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Project Development Programme East Africa

Target Market Analysis

Uganda‟s Solar Energy Market

www.renewables-made-in-germany.com

Target Market Analysis

Uganda’s Solar Energy Market

Authors

Konserve Consult:

Abdalla Kyezira

Integrated Energy Solutions (IES):

Mark Hankins

Anjali Saini

Paul Kirai

November 2009

Editor

Gesellschaft für technische

Zusammenarbeit (GTZ) GmbH

On behalf of

German Federal Ministry

Of Economics and Technology (BMWi)

Contact

Gesellschaft für technische Zusammenarbeit (GTZ) GmbH

Potsdamer Platz 10, 10785 Berlin, Germany

Regine Dietz

Daniel Busche

Tel: +49 (0)30 408 190 253

Fax: +49 (0)30 408 190 22 253

Email: [email protected] Web: www.gtz.de/projektentwicklungsprogramm

Web: www.exportinitiative.bmwi.de

This Target Market Analysis is part of the Project Development Programme (PDP) East Africa. PDP East Africa is

implemented by the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) on behalf of the German Federal

Ministry of Economics and Technology (BMWi) under the Export Initiative Renewable Energies. More information about

the PDP and about renewable energy markets in East Africa: www.gtz.de/projektentwicklungsprogramm

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Target Market Analysis: Uganda‟s Solar Energy Market IV

Contents

1 Status Quo of the Solar Sector in Uganda .................................................................. 1

1.1 BRIEF SOLAR SECTOR OVERVIEW .................................................................................................. 1

1.2 MAJOR MARKET SEGMENTS ............................................................................................................... 1 1.2.1 The Solar PV Market ........................................................................................................ 1

1.2.2 The Solar Water Heater Market ....................................................................................... 4

1.3 LOCAL CAPACITIES .................................................................................................................................. 5 1.3.1 Solar PV Capacity ............................................................................................................ 6

1.3.2 Solar Water Heating (SWH) Capacity .............................................................................. 6

2 Market potentials .......................................................................................................... 7

2.1 OVERALL SECTOR OUTLOOK ............................................................................................................. 7 2.1.1 Solar PV ........................................................................................................................... 7

2.1.2 SWH ................................................................................................................................. 8

2.2 UNDEVELOPED MARKET OPPORTUNITIES .................................................................................. 8 2.2.1 The Household PV Market ............................................................................................... 8

2.2.2 The Institutional PV Market .............................................................................................. 9

2.2.3 Solar Hybrid PV Systems and Telecommunications ....................................................... 9

2.2.4 The SME Commercial PV Market .................................................................................. 10

2.2.5 Solar Water Heating ....................................................................................................... 10

2.2.6 Large Scale and Grid Connected Solar Applications .................................................... 11

3 Solar- specific regulation and framework ................................................................. 14

3.1 POLICIES AND REGULATIONS ......................................................................................................... 14 3.1.1 Government Institutions for Solar Energy in Uganda .................................................... 14

3.1.2 Standards and Code of Practice .................................................................................... 14

3.2 APPLICABLE PUBLIC SECTOR SUPPORT ................................................................................... 15

4 Business partners and competitors .......................................................................... 16

4.1 OVERVIEW OF KEY SOLAR MARKET PLAYERS ....................................................................... 16

4.2 OVERVIEW OF MAJOR AND/OR MOST EMBLEMATIC SOLAR PROJECTS .................. 21

Target Market Analysis: Uganda‟s Solar Energy Market V

Summary

Uganda‟s solar market has experienced steady growth since 1994 and currently has approximately 1.1

MW of installed solar PV capacity with over 30 companies operating in the PV and thermal

marketplace. The PV market that has been encouraged by Government projects and donor support

within the institutional (especially rural) sector and household solar systems, whilst solar water heating

is in its infancy.

Opportunities within the PV sector are underlined by an ambitious target by the Government to supply

61% from a current 4% of total consumed energy from renewable sources by 2017. Solar shall be a

component but a target is not specified. The greatest potential is identified in household small

systems (55 MWp of a total 70MWp) but to be realised supporting credit and financing facilities are

key. Households offer the best potential in solar water heating.

The Rural Electrification Agency publishes subsidies and targeted approaches to encourage PV

implementation, and has worked with the private sector, in co-operation with the World Bank, through

the Energy for Rural Transformation initiative for cost-sharing and market development.

Target Market Analysis: Uganda‟s Solar Energy Market VI

List of Acronyms

BOS Balance of Systems (non PV components of systems)

BTS Base Transceiver Stations

BUDS Business Development Services

ERT Energy for Rural Transformation

ICT Information Communication Technology

IREMP Indicative Rural Electrification Master Plan

kWp Peak kilowatt

MFI Microfinance institutions

MWp Peak megawatt (solar PV unit)

NGO Non-Government Organisation

PV Photovoltaic

PVTMA Photovoltaic Targeted Market Approach

REA Rural Electrification Agency

SHS Solar Home Systems

UETCL Uganda Electricity Transmission Company Limited

Target Market Analysis: Uganda‟s Solar Energy Market VII

List of Tables

Table 1: PV Market Segmentation ........................................................................................................... 2

Table 2: Typical PV system prices .......................................................................................................... 3

Table 3: Local Solar Energy Capacity in Uganda .................................................................................... 5

Table 4: Major Solar Water Heater Suppliers in Uganda ........................................................................ 6

Table 5: Overview of Solar PV market potentials .................................................................................... 7

Table 6: Potential solar thermal market demand in Uganda ................................................................. 11

Table 7: Summary of the undeveloped market opportunities ................................................................ 12

Table 8: Overview of Key Solar Market Players .................................................................................... 16

Annex:

Table 9: Subsidies from REF for Rural Electrification ........................................................................... 22

Table 10: Regional Equity Distribution .................................................................................................. 22

Table 11: Insolation in Busia, Uganda ................................................................................................... 23

Table 12: Insolation in Fort Portal, Uganda ........................................................................................... 23

Table 13: Insolation in Gulu, Uganda .................................................................................................... 23

Table 14: Insolation in Hoima, Uganda ................................................................................................. 23

Table 15: Insolation in Kabale, Uganda................................................................................................. 24

Table 16: Insolation in Kampala, Uganda ............................................................................................. 24

Table 17: Insolation in Iganga, Uganda ................................................................................................. 24

Table 18: Insolation in Jinja, Uganda .................................................................................................... 24

Table 19: Insolation in Kasese, Uganda ................................................................................................ 24

Table 20: Insolation in Kitgum, Uganda................................................................................................. 25

Table 21: Insolation in Lira, Uganda ...................................................................................................... 25

Table 22: Insolation in Mbale, Uganda .................................................................................................. 25

Table 23: Insolation in Mbarara, Uganda .............................................................................................. 25

Table 24: Insolation in Tororo, Uganda ................................................................................................. 25

Target Market Analysis: Uganda‟s Solar Energy Market 1

1 Status Quo of the Solar Sector in Uganda

1.1 Brief Solar Sector Overview

With an average daily insolation of 5-6kWh/m2, much of Uganda has adequate sunlight throughout the

year to support a solar energy market. Geographical features such as in the mountainous regions

negatively affect some areas.

It is estimated that about 1.1 MW of solar PV power is installed throughout the country. This includes

both institutional and solar-home systems with the former accounting for a greater portion of that

installed capacity. The solar thermal (solar water heating) market is still only in its infancy.

The solar PV market in Uganda has steadily grown over the last 15 years with new players entering

the market that include foreign investors. While ten years ago there were a handful of solar companies

mainly engaged in institutional solar PV installations, there are now over thirty companies (see section

4.1) involved in the solar business (both PV and thermal). The market is in a state of transition where

different players are yet to find their optimum servicing levels within the market.

The historical growth in the market is accounted for by five key components.

