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Uganda`s Bioenergy Market

Target Market Analysis

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Target Market Analysis

Uganda’s Bioenergy Market


Authors

Robert J. van der Plas

Paul Kirai

November 2009

Editor

Deutsche Gesellschaft für Technische

Zusammenarbeit (GTZ) GmbH

On behalf of the

German Federal Ministry

of Economics and Technology (BMWi)

Contact

Deutsche Gesellschaft für

Technische Zusammenarbeit (GTZ) GmbH

Potsdamer Platz 10, 10785 Berlin, Germany

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) in context of the Export Initiative Renewable Energies. More information about the PDP and about

renewable energy markets in East Africa: www.gtz.de/projektentwicklungsprogramm

This publication, including all its information, is protected by copyright. GTZ cannot be liable for any material or immaterial

damages caused directly or indirectly by the use or disuse of parts. Any use that is not expressly permitted under copyright

legislation requires the prior consent of GTZ.

All contents were created with the utmost care and in good faith. GTZ assumes no responsibility for the accuracy,

timeliness, completeness or quality of the information provided.

Target Market Analysis: Uganda’s Bioenergy Market V

Content

1 STATUS QUO OF THE BIOENERGY SECTOR ....................................................................... 1

1.1 Brief Bioenergy Sector Overview .......................................................................................................... 1

1.2 Major Market Segments ....................................................................................................................... 2 1.2.1 Forests and Woodlands ....................................................................................................................... 2 1.2.2 Agricultural and Agro-Industrial Residues ........................................................................................... 5 1.2.3 Papyrus ................................................................................................................................................ 6

1.3 Local Capacities..................................................................................................................................... 6

2 BIOENERGY MARKET POTENTIALS ..................................................................................... 8

2.1 Overall Sector Outlook .......................................................................................................................... 8 2.1.1 Recommendations for German companies ...................................................................................... 10

2.2 Undeveloped Market Opportunities ................................................................................................... 10 2.2.1 Agricultural and Agro-Industrial Residues ......................................................................................... 11 2.2.2 Municipal Solid Waste (MSW) ........................................................................................................... 12 2.2.3 Other Solid Biomass Opportunities (Mainly Household Sector) ....................................................... 13 2.2.4 Liquid Biofuels ................................................................................................................................... 15 2.2.5 Advanced Technologies ..................................................................................................................... 16

3 BIOENERGY-SPECIFIC REGULATION AND FRAMEWORK .......................................... 17

3.1 Policies and Regulations ..................................................................................................................... 17 3.1.1 National Energy Policy (esp. Biofuels) ............................................................................................... 17 3.1.2 Electricity Regulation Authority (ERA) ............................................................................................... 18 3.1.3 Forestry Policy ................................................................................................................................... 18

3.2 Applicable Public Sector Support / Financing Mechanisms and Sources............................................. 19

3.3 Campaigns and Others ........................................................................................................................ 20

4 BUSINESS PARTNERS AND COMPETITORS IN THE BIOENERGY SECTOR ............ 21

4.1 Overview of Bioenergy Market Players ............................................................................................... 21

4.2 Overview Major and/or Most Emblematic Bioenergy Projects ........................................................... 27

4.3 Highlights in Local Bioenergy Market Developments .......................................................................... 28

Target Market Analysis: Uganda’s Bioenergy Market VI

List of Tables Table 1: Details of Biomass Energy Technologies Available in Uganda Market .................................................... 2

Table 2: Woody biomass demand by sector (tons/year) 2006 ............................................................................... 3

Table 3: Woody Biomass in Uganda ..................................................................................................................... 4

Table 4: Summary of Estimated Available national Woody Biomass ..................................................................... 4

Table 5: Agricultural Residues in Uganda (MEMD) ............................................................................................... 6

Table 6: Regional Wood Biomass Balances .......................................................................................................... 8

Table 7: The Renewable Energy Power Potential ............................................................................................... 10

Table 8: Energy Production Potential from Agro-Residues ................................................................................. 11

Table 9: Technical Potential of Agro-industrial and Agri-cultural Residues ......................................................... 11

Table 10: Potential for Electricity Generation from MSW ..................................................................................... 12

Table 11: Potential Opportunities Solid Biomass –MSW ..................................................................................... 13

Table 12: Potential Opportunities Solid Biomass – Traditional Fuels .................................................................. 14

Table 13: Biomass Technologies Targets and Impacts ....................................................................................... 15

Table 14: Potential Opportunities Liquid Biomass ............................................................................................... 17

Table 15: Biomass Energy in the Renewable Energy Policy ............................................................................... 20

Table 16: Selected Bioenergy Market Players in Uganda ................................................................................... 22

Table 17: Key Actors and their Roles .................................................................................................................. 25

Table 18: Most Important Bioenergy Projects ...................................................................................................... 27

Target Market Analysis: Uganda’s Bioenergy Market VII

Currency

1 USD = UShs 2,230 (May 2010)

1 € = UShs 2,733 (May 2010)

Measurement

W Watt Wp Watt peak Wh Watt hour

kW Kilowatt kWp Kilowatt peak kWh Kilowatt hour

MW Megawatt MWp Megawatt peak MWh Megawatt hour

GW Gigawatt GWp Gigawatt peak GWh Gigawatt hour

Target Market Analysis: Uganda’s Bioenergy Market VIII

List of Acronyms

API Africa Power Initiative

BET Biomass-Energy Technologies

CHP Combines Heat and Power

COMESA Common Market for Eastern and Southern African States

CREEC Centre for Research in Energy and Energy Conservation

EAC East African Community

EIA Environmental Impact Assessment

ERA Electricity Regulatory Agency

KCC Kampala City Council

MAAIF Ministry of Agriculture, Animal Industry and Fisheries

MEMD Ministry of Energy and Mineral Development

MSW Municipal Solid Waste

Mt Megaton

Mtoe Million oil equivalent tons

MUK Makerere University

NFA National Forestry Authority

NGO Non-Governmental Organisation

PCIA Partnership for Clean Indoor Air

RAP Resettlement Action Plan

REA Rural Electrification Agency

RET Renewable Energy Technology

SPGS Sawlog Production Grant Scheme

UETCL Uganda Electricity Transmission Company Ltd

UFRIC Uganda Forestry Resources and Research Institute

UNBS Uganda National Bureau of Standards

UOSPA Ugandan Oil Seed Producers and Processor Association

UORDP Uganda Orphans Rural Development Programme

UTGA Uganda Timber Growers Association

WRMD Water Resources Management Department

Target Market Analysis: Uganda’s Bioenergy Market IX

Summary

85 % of the Uganda’s energy balance is made up of biomass, predominantly woodfuel for cooking and

heating. The sugar industry utilises agricultural residues (bagasse) for energy production. A small

amount of coffee and rice husks is also used to provide heat for the production of cement, lime, and

brick & tiles.

Studies by the Ministry of Energy and Mineral Development (MEMD) in 2003 estimated a potential of

more than 5 GW potential from renewable energy in Uganda with biomass contributing 2.45 GW,

almost 50 %. The main opportunities are power generation from bagasse at specific locations and

municipal solid waste in Kampala. There are further opportunities in the traditional energy sector

ranging from briquette production from papyrus and agro or silvi-industrial operations, plus a variety of

activities dealing with energy efficiency in tree plantations and household cooking. Biofuels present

another opportunity. However, there remains limited local technical experience available. The

government’s renewable energy policy recommends blending of diesel with 20 % biodiesel and is

intended to create a marketplace and attract investment in production. There is some, but limited,

financial and technical skills capacity in the public and private sector to develop these opportunities.

Target Market Analysis: Uganda’s Bioenergy Market 1

1 Status Quo of the Bioenergy Sector

1.1 Brief Bioenergy Sector Overview

Uganda covers an area of 236,040 km2 and had an estimated population of over 28 million in 2006

growing at about 3 % per annum. Over the last decade the country has recorded a fairly steady

economic growth and stable political climate, with an average GDP real growth rate of 6 %. This

growing economy combined with the fast growing population translates into a growing demand for

energy.

Uganda’s energy supply and utilisation remains dominated by biomass while access to electricity is

limited to only 9 % of the population; the remaining 91 % of the population mainly use biomass in the

form of firewood or charcoal. It is envisaged that this trend will continue in the foreseeable future.

Trading in biomass energy, especially charcoal, contributes to the economy in terms of rural incomes,

tax revenue and employment, employs at least 20,000 people and generates approximately UShs 36

billion (USD 20 m) per year in rural incomes. Fuel wood demand and particularly land clearing for

agriculture have contributed to the degradation of forests and wood reserves are being depleted at a

rapid rate in many regions. Charcoal, which is generally produced on non-state land, experiences a

high growth as the consumption increases at a rate close to that of urban population (6 % per annum).

Most of the biomass in Uganda is used with traditional energy technologies that are not very efficient.

Several initiatives to conserve biomass resources or improve the utilisation efficiency have been

undertaken by the government, the private sector, and NGOs. They include the use of modern

furnaces and boilers, the promotion of improved cooking stoves, and re- or afforestation. However, the

impact of these efforts has remained limited so far. There is no lack of biomass in Uganda and the

bioenergy market could therefore be described as “underdeveloped with substantial potential”, which

is good news for new investors interested in this subject.

