Those engaged in the clean energy sector of Uganda will agree that momentum is building towards increasing energy access via renewable sources.

Investment in this sector has increased substantially over the last decade. In 2018 alone, the private sector represented 70 percent of clean energy investments in Uganda, totalling USD 3.1 billion!

With the clear potential of renewable sources to expand energy access in Uganda, both the private sector and the government recognize that beyond financial investment, there is need for heightened collaboration in the sector. In the past few years, the country has seen increased engagements and collaboration between public and private stakeholders in the review and drafting of energy related policies. Through this engagement, the core issues that are being addressed are:
1. Policy and regulation
2. Consumer protection and awareness
3. Consumer and supply chain finance

The growing momentum also means a growth in the number of stakeholders active in this space. While the increase in actors in the sector is a positive sign, it presents a challenge in coordination. As one United Nations Capital Development Fund (UNCDF) partner said, “It is like having 11 football players on the same team, in a football match where more than half of the players are blindfolded”. If Uganda is to reach the potential of clean energy to address energy access and broader Sustainable Development Goals (SDGs), collaboration and transparency is required across the sector.

As part of the Inclusive Digital Economies (IDE) programme, the UNCDF Energy Access programme is working with a broad range of stakeholders to design interventions that help address these challenges.

At the policy level

UNCDF is engaging policy makers such as the Ministry of Energy and Mineral Development ( MEMD) in promoting policies that incentivize clean energy growth. UNCDF also works with the Uganda Solar Energy Association (USEA) to coordinate and advocate for a clean energy sector that promotes growth and shared understanding of needs and opportunities.

For consumer protection and awareness

UNCDF is working with the Uganda National Bureau of Standards (UNBS) by providing equipment to test the quality of clean energy products in the market. Through this testing, we can help ensure that consumers are accessing products that work, building trust across the industry. We are also supporting the development of a database that will help solar energy companies improve the transparency and accuracy of information for investors interested in getting involved in the sector.

At the consumer and supply chain financing level

There is no ‘one size fits all’. UNCDF takes a multi-step approach to catalyze financing in the clean energy space based on the needs of a vastly diverse group of stakeholders (that includes clean energy consumers and companies).

When it comes to access to solar energy products, for example, consumers have a range of affordability levels. This includes those that can use pay-as-you-go (PayGo) for smaller systems to those that can afford the upfront costs for larger systems. Across the spectrum of affordability, consumers have different financing needs. Our support and designed interventions have to reflect these different needs. The solar companies that serve these different consumer segments also have different financing and technical needs.

UNCDF designs and currently provides a menu of financing options that help different businesses based on their attributes, such as their stage of growth, level of business maturity, etc. For example, clean energy companies face higher costs in getting products to those in hard-to-reach areas. With the support of the Swedish International Development Cooperation Agency (SIDA), UNCDF has organized several Challenge Fund windows to provide grants to businesses that need the capital to reach last-mile communities.

The LDC Investment Platform – the next level for growth

As with any innovation, there are failures, successes, and lessons learned. When businesses succeed, they can access additional financing that focuses on post proof of concept. Through this option, businesses can tap into the LDC Investment Platform, which blends grant and debt capital along with technical assistance to further grow and achieve sustainability.

Businesses that are at least three years old but have difficulty in raising funds can also tap into financing options through the LDC Investment Platform. This option aims to accelerate energy access by providing much needed working capital and technical assistance where needed. Given the maturity of businesses at this stage, other financing options such as guarantees can be deployed to crowd in other investors.

For the businesses that need much more working capital and are ready to scale, UNCDF, through the LDC Investment Platform, can tap into the Build Fund for financing of US$1 to US$2 million.

These financing options are not mutually exclusive.

The UNCDF Energy Access programme, like every player in the sector, learns by doing. Our next step is to replicate this approach across multiple programmes. By sharing our story, we hope that other stakeholders can learn from our challenges and build on the successes. Through collaboration and knowledge-sharing, the clean energy sector in Uganda can move forward together and reach its true potential in catalyzing sustainable growth in the decades to come.