Conducive regulatory policies that encourage investment and trade in the solar sector (section

3.1)

Government projects that specifically promote the use of solar in rural electrification (see

section 3.2)

The demand for reliable electricity and modern energy services by an expanding middle-

income society

The growth in the telecommunication sectors

National awareness programs that are facilitated through donor support

The solar thermal business in Uganda is relatively small in comparison to solar PV. It is still at a

nascent stage with a few players. Growth in this subsector is slow because of the limited effort that has

been put towards creating awareness and a lack of a clear government policy intended to support

growth of this sector. As well, initial investment costs are still comparatively high and there are still

limited consumer options.

1.2 Major Market Segments

1.2.1 The Solar PV Market

Institutional public procurements account for the biggest portion of the installed solar PV systems,

usually project or donor supported through government. The applications are mainly in the following

sectors: Health, Water, Education and Local Government. An on-going World Bank funded rural

electrification project, Energy for Rural Transformation (ERT), is currently the main driver behind most

of the public procurements and the number of these is expected to grown in the next four years as a

direct result.

The Solar Home Systems (SHS) market is one of the biggest areas for commercially driven solar PV

business. The ERT program also provides support here also under a strategy that has been referred to

as the PVTMA (Photovoltaic Targeted Market Approach).


The Telecommunications and ICT sector is another key PV market demand segment. The

applications in this segment include small offices (in public institutions and commercial operations)

which will require power ranging from 0.5 – 5kWp, ICT training centres that typically consume about

10kVA and base stations and repeater sites (VHF, UHF and cellular) for data, video and voice

communication which typically require about 15kWp per site.

Table 1: PV Market Segmentation

1

Sector Application &

Applied

Technology

Market driver Est.

Installed

Cap

(KWp)

Implied

Financial

Volume

(US$)

Degre

e of

Comp

etition

Educatio

n (Public)

Basic electricity supply

(mainly lighting) for rural

off-grid boarding schools in

dormitories, classrooms,

offices and staff houses

Projects driven

through government

(e.g. ERT)

Donor funding through

NGOs and

international aid

agencies

Private entrepreneurs

who own schools

90 $ 1,800,000 High

Health

(Public)

Electricity supply for lighting

and medical equipment.

Projects driven

through government

(e.g. ERT)

Donor funding through

NGOs and

International aid

agencies

Private Clinics

120 $1,600,000 High

Refrigeration for drugs and

vaccines.

Basic electricity supply for

staff houses.

HF communication.

Communi

cation

Powering Telecom BTS

and Link sites.

Telecom service

providers

250 $5,500,000 High

Powering remote tele-

centres

Internet Service

Providers

40 $800,000 High

Water

and

Sanita-

tion

Water Pumping for

community water supply

Projects driven

through government

(e.g. ERT)

250 $5,400,000 High

House-

holds

Basic household electricity

supply. Specifically:

Lighting and relatively small

household appliances.

Rural/ remote

households

PV technical providers

Micro finance

Institutions

SACCOs

Projects through

government

200 $4,000,000 Moder

ate

Hybrid backup power

supply for urban

households

Urban households

PV technical providers

100 $2,000,000 Moder

ate

1 Source of information includes market research through discussion and working with various solar PV technical

providers, experience and knowledge; the Indicative Rural Electrification Masterplan; discussions with technical

personnel at MTN and UTL and the Ministry of Energy and Mineral Development. (See Annex 5 for case

studies of Household systems)


Public

Utilities

Street Lighting Local municipalities

through local

government

10 $150,000 Low

Tourism Basic electricity supply

(mainly lighting) for rural

lodges and hotels.

Rural entrepreneurs 50 $1,000,000 Low

SME Electricity supply for small

productive business

applications: mobile phone

charging; barber shops,

grocery shop lighting and

rural video entertainment

halls.

Rural entrepreneurs 7.5 $150,000 Moder

ate

Fish farming and breeding

electricity supply for

powering water pumps and

pond water filters

Fish Farmers 5 $100,000 Low

TOTAL 1,122.50 $22,500,000

The biggest application in the Solar PV sector is for standalone PV systems and in recent years there

has been a steady growth of the power backup sector. This is mainly applied in the urban centres of

Kampala and Entebbe where the grid electricity supply is available but characterised by unreliability

and poor quality electricity; it is therefore a choice of convenience

There is a surplus of demand for the small size PV systems and products ranging from 10W – 50W.

Typically, a solar PV system in this range costs between US$ 12.00 and US$ 16.00 per Watt peak.

However, this surplus situation is only created when there is end-user financing in form of credit,

therefore affordability does not always meet the demand.

The prevailing market conditions in the PV sector are:

Ease of importing solar PV products.

Products (including BOS) are exempted from taxes.

There are no significant entry/ exit barriers;

Most of the firms tend to maximise profits with the Watt Peak of a unit module reaching the end

user at about US$ 4.8 – US$ 5.0.

The vast range of products both in quality and capacity keeps prices competitive for the consumer.

Table 2 below is an indication of typical prices within a range of different PV capacities (often there is

no standard price because this depends on the product quality, design and supplier).

Table 2: Typical PV system prices2

System Description Average

Size

Cost (US$)

Wp Lower Upper

Solar Home Systems

Micro Systems (Lanterns) 5 80 140

One Light & Phone Charging/ small transistor radio 10 120 180

2 light and radio system 20 210 280

2 Data is based on sales information from four solar system integrating firms (Incafex Solar Systems Ltd; Solar

Energy Uganda Limited; Power Options and Power & Communication Systems).


4 light system or higher 50 700 1,000

75 1000 1,450

Larger systems (inverter or hybrid) 150 1800 2,800

In pricing solar systems different components account for the total system cost along these guidelines:

Solar PV modules account for 30% - 45%

BOS (includes the battery bank, Charge Controller, Cables and Accessories) account for 45% -

60%

5% - 10% for installation and commissioning.

Predominant Operator Models

In the Solar PV sectors, there are six distinct business models, but it is common that a single company

will apply two or three of these models in its business implementation for an assured market of

products. (See Appendix 4 for examples of best practice models and operators).

(i) Product Franchising: Suppliers identify rural based dealers to promote a product that they supply.

In most cases there is direct cash exchange between the dealer and the supplier. The model

developed from a loose relationship with limited trust between the dealer and the supplier,

however the user will usually know the dealer as a local community member. In some cases, if

the dealer is consistent and a relationship grows, they may get limited quantities of products on

credit.

(ii) Brand Franchising: A rural based dealer is assisted to promote the suppliers‟ brand. The supplier

will give marketing support to the dealer to promote their product and a limited quantity of stock in

form of credit. An example would be traders in electrical accessories.

(iii) Hire Purchase: The supplier or system integrator creates a specific solar product and promotes it

in a group of common income earners, which are usually rural based civil servants, farmers‟

groups or clustered communities. This model requires a high quantity of stock, a good financial

resource and a network of community-based agents to assist in promotion and collections. A

typical organisation that promotes this type of business model is Solar Energy Uganda Limited.

(iv) Microfinance institutions (MFI) and SACCOs: This is one of the most dominant models of selling

Solar PV Systems of late. In some cases the MFI simply acts a conduit of collection and benefits

by charging an interest on the system without actually paying for the solar product to the supplier.

This model has become very popular; the government is promoting its end-user subsidy through

this approach in Post Bank and FINCA

(v) Direct off-the counter sales: The clients include end-users, dealers and system integrators. All the

solar supplier companies that have any basic stock will do a direct sale.

(vi) Bids and Tenders: This is most applicable through projects. Periodically government and large

donor institutions advertise project-specific procurements. There are firms that specialise in the

bids and tenders to run and most firms usually participate in partnership with international

suppliers.

1.2.2 The Solar Water Heater Market

The solar water heater market in Uganda uses a variety of technologies. Most providers utilise flat

plate collectors. In the domestic market, passive solar water heater (heaters that rely on gravity and


the tendency for water to naturally circulate as it is heated) installation approaches are used. While in

the larger hotels, active solar water heater installations are applied using circulatory pumps.

Indirect solar water heaters are mainly imported from Australia. Solahart is a well-known market brand

supplied by one of the leading distributors of these products. Two other companies supply direct water

heaters from Israel and assemble the collector in Uganda.