The country is dependent on imported fossil fuels. Deposits of oil have been discovered in the

Western region of the country and commercial drilling is expected to begin in 2010 in Lake Albert. As a

landlocked country, Uganda experiences higher retail prices for petroleum products compared to many

other African countries due to high transportation costs. The escalating prices of fossil fuels have

made it imperative for the government to promote the development and utilisation of renewable energy

resources including bioenergy and associated technologies.

Interest in bioenergy in Uganda is driven by a number of factors and events. Firstly, the recent volatile

price of fossil fuels in the international market. Secondly, the (global) renewed interest in green and

clean energy would apply to biomass under the right conditions in Uganda giving rise to many

opportunities due the good physical climate for agriculture. Thirdly, although it is not generally

perceived as such by the government, energy from biomass contributes to the energy security of the

country as well as to rural development as a result of employment generation, technology transfer and

promotion of capacity building.

Obstacles for increased biomass development identified in Uganda include inadequate land due to

increasing population density and a high demand for land for food crop farming. Since many of the

communities in Uganda are still deeply rooted in their traditions, they have great reverence to cultural

heritage sites that have special significance to the community. Biomass resources in such sites would

not be easily exploited due to cultural resistance.


1.2 Major Market Segments

Biomass is predominantly used at the household level for cooking and boiling water in the forms

firewood, charcoal, farm residues and wood wastes. Over 80 % of households and restaurants use

charcoal in urban areas traditionally on a metallic stove known as a “sigiri”, whilst rural households and

institutions use firewood in three-stone stoves or more modern improved stoves with a recent

introduction of charcoal.

Table 1: Details of Biomass Energy Technologies Available in Uganda Market

Equipment Capacity/application Cost (UShs)* Cost (USD)

Domestic charcoal stove Ranging from budget to large

size

8,000 – 15,000 3.59 – 6.73

Domestic heavy duty domestic

stove

Standard capacity 50,000 22.42

Multipot burners (wood chops) 2-12 pots (one fire feeding

point)

600,000 -3,200,000 269.06 –

1,434.98

Deep friers (wood chops) 8 - 30 liters 720,000 – 840,000 322.87 – 376.69

Meat roasters (charcoal or firewood) Domestic and commercial use 200,000-800,000 89.69 – 358.74

Water heating systems 100 -200 liters 3,250,000 –

4,500,000

1,457.4 –

2,017.94

Institutional energy saving jikos

(wood chops)

50-400 liters (serves 800

people)

800,000 –

2,200,000

358.74 – 986.55

Baking ovens (wood chops) 12,30 and 60 loaves (1kg) 800,000 –

2,200,000

358.74– 986.55

Milk pasteurisers (Wood chops) 150 -300 liters 3,000,000 –

4,500,000

1,345.29 –

2,017.94

Incinerators Institutional and hospital use 6,000,000 –

15,000,000

2,690.58 –

6,726.46

Source; MEMD*Based on 2004 prices (May 2010: 1 USD=USh 2,230)

The main biomass market segments in Uganda are:

(i) trees in forests, plantations, and on farmers lands;

(ii) agricultural and agro-industrial residues;

(iii) papyrus;

(iv) municipal solid waste

1.2.1 Forests and Woodlands

According to the MEMD’s 2004 Annual Report (2006), the per capita consumption in 2004 was 680

kg/yr and 240 kg/yr for firewood for rural and urban areas respectively, and 4 kg and 120 kg of

charcoal per person per year. Total biomass (firewood and wood for charcoal) demand for households

(year 2006) is 22.2 million tons per year. The cottage industries account for about 20 % of total

biomass use, adding a further 5.5 million tons of biomass and bringing the total biomass demand to

about 27.7 million tons as shown in Table 2 below.


Table 2: Woody biomass demand by sector (tons/year) 2006

Region Household demand Cottage industrial demand Total

Central 6,515,210 1,628,810 8,144,020

Eastern 5,382,940 1,345,740 6,728,680

Western 5,305,470 1,326,370 6,631,840

Northern 5,023,170 1,255,790 6,278,960

Total 22,226,790 5,556,710 27,783,500

Source: MEMD Annual Report 2004

Approximately 10-15 % of woodfuel demand is from the services/commercial and industrial sectors.

The high usage of biomass in these sectors has been attributed to the limited availability of electricity

and the high prices of petroleum products.

The woody biomass supply in Uganda comes from various sources of vegetation and land use types.

The major sources of woody biomass are hardwood plantations (mainly eucalyptus and indigenous

species), woodlands consisting of trees with an average height above five metres and a canopy cover

of over 40 %, bushlands (consist of small shrubs occurring in open stands) and subsistence farmland.

The total standing biomass stock is approximately 460 million tons with a sustainable biomass supply

of 50.8 million tons per annum. However, accessible sustainable wood biomass supply stands at 27.7

million tons of first grade quality wood. In addition, it is assumed that an additional 25 % is available

through leaves, twigs, and non-saw grade quality that is suitable for firewood purposes.

When crop residues, with a theoretical potential of 4.4 million tons, are included there is a national net

surplus of biomass. The total amount of agricultural and agro industrial residues after harvesting or

processing of crops amounts to almost 11 million tons per year. In addition, other sources of biomass

are potentially available but not used on any scale: papyrus, and municipal solid waste.

The Ugandan Forestry Department divides biomass cover into thirteen stratifications at the national

level and down to the regional and district levels (see Annex 1). The size of areas under the different

stratifications and their total potential respective available standing biomass are as shown in Table 3

below.


Table 3: Woody Biomass in Uganda

Land cover (use) Gross area (km2) Total biomass(,000 t, air dry)

Broadleaved plantations total 188.9 1,431.20

Built up areas total 365.8 47.4

Bushlands1 total 14,221.90 14,961.30

Grasslands2 total 50,721.10 58,560.80

Impediments3 total 37.4 0

Large scale farmlands total 684.5 0.6

Softwood plantations total 163.9 2,456.50

Subsistence farmlands total 84,007.10 104,534.30

Tropical high forest total 6,511.10 145,847.80

Tropical high forest (degraded) total 2,730.60 30,855.50

Water total 36,895.60 0

Wetlands total 4,840.30 0

Woodlands total 39,744.60 118,474.20

Grand total 241,112.80 477,169.60

Source: National Biomass Assessment Study 2003, Ministry of Water, Lands and Environment

Woody biomass supplies a very important source of energy for both the rural and urban population of

Uganda. It is worth noting that not all the biomass is accessible due to either being far from populated

areas or because of management restrictions in protected areas such as forest reserves, game

reserves and national parks. In consideration of reduced access to potential wood sources, Table 4

below provides a summary of estimated available national woody biomass resources.

Table 4: Summary of Estimated Available national Woody Biomass

Land cover

(use)

Gross

area (km2)

Protected

area (km2)

Available

area (km2)

Total biomass

(,000 t, air dry)

Protected

(,000 t, air dry)

Available

(,000 t, air dry)

Broadleaved

plantations total

188.9 66.7 122.2 1,431.20 505.65 925.55

Built up areas

total

365.8 26 339.9 47.4 3.72 43.68

Bushlands total 14,221.90 8,626.70 5,595.20 14,961.30 8,102.34 6,858.96

Grasslands total 50,721.10 23,163.40 27,557.70 58,560.80 27,522.52 31,038.28

Impediments

total

37.4 11.4 26 0 0 0

Large-scale

farmlands total

684.5 22.6 662 0.6 0 0.6

Softwood

plantations total

163.9 156.9 7 2,456.50 2,353.50 103

Subsistence

farmlands total

84,007.10 4,985.70 79,021.40 104,534.30 4,346.80 100,187.50

1 Bushlands refer to crown cover over 40% and below 5 meters.

2 Grasslands are predominantly covered with grass vegetation but with occasional scattered trees.

3 Implements refer to areas where no biomass is expected such as rock outcrops and bare lands.


Tropical high

forest total

6,511.10 4,763.40 1,747.70 145,847.80 106,700.83 39,146.97

Tropical high

forest

(degraded) total

2,730.60 971.5 1,759.10 30,855.50 10,978.29 19,877.21

Water total 36,895.60 270.5 36,625.10 0 0 0

Wetlands total 4,840.30 535.8 4,304.50 0 0 0

Woodlands total 39,744.60 13,726.50 26,018.10 118,474.20 40,728.35 77,745.85

Grand total 241,112.80 57,327.00 183,785.80 477,169.60 201,242.00 275,927.60

Source: National Biomass Assessment Study, 2003, Ministry of Water, Lands and Environment

1.2.2 Agricultural and Agro-Industrial Residues

Rural households will use agricultural residues whenever available, particularly during the harvest

seasons. In addition, they will gather as much wood and small biomass leftovers then can find. Only

households in secondary cities and larger towns may use purchased firewood in addition to gathered

firewood. Biomass energy from crops is derived from agricultural residues available from growing,

harvesting, and/or processing of food crops (cereals, root crops and pulses) as well as cash crops

such as coffee, tea and cane sugar. The distributions of these crops in the country depend on specific

crop requirements such as soils and climatic conditions (e.g. rainfall patterns and its distribution).

Table 5 below indicates the available agricultural residues in Uganda.

