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UN Clean Energy Subsidy in Uganda Ends

The project funded by the United Nations Capital Development Fund (UNCDF) in Uganda and supported by the Swedish government has benefited 4.2 million people since its inception in 2015.

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The Renewable Energy Challenge Fund, (RECF) a project aimed at expanding renewable access in Uganda has come to an end.

The project funded by the United Nations Capital Development Fund (UNCDF) in Uganda and supported by the Swedish government has benefited 4.2 million people since its inception in 2015.

The program aims to improve access to clean energy finance for poor and low-income people, where the use of firewood for cooking and kerosene for lighting is still highly in use.

Uganda's access to electricity is between 48 and 56 percent, while grid electricity access has grown to about 28 percent, but this still remains much lower than the recommended 66 percent.

The UN agency says the Program aims to fill in the “missing middle” in renewable energy Small and Medium Enterprise financing, by investing in early-stage and high-risk ideas.

“This in turn sets the energy SMEs on the way towards larger, more commercial-oriented capital.”

One of the beneficiaries was Fenix International, providers of solar power solutions, who bundled together cleaner energy cook stoves with solar home systems and sold them at reduced costs.

“The aim was to reduce the overall energy spend for customers, especially on charcoal, which increased their ability to pay off their solar home systems and cook-stove,” says the UNCDF. 

Other solutions include Pay-Go where the suppliers were given capital to be able to give away products on credit or hire purchase.

The UNCDF Uganda Energy Access Coordinator, Julius Magala says despite the program coming to an end, they will continue with other activities like investing in private sector companies to ensure the continuity of the drive towards higher renewable energy consumption.

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In total, 22 enterprises were supported under this program, including M-Kopa, d.light Solar, Sun King, Eco Stove, and Venture South, among others.

By the end of the program, 786,000 clean energy products had been distributed, and 8,100 tonnes of briquettes sold, in activities that also reportedly created 566 jobs.

On the environmental side, the UNCDF in their assessment says almost 197,000 tons of firewood were saved, and almost 1.5 million tons of carbon emissions were offset.

Josephine Namusaanya, whose company, Anuel Energy was one of the beneficiaries, says the funds provided enabled them to create an easier and cheaper distribution system which included enrolment of agencies around the country. 

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Anuel imports and distribute solar lanterns, plug-and-play kits, and customized solar systems for homes, commercial and institutional users.

According to Namusaanya, the distribution system built came in handy, especially during the Covid-19 lockdowns where customers found it easier to get services instead of moving long distances which had been banned.

The use of firewood and other biofuel has persisted partly because solar and other cleaner renewable solutions have taken a long to be embraced because of the initial high costs involved.  

The UNCDF, therefore, had to also help entrepreneurs who were willing to offer financing solutions to customers. 

One of them is Venture South, which introduced the model of financing from Kenya to the Ugandan market, to pay the suppliers of the energy products at once, so that the entrepreneurs can in turn serve the customers on credit.

The founder of the company, George Petty says this helped the suppliers or distributors to remain in business because they always had capital at hand.

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The beneficiaries were required to fund at least 25 percent of their venture before accessing the fund.  This was aimed at enhancing proper management, and ensuring continuity when the project time expired. 

Magala says that the project initially offered 100,000 to 600,000 dollars per beneficiary, but that this was revised after realizing that a majority of the companies needed smaller capital. 

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The Ministry of Energy and Mineral Development admits that there has been significant use of firewood and the use of briquettes increased, adding that even carbon emission arising from biofuel use has gone down.

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On the use of solar energy in Uganda the ministry says uptake has been slower than had been expected because many people still see it as expensive, especially because, on the open market, one has to pay for it at once.

People, therefore, find themselves continuing to use kerosene, firewood, and ordinary charcoal stoves.

Ssekitoleko says that while homes have embraced solar faster, institutions and factories are taking longer because of a lack of awareness of renewable energy sources. He says that solar power can actually be used for any activity that is done by the use of grid electricity.   

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