EU unveils sh18.5b funding for renewable energy in Uganda

BUSINESS | RENEWABLE | ENERGY 

KAMPALA – The European Union (EU) has committed Euro5m (sh18.5b) to extend renewable energy support and electricity services to underserved communities in Uganda with immediate effect.

EDFI ElectriFI, the Electrification Financing Initiative funded by the EU launched the facility to cater to Uganda according to Lennart Deridder, Acting Head of Cooperation, EU Delegation.

Speaking at the launch of the 3-day Renewable Energy Conference 2022 (REC22) taking place at Speke Resort Munyonyo on Thursday, Lennart said in December 2020, the EU and EDFI ElectriFI agreed on establishing a dedicated window for Uganda, with a specific funding package of Euro5m, to be invested in renewable energy companies active in Uganda.

“This financing comes in different financial instruments, there will be a commercial aspect, but obviously it comes from the donor community with a component of grant and also will help in accessing extra funding,” he said on the sidelines with the New Vision.

Lennart explained that ElectriFi is an impact fund bridging the financial gap in terms of equity, quasi-equity, and debt to private companies investing in rural electrification, commercial and industrial captive power, productive use of energy, e-mobility, and independent power producers, amongst others.

The initiative was established in partnership with European Union Delegations and host governments, ElectriFI Country Windows offer dedicated funding for selected countries, in line with national objectives.

This will enable Uganda’s capacity to usher in its electricity-generating potential and step up its efforts to mobilize renewable energy resources while tapping into private-sector funding.

“We are discussing with the government to develop a broader scope for different private sector initiatives in Uganda that still require additional funding to those who can apply for the facility,” he explained.

This support provided by the European Union will contribute to the efforts to unlock significant economic, social, and environmental development opportunities and to tackle various challenges such as the loss of forests, biodiversity, and soil fertility due to the massive use of charcoal.

In the last 5 years, the EU has set up a program to support Uganda’s energy sector worth more than 100 million EUR that – in a Team Europe Approach together with its Member States – has leveraged an additional EUR1b. 

However, Brian Isabirye, the Commissioner of Renewable Energy in the Ministry of Energy and Mineral Development said that there is a need to build a homogenous ecosystem in renewable technologies.

“Technologies are still lacking and there is a need for intervention because we must demonstrate that this technology works and come up with innovative ways to attract investors,” he said.

Uganda is richly endowed with renewable energy resources. The total estimated potential is about 5,300 MW of electricity generating capacity.

This is equivalent to 5 nuclear power plants. These resources, however, remain largely unexploited.

EU lists Uganda among the emerging economies embracing the need for transition to not only halt CO2 emissions in the context of the fight against Climate Change.

Last year, the EU launched a new European strategy to boost smart, clean, and secure links in digital, energy, and transport sectors and to strengthen health, education, and research systems across the world.