Total cultivated area for crops and plants as a potential source of energy is almost 5.1 million ha. The

total amount of agricultural residues left after harvesting or processing of crops amounts yearly to

almost 11 million tons. As of today, sugar mills utilise to some extent residues for energy conversion

using modern technology, all other industries with residue potential do not use these. A small amount

of coffee and rice husks are utilised for heat production in cement as well as in brick and tiles

manufacturing. Residues are also used as fertiliser and/or animal fodder.


Table 5: Agricultural Residues in Uganda (MEMD)

Crop Type Residues (t) Availability for

energy (%)

Availability for

energy (tons)

Cassava 667,200 0 0

Bananas 3,604,799 30 1,081,440

Beans 273,001 30 81,900

Cow peas 26,783 30 8,035

Field peas 9,599 30 2,880

Soya beans 55,299 30 16,590

Finger millet 695,200 0 0

Sorghum 478,802 30 143,641

Maize 913,002 30 273,901

Rice 108,445 30 32,534

Wheat 10,800 0 0

Sun flower 22,251 0 0

Ground nuts 144,000 30 43,200

Sweet potatoes 666,900 0 0

Irish potatoes 155,726 0 0

Coffee 145,172 30 43,552

Tea 12,692 30 3,808

Tobacco 6,851 30 2,055

TOTAL 7,996,522 - 1,733,536

Source: MEMD (2007); Renewable Energy Policy for Uganda

1.2.3 Papyrus

Despite the lack of available data to determine the full extent of papyrus in Uganda, the World

Resources Institute indicated that 514 districts in Uganda have papyrus resources and 444 do not. In

addition, it shows that papyrus is available throughout the country with a concentration in the Western

and Southern parts and that there are already some small-scale harvesting operations. In Uganda,

papyrus grows at more than 20 t/ha/year (dry biomass), a higher productivity rate than typically

observed for eucalyptus trees4. Some harvesting has been reported but it is not known whether this is

for energy or for other purposes such as making mats as an alternative to water hyacinth.

1.3 Local Capacities

There is latent capacity in Uganda for issues dealing with biomass energy, dispersed across

organisations throughout the country. There is no interest group pursuing more efficient biomass

energy issues.

Partner organisations

Organisations established by stove artisans who continue to face capacity issues. Some do not

have formal job training and acquired practical on-the-job experience. They may have benefited

from occasional stakeholders courses organised by e.g. MEMD, NGOs, GTZ

Lack of own finances hinder expansion and better product improvement

4 Compared to a typical productivity of 10 t/ha for eucalyptus.


Research and Development is rarely given a priority and product differentiation is minimal

Product quality is not strictly adhered to

Capacity building programmes

GTZ advises the Ugandan MEMD and organises training measures on energy efficiency and

renewable energy for representatives of business. GTZ trains local producers of efficient stoves

and assists marketing plus awareness-raising campaigns within the population and training

courses in the villages on how the energy-saving stoves work.

One of the main universities in the country offers specialised courses in renewable energy.

Makerere University Faculty of Technology has acquired some basic testing equipment for

biomass related issues and can be involved in capacity building and technology assessment.

Elementary schools address household energy issues and include a section on improved stoves;

secondary schools have specialised curricula for household energy.

Through the Partnership for Clean Indoor Air (PCIA), managed by the US Environmental

Protection Agency, UGASTOVE (as the market leader sold 30,000 units in 2008) has improved

their capacity to construct and operate a fuel-efficient kiln to produce light-weight insulation

ceramics to be used in the production of improved cooking stoves.

Availability of qualified human resources

Educational programmes in schools and sessions organised by GTZ and other NGOs have raised

the awareness on efficient biomass stoves.

A pool of technicians and artisans exist, but there is still a shortage of engineers with prerequisite

skills in the bioenergy field.

A number of personnel who have trained overseas have returned to Uganda.

Local contacts

There is not a professional association to look after the interests of biomass and biomass energy

practitioners.

Competing interests among various players have led to emergence of multiple advocacy

organisations which may not be strong enough to pursue a common objective for all players.

MEMD has produced a Renewable Energy directory with GTZ funding.

Local suppliers for bioenergy installations

Manufacturers of improved cook stoves utilise local materials only.

There are few suppliers of industrial equipment like modern kilns, presses etc.; most of these are

fabricated locally at informal workshops.

Available suppliers also double-up as consultants thereby reducing the reliability of their installed

systems.

Potential customers first contact their suppliers and give little consideration to the importance of

consultancy advice that they find expensive and often not necessary.

Local operation and maintenance capacities

Most of the manufacturers do not have quality verification systems in place which has hindered

market penetration due to lack of confidence in local products.

After sale services of bioenergy systems is not well established. This has caused low level of

confidence in viability of such systems hence reducing their uptake among the local population.


Constraints to local business growth

Lack of investment capacity for expansion and modernisation.

Many of the business set up are family-oriented or traditional, and thus lack the prerequisites for a

modern business approach.

Lack of unified advocacy body to pursue a united objective for all the sector players hinders higher

market penetration.

Local capacity for research and development

Makere University has a Forestry Faculty with four departments: Forestry Products, Forest

Management, Community Forestry and Forest Biology.

The Uganda Forestry Resources and Institutions Center (UFRIC) intends to ensure sustainability

of forestry resources in Uganda through systematic data collection and analysis for use in forest

policy formulation.

2 Bioenergy Market Potentials

2.1 Overall Sector Outlook

The national balance of woody biomass has a deficit of 85,000 tons (Report on the Renewable Energy

Resource Information Development and Capacity Building Assessment In Uganda; KAMFOR, 2006),

i.e. the estimated sustainable supply of woody biomass is smaller than the total estimated demand for

wood fuels plus timber. This does not include crop residues and non-timber grade. However, the use

of biomass is site-specific due to bulkiness and low density characteristics of most residues transport

from one region to another is not practical and expensive. For firewood, commonly accepted

breakeven distances are about 80 km from the consumption centre, while charcoal can be transported

over much larger distances of several hundreds of km. Therefore, at a regional level differences in the

local supply-demand balances occur, with a deficit of about three million tons in both the Central and

Eastern Regions, and a surplus of about four million tons in the Northern region and of about two

million tons in the Western region.

Currently, accessible sustainable wood biomass supply stands at 27.7 million tons. When crop

residues, whose theoretical potential in Uganda could be 4.4 million tons, are included, there is a

national net surplus. Agro-industrial residues from the sugar, coffee and rice industries amount to

about 3.7 million tons a year. Sawmilling residues (440,000 m3) consist of sawdust, bark, chips and

other waste wood that is not suitable for further processing; most of this is used as fuel wood.

Table 6: Regional Wood Biomass Balances

Regions Total Demand Sustainable

Supply

Balance

Central 8,144,013.18 5,152,332.95 – (2,991,680.23)

Eastern 6,728,674.51 3,812,874.61 – (2,915,799.90)

Western 6,631,836.37 8,485,586.19 1,853,749.82

Northern 6,278,955.35 10,247,437.46 3,968,482.11

Total 27,783,479.40 27,698,231.20 – (85,248.20)

Source: KAMFOR Report, 2006


Several barriers hamper further bioenergy development and use in Uganda.

Inadequate legal and institutional framework

There is no standard procedure for developing bioenergy activities and legal instruments to

supporting investments. There is a Renewable Energy Policy for Uganda but this has hardly been

put into place and as a result there are not many concrete actions.

Low priority for bioenergy

Insufficient attention is given to biomass energy in the national policies, strategies, programmes

and projects. Prospects for petroleum deposits in the Western Rift Valley have further decreased

the government’s interest in bioenergy and increased interest in fossil fuel exploration and use.

Preferential investment incentives for petroleum sector development are likely which will further

marginalise bioenergy. The majority of policymakers, planners, decisionmakers and political

leaders equate energy with high-grade forms of energy such as electricity and petroleum products.

The quasi-exclusive focus on increasing access and substituting away from biomass energy is

partly due to a poor understanding of the important roles currently played by biomass energy.

Poor data bank

There is lack of comprehensive and reliable data on both the consumption and supply sides.

Biomass energy planning relies on a wide variety of information (both quantitative and qualitative)

from different disciplines. The responsible institutions (Energy Department and Bureau of

Statistics) lack the prerequisite financial and human resources as well as the professional interest

to properly address this sector. The key institutions in the biomass sub-sector like MEMD and

MUK, NGOs and private companies experience shortage of qualified personnel/experts in the

area of biomass. Also the institutional linkages between the various actors are weak and in some

cases non- existent.

Lack of suitable and available financing mechanisms

Commercial banks in Uganda do not offer financing schemes that support short or long-term

investments in biomass energy due to perceived risks and misunderstanding of the sector. The

biomass sub-sector largely functions and operates in the informal and private sector and banks

consider it as risky business with little attraction for capital investments and poor payback

performance. The sub-sector is characterised by projects/businesses with long gestation periods

and small profit margins. It is rarely attractive to large capital providers as it lacks financial appeal

compared to other sectors of the economy.

Underdeveloped markets

There is potential for commercial demand of bioenergy products, but the market is not yet fully

developed to realize actual demand. The public is neither aware of available new technologies

with associated advantages and constraints, nor are they aware of the usefulness of investing in

such technologies. Few local producers/manufacturers and importers characterise the sub-sector.