There are also other heaters imported from China, Austria and Turkey. The most common technology

from China is the evacuated tube. Most of the domestic solar water heaters are supplied with

separate water tanks.

1.3 Local capacities

The solar market is generally characterised by relatively small solar firms with annual turnovers

ranging from US$100,000 to US$ 3,000,000. Potential consumers are not well educated or informed

about the products. The level of education is limited to knowledge of solar as an alternative energy

source. However, there is limited knowledge on application. It is common that potential consumers will

be unable to distinguish between PV and thermal applications.

Table 3: Local Solar Energy Capacity in Uganda

General Strengths General Weaknesses

Partner Companies Can do basic installation,

maintenance and design of

household PV systems

Limited experience in large solar

PV installations. This is usually

related to the technical capacity.

Informal training ground for

general technicians and

plumbers into solar experts

PV companies cannot compete

with telecom companies for fairly

well qualified engineers and

technicians because of their low

turnovers and therefore pay.

Good collaboration among each

other despite being competitors

Low advertising budgets and

therefore use poor marketing

skills

Quite knowledgeable about the

market (especially the rural

market).

Target only local market yet there

is a vast market around the

country Uganda

Most lack focus in terms of

business models and target

markets hence spreading too thin

Craftsmen and

Contractors

Offer their services in the rural

areas

Poorly equipped with tools and

general tendency not to use tools

well or effective

Support the promotion and

awareness about solar PV

Limited knowledge hence usually

bad system installations and

designs

Good at individual marketing

Capacity Building

programs

Through projects a few

consulting firms have developed

good training curriculum

Limited follow-ups of training

programs that are project driven

Are usually focused on specific

subjects and are short hence

No syllabuses focused on solar

PV training in the curriculums


maintaining business operations

Limited qualified trainers.

Project driven as they are usually

expensive and individual private

companies cannot afford to do

invest in training

Education system quite traditional

and is not yet open to new energy

sources

1.3.1 Solar PV Capacity

On the supply side, the solar PV subsector can be divided into three distinct categories:

Distributors, mainly comprised of foreign investors, there are very few local companies in this role.

Some distributors represent specific manufacturers while the others are general distributors

representing various manufacturers from Europe, India, China and the USA.

System integrators form the majority of the local solar companies combining their trade with some

small importers (this is usually related to large projects). However, the bulk of their products are

locally procured from the larger locally based distributors that are mostly based in Kampala and

target large system installations. Besides solar PV they are also engaged in the power backup

business.

Dealers and installers that are typically rurally based but loosely linked with the city based local

companies. Their biggest target market is the stand-alone solar home systems market.

The recent growth in the market has further attracted a couple of solar consulting businesses. These

are involved in offering engineering services (design and installation), training and solar market

business development.

1.3.2 Solar Water Heating (SWH) Capacity

The SWH sector has fewer companies operating. There are three leading companies in competition

with all the products imported; these include Solar Construct, Balton and UltraTec. Solar Construct is a

Danish/ Ugandan joint venture that has a unique model in that it sources its tank, pipes and panel from

different parts of the world.

Solar water heaters are still a product for the rich and most applied in the rich urban centres of

Kampala and Entebbe. In all cases this product has to be paid for on a cash basis. The cost of a Solar

Water heating system is based more on the water quantity heated.

Table 4: Major Solar Water Heater Suppliers in Uganda

Supplier

name

Balton

UltraTec

Solar Construct

Adress P.O.Box 852

Kampala, Uganda

Tel.:+256 312 502 500

Attn: Mr. Zeev Shiff

P.O.Box 4520

Kampala, Uganda

Tel.:+256 414 501 620

Attn: Mr, Abhay Shah

P.O.Box

Kampala, Uganda

Tel.:+256 414 341 974

Attn:

Tank Chromagen – Israel SolarHart – Australia Turkey

Solar Plate Chromagen – Israel SolarHart – Australia Batec – Denmark

Capacities/ Cost Cost Cost


Panel area UGX US$ UGX US$ UGX US$

120L/1.9m2 2,000,000 952.38 - - - -

150L/ 2.2m2 2,300,000 1,095.2

4

- - - -

180L/ - - 3,230,000 1,538.10 - -

200L/2.6m2 2,800,000 1,333.3

3

- - 2,900,000 1,380.95

300L/4.4m2 4,000,000 1,904.7

6

4,800,000 2,285.71 4,900,000 2,333.33

The SWH sector is purely a cash market with hardly any rural market players. The selling model is an

off-the counter model. Most of the solar water heaters‟ dealers have external plumbers who they work

with to assist in the installation of these products. In most cases, failed performance of the Solar Water

Heater is a responsibility the suppliers always account to poor plumbing. While this may be true, it

becomes a challenge for the client in the event that the system does not work that they will get

support.

2 Market potentials

2.1 Overall Sector Outlook

By way of background, the government of Uganda has initiated a renewable energy policy with an

overall goal of increasing the use of modern renewable energy, from the current 4% to 61% of the total

energy consumption by the year 2017. The most applied renewable energy technologies in Uganda

are the micro-hydro. In this national target, it is not clear what percentage solar technologies are

expected to contribute in terms of consumption, however, it is anticipated that the combination of

Photovoltaic and Thermal applications will account for 2.5% of total consumption.

2.1.1 Solar PV

Uganda‟s potential market for solar PV is estimated at almost 70 MWp (Table 5). Over the long term,

the commercial SHS market is seen to have the largest potential. The telecom systems market is also

quite large with over 800 off-grid BTS and transmission sites and most ready through a project

approach that combines turnkey systems with system modifications.

Table 5: Overview of Solar PV market potentials

3

Sector Application Estimated

Potential

(KWp)

Estimated

Financial

Volume (US$)

Education Basic electricity supply (mainly lighting) for

rural off-grid boarding schools in dormitories,

classrooms, offices and staff houses

450 9,000,000

Health Electricity supply for lighting and medical

equipment

1000 20,000,000

Refrigeration for drugs and vaccines

Basic electricity supply for staff houses

HF communication

Communication Powering telecom BTS and link sites 1,500 33,000,000

3 Source IREMP (Indicative Rural Electrification Master Plan)


Powering remote tele-centres 260 5,200,000

Water and

Sanitation

Water pumping for community water supply 600 12,960,000

Households Basic household electricity supply.

Specifically: lighting and relatively small

household appliances

55,000 1,210,000,000

Hybrid backup power supply for urban

households

10,000 200,000,000

Public utilities Street lighting 90 1,350,000

Tourism Basic electricity supply (mainly lighting) for

rural lodges and hotels

200 4,000,000

SME Electricity supply for small productive

applications: mobile phone charging; barber

shops; grocery shop lighting and rural video

entertainment halls

500 10,000,000

Fish farming and breeding electricity supply for

powering water pumps and pond water filters

200 4,000,000

TOTAL 69,800 1,545,510,000

Obstacles/ Constraints

Incomes in the rural areas are dependent on agricultural activities. Such income is seasonal and

sometimes not guaranteed. This means that affordability for farmers in rural areas is seasonal.

Currently feed-in tariffs and power purchase agreements are negotiated on a case-by-case basis.

This increases transaction time, costs and leads to low investor turn out.

Recommendations to German RE enterprises

Creating partnerships with local enterprises can ease the cost of market entry and further ease

access to the market.

2.1.2 SWH

The solar water heating sub sector is mostly located in urban centres where consumer electricity costs

are among the highest in the world (US$ 0.21/kWh). Such costs justify replacement of internal electric

water heaters with solar water heaters. Potential in the commercial sector (hotels, restaurants) is also

high, despite the bundled tariff s that makes electricity slightly cheaper compared to households

(commercial tariffs are US$ 0.17/kWh).

2.2 Undeveloped Market Opportunities

2.2.1 The Household PV Market

The current government policies (described further in section 3) allow for market growth. Most solar

products are zero rated in terms of taxes and duties.

