31 May 2013 – A stalling of the procurement process for Uganda’s proposed 600 MW Karuma hydroelectric scheme has shifted the focus in that country towards the development of portfolio of small renewable energy projects to ensure it does not return to load-shedding.
Uganda’s New Vision newspaper reports that fears of power demand outstripping supply in the country have seen authorities with the support of donor partners come up with the GET FiT programme. This would see the fast-tracking of up to 15 small-scale renewable energy generation projects with a total installed capacity of about 125 MW. These would be developed by the private sector within the next three to five years.
The GET FiT is a private investment facilitator programme jointly developed by Uganda, KfW, Electricity Regulatory Authority (ERA) and the Deutsche Bank group. The programme is supported by Norway, the UK, Germany and the World Bank.
The first request for proposals launched in April 2013 has attracted big interest among renewable energy developers, and the first projects will be selected as early as July 2013. The implementation of the GET FiT programme in Uganda should help enhance the overall enabling environment for private investment in renewable energy through improvements in the Renewable Energy Feed-In Tariff system and its application.
ERA has approved the draft power purchase agreement for the electricity purchase and sale to the Uganda Electricity Transmission Company by the renewable energy generation projects qualifying for the GET FiT programme.
GET FiT is designed to leverage more private capital into renewable energy generation projects by dealing with three key hurdles for private investments in the sector. The hurdles include low feed-in tariffs for renewable energy, high perceived off-taker risks and lack of availability of long-term commercial finance at acceptable terms and conditions.
This will be accomplished through the innovative combination of the FiT premium payment mechanism, a guarantee facility to secure against off-taker and political risks, as well as a private financing mechanism that will offer debt and equity at competitive rates.