Limited technical and institutional capacity

The public and private sectors have limited technical and institutional capacity to develop and

manage bioenergy projects. Training at higher institutions of learning has not sufficiently

emphasized bioenergy in the engineering and other related professional courses.

Lack of research and development support

Due to increased pressure to fulfill pressing social and infrastructural concerns, there is limited

government’s budgetary support to higher learning and research and development institutions to

carry out adaptive research that can promote the development of bioenergy.


2.1.1 Recommendations for German companies

Partner with local companies that understand local market dynamics. Identify key institutional

partners to assist in strengthening the capacity of these players to effectively carry out their

respective roles which is ideal to sustain a project.

Identify the most appropriate and cost-effective designs before launching a large-scale

dissemination programme; pilots are a good and low-cost way to identify any remaining barriers.

Establish and enforce design, quality and service criteria to commensurate modern technology as

practiced in Europe to ensure the reliable and cost-effective operation of installed systems as a

fundamental attribute to realising success in energy projects.

Sub-standard product quality is expected in the Uganda market and therefore product

differentiation is absolutely necessary. German technology is known for its robustness and

durability, and products sold in Africa should not differ from this.

Understanding end-user/market needs and concerns by designing a product that meets these

needs and addresses the concerns.

The market for renewable energy technologies (RETs) and after-sales delivery services are

underdeveloped. Market vendors for RETs are concentrated in major towns only and it is

expensive to contract sales and after sales services in rural areas. Any potential investor should

see this as an opportunity for entry into the market.

2.2 Undeveloped Market Opportunities

In addition to the mainstream primary woody biomass resources, a large potential exists in the form of

secondary sources like agro-industrial and agricultural residues and municipal solid wastes (MSW).

Although it is technically possible to produce electricity from these residues by combustion through

combined heat and power (CHP), it remains a matter of economic performance that determines the

viability. The operational costs of using agro-industrial residues, the benefits of replacing grid

electricity and income from the sale of excess electricity back to the national grid should provide an

adequate rate of return on the capital investments in the bioenergy plant. The suitable technology

depends on the size of the plant.

Advanced biomass technologies such as gasification, and modern brick kilns are still new and

untested in the country, possibly presenting viable bioenergy business opportunities.

The Renewable Energy Policy for Uganda estimated a potential of more than 5 GW potential from

renewable energy, as indicated in Table 7. Biomass could contribute 2.45 GW, almost 50 %, of this

potential capacity. The following table illustrates the potential of different alternative energy resources

in Uganda in 2003/4, since which few developments have been made.

Table 7: The Renewable Energy Power Potential

Energy source Estimated electrical potential (MW)

Hydro 2,000

Mini-hydro 200

Solar 200

Biomass 1,650

Peat 800

Geothermal 450

Wind -

Total 5,300

Source: Renewable Energy Policy for Uganda, 2007


2.2.1 Agricultural and Agro-Industrial Residues

Table 8 below shows potential energy production potential for agro-residues; the economically viable

part to this potential is likely to be much smaller because the feedstock has a low energy density, is

difficult and expensive to transport, and cannot always be easily burnt in a boiler.

Table 8: Energy Production Potential from Agro-Residues

Biomass type Annual production

(‘000 tons/yr)

MWe average

Bagasse, total 590

Of which un-used surplus, (available

immediately)

3 x 25-50 67

Rice husks 25-30 16

Rice straw 45-55 30

Sunflower hulls 17 20

Cotton seed hulls +50 (being developed) 1

Tobacco dust 2-4 2

Maize cobs 234 139

Coffee husks 160 95

Groundnut shells 63 37

Total 407

Source: Renewable Energy Policy MEMD 2007.

Some of the food and cash crops that would in theory provide substantial potential for energy

extraction are highlighted below in Table 9. Some of the residues will be ploughed back into the fields,

households will use some and the remaining could be used for industrial energy purposes. Whether or

not this is viable should be determined through a systematic assessment. The fact that the three sugar

mills all have converted their boilers to allow CHP generation operations indicates that it is

economically viable in Uganda to use biomass for energy purposes in a commercial setting.

Table 9: Technical Potential of Agro-industrial and Agri-cultural Residues

Agriculture residues

Remarks

Sugar cane Bagasse form sugarcane can be used for cogeneration to produce electricity. Currently, three factories in Uganda, namely: Kakira Sugar Works Ltd, Kinyara Sugar Works Ltd and Sugar Corporation of Uganda Ltd, already employ cogeneration equipment with a total electricity generation of over 10 MW. There is potential to increase this as the excess can be fed to the national grid.

Banana

The banana is a common food in Uganda and on average consists of 35 % banana and 65 % banana peelings. The production of banana in 2003 was 9.6 million tons of which 6.2 million tons are banana peelings. This can be used for briquetting that can be used as fuel in small scale industries and commercial institutions. Even if only 10 % can be collected, this still is a large quantity compared to the total market for wood fuels.

Cassava Total cassava production in Uganda in 2003 was five million tons. The stalk residues weigh approximately 326,000 tons that can in theory be used as source of energy.

Maize Maize is an annual plant grown widely in Uganda. After harvest, the straw and cobs are residues that can be utilised to provide energy sources. The production of maize in Uganda in 2003 was 1.2 million tons.

Rice

The amount of rice produced in Uganda in 2003 was 109,000 tons. The resulting rice husks

can be a viable source of energy.

Groundnut

The amount of groundnuts produced in Uganda in 2003 was 130,000 tons. The groundnut

shells or husks are well suited for energy purposes.

Coffee

There are two commercially grown coffee species in Uganda, Robusta and Arabica. Coffee

husks removed when coffee beans are harvested can be utilised for to provide energy e.g.

as in Uganda Clay, Kajjansi Bricks. The coffee production in Uganda in 2002 was

approximately 210,000 tons.


2.2.2 Municipal Solid Waste (MSW)

Municipal waste in Uganda is generally composed of wet carbon and nitrogen rich materials that

include organic waste from households, agro-industrial waste (slaughter houses, food industry) and

agro waste (manure and straw). There is a vast amount of municipal waste (both solid and sewage

effluents) that is currently not being utilised for energy production. The capital city, Kampala, produces

an estimated 430,000 tons of solid wastes annually. Other municipalities and towns also generate

considerable amounts of waste, but do not have in place proper waste management plans. Over 70 %

of the municipal solid waste is vegetable matter (mainly food residues). The current practice is either

to burn these wastes in the open-air or dump them in landfills with no extraction of their energy

contents. This does not only result in a waste of energy potential, but also causes environmental risks

as the burning is not controlled and the landfills are poorly managed.

Kampala City Council (KCC) currently collects only 40 % of the waste generated in Kampala (KCC,

2002). The following Table 10 shows the potential for electricity generation from MSW in the capital

city.

Table 10: Potential for Electricity Generation from MSW

Power output from waste combustion

Year Waste

produced

(tons)

Feeding rate,

combustion

(kg/h)

Heat

output,

based

on EHV

(KW)

Effective

power

generation

(KW)

Electricity

output

(GWh)

theoretical

(1)

Electricity

output

(GWh)

practical (2)

Electricity

output

(GWh)

theoretical

(3)

2004 430247 49115 102925 28563 250 98 98

2005 444876 50785 106425 29534 259 101 114

2006 460002 52512 110043 30538 268 104 131

2007 475642 54297 113785 31576 277 108 149

2008 491813 56143 117653 32650 286 112 169

2009 508535 58052 121653 33760 296 115 189

2010 525825 60026 125790 34908 306 119 211

2011 543703 62067 130066 36095 316 123 234

2012 562189 64177 134489 37322 327 128 258

2013 581304 66359 139061 38591 338 132 284

2014 601068 68615 143789 39903 350 136 311

Source: Kampala City Council Strategy to improve Solid Waste Management in Kampala City Council, Kampala

City Council, Kampala Uganda, 2002

Note: The level of waste generation in 2002 is the baseline for the projected the calculations. Steady growth rate

in the capital population at 3.4 %, steady rate of waste production at 1 kg per capita is assumed and 5 % recycling

rate. 1) The theoretical available waste amounts provided 100 % collection rate. 2) the practical amounts are

based on the current collection rate at 39 % 3) This scenario involve an increase of the collection rate by 5 %

annually, initially at 39 % in 2004 and rising to 89 % in 2014.

MSW can be used for electricity generation through a combination of combustion and methane gas

extraction. The non-combustible organic matter can be digested to produce biogas. The slurry that

comes out of the digester is rich in nitrogen, phosphorous, potassium and humus and can be used to

replace imported fertilizers and increase agricultural productivity on farms. In addition to municipal

wastes, there are vast quantities of industrial wastes like spent grains in the breweries and used oils,

which can all be used for power generation. The large quantity of sewage can also be effectively used

to generate biogas. Biogas in principle can be used as domestic fuel, fuel for vehicles and power

generation, but in practice power generation is the most practical.


In rural farms MSW can be converted into biogas for cooking and lighting at the domestic level, and

commercial dairies and piggeries at the industrial level can generate biogas to be used by gas turbines

to generate electricity and heat in cogeneration technology.