While a very large number of households may be able to afford a micro solar PV systems, the financial

value attached to these systems is less than 45% of the overall market potential for households,

meaning that systems above 50 Wp are most interesting in terms of potential turnover.

A few key statistics for potential market expansion:


Up to 60% of the rural households can afford micro-solar systems of 2-20W (lanterns, phone

chargers, radio systems).

10% of the rural population can potentially afford medium to larger SHS PV systems (50Wp –

150Wp).

30% of the rural households would be considered too poor to afford a solar PV system.

Through the World bank funded ERT program (implemented through the Rural Electrification Agency,

REA), incentives have been put in place to bring down PV costs for end-users. This initiative was

started in 2002 and provides a direct subsidy to the end-users through rural based micro financing

institutes of US$5.00 per Wp (with a maximum system size of 50Wp).


The Solar Home Systems Market is not guaranteed without substantial effort in marketing and use

of creative methods of making solar PV more affordable through suitable financing schemes.

Financing institutions have a considerably importance in assisting interested households to access

solar PV systems. It is therefore important to have links and association, at rural level, with the

financing institutions.

2.2.2 The Institutional PV Market

The institutional market in Uganda is driven by national procurement projects. There are a wide

variety of opportunities through national projects in the water, health and education sectors. These

sectors are being promoted specifically through the World Bank funded Energizing Rural

Transformation (ERT) project that has recently scaled up and is just entering its second phase. In this

phase, there is an opportunity for many off-grid solar PV installations for rural boarding secondary

schools and health centres that will be procured through a bidding process.

In the national programs, there is a market potential of close to 5MW in solar PV driven through the

ERT project initiatives with associated business opportunity for maintenance, design and training to

support this market area.


For an investor to have immediate impact on the ground, work with in joint venture with the smaller

local firms that are usually engaged in the business as system integrators and have a full

understanding and experience of the market. Most of the procurement (in case of international

bidding) conditions require such a local presence.

Local companies should be seen as partners, however, most of the bids are based on

international procurement standards (e.g World Bank) that local firms are unable to meet.

2.2.3 Solar Hybrid PV Systems and Telecommunications

The telecom sector is one of the most highly competitive commercial sectors in Uganda. With five

companies competing in the mobile phone sector, national coverage has become crucial for all the

telecom operators. There are over 800 off-grid Base Transceiver Stations (BTS)/ link sites nationally

and many more are being built each year to maintain guaranteed coverage. Today over 95% of the

off-grid sites are powered by diesel gen-sets with the cost of running these sites on diesel extremely

high, therefore solar PV is being considered an alternative that reduces costs at off-grid sites.

There is a potential of over 2MW demand already for energy needs at the existing BTS/ Link sites

where the application is not fully standalone.


A potential of over 8MW for standalone power supply at the BTS sites.

A potential of over 25MW for hybrid and backup power for over 3,000 on-grid BTS/ Link sites

There is a significant potential on the commercial side of the telecom companies, including

ensuring power for franchises in the rural areas.

Recommendation to German RE enterprises

Many of the telecom companies can easily afford to construct solar PV solutions but need to be

convinced that a company can provide reliability and service and that the solutions are proven.

German companies can demonstrate this through site visits to existing installations where the

technology is in use.

Participating in bids and procurements is one means of directly accessing the market while

joining it at commercial level.

In the procurement market, less effort is required in promotion and marketing than in lobbying.

2.2.4 The SME Commercial PV Market

The SME commercial market may be defined as:

(i) Solar energy for income generation (productive energy use)

(ii) SME enterprises and business institutions that need solar energy for effective operation.

Solar PV has been used in rural Micro-Small Enterprises (MSEs) such as:

Cell phone charging and village public phone power.

Barber shops

Video entertainment halls and

Grocery shops.

There is further potential in

Food processing to expand on trial crop-drying schemes that were initiated through UNESCO.

Typically these schemes were systems that were setup as hybrids that combined different sources

of energy and electricity to dry produce (tomatoes, bananas, pineapples and pepper), powered by

400W of PV power that circulates solar-heated.

Dairy industry accessed through farmers‟ cooperatives in Uganda. There are over 60 milk

collection centers in Western Uganda with a potential power requirement of 0.75KW each

representing a local market of 4.5MW.

Mini-grids in clustered communities with support through GTZ for subsidized funding for the setup

of such systems. The challenge to this is managing the distribution of electricity from the mini-grid.


Creativity is a key factor for success in commercial solar PV applications and recognising the

SME businesses that would benefit the most from guaranteed access to power. Many small

cottage industries have limited turnover because of the lack of modern energy.

2.2.5 Solar Water Heating

Solar water heating technologies in Uganda are generally considered a “luxury” for urban dwellers and

those that understand the energy saving benefits of using solar water heaters. This market is poorly

developed and there is no specific program aimed at promoting solar heating, rather the systems have

been established through individual private initiatives.

At the institutional level, outside of general policy statements, there are no specific government

initiatives aimed at promoting solar water heating in hotels, schools and hospitals.


Table 6: Potential solar thermal market demand in Uganda4

Sector Application Market driver Est.

Installed

Cap (m2)

Est.

Potential

(m2)

Potential

Financial

Volume

(US$)

House-

holds

Urban

household

water heating

Urban

households

Technical

service

providers

<1000 300,000 $241,500,000

Tourism Hotels water

heating

Hotel

Owners

<1000 75,000 $55,000,000

>350,000 296,500,000

2.2.6 Large Scale and Grid Connected Solar Applications

To date no large grid-connected or solar generation station projects have been attempted in Uganda.

Although electricity is expensive, the sector is in particular need of guaranteed power (which is

available during the evening peaks) and peaking power (which can be dispatched as required).

To date, the donor partners that support much of the power sector have tended to push for

investments in hydro and thermal back-ups. Solar energy is seen mostly as an off-grid choice and as

a demand-side management tool. Consequently there have been no incentives for grid-connected

solar power in the country. Similarly, there have not been any consumer-led initiatives to introduce

net-metering, though the Government policy would seem to support consumer-led solar in the current

electricity-starved environment. Indeed, battery-backups with inverters that can serve as connection

points with PV systems are widespread.

Obstacles/ Constraints

There is a need for the country to build up experience with large-scale solar. There is no question

that solar will be part of the solutions to power production in the country. However, at this stage

the country is focused on short-term solutions to power problems, and solar PV and CSP are not

seen as least cost solutions.

For the moment, there is no standard feed-in tariff for solar PV electricity generation and would

thus have to be negotiated on a case-by-case basis.

4 Assumption that 1sq.m replaces 0.7Kw of electric power


Table 7: Summary of the undeveloped market opportunities

Market Application Classification Anticipated Potential

Applicable Support Risks/ Constraints

Wp MW

Household Standalone power using PV

<50Wp 18.50 End-user subsidy Marketing, Capacity, User abuse.

50Wp-100Wp 21.50 End-user subsidy up to 50Wp

>100Wp 13.50 End-user subsidy up to 50Wp

Hybrid backup with PV

>200Wp 30.00 None

Solar Water Heating (As a replacement for electricity)

100 – 200L 120.00 None Marketing & Promotion

>200L 90.00 None Marketing & Promotion

Institutional National PV Projects Health Sector 2.00 Trade with government Slow/ delayed payment due to bureaucracy

Water Sector 3.00 Trade with government

Education Sector 1.00 Trade with government

Rural offices 0.50 None Marketing

Telecom Power BTS/ Link Sites 10.00 None Slow/ delayed payment due to bureaucracy

Commercial outreach 2.00 None

Commercial Water heating in tourism sector

Urban hotels 45.00 None Marketing

Rural Lodges 5.00 None

MSE/ SME electricity Phone charging 2.50 ERT end user subsidy US$ 3.00 /Wp

Marketing, Capacity, User abuse Hair cutting 0.50

Entertainment 0.50

Grocery shops 1.00


Productive energy using PV

Milk collection centres 5.00 ERT end user subsidy US$3.00/Wp

Marketing and finding interested entrepreneurs

Drying of agriculture produce

0.50

Mini Grids 100 – 250KWp 100.00 Subsidy through national projects – Not clearly defined

Management of Minigrid & finding partners


3 Solar- specific regulation and framework

3.1 Policies and regulations

Two Government policies concern solar energy technology in Uganda.

