Uganda’s Hydropower Development: A Bright Future for Sustainable Energy (By J.S. Held Africa Advisory)

 

By J.S. Held Africa Advisory

At the heart of Africa’s Great Lakes region, Uganda boasts a rich landscape of plateaus, mountains, and abundant water resources. The nation is a tapestry of natural beauty, serving as home to three of the continent’s largest water bodies – Lake Victoria, Lake Albert, and Lake Edward. Along with smaller lakes and Uganda’s own section of the White Nile, they cover one fifth of the country’s surface in water. Among Uganda’s numerous natural endowments, its potential for hydropower unsurprisingly stands out as a significant opportunity for sustainable development. 

Despite having vast energy resources, including biomass, solar, geothermal, peat, and fossil fuels, Uganda’s electricity access and consumption remain low. According to the Uganda Bureau of Statistics (2019), only about 50% of the population has access to electricity, with per capita consumption at a mere 215 kWh annually, significantly lower than the Sub-Saharan African average of 552 kWh. This low consumption underscores the critical need for enhanced energy infrastructure to support economic growth and improve living standards. 

Hydropower is a cornerstone of Uganda’s energy strategy. Uganda’s hydropower journey began in the mid-20th century with the construction of the Owen Falls Hydropower Station, which developers have upgraded and expanded over the years. By 2023, Uganda’s electricity generation reached 3,874 GWh, with hydropower contributing 87% of the total mix. This dominance is expected to rise to 92% with the commissioning of the Karuma Hydropower Plant, a 600 MW facility set to significantly boost the nation’s energy capacity by the end of 2024. 

Yet developers have only exploited around 15 percent of Uganda’s hydroelectric capacity, with a technically feasible potential of 20,833 GWh per year and an economically feasible potential of 12,500 GWh per year. This clearly indicates ample room for growth.  

Uganda’s approach to hydropower is two-pronged, consisting of large-scale hydropower projects along the Nile and numerous small and medium-sized hydro sites in the western and eastern regions. These small hydropower (SHP) projects have an installed capacity of no more than 20 MW and, given their size, play a crucial role in meeting local energy demands and supporting isolated grids. There are currently 20 SHP facilities in operation, mostly privately owned and operated by independent power producers (IPPs), highlighting the growing trend of private sector involvement in Uganda’s energy sector. 

Among the notable hydropower projects is Nyagak III, a 6.6 MW plant in West Nile. Developed through a public-private partnership, this project exemplifies the collaborative efforts driving Uganda’s renewable energy sector. Genmax Nyagak Limited, a special purpose vehicle (SPV), developed Nyagak III. The Government of Uganda and a strategic consortium comprising DOTT SERVICES LIMITED and Hydromax Limited formed the SPV, in which they respectively own a 30% and 70% share. 

Genmax Nyagak is set to commission the plant by the end of 2024. DOTT SERVICES LIMITED led the project’s construction. The company’s clients know it for its expertise in civil works, the management of electromechanical works, and of hydromechanical works executed under EPC contracts. Tata Consulting Engineers serves as the engineer for the project construction. The project’s unique features include a concrete dam with a desilting basin, a 1.3 km steel water conduit system, and a powerhouse accessible through challenging terrain, ensuring efficient and reliable power supply to the grid.  

Once commissioned, Nyagak III will supply the entire West Nile region along with Nyagak 1 and will eliminate any need for thermal power generation. Producing power at USD 5.74 cents per kWh, electricity from Nyagak III is also the cheapest among mini hydropower projects.  

Uganda’s commitment to expand its hydropower capacity is evident in the identification of 59 mini hydropower sites with a potential of about 210 MW. These sites present opportunities for isolated grids and grid-connected projects, further promoting energy access across the country. The government’s Renewable Energy Feed-in Tariffs (REFiT) policy encourages private investment in SHP and other renewable energy projects. This fosters a favourable environment for sustainable development, aligned with the National Development Plan’s emphasis on the critical role of renewable energy in achieving economic transformation and improving living standards for all Ugandans. 

The sector is therefore poised for significant growth, driven by strategic investments, public-private partnerships, and a commitment to harnessing renewable energy resources. The development of hydropower projects like Nyagak III highlights the potential for local and regional energy solutions, contributing to Uganda’s vision of a sustainable and energy-secure future. 

Distributed by APO Group on behalf of DOTT Services Ltd.

Media contact: 
africaadvisory@jsheld.com 

About Africa Matters Limited, a part of J.S. Held:
Established with the aim of supporting investors and companies operating in Africa, internationally, Africa Matters Limited is a strategic advisory firm at the forefront of promoting the continent as a place in which commercial activity could result in both attractive financial returns and a positive development impact.