Table 11: Potential Opportunities Solid Biomass –MSW

Opportunity 1: Municipal solid waste

Potential reserves MSW: 50,000 t/annum (Kampala only)

Under development None known of substantial magnitude

Type of equipment MSW: collection and drying equipment: specialised tractors, trailers; storage

facilities; specialised boilers and furnaces

Justification MSW: electricity and/or gas generation

Organisational set-

up/operator models

Private investments

Planning 3+ year time horizon

Constraints/obstacles Financing availability

Recommendations for

German companies

Look for opportunities in Development Business and local newspapers

Options: electricity generation; other energy-intensive manufacturing or processing

2.2.3 Other Solid Biomass Opportunities (Mainly Household Sector)

The supply of solid biomass use in the household sector is quite substantial. The market for charcoal

in towns and cities is fairly large and commercial firewood is used throughout the country. These

products originate mainly from natural forests and to a limited extent from man-made wood

plantations, and private lands.

Charcoal demand is driven by three factors: (i) urban households have no time to collect firewood or

residues and for convenience reasons they buy charcoal; (ii) urban areas have a growing population

which results in a growing charcoal market; (iii) high cost of alternatives, such as kerosene, LPG and

electricity compared with charcoal resulting in market inertia.

There is a large market for solid fuel in Uganda and much of it is in the hands of private individuals and

village authorities. This creates several opportunities for new business to supply woodfuel to industries

or the household market, or to supply alternative biofuels. Conversion of wood into charcoal is

inefficient and causes many harmful emissions. Although modern stove technologies that double

charcoal fuel efficiency and reduce emissions are used in Europe and Latin America, they are not

widely used in Africa.

There are possibilities for the production of briquettes from residues or other. Briquettes made from

carbonized materials replace charcoal for use in households; briquettes from materials that are not

carbonized replace firewood and are likely for industrial purposes. However, in practice these

possibilities are quite limited as most valuable residues are already used by small-scale industries,

such as coffee husks, rice husks. In urban areas there are limited quantities of charcoal dust available

that could be made into briquettes also.


Another option for producing briquettes is the use of fast growing biomass, such as papyrus or water

hyacinth through sustainable harvesting. Papyrus is an interesting option that is available but not used.

(Tests on the conversion of papyrus into charcoal briquettes are expected in Rwanda in the near

future). It has already been demonstrated in Mali with typha, which is a very similar plant to papyrus.

Table 12: Potential Opportunities Solid Biomass – Traditional Fuels

Opportunity 2: Other solid biomass

Potential reserves Briquetting of residues

Modernisation of the charcoal conversion and the whole charcoal supply chain

3rd

generation improved stoves

Under development

Type of equipment

20-50

Justification

Briquetting equipment, carbonizes/kilns

Organisational set-

up/operator models

Commercial sale of fuel; export to Congo

Planning

Private investments or fee for service

Constraints/obstacles

5+ year time horizon

Recommendations for

German companies

Financing availability

Potential reserves

Look for opportunities in Development Business and local newspapers

Consider setting up a CDM project

Finally, there is an opportunity with regards to solid biomass in the commercialization of modern

cooking appliances. The urban and rural population uses improved stoves on a fairly large scale,

however, these are based on traditional stove models that have been in use for 30 years and are not

the most modern appliances. Many households, urban and rural, now have mobile phone access and

are looking for ways to further modernize their lives. Modern cooking stoves fit in this pattern. Bosch-

Siemens, Philips, Envirofit, and BP have recently developed modern, efficient; low-emission stoves for

plant-oil, firewood and kerosene, however, the projects remain at marketing trials. It is not unthinkable

that households would accept buying modern stoves if these became available and affordable. The

potential market size is significant at five million households (firewood stoves) and one million urban

households (charcoal stoves).

Table 13 presents potential market opportunities for more modern energy equipment in the biomass

energy field. The figures in the table are the MEMD targets to improve efficient utilisation of biomass

resources in the country.


Table 13: Biomass Technologies Targets and Impacts

2007 2012 2017

Technology Baseline No.

of units

Savings Ton

Biomass

Target No. of

units

Savings Tons

biomass

Target No. of

units

Savings Tons

biomass

Improved

wood stoves

170,000 2,300,000 1,000,000 9,520,000 4,000,000 23,380,000

Improved

charcoal

stoves

30,000 96,000 100,000 320,000 250,000 790,000

Institutional

wood stoves

450 10,800 1,500 36,000 5,000 120,000

Baking

ovens

60 4,860 250 20,000 1,000 81,000

Kilns (lime,

charcoal,

brick)

10 4,500 30 13,500 100 45,000

Biogas 500 1,000 30,000 60,000 100,000 200,000

Total 2,417,160 11,221,000 27,825,000

Source: Renewable Energy Policy, MEMD 2007

Assuming an investment of USD 8 for improved wood stoves, USD 26 for improved charcoal stoves,

USD 1,025 for institutional wood stoves, USD 770 for baking ovens and USD 2,065 for kilns the

annual market value is equivalent to USD 28.5 million with a 70 % market penetration. This calculation

assumes a constant population over the period. Taking into account the current population growth of 3

%, the market will be equivalent to USD 37 million for the technologies considered.

2.2.4 Liquid Biofuels

The government actively supports the development of this sector and some private firms have started

to initiate activities by buying seeds from out-growers and developing plantations, however the

industry is still in its infancy.

It is estimated that in 2010 Uganda will import and consume 360 million liters of diesel and 385 million

liters of gasoline. If this fuel could be blended with environmentally friendly locally produced biofuel,

Methyl alcohol, at proportions of 25 % for gasoline and for 60 % diesel, it would require a total of 312

million liters of Methyl alcohol. If a total of 312 million liters of petroleum products are replaced by

Methyl alcohol, this will replace nearly one million tons of CO2-emission in the country and would make

a commendable impact on the environment.

Various options exist for biodiesel production in Uganda. A considerable amount of oil can be obtained

from various plant products. The advantage of most of these plants (other than Jatropha) is that they

can be used as cooking oil or for other processing. A recent feasibility study in Uganda (MEMD,

Annual Report 2006), found it uneconomical to produce ethanol from molasses due to the high

demand of molasses in the production of local gin, the Uganda Waragi. On the local market a liter of

crude Waragi costs more than UShs 7,000 (USD 3.6), ethanol for petrol blending would fall far below

this whilst petrol prices hover below USD 1 per liter.

The government’s Renewable Energy Policy recommends blending of diesel with 20 % biodiesel and

is intended to create a market and attract investment in biodiesel production. To ensure that this is

integrated with the agriculture system, the government is promoting oil seed production to meet the

need for feedstock for biodiesel and for edible vegetable oil production. The bio-diesel will be used for

the transport sector and farm power production. Blending of all diesel used for transport in Uganda

with 20% biodiesel would translate into a market potential of 100 million liters of biodiesel based on


2008 figures, increasing to approximately 200 million liters in 2012 given the annual average increase

in diesel consumption of 17%.

Jatropha has been grown mainly as a support tree in small-holder vanilla farms. In the last two years

there has been interest in Jatropha as a crop for oil seed production. A number of organic processors

in Mukono District have started buying Jatropha seeds from the vanilla growers. The seeds are then

used as raw materials for oil extraction and the oil is either converted into biodiesel first or used

directly in internal combustion engines. For example, the flower growing company Bas Lankveld based

in Mukono District (www.royalvanzanten.com) buys Jatropha seeds from farmers and uses it as a

source of fuel for running their machinery. The company has also established a Jatropha farm of 11 ha

and would like to expand it to 100 ha. Interest in Jatropha production and processing in Uganda is very

high.

The Mukwano group of companies (www.mukwano.com), the largest importer of vegetable oil,

operates the largest sunflower out-grower scheme in the districts of Apac and Lira. Annual production

of sunflowers in these two districts is estimated at more than 10,000 mt contributing more than USD

17 million to the local economy. Mukwano intend to establish a 1000 ha Jatropha plantation and build

a processing facility for biodiesel. Palm oil and sunflower plantations are being established in

Kalangala District. Though earmarked for vegetable cooking oil, the palm establishment is encouraged

among small holders for excess oil for energy production. More farmers are producing sunflower

crops, especially through the efforts of the Uganda Oil Seed Producers and Processors Association

(UOSPA). A hectare currently produces about 1.5 tons, with current processing techniques produces

about 400 liters of oil and about one ton of cake, which is used for poultry and cattle feed. Higher

yields per ha and more oil per kg of sunflower can be achieved with improved pressing technologies

and the use of fertilizers and irrigation. A liter of oil fetches is about UShs 2,000 and cake UShs 200

per kg, barely competitive with petroleum products from the pump.

The government estimates that present sunflower and oil yields are good enough to encourage large-

scale uptake of sunflower production and processing. UOSPA through training farmers’ groups on

agronomy, harvesting and post-harvesting techniques is already achieving higher yields per hectare. It

also gives seeds to the farmers and provides market links to millers. There are presently about 25

millers who process between 2.5 - 20 tons a day with a collective capacity of about 200 tons (50 m3/d).

2.2.5 Advanced Technologies

Modern biomass power generation systems are not very common in Uganda, but are gaining ground

in developed countries on account of its cleanliness, availability sustainability and non-reliance on

fossil fuels. This is mainly through gasification (conversion of biomass material into gaseous fuel and

ash under limited air supply). Gases can be used for combustion engines for electricity production.