The Energy Policy

The Renewable Energy Policy

Under the existing Energy Policy, solar energy falls in the category of New and Renewable Sources of

Energy. The policy with regards to solar provides a financing mechanism that makes it possible for

both PV consumers and vendors to obtain credit from banks for solar rural electrification.

The statutory issues related to the generation and distribution of electricity in Uganda is handled under

the Electricity Act. The Electricity Regulatory Authority (ERA) in Uganda is the body mandated to

enforce matters related to this act and to carry out all administration, compliance and issuance of

licenses for the generation, transmission, distribution or sale of electricity, to approve standards for

electricity generation and to establish and approve tariffs. The Electricity Act is fairly comprehensive

with regards to investment and land use thus requiring investment in substantial PV power generation

for land acquisition for generation and transmission of electricity, except stand-alone small Solar PV

systems do NOT require a license.

No Feed in Tariff regulation exists for solar PV. Standardized tariffs are based on the avoided cost of

the system for sales to the grid of electricity generated by renewable energy systems. To a maximum

capacity of 20MW these published for electricity generated from bagasse cogeneration and

hydropower supply.

The overall objective of the Renewable Energy Policy is to diversify the energy supply sources and

technologies in the country. In particular, the policy goal is to increase the use of modern renewable

energy from the current 4% to 61% of the total energy consumption by the year 2017. It will require

legislation for urban and local authorities to implement to achieve this goal.

3.1.1 Government Institutions for Solar Energy in Uganda

UETCL

Uganda Electricity Transmission Company Limited (UETCL) is the holder of transmission licenses

(including solar) and is the only designated entity to purchase electricity fed into the grid.

Rural Electrification Agency (REA)

The Minster of Energy and Mineral Development established the Rural Electrification Agency as a

semi-autonomous agency in 2001 to operationalise the Government‟s rural electrification function

under a public-private partnership. It functions as the secretariat of the Rural Electrification Board

(REB) which carries out the Minister‟s rural electrification responsibilities, as defined in the Electricity

Act of 1999. The Rural Electrification Agency (REA) is mandated to facilitate the Government‟s goal of

achieving a rural electrification rate of at-least 10% by the year 2012 from 1% at the beginning of the

decade.

3.1.2 Standards and Code of Practice

In terms of regulation, there are standards based primarily on international standards upon which solar

products in Uganda must conform. The Uganda National Bureau of Standards is responsible for

policing and enforcement.


Solar PV modules entering Uganda need to satisfy the following standard specifications.

IEC 61215 – 2005 for Crystalline solar modules

European CEC Specification No. 503: Ver 2.1, 1990, OF THE Joint Research Centre, Ispra of the

Commission of European Communities.

Certification of requirements of PVGAP.

3.2 Applicable Public Sector Support / Financing Mechanisms and Sources

Rural Electrification Subsidies

The Rural Electrification Agency published its Subsidy Policy in March 2009. The types of rural

electrification projects that will be processed by REA comprise grid extension with electricity supplied

from the main electricity generation plants in the country, and mini-grids around isolated generation

plants and stand-alone systems. Project Sponsors are either private parties,

communities/cooperatives, the Government or individuals, sometimes in combination. REA can also

initiate projects by tendering out packages.

Projects that can receive subsidies must be outside the urban triangle of Kampala, Entebbe and Jinja,

but there may be interfaces with the UETCL-owned distribution network.

Eligible projects are:

The local distribution part of grid-connected generation projects.

Mini-grid distribution system around an isolated generation plant.

Grid-connected distribution extension with no own generation.

Small stand-alone systems with one or few consumers (PV, small diesel or pico hydro).

Solar PV Targeted Market Approach

In March 2007, REA published the Solar PV Targeted Market Approach (PVMTA) in response to the

slow pace of PV implementation under the BUDS-ERT grant scheme. The approach aims to:

Promote partnerships between rural MFIs, NGOs, CBOs and private commercial companies.

Strengthen rural infrastructure through specific measures to ensure that rural based solar PV

entrepreneurs (agents, franchisees, etc.) can access grants and trading capital.

Include micro-deposit taking institutions (MDIs) and selected SACCOs in the subsidy framework

for disbursement of subsidies to rural end-users.

Introduce a new complementary subsidy paid direct to consumers of 4.4 USD/Wp for SHS

between 31 and 50 Wp and 5.5 USD/Wp for SHS between 10 and 30 Wp.

Provide a special grant program that will be implemented by REA through tendering of specific

target market segments in areas that have lagged behind in implementing solar PV.

Increase credit options for consumers.

BUDS-ERT

Business Development Services, Energy for Rural Transformation (BUDS-ERT) is managed by the

Private Sector Foundation of Uganda to provide cost-sharing assistance for carrying out of preliminary,

feasibility and other studies for market entry in the solar PV sector, the design of business plans and

capacity building (technical and business). The next phase of the ERT initiative will take into account

solar water heating technology and support market development.


4 Business partners and competitors

4.1 Overview of Key Solar market players

Table 8: Overview of Key Solar Market Players

Full name Core

business

General business information Location Annual

turnover

(est. in US$)

Staff Contact details

AB Matra Supply of

Solar PV

Equipment

Import and sell solar PV products to

dealers and system integrators

through branch network. Main

brands are Kotak (India).

CBD

Kampala,

Along

Entebbe

Road

Unknown 7 Contact Person Mr. Bhavin Ruparelia

Tel. +256 712 444 750

E-mail

Website

UltraTec

(U) Ltd

Supply of

solar PV

equipment,

power backup

equipment &

solar water

heaters.

Sells to Kampala based system

integrators; rural based installers/

technicians and rural based dealers

through both product and brand

franchising. Involved in large

institutional installations.

Represents various international

brands/ manufacturers: Steca,

Outback, Victron, First Power and

Solarhart.

Kabalagala,

Kampala

2,000,000 12 Contact Person Mr. Abhay Shah

Tel. +256 772 200 007

E-mail ultratecworld@infoco

m.co.ug

Website

Ital Trade

(U) Ltd

Supply of

solar PV

equipment,

power backup

equipment &

Water Pumps


integrators. Involved in high end

large installations. Represents

various international brands/

manufacturers: Phoccos, Outback,

Victron, Rolls and Lorentz

Kansanga,

Kampala

3,500,000 6 Contact Person Mr. Andre Marinelli

Tel. +256 772 767 862

E-mail

Website




ASE Solar

Energy Ltd

Supply of

Solar PV

equipment


integrators and rural based dealers,

small DC SHS, Solar modules and

batteries manufactured and

imported from China. Represents

Topraysolar a chinese

manufacturing firm.

Mbuya Hill,

Kampala

1,000,000 5 Contact Person Mr. Wu JingBao

“Steve”

Tel. +256 773 412 452

E-mail

Website

Pulsee Int

Investment

Co. Ltd

Supply of

Solar PV

equipment

Sells to endusers mainly solar

water heaters, solar cookers and

some PV products that are

imported directly from China.

62 Luthuli

Av. Bugolobi

Kampala

100,000 5 Contact Person Mr. Wu Erfang

Tel. +256 702 967 668

E-mail

Website

Balton (U)

ltd

Agro inputs,

Agro

machinery;

Communicatio

n and ICT

equipment;

and

Electromecha

nical products

Divided into five divisions. Solar

thermal falls in the electro-

mechanical products which include

Aircons, generators and Solar

Water Heaters. This accounts for

about 20% of the company

turnover. The water heaters are

installed by plumbers that were

trained by Balton.

47/51,

Mulwana Rd.

