari Program
(Interim-REFiT) was introduced in Namibia in 2015 and
will contribute to mobilising private investments into
small-scale energy projects with a total capacity
of 70 MW. However, the Namibian Interim REFiT
Programme attracted investments mainly into solar
energy, whereas investments into other renewable
energy resources did not materialize as expected.
Namibia is particularly interested in supporting the
utilization of encroacher-bush, as more than one third
of Namibia’s surface is covered as a result of intensive
farming. The bush encroachment suppresses the
growth of grass, reduces biodiversity and reduces the
penetration of rainwater required to recharge the all-
important underground water resources.
In order to explore the utilization of encroacher bush
as a renewable resource for electricity generation,
the Government of Namibia has requested KfW to
undertake a detailed design and implementation
readiness study to develop a programme concept for a
GET FiT Programme ‘bush-to-electricity’ in Namibia. The
study is nanced by the Government of Germany and
will be concluded during the third quarter of 2018.
A Renewable Energy Feed-in Tari (REFiT) was
introduced in Mozambique in 2014. However, private
investments in renewable energy projects have not
materialized as expected. In order to operationalize the
REFiT, the Government of Mozambique has requested
KfW to undertake a detailed design and implementation
readiness study to develop a programme concept for
a GET FiT Programme in Mozambique. The study will
be nanced by the Government of the United Kingdom
and Northern Ireland. It will be carried out during the
course of 2018.
Based on an earlier commitment by the German
Government, in December 2017 KfW signed a nancing
agreement with the Government of Vietnam over EUR
14.5 million for the Renewable Energy Development
Facility GET FiT Vietnam. Additional nancing of
EUR 14 million will be requested from the EU.
Implementation details remain to be discussed with
the main Implementing Partner, the national power
utility Electricity of Vietnam, so that the GET FiT facility is
expected to be operational by the end of 2018 or early
2019.
STATUS OF GET FiT ROLL-OUT TO
OTHER COUNTRIES
11
www.gett-reports.com/2017