Systems are often configured as cogeneration, i. e. simultaneous production of electricity and the use

of exhaust heat (e.g. in production processes). A study sponsored by the National Forest Authority

(SPGS/ Unique forestry consultants; Reducing the Uncertainty for Forest Investors in Uganda, 2006)

indicates that using Eucalyptus grandis and Markhamea lutea plant species on a short rotation of four

to five years, can produce electricity at a cost of US cents 10.5 per KWhel and is comparable to that of

grid electricity (US cents 12.6 per KWhel).

In addition, pyrolysis is a technology that could use low-grade biomass residues (grass, leaves, etc)

and transform into fuel oil equivalent. A sugar mill plant was assessing a test project with Dutch PSOM

funding whereby bagasse would be used to produce a fuel oil that would be used in the mill or sold to

a cement factory. The status of this activity is unknown.


Table 14: Potential Opportunities Liquid Biomass

3 Bioenergy-Specific Regulation and Framework

3.1 Policies and Regulations

The government’s commitment to develop the use of renewable energy sources is aimed at creating

means for socio-economic development especially transforming rural areas. In implementing the policy

the government expects to address poverty issues, catalyze industrialisation and protect the

environment.

3.1.1 National Energy Policy (esp. Biofuels)

Uganda’s current National Energy Policy promotes accelerated power generation from renewable

resources and emphasizes the development, adoption and utilisation of modern fuels and

technologies such as biofuels, whereas previously there were no specific incentives for the growing of

energy crops. The provision of incentives for the growing of energy crops is expected to contribute to

re-afforestation and sustainable use of biomass. However, charcoal production and transportation

remain unregulated and the disposal of biomass waste by burning is not restricted.

The government’s Renewable Energy Policy recommends blending of diesel with 20 % biofuel. By

specifying the maximum proportion of biodiesel blends the government hopes that investors will be

attracted to invest in biodiesel production knowing that there is a market for it. As outlined above, to

ensure that the biodiesel is integrated in the agriculture system the government is promoting oil seed

production not only to meet the need for feed stock for biodiesel but also for edible vegetable oil

production. The biodiesel is likely to be used in the transport sector and also in rural electrification and

farm power production. The expected benefits from the policy include:

Opportunity 3: Liquid

Biomass

Under development Private firms have started developing oil production to replace own

petroleum fuel consumption

Type of equipment Oil pressing; refining; esterization

Justification Payback from savings on the consumption of petroleum fuels

Organisational set-

up/operator models

Private investments, CDM

Planning 5+ year time horizon

Constraints/obstacles Financing availability

Recommendations for

German companies

Look for opportunities in development business and local newspapers

Options: CDM or voluntary market


Improved national energy security by using indigenous renewable energy sources instead of

imported fossil fuel

Create employment and income in rural areas

Promotion of local renewable natural resources

Reduced emission of carbon dioxide to the atmosphere

Promotion of a new source of income to farmers

Support rural electrification strategy

Promotion of technology transfer

Blending of all diesel used for transport in Uganda with 20 % biodiesel would translate into a

market potential of 100 million liters of biodiesel in 2008 increasing to approximately 200

million liters in 2012 given the annual average increase in diesel consumption of 17 %

(obtained from the rate of fuel imports projections).

The government has stated the need for developing appropriate regulations for grid connections and

support for electricity generated from renewable energy. The policy also states the intention of

facilitating commercially-based development of small-scale renewable energy power generation,

utilising indigenous renewable energy sources such as bagasse, crop residues and mini-hydro by

implementing a standardised transactional framework for contract, pricing and regulation.

3.1.2 Electricity Regulation Authority (ERA)

In the case of rural electricity systems with generation capacity of less than 2 MW or sales of less than

4 GWh per year, the ERA has the power under Section 114 of granting exemptions from licensing.

The projects will still need to register and the absence of a license does not preclude the ERA from

exercising its other regulatory functions. The Electricity Act contains provisions which allow ERA to

delegate its regulatory powers to competent local authorities. However, regulatory responsibilities are

not delegated to any local authority which is active as the sponsor of an electricity project. This is in

order to prevent conflicts of interest arising. Any local authority entering into the role of a project

sponsor must immediately declare its interest and surrender any existing regulatory functions to the

ERA.

Article 56 of the Electricity Act 1999 requires “the system operator, in consultation with the authority, to

publish standardised tariffs based on the avoided cost of the system for sales to the grid of electricity

generated by the renewable energy systems of up to a maximum capacity of 20 MW.”

3.1.3 Forestry Policy

The Forestry Policy (2001) indicates that the government will actively protect, maintain and sustainably

manage the current permanent forest estate. Profitable and productive forest plantation businesses

will be promoted. The private sector will play the major role in developing and managing commercial

forest plantations. This may either be through large-scale industrial plantations on government or

private land, or through small-scale plantations on farms. The role of government will be to support

and regulate this development and create a positive investment climate to encourage private

investment in commercial forest plantations. The government will also set out priority areas for the

development of fuel wood, timber and carbon storage plantations in different areas of Uganda,

concentrating fuel wood priorities in peri-urban areas.

Collaborative partnerships with rural communities will be developed for the sustainable management

of forests. The government will promote innovative approaches to community participation in forest

management on both government and private forest lands. This will address the disincentives


associated with a protectionist approach to forest management, and the destructive practices

associated with open access to forest resources. The development of collaborative forest

management will define the rights, roles and responsibilities of partners and the basis for sharing

benefits from improved forest management. There will be a specific focus on wide stakeholder

participation, collective responsibility and equity, and on improving the livelihoods of forest-dependent

communities.

3.2 Applicable Public Sector Support /

Financing Mechanisms and Sources

The level of dependence on external sources to finance energy development in Uganda has been

prevalent, overlooking the need to mobilise local financial resources. A few private sector biomass

energy initiatives have been implemented using locally generated resources however, the success of

these initiatives is limited.

Some biomass energy technologies such as biogas systems, institutional stoves and technologies for

harnessing alternative fuels have high investment costs that discourage end-users. The first biogas

digesters introduced in Uganda were made of concrete and/or bricks that most farmers could not

afford. Currently, integrated rural development initiatives are disseminating a tubular biogas digester

that is cheaper; however, farmers still need financial assistance.

In order to promote the development of biofuels the government intends to provide financial incentives

for the production of biofuels through

i. Subsidies to the farmers of vegetable oil

ii. The removal of taxes on biofuels

iii. Five-year-tax-free importation of machinery and equipment (from licensed

manufacturers, who have a patent)

In order to encourage the use of municipal waste for energy extraction, the government intends to

promote fiscal measures that will discourage open burning or disposal of wastes without extracting

their energy content.


3.3 Campaigns and Others

The Renewable Energy Policy outlined the following strategies:

Table 15: Biomass Energy in the Renewable Energy Policy

Policy Objective Strategies

Utilise biomass energy

efficiently so as to contribute

to the management of the

resource in a sustainable

manner

1. Promote, in collaboration with NFA and MAAIF, the growing of energy

crops.

2. Provide incentives for farmers to establish commercial woodlots.

3. Integrate biomass energy production and efficient utilisation and its

impacts on climate and health into the formal education system.

4. License charcoal production and transportation and encourage commercial

production in an efficient and sustainable manner.

5. Promote the production and use of biogas at both household levels and

large/industrial scale. Scale up household biogas units to 100,000 by

2017.

6. Scale up the adoption of efficient charcoal fuel stoves from 20,000

currently to 2,500,000 households by 2017.

7. Increase the adoption of efficient fuel wood stoves from 170,000 currently

to 4million by 2017.

8. Promote interfuel/intertechnology substitution in households, commercial

buildings and industry.

9. Promote efficiency in intensive wood burning industries.

10. Promote biomass fired cogeneration in industries and institutions.

11. Offer training opportunities for “Jua Kali” artisans for manufacture,

installation and maintenance of efficient cook stoves.

12. License encroached national forest reserves to investors.

Promote the sustainable

production and utilisation of

biofuels

1. Develop appropriate legislation for the use of biofuels.

2. Adopt appropriate international standards for the manufacture and

blending of biofuels with petroleum fuels.

3. License companies to blend up to 20 % biofuels into gasoline and diesel.

4. Provide financial incentives for the production of biofuels.

5. Set up a biofuels standard testing facility at the UNBS for testing and

monitoring purposes.

6. Monitor the standards of biofuels producers.

7. Sensitise the public and stakeholders on the use of the biofuels.

8. Facilitate research on biofuels.

Promote the conversion of

municipal and industrial

waste to energy

1. Provide incentives for the conversion of wastes to energy.

2. Put in place fiscal measures that will discourage open burning or disposal

of wastes without extracting their energy content.


4 Business Partners and Competitors in the Bioenergy

Sector

4.1 Overview of Bioenergy Market Players

The GTZ’s Promotion of Renewable Energy and Energy Efficiency Programme (PREEEP) has been in

operation for several years, jointly implemented with the MEMD. It is focused on improved cooking

stove promotion and dissemination plus addressing non-biomass energy. GTZ has implemented

NGO-led training of artisans in several districts including Bushenyi and Rakai.