Industrial

Area

10,000,000 87 Contact Person Mr. Zeev Shiff

Tel. +256 312 502 300

E-mail [email protected]

Website

Solar

Construct

Solar Water

heaters

Assemble water heaters in Uganda.

Tank imported from Israel, glass

from China, copper pipes from

Denmark. Tanks designed based

on high quality European

Standards. The leading Solar Water

Heaters' supplier and installer in

Uganda

45 Mulwana

Rd. Industrial

Area

N/A 8 Contact Person Mr. Franz Eichinger

Tel. +256 312 264 264

E-mail info@solarconstruct.

com

Website





Davis &

Shirtliff

Water

Pumping

systems

Mainly engaged in Solar PV

through its core business of water

pumping. Supplies modest

quantities of Sundaya products

(lights and regulators) for use in

SHS applications.

CBD

Kampala,

Kitgum

House, 53

Jinja Road

1,500,000 11 Contact Person Mr. Wainaina

Ephraim

Tel. +256 414 346 337/8

E-mail d&[email protected]

Website

Energy

Systems

Ltd

Supply and

installation of

Solar PV

systems

Import some of the products

(mainly solar modules) needed for

service delivery from various

international distributors and

suppliers. Often locally purchase

other products if not in stock.

Involved in both SHS installations

and institutional government

installations.

CBD

Kampala,

Get-in

House,

William

Street

1,100,000 7 Contact Person Mr. Emmy Kimbowa

Tel. +256 772 313 470

E-mail emmy@energysyste

msug.com

Website

Solar

Energy for

Africa

Supply and

installation of

Solar PV

systems









installations.

CBD

Kampala,

Carol House,

Bombo Road

850,000 16 Contact Person Ms. Jennifer Kayanja

Tel. +256 414 250 125

E-mail solar-

[email protected].

ug

Website www.solarafrica.org

mailto:d&[email protected]






http://www.solarafrica.org/


Solar

Energy

Uganda

Supply and

installation of

Solar PV

systems









installations.

CBD

Kampala,

Wilson Road

800,000 12 Contact Person Mr. Richard Kanyiike

Tel. +256 772 504 429

E-mail soenergy@africaonli

ne.co.ug

Website

Incafex

Solar

Systems

Ltd

Supply and

installation of

Solar PV

systems





suppliers. Represent Mastervolt.



installations.

9/6 Bombo

Road,

Gathani

House,

Kampala

450,000 14 Contact Person Mr. Henry H Nganwa

Tel. +256 414 250 008

E-mail incafexsolar@africao

nline.co.ug

Website

Power

Options

Supply and

installation of

Solar PV

systems





suppliers. Represent Sunlight

battery manufacturers.

Teachers

House,

Bombo Road

380,000 4 Contact Person Mr. Musoke Kivumbi

Tel. +256 772 455 401

E-mail poweroptions@africa

online.co.ug

Website

GiraSolar

(EA) Ltd

PV systems

integrators

Rural SHS installations. Backend

support for technical installations

for engineering designs and

solutions by Konserve Consult Ltd

P.O. Box

6494,

Kampala,

Uganda

180,000 5 Contact Person Mr. Kato Musigire

Tel. +256 312 279 920

E-mail [email protected]

o.ug

Website










Power &

Communica

tions Ltd

PV systems

integrators

Rural SHS installations. Also

involved in supply of generators

and communication equipment

Namugongo

Road, Kireka

Kampala

150,000 5 Contact Person Mr. Joshua

Mudduawulira

Tel. +256 414 288 363

E-mail powercomsysug@g

mail.com

Website

Konserve

Consult

Limited

Technical

and

businesses

consulting

services in

Solar PV

Engineering designs, energy

efficiency solutions and projects

development

164 Upper

Mawanda

Road,

Kampala

410,000 8 Contact Person Mr. Abdalla Kyezira

Tel. +256 414 535 685/8

E-mail konserve@konserve.

co.ug

Website www.konserve.co.ug

Solar Sense

Ltd

Supply and

installation of

Solar PV

systems

Rural SHS sales and installations P.O. Box

6494,

Kampala,

Uganda

220,000 8 Contact Person Mr. Musooka

Kiwanuka

Tel. +256 312 372 037

E-mail solarsenseug@gmail

.com

Website





http://www.konserve.co.ug/




4.2 Overview of major and/or most emblematic solar projects

The Energy for Rural Transformation (ERT) supported Photovoltaic Targeted Market Approach

(PVTMA) program on end-user financing

The GTZ/ MEMD supported PREEEP program

The ERT supported BUDS-ERT Program

Target Market Analysis: Uganda‟s Solar Energy Market XXII

Annex 1: RE Subsidies for Off-Grid Projects

Subsidies for Rural Electrification Available from REF Table 9: Subsidies from REF for Rural Electrification

Type of Project Private LIREP CIREP PREP Existing

Concessio

naire

Basic Subsidies in UGX

Mini-grid generation & related distribution

o UGX/ kW 2,150,000 2,580,000 2,580,000

UGX/ kW 640,000 800,000 800,000

Grid Connection & mini-grid distribution

MV UGX/m MV Route 15,500 18,600 18,600 18,600 15,500

UGX/ kVA 125,000 150,000 150,000 150,000 125,000

LV UGX/m LV Route 11,000 13,200 13,200 13,200 11,000

UGX/ Conn. 125,000 150,000 150,000 150,000 125,000

A LIREP (locally initiated rural electrification project) can be initiated by a small private investor without

access to finance on international capital markets, whereas a CIREP (community initiated rural

electrification project) can be initiated by a local „community.

In both cases, the costs of the development of the project are met jointly by the investor /community

and the REF. Projects may be either grid extensions or mini-grid electrification and can be within or

outside a distribution concession footprint. Communities are also able to form cooperatives to be

concessionaires.

Regional Equity

The Subsidy Policy further provides for the concept of regional equity, i.e. the support of projects to

obtain a more even distribution of electrification geographically. Areas which are more remote, poorer

and/or that experience security problems are targeted to receive a premium over-and-above the

normal subsidy.

Table 10: Regional Equity Distribution

Zone Zone

Adjustment

Remoteness

(>60Km from

Grid)

Poverty and

Low Population

Density

Security

(Civil/ unrest/

insurgency)

Maximum

Adjust-

ment

Centre +0.0% +2.5% +0.0% +0.0% +2.5%

East & West +2.5% +2.5% +5.0% +2.5% +12.5%

North East & North +10.0% +5.0% +5.0% +5.0% +25.0%

West Nile +5.0% +2.5% +2.5% +2.5% +12.5%

Target Market Analysis: Uganda‟s Solar Energy Market XXIII

Annex 2: Insolation data at key locations in Uganda. (Source: NASA Langley Research Center – Amospheric Science Data 2002)

1. Busia

Table 11: Insolation in Busia, Uganda

Variable Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Insolation,

kWh/m²/day 5.97 6.26 6.14 5.63 5.44 5.19 5.09 5.43 5.97 5.83 5.55 5.78

Clearness, 0 – 1 0.60 0.61 0.59 0.55 0.56 0.56 0.54 0.55 0.58 0.57 0.55 0.59

Temperature, °C 21.49 22.18 22.44 21.40 20.51 19.94 19.85 19.94 20.20 20.48 20.61 21.00

2. Fort Portal

Table 12: Insolation in Fort Portal, Uganda


Insolation,

kWh/m²/day 5.47 5.69 5.22 5.00 4.96 4.72 4.56 4.63 4.74 4.36 4.46 5.00

Clearness, 0 – 1 0.55 0.55 0.50 0.49 0.51 0.50 0.48 0.47 0.46 0.43 0.45 0.52

Temperature, °C 23.76 24.37 23.28 22.09 22.01 22.29 22.60 22.18 21.53 21.18 21.22 22.22

3. Gulu

Table 13: Insolation in Gulu, Uganda


Insolation,

kWh/m²/day 6.10 6.32 5.88 5.51 5.50 5.22 5.00 5.29 5.91 5.72 5.59 5.80

Clearness, 0 – 1 0.63 0.63 0.56 0.54 0.56 0.54 0.52 0.53 0.58 0.56 0.57 0.61

Temperature, °C 26.92 27.67 26.70 24.74 22.99 22.49 22.20 21.94 22.35 22.72 23.91 25.56

