Money

4 May 2012 – CIRE Uganda, a company that is looking to develop a 4.0 MW grid connected solar photovoltaic (PV) facility in Uganda with a 20 year power purchase agreement (PPA) is seeking US$3.75 million in funding for the project. The total capital expenditure of the project is expected to be US$11 million.

The US$3.75 million of funding is required in two tranches, these being US$500,000 of development finance followed by US$3.25 million in equity finance (based on a 70/30 debt equity split). Indicative financial modelling, based on US$2.5 million per MW, and insurance at 2% gives a project IRR of 24% and an equity IRR of 55%.

The freehold of a 25.3 acre site has been purchased by a company shareholder, and a 100 year lease agreement granted to CIRE Uganda. The site, six kilometres from the town of Tororo Uganda, is adjacent to a 26 MW thermal power station, and has connectivity via a substation approximately 1,000 meters away.

The site is flat, has no horizon shading, and is unencumbered and free of any resettlement issues. Traditional PV technology allows for a 4.0 MW project on this site. The company has identified a second site adjacent to the one purchased which will allow for a further 3.5 MW which is available. In addition, CIRE has been investigating alternative new PV technologies that would allow for a 7.5 MW project on the existing site without the need for expansion. However, as this technology has not been previously utilised the company will fully evaluate the risks and benefits with its partners during the project financing phase.

Uganda is a fast developing economy and since 2005 its economic growth has averaged 7.2% annually. However, the country continues to experience an extreme energy deficit with a shortage of some 250 MW a year. The state owned power company is offering a solar PV feed-in tariff of US$362/MWh via a 20 year PPA.

The state power company has confirmed that the current transformation capacity at Tororo main substation is two by 15/20 MVA transformers equal to 40 MVA and that the peak demand at the node as of end of April 2011 was 26 MW. As such the site has spare capacity.