The most successful stove models today are the stationary, clay improved cooking stoves (the Rocket

Lorena) and the portable improved stove (shielded). The dissemination of the improved Rocket Lorena

stoves has followed a “pyramid” system strategy that starts with a few coordinators and ends with

hundreds of stove builders at the village level. NGOs train sub-county coordinators who select artisans

to train at the parish and village levels.

The project strategy is to build the capacity of an NGO in a chosen district to technically and

administratively manage the program. The NGO appoints a number of district coordinators for the

scaling up dissemination process. Since the district is divided into sub-counties, parishes and villages,

the NGO builds the capacity of sub-county stove coordinators. Selected potential stove builders from

every village are trained at parish level by visiting trainers. Every parish is given a proven artisan to

train the stove builders. The parish coordinator also ensures that the stove builders are organised into

operational groups that can disseminate stoves. The sub-county coordinator is responsible for the

selection of trainees and organising the training in every parish in the sub-county. This strategy has

been successful used to disseminate over 175,000 Rocket Lorena stoves in Bushenyi and Rakai

districts in Uganda since 2005.

GTZ estimates that PREEEP with its partners have reached over 200,000 households with improved

stoves within two years, saving over 200,000 tons of wood are per year.


Table 16: Selected Bioenergy Market Players in Uganda

Full Name Core Business and Market

Position

Products Location Further remarks Contact details

Consultants Biogas Consultant

Engineering Workshop

Established in 1985. Focus on

biogas feasibility studies,

surveys, system layouts, bio-

digester construction and

installation, fabrication and

modification of biogas appliances

and consultancy

Products available include fixed

dome biogas digesters, biogas

appliances. Services

Kampala Company has

collaborations with

CARMATEC –

Tanzania, NARO,

Makerere University

Christopher Kato

Namalere, Kawanda Trading

Centre

8 miles off Kampala,

Bombo Rd

P.O. Box: 7144,

Kampala, Uganda

Mob: +256 (0) 772 495000

Email:

[email protected]

Energy Saving Stove

Builders Co. Ltd

Focus in energy efficient biomass

usage for domestic, commercial

and institutional purposes in the

Western areas of Uganda –

Mbarara, Bushenyi, Kanugu,

Kabale and Kasese

Design and production of

stainless cooking systems,

institutional stoves, biomass

baking ovens

Mbarara Ibrahim Barugahare

Old taxi park- Mbarara

P.O. Box 707,

Mbarara 70964,

Kampala, Uganda

Tel (+256) (0) 77442557

Retailers Institutional & Commercial

Cooking Systems

Fabrication, design and

production of stainless steel

based energy saving equipment

for domestic, commercial,

institutional and factory use.

Company is also involved in

biomass consultancy and

apprentice training. Only

operates within Kampala but

sells over the country

Domestic improved charcoal

stoves, baking ovens

Kampala Arthur Mugyenzi

Bagala, Seeta Industrial Area,

Namilyango Rd

P.O. Box 994,

Kampala, Uganda

Tel: +256 (0) 414 285679

Mob: +256 (0) 772 489299



Uganda Stove

Manufacturers Limited

(UGASTOVE)

Firewood/charcoal saving stove,

rocket stove for households and

institutions, training of artisans,

research and awareness raising

Firewood/charcoal saving stove,

rocket stove for households and

institutions

Kayemba

Rd,

Kampala

USD 350,000,

more than 50

employees

Mohamed Kawere

Nkere Zone, Kayemba Rd,

Kibuye

P.O.Box 1265,

Kampala, Uganda

Tel: (+256) (0) 752640073

Contractors

Prime Equipment and

Contractors Ltd

Charcoal/firewood energy saving

stoves, wood fuel boilers, baking

ovens, incinerators and

construction services

Joseph. I. Semaganda

Mutungo - Biina, off Port bell

Rd

P.O. Box 971,

Kampala, Uganda

Tel: +256 (0) 312 283479

Mob: +256 (0) 772/753 403785


Uganda Oil Seed

Producers and

Processors Association

(UOSPA)

Oil seeds Northern

Uganda

Plot 47/49 Nkrumah Road

UCA Building- 1st Floor

P.O Box 26357

Kampala Uganda

Tel:(+ 256) (0) 41 342504

Fax: (+256) (0) 41 342504

Email:

[email protected]

Bas Lankveld

Flower grower Flowers, oil seeds Mukono

district

www.royalvanzanten.com

Urban Community

Development Association

(UCODEA)

A community based organisation

focused on the promotion of

biomass energy efficient

appliances for both domestic and

institutional use

Biomass products – households

(sigiri), ovens and institutional

stoves. Also carries out

research, consultancy and

training in alternative energy

sources in the biomass sub-

sector

Plot 574, Kayemba Road,

Nkere Zone

Kibuye Parish, Makindye

Division, PO Box 15191

Kampala, Uganda

Tel: (+256) (0) 41 578 251

Others Joint Energy &

Environment Project

(JEEP)

Environmental NGO started in

1983

Institutional stoves, promote use

of domestic stoves,

consultancy, training in stove

construction and solar energy

applications

Kampala,

Kyanja,

Gayaza

Road

Plot 243, Gayaza Road

Kyanja, Kampala

7 miles/11 kilometers north of

P.O. Box 4264

Kampala Central, Uganda

Tel (+256) (0) 414568300,

772468662

Email:


[email protected]

Youth Association for

Rural Development

(YARD)

Dissemination of energy saving

stoves and wood lot planting

Ngongwe

Subcounty,

Mukono

District

Lunaana Luke

Ngogwe sub county, Mukono

District

P.O. Box: 109,Lugazi

Uganda

Tel:(+256) (0) 773116664

Email :

[email protected]

Political

pressure

groups,

NGOs, etc.

Yumbe District Farmers

Association (YDFA)

Capacity building in use of

improved stoves and promotion

of tree planting

Yumbe Edon Brahan Nasur

Yumbe Town Council next to

Local government

Administration Offices

BOX 55, Yumbe

Tel : (+256) (0) 782541579


Uganda Orphans Rural

Development Programme

(UORDP)

Dissemination of rocket Lorena

stoves to communities

Tororo J. Apollo

Wills Rd, Namirembe, Kampala

&

Plot 3, Busia Rd, Tororo

P.O. Box: 29156,

Kampala & 853 Tororo

Tel: (+256) (0) 392822223

Mob: (+256 )(0) 752 621842

Email:

[email protected]

JEEP

This page is best viewed at 1024 x 768 resolution. Copyright © 2008 JEEP


Table 17: Key Actors and their Roles

Key actor Role in sector Contact details

Government The Ministry of

Energy and Mineral

Development (Energy

Department, New and

Renewable Energy

Sources Division)

MEMD is the lead agency in the

energy sector. It is responsible

for policy formulation, promotion,

coordination, monitoring and

evaluation. MEMD is also

responsible for initiating

legislation in the energy sector.

Eng. Paul Mubiru

P.O.Box 7270,

Kampala.Uganda

Tel: (+256) (0) 41-4349010

Fax: (+256) (0)41-4349342

E-mail: [email protected]

Internet: http://www.energyandminerals.go.

ug/dept_energy.php

The Ministry of Water,

Lands and

Environment

Major actor providing requisite

information on biomass

distribution and balances in

different parts of the country.

Plot 21/28 Port Bell Road, Luzira

P.O. Box 20026 Kampala

Uganda

Tel: (+256) (0) 414 505942


www.mwe.go.ug

National Bureau of

Statistics and the

Ministry of

Agriculture, Animal

Industry and

Fisheries

Provide information on energy

demand and supply; and,

production and stocking rates in

relation to use of agricultural

waste for energy production

respectively.

Uganda Bureau of Statistics

Plot 9, Colville Street

P.O. Box 7186

Kampala, Uganda

Tel: (+256) (0) 414 706000

Fax: (+256) (0) 414 237553


Internet: www.ubos.org

Ministry of Agriculture, Animal

Industry and Fisheries

P.O.Box 102, Entebbe – Uganda

Tel: (+256) (0) 41 32084, 320981

Internet: www.agriculture.go.ug/

The National

Environment

Management

Authority

The principal environmental

monitoring agency in Uganda in

charge of strategic and project

based impact assessments.

Involved in licensing of projects

that may have an impact on the

environment. Awards

environmental clearances,

following review and approval of

environmental audits,

environmental impact

assessment (EIA) statements

and resettlement action plans

(RAP).

Nema House,

Plot 17/19/21 Jinja Rd,

P. O. Box 22255

Kampala,Uganda

Tel: (+256) (0) 414 251064/65/68

Fax: (+256) (0) 414 257521


Internet: http://www.nemaug.org

The National

Agricultural Research

Organization (mainly

Agricultural

Engineering,

Appropriate

Technology Research

Institute and Forestry

Resources Research

Institute) and

Makerere University

Both play an important role in

research addressing technology

development and research

issues.

NARO Council Secretariat

Plot 3, Lugard Avenue, Entebbe

Council Sectretariat: P.O.Box 295,

Agricultural Engineering:P.O. Box:

7144

National Forestry Resources

Research Institute: P.O.Box 1752

Entebbe, Uganda

Tel:(+ 256) (0)41 320512, 41

320341/2; 41- 320178

Fax: (+256) (0) 41 321070


Internet: www.naro.go.ug


Water Resources

Management

Department (WRMD)

WRMD is the authority that

awards surface water permits

and construction permits to

developers. Additionally, WRMD

provides technical advice to the

developer in the early stages of

the EIA and initial project

development phase.