4. Hoima

Table 14: Insolation in Hoima, Uganda


Insolation,

kWh/m²/day 5.53 5.78 5.50 5.23 5.04 4.84 4.84 4.83 5.05 4.69 4.86 5.24

Clearness, 0 – 1 0.56 0.56 0.53 0.51 0.52 0.51 0.51 0.49 0.49 0.46 0.49 0.54

Temperature, °C 23.89 24.59 23.57 22.16 21.80 22.06 22.32 22.18 21.54 21.18 21.31 22.38

Target Market Analysis: Uganda‟s Solar Energy Market XXIV

5. Kabale

Table 15: Insolation in Kabale, Uganda


Insolation,

kWh/m²/day 5.06 5.27 4.92 4.82 4.79 4.85 5.02 4.95 5.05 4.66 4.55 4.72

Clearness, 0 – 1 0.50 0.51 0.47 0.48 0.50 0.53 0.54 0.51 0.49 0.45 0.45 0.48

Temperature, °C 20.59 21.30 20.89 20.25 20.68 21.24 21.63 22.02 21.19 20.03 19.68 19.86

6. Kampala

Table 16: Insolation in Kampala, Uganda


Insolation,

kWh/m²/day 5.60 5.88 5.81 5.31 5.02 4.84 4.90 5.16 5.57 5.43 5.28 5.44

Clearness, 0 – 1 0.56 0.57 0.56 0.52 0.52 0.52 0.52 0.52 0.54 0.53 0.53 0.55

Temperature, °C 22.37 22.92 22.79 21.72 20.95 20.81 20.90 21.12 20.80 20.65 21.11 21.80

7. Iganga

Table 17: Insolation in Iganga, Uganda


Insolation,

kWh/m²/day 5.99 6.31 6.20 5.84 5.58 5.29 5.26 5.59 6.12 5.99 5.77 5.88

Clearness, 0 – 1 0.61 0.62 0.59 0.57 0.57 0.56 0.55 0.56 0.60 0.58 0.58 0.61

Temper`ature, °C 24.61 25.32 25.09 23.31 21.64 21.24 21.29 21.29 21.37 21.80 22.73 23.77

8. Jinja

Table 18: Insolation in Jinja, Uganda


Insolation,

kWh/m²/day 5.60 5.88 5.81 5.31 5.02 4.84 4.90 5.16 5.57 5.43 5.28 5.44

Clearness, 0 – 1 0.56 0.57 0.56 0.52 0.52 0.52 0.52 0.52 0.54 0.53 0.53 0.55

Temperature, °C 22.37 22.92 22.79 21.72 20.95 20.81 20.90 21.12 20.80 20.65 21.11 21.80

9. Kasese

Table 19: Insolation in Kasese, Uganda


Insolation,

kWh/m²/day 5.15 5.40 5.10 4.90 4.80 4.64 4.62 4.65 4.87 4.50 4.48 4.78

Clearness, 0 – 1 0.52 0.52 0.49 0.48 0.50 0.50 0.49 0.47 0.48 0.44 0.45 0.49

Temperature, °C 22.26 22.94 22.20 21.29 21.52 22.04 22.50 22.39 21.44 20.70 20.57 21.08

Target Market Analysis: Uganda‟s Solar Energy Market XXV

10. Kitgum

Table 20: Insolation in Kitgum, Uganda


Insolation,

kWh/m²/day 5.86 6.08 5.76 5.31 5.41 5.28 5.12 5.43 6.02 5.60 5.34 5.54

Clearness, 0 – 1 0.61 0.60 0.55 0.52 0.55 0.55 0.53 0.54 0.59 0.55 0.55 0.59

Temperature, °C 26.05 27.07 26.74 25.27 23.40 22.69 22.12 21.97 22.69 23.32 23.87 24.76

11. Lira

Table 21: Insolation in Lira, Uganda


Insolation,

kWh/m²/day 6.03 6.28 6.09 5.71 5.53 5.37 5.28 5.64 6.28 5.98 5.65 5.81

Clearness, 0 – 1 0.62 0.62 0.58 0.56 0.56 0.56 0.55 0.57 0.61 0.59 0.57 0.61

Temperature, °C 25.78 26.63 26.40 24.68 22.61 21.95 21.66 21.54 22.11 22.84 23.75 24.67

12. Mbale

Table 22: Insolation in Mbale, Uganda


Insolation,

kWh/m²/day 5.92 6.22 6.11 5.73 5.55 5.40 5.33 5.68 6.20 5.92 5.56 5.72

Clearness, 0 – 1 0.60 0.61 0.59 0.56 0.57 0.57 0.56 0.57 0.60 0.58 0.56 0.59

Temperature, °C 23.50 24.35 24.58 23.27 21.78 20.90 20.63 20.56 21.25 21.94 22.26 22.72

13. Mbarara

Table 23: Insolation in Mbarara, Uganda


Insolation,

kWh/m²/day 4.83 5.08 4.93 4.68 4.62 4.78 4.90 4.82 4.88 4.48 4.41 4.56

Clearness, 0 – 1 0.48 0.49 0.47 0.46 0.48 0.52 0.53 0.49 0.48 0.43 0.44 0.46

Temperature, °C 20.57 21.18 20.89 20.29 20.35 20.72 21.00 21.52 21.08 20.16 19.84 20.03

14. Tororo

Table 24: Insolation in Tororo, Uganda


Insolation,

kWh/m²/day 5.92 6.22 6.11 5.73 5.55 5.40 5.33 5.68 6.20 5.92 5.56 5.72

Clearness, 0 – 1 0.60 0.61 0.59 0.56 0.57 0.57 0.56 0.57 0.60 0.58 0.56 0.59

Temperature, °C 23.50 24.35 24.58 23.27 21.78 20.90 20.63 20.56 21.25 21.94 22.26 22.72

Target Market Analysis: Uganda‟s Solar Energy Market XXVI

Annex 3: Licensing Procedures

Person who intends to establish a project for which

a license is required shall notify ERA of the

intended project according to S.30 of the Act.

If the notification does not meet the requirements,

the developer will be informed as soon as

possible.

If the notification meets the requirements, ERA will publish it in

the Gazette and at least one newspaper of wide circulation

within 30 days according o S. 31.

ERA shall invite directly affected parties and affected public

agencies to make comments on the notice within a fixed period

but not less than 30 days after the publication according to S. 31

(3)

ERA may, in not more than 30 days after the receipt of

comments under S. 31, issue a permit allowing the intended

applicant to carryout studies and other activities required to

prepare an application according to S. 32.

ERA shall through a fair, open and competitive process invite

applications for any license according to S. 33

An application for a license is made to the Chief

Executive Officer of ERA

If the application does not meet the

requirements prima facie, the applicant will be

informed about the missing items within 30

days.

ERA shall within 45 days after receiving the

application cause a notice of the application to be

published in the Gazette and at least one national

paper of wide circulation S. 36

Directly affected parties and local

authorities shall be invited to lodge with

ERA an objection within a specified time

being not less than 30 days after the

publication, according to S. 36 (2) (d)

ERA shall, where it refuses to grant a

license, give the applicant a statement of its

reasons for the refusal within 30 days after

the refusal, according to S. 39 (1)

ERA shall process all applications for licenses

expeditiously and in any case not later than 180

days after the receipt of a complete application

according to S. 35

A person aggrieved by ERA's decision may

appeal to the Tribunal

Target Market Analysis: Uganda‟s Solar Energy Market XXVII

Annex 4: Examples of Best Practice Models and Operators

The examples given below are based on the experience Konserve had working with different solar PV

suppliers in Uganda in an effort to promote solar PV in the rural areas of Uganda. This was under the

Energy Advisory Project of the Ministry of Energy and Mineral Development that was supported by

GTZ. This project started in August 2006 and was concluded at the end of 2008 albeit many of the

activities within were extended to a similar project, the PREEEP.