Plot 12 Mpigi Road, Entebbe

P.O. Box 19,

Entebbe

Tel: (+256) (0) 321914, 321342

Fax (+256) (0) 321368

Email [email protected]

Private

Firms,

Producers

Associations

and NGOs

acting as

Energy

Service

Companies

The National Forestry

Authority (NFA)

Mandated to manage and

license tree growing in 506

Central Forest Reserves

(CFRs).

10/20 Spring Road, Nakawa

Tel: (+256) (0) 31 264035/6,

41 230365/6

Fax: (+256) (0) 41 230369


Internet: www.nfa.org.ug/

The Sawlog

Production Grant

Scheme (SPGS)

Have reforested 7,500 ha in the

last five years. SPGS clients are

considering producing power

from thinning.

Plot 92 Luthuli Avenue Bugolobi,

P.O.Box 5244

Kampala, Uganda

Tel: (+256) (0) 31 226 5332/3

Fax: (+256) (0) 31 226 5334

Internet: http://www.sawlog.ug/

Uganda Timber

Growers Association

(UTGA)

UTGA is an advocacy body for

the private timber plantation

sector which focuses on policy

drivers affecting the forest

industry and the investment

climate in plantations. It is

engaging in bioenergy marketing

and policy issues.

Plot 116, Bukoto Street,

Kamwokya, Kampala

P.O. Box: 5244

Kampala, Uganda

Tel: (+256) (0) 772 435353

Fax: (+256) (0) 704 435353

Internet: www.utga.net

CREEC, the Centre

for Research in

Energy and Energy

Conservation

Based at the Faculty of

Technology – Makerere

University is carrying out

practical research in gasification

of wood and agricultural

residues.

Dr. I. Pereira Da Silva

Makerere University

Faculty of Technology

P.O. Box: 7062, Kampala

Tel: (+256) (0) 414 532008

Mob: (+256) (0) 772 505792


Global Village Energy

Partnership

International

Is in the process of creating a

multimillion dollar East Africa

Energy Access Fund covering

all EAC partner states.

73 Wicklow Street

London WC1X 9JY

United Kingdom

Tel: (+44) (0) 207 713 8246

Fax: (+44) (0) 207 713 8706


Internet:

http://www.gvepinternational.org/

Uganda Electricity

Transmission

Company Ltd

(UETCL)

It is the bulk supplier and single

buyer of power for the national

grid in Uganda. It is the

purchaser of all independently

generated power in the Country.

UETCL is also responsible for

publishing standardized tariffs

for renewable energy generation

up to 20 MW capacity based on

the avoided cost principle.

Plot No.10, Hannington Road

P.O.Box 7625,

Kampala, Uganda

Tel: (+256) (0) 41 4233 433/4

Fax: (+256) (0) 41- 3441 789


Internet: http://www.uetcl.com/


Rural Electrification

Agency (REA)

REA responsible for developing

and promoting rural

electrification and rural

electrification projects. Rural

Electrification Board (REB), as

the governing body for REA,

controls subsidies for rural

electrification and renewable

energy projects, and therefore

decides on priorities and

allocation of funds.

Plot 1 Pilkington Road

10th Floor, Worker’s House

P.O Box 7317,

Kampala, Uganda

Tel: (+256) (0)312

264095/264103/4/5

Fax: (+256) (0) 414 346013


Internet: http://www.rea.or.ug/

4.2 Overview Major and/or Most Emblematic Bioenergy Projects

Table 18: Most Important Bioenergy Projects

Location Installed capacity Success factors

Kinyara Sugar Works 7.5 MW Use bagasse for cogeneration

Sugar Corporation of

Uganda Ltd (SCOUL)

3.5 MW Use bagasse for cogeneration

Bas Lankveld, Mukwano

Industries

N/A Private interest in oil seeds, buying oil seeds for

pressing and own energy use of for sale


4.3 Highlights in Local Bioenergy Market Developments

The British energy firm, Aldwych International, intends to construct and install a biomass power

plant of 50 MW in Uganda. The company is backed by the Dutch development finance institution

and Shell. It has filed a proposal with the Ugandan Electricity Regulatory Authority (ERA) for the

project estimated to cost about USD160 million. It is expected that the plant be commissioned in

2010 and has a life-span of 20 years.

A local company, Africa Power Initiative (API), is in the advanced stages of producing 60,000 liters

of oil a day from locally grown Jatropha and other oil seeds in Uganda's North-Eastern region of

Karamoja. The project integrates the local community and is a partnership with American and local

investors. The farm employs over 500 people on 2,000 acres of land.

In 2002, Kakira Sugar Works Ltd was licensed to generate about 6 MW from baggase for its

internal use. In July 2003, the company completed a power purchase agreement with the Uganda

Electricity Transmission Company (UECTL) to sell electricity to the grid. With the planned increase

in cane production, the company plans to expand the cogeneration facility to generate 14 MW.

The local company Liquefier Uganda Limited became operational in Uganda in 2007 introducing

synthetic oil to burn in especially designed lamps (Liquilamp). The company currently imports the

biofuels (synthetic oil and gel) from their South African-based parent company Liquefier Pty

Limited. The Liquilamp, which takes half a liter of synthetic oil, sells at UShs 26,000 (USD 13.3)

giving 60 hours of burning or lighting. The synthetic oil has been mixed with a chemical called

citronella, a mosquito repellant, as an advantage due to prevalent malaria problem. Other

products are gels that come with specially designed stoves, made of mild steel. A liter of gel,

which burns in the stove, sells at UShs 3,600. A five-liter gel pack burns for a period of three to

four weeks for light cooking. The gel product leaves minimal residue after use and produces

double the energy compared to gas and paraffin. The company is planning to start local

production in the near future.

In 2008, the US Trade and Development Agency and the MEMD signed a USD 572,000 (UShs

972.4 million) grant to develop the potential for a biofuel market. The grant was to provide cost-

benefit analysis on potential biofuel resources and technologies, as well as recommend

appropriate industry regulations and potential incentives for the development of safe and

responsible biofuel production.

http://www.aldwych-international.com/

http://www.era.or.ug/


Annex 1: Biomass Stratification

The Forestry Department divides biomass cover into 13 stratifications at the national level and down

to the regional and district levels. The key stratifications are:

i. Hardwood Plantations: mainly eucalyptus indigenous species e.g. Maesopsis eminii.

Eucalyptus species are planted for the production of transmission poles, building construction

timbers and fuel wood for both domestic energy as well as for agricultural uses such as

tobacco curing or tea production.

ii. Softwood Plantations: comprises pines and cypress mainly for timber supply but also to

reduce pressure on natural forests. They provide little in terms of fuel wood. One third of the

coniferous plantations are Cupressus spp. and the remainder is Pinus spp.

iii. Tropical High Forest (stocked): without human interference that is normally protected as they

occur mainly in forest reserves and national parks.

iv. Tropical High Forest (depleted): degraded by human influence, mainly in the non-gazetted

areas and on private land.

v. Woodlands: open stands of trees, single storied. Woodlands are characterised by trees above

5 m with a canopy cover of over 40% and a ground layer dominated by grasses.

vi. Bushlands: a crown covers below 40 % with trees below 5 m in height. They mainly consist of

small shrubs occurring in open stands.

vii. Grasslands: dominated by grasslands and scattered, short and small-diameter trees.

viii. Wetlands: permanently covered by wetland grass e.g. papyrus or seasonal varieties.

ix. Subsistence farmland areas with settlements: include areas where agro forestry is practiced.

x. Commercial Farmlands: large-scale farms e.g. sugarcane and tea plantations.

xi. Built-up areas: include urban and trading centers, etc.

xii. Water bodies: include lakes, ponds and rivers

xiii. Impediment areas: include rock outcrops and bare lands.


References

Alternative Energy Sources Assessment Report, 2004

Annual Report Ministry of Energy and Mineral Development, 2001




Kampala City Council Strategy to improve Solid Waste Management in Kampala City Council,

Kampala City Council, Kampala Uganda;

National Biomass Assessment Study 2003

Renewable Energy Policy for Uganda., MEMD 2007

Report on the Renewable Energy Resource Information Development and Capacity Building

Assessment In Uganda, KAMFOR Report, 2006

The Sawlog Production Grant Scheme (SPGS) / Unique forestry Consultants, Reducing the

Uncertainty for Forest Investors in Uganda, 2006

This publication is available free of charge as part of the public relations work of the Federal

Ministry of Economics and Technology, and may not be sold. It may not be used by political parties

or campaigners or electoral assistants during an election for the purposes of campaigning. In

particular, it is forbidden to distribute this publication at campaign events or at information stands

run by political parties or to insert, overprint, or affix partisan information or advertising. It is also

forbidden to pass it on to third parties for the purposes of electoral campaigning. lrrespective of

when, in what way, and in what quantity this publication reached the recipient, it may not be used

even when an election is not approaching in a way that might be understood as suggesting a bias

in the federal government in favour of individual political groupings.

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