Below are three business models that are generally considered best practice if issues related to the

challenges in each are addressed

The Hire Purchase Business model by Solar Energy Uganda Ltd

Project Developer

Solar Energy Uganda Limited (SEUL)

Project Summary

SEUL played the role of both technical provider and financier

The solar home systems provided were generic solar PV systems that

included a single light and a single phone charger used every day as the

key benefits.

SEUL targeted a much lower income bracket hence the basic benefit

described above.

As beneficiaries formed groups of 25 – 50 members. These are referred to

as homeowners‟ associations. It is through these that one was able to

acquire and pay for a solar PV system.

In the financing role, an interested user applied for a system by opening an

account with SEUL through a locally selected mobilise. This account was

opened in what was referred to as the “Solar Bank.”

To open an account one had to pay UGX 7,000 (Seven thousand Uganda

Shillings). Thereafter, the end-user was required to pay an initial UGX

30,000 before a solar PV system is installed. Subsequent to completing the

installation, the beneficiary would have to pay a monthly UGX30,000 for

nine (9) months before becoming owner of the system.

Key Success

features

Basic application

Low cost

Relatively good payment terms that did not include any interest.

Local mobilisers involved

Generic systems easy to install and maintain

Challenges

High financing cost required to maintain stock

Money held in stock and installed systems hence slow progress for new

installations.

Target Market Analysis: Uganda‟s Solar Energy Market XXVIII

The Franchising Business model by UltraTec (U) Ltd

Project Developer

Solar Energy Uganda Limited (SEUL)

Project Summary

In this project model, UltraTec (U) Ltd entered into an agreement or a

memorandum of understanding with interested partners who were ready to

reach out to the rural markets. UltraTec acted by giving these partners the

rights to market its products within their (the partners) own service

approach. UltraTec combined two types of franchising methods to reach the

rural end-users.

3.2 A business format franchising in which UltraTec offered a variety of

services to the franchisees including providing the franchisee use of

trademarks and logos, as well as a complete system of doing business.

UltraTec used the trademark name UltraSolar. An UltraSolar outlet was

set up at Masaka for this franchising method.

3.3 In an optional approach, UltraTec has also entered into product

franchising by signing M.O.Us with independent business entities or

organisations that are able and willing to sell solar PV systems in the

specific geographical areas.

As a result, UltraTec has entered into M.O.U.s with:

Organisation Type of business Market target

area

Uganda Microfinance

Ltd

Microfinance – MDI Kayunga

FINCA Microfinance – MDI Masaka

Lwamagwa SACCO Rural microfinance Rakai

Girasolar (EA) Ltd Solar PV sales and

installation

Masaka &

Sembabule

South Buganda

Teachers‟ SACCO

Cooperative & credit

society

Masaka

Key Success

features

Quality Products

A variety of players for the same goal with different strengths

Possibilities to offer financing services were available.

Products were always readily available

Challenges

Limited financial capacity of the different franchisees

Money held in stock and installed systems hence slow progress for new

installations.

UltraTec worked in some cases with competition which could easily use

pricing with another supplier as a tool against UltraTec

Target Market Analysis: Uganda‟s Solar Energy Market XXIX

The Solar Loans through farmers’ cooperatives by Incafex Solar Systems Ltd

Project Developer

Incafex Solar Systems Ltd

Project Summary

The Solar Loans Scheme targeted farmers‟ cooperatives. These

cooperatives had members who had similar products. These were Tea, Milk

or Bananas.

In this project model, Incafex Solar Systems Ltd (ISSL) supplied systems to

the members through their cooperative that undertook the responsibility of

paying for the systems (on a cash basis). The cooperative management

would subsequently pay for the system through the collected revenue from

selling the farmers‟ produce.

Incafex targeted farmers in Bushenyi district.

A local agent of ISSL carried out all the installations.

Key Success

features:

The target market (farmers) had good sources of revenue.

The company was always paid on time and therefore would easily

supply the systems.

The cooperative had direct access to the farmers‟ income.

Very little in terms of marketing and promotion invested by the company

Challenges

Market availability dependent on management of cooperative

Minimal responsibility for the installations on the part of the company.

For the end-user, technical problems had to be reported to the

cooperative that would then communicate to the company. As a result it

took long to resolve simple technical problems.

Target Market Analysis: Uganda‟s Solar Energy Market XXX

Annex 5: Case Studies of Solar Home Systems

Case study 1: Solar Power System for Mr. Naboth Muhanguzi at Keizooba Bushenyi

This is an AC system that is designed to power the following loads of

10X Lights

- 6X Internal Lights used for 4 hours.

- 4X Security Lights used for 9 hours (from 9:00pm to 6:00am)

1X Radio with a CD Player on top and

2X Daily Phone Charges

Item Description Unit Qt

y

Rate Amount %

U. Shs U. Shs

PV Module (s) 75Wp Shell Solar Modules Pieces 2 750,000 1,500,000

Sub Total 1 1,500,000 42%

BOS 10A Steca Charge Controller Piece 1 150,000 150,000

12V/150 Sealed Solar Battery Pieces 1 480,000 480,000

12V/350W Victron Sinewave

Inverter

Piece 1 350,000 350,000

Wooden Battery Box (A-

Double 100)

Pieces 1 50,000 50,000

Module mounting frame

(Limited)

Set 1 60,000 60,000

CFL Light Fittings Pieces 10 10,000 100,000

Flexible Cable rolls 2.5 mm2 Rolls 2 180,000 360,000

Round tower clips Packs 4 8,000 32,000

UV-Resistant 6mm2 Cable Metres 15 4,000 60,000

6mm2 Tower Clips Set 1 12,000 12,000

Junction Boxes Pieces 15 3,000 45,000

1 Gang 1 Way Switches Pieces 6 3500 21,000

2 Gang 1 Way Switches Pieces 2 8,500 17,000

Single Sockets outlets Pieces 4 5,500 22,000

Angled Lamp Holders Pieces 2 2,000 4,000

Sub Total 2 4,763,000 49%

Installation Cost 10% 326,300 9%

Total (1+2+ Installation cost) 3,589,300

This is a client in the high-end category.

It is estimated that they account for over 1-2% of the Off-grid PV market potential.

About half of such clients are based in urban centres (as employees or business people) with

rural homes.

A conservative estimate of the potential number of such solar home systems that can be

turned into effective demand is 50,000 off-grid rural households representing a market of

about US$ 100,000,000.

Target Market Analysis: Uganda‟s Solar Energy Market XXXI

Case Study 2: Power System installed for Ms. Nandaula

2X DC Lights and

1X Hair Shaving machine

ITEM Description Qty Ug Shs

PV Module (s)

14Wp Solar Module 2 150,000 300,000

Sub Total 1 300,000 29%

BOS 12V/ 70 Ah TV Exide Battery 1 125,000 125,000

5A Steca Charge Controller 1 81,000 81,000

2X2.5mm2 Flexible Cable roll 1 180,000 90,000

2X2.5mm2 Tower Clips 2 5,000 10,000

MSM14 Module Mount 2 22,500 45,000

4W CCFL 2 33,750 67,500

AC Double Socket Outlets 1 15,000 15,000

12V/150W Inverter 1 150,000 150,000

Battery Box 1 25,000 25,000

1 Gang 1 Way Switches 2 3,750 7,500

Junction Boxes 20A 4 3,250 13,000

Screws and Wall Plug Set 1 7,500 7,500

Sub Total 2 936,500 62%

Installation and Commissioning 1 10% 93,650 9%

Total Amount 1,030,150

A lower end solar home system client with a10 -30Wp Solar Home System.

It is estimated that they account for over 15% of the Off-grid PV market.

Most of these clients are based in the rural areas with various income generating activities

such as small scale.

A conservative estimate of the potential number of such solar home systems is 500,000 off-

grid rural households representing a market of over US$ 200,000,000.

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