By Justin Giannantonio
East Africa’s Lake Victoria, the largest freshwater tropical lake in the world, is a valuable resource for people in Rwanda, Burundi, Kenya, Tanzania, and Uganda for fishing, irrigation, drinking water, and transportation. In Uganda specifically, the lake is also a source of hydropower.
Yet extreme, variable weather patterns due to climate change, as well as hydropower overuse, are wreaking havoc on the lake. In 2005, the water level of 10.89 meters was reported as being the lowest level since 1961. Just this month, Lake Victoria’s waters have been rising dangerously, flooding low-lying villages and leaving death and destruction. A recent study in the journal Earth and Planetary Science Letters found that if the current course continues uninterrupted, Lake Victoria–and all that it provides to countries in East Africa–could dry up in the next 500 years.
Importantly, hydropower use is not efficient, and demand outpaces supply; just above half of urban Ugandans, and only 10 percent of those in rural areas, are connected to the electrical grid. Over-abstraction from Lake Victoria has led to merely half of installed capacity actually utilized for electrification. Additionally, numerous droughts between 2003 and 2007 have declined hydropower generation by over 70 percent.
In order for Uganda to meet the electrification needs of its rural population without further harming Lake Victoria, Uganda’s Ministry of Energy and Mineral Development should consider shifting investment from large-scale hydroelectric projects to cheaper and more reliable large-solar projects. Solar energy has the added benefit of more easily reaching isolated rural areas.
However, to increase rural electrification, Uganda has earmarked three hydropower projects for immediate development, including the Ayago hydropower dam, which would be the largest power plant in the country. Based on a natural run-of-the-river flows and Lake Victoria water elevations, the planned Ayago dam will only produce less than half of the planned output, thus supplying little electricity to the national grid.
Zeroing in on hydropower, the Government of Uganda has invested US$1.1 billion into financing the Ayago hydroelectric project. The construction contract of the dam was awarded to the China Gezhouba Construction Company, with construction beginning this year. These costs, consisting of resettlement and environmental mitigation costs, would exceed the initial investment by 30 percent. A financial cost-benefit analysis indicates that based on internal costs and externalities, Ayago is an unsustainable project.
Under the Global Energy Transfer Feed-in Tariff (“GET FiT”), a program to promote clean, renewable energy in East African nations, a solar PV power plant as an alternative to the Ayago Hydroelectric Power Station would prove more cost-effective and sustainable. GET FiT could assist in stabilizing Ugandan power sector finances by calculating the least-cost generation capacity, in addition to helping Uganda overcome some of the key hurdles of solar power generation. This will add much-needed clean generation, help to strengthen regional grids, and result in emissions reductions.
A successful solar power plant in South Africa, the Jasper Solar Energy Project, has connected 30,000 people to electricity. South Africa’s geography is similar to that of Uganda, which suggests that a similar project can easily be transferred to rural Uganda. The total cost of the Jasper project amounted to US$260 million, which is US$ 1.6 billion less than the planned Ayago Hydroelectric Power Station. Electricity is generated at the cost of USD 0.11/kWh, allowing energy prices in South Africa to remain low.
When considering the internal and external costs, the Ayago Hydroelectric power station proves economically unsustainable. A financial cost-benefit analysis with an economic comparison of the Ayago hydroelectric power station and a proposed 100-MW solar PV power plant is below:
|Option 1: Ayago Hydroelectric Power Station on Victoria Nile||Option 2: 100-MW Solar PV Power Plant in the Kotido District + GET Fit Mechanism|
|Unit Cost per kWh||US$ 0.21 per kWh||US$ 0.15 per kWh|
|Initial Investment||US$ 1.1 billion||US$ 300 million|
|Total Construction Cost||US$ 1.9 billion||US$ 260 million|
|Operation and Maintenance Costs||US$ 30 million||US$ 4 million|
[Notes: Cost overrun calculation for Option 1 (resettlement cost: US$5 million + Environmental mitigation cost: US$43 million); Cost overrun calculation for Option 2 (resettlement cost: US$0 + Environmental mitigation cost: US$20 million)]
In option 1, the total cost of the hydroelectric project will amount to US$1.9 billion, thus exceeding the initial investment of US$1.1 billion by the government of Uganda. Note that the planned hydro project also faces a substantial cost overrun risk of 30 percent due to construction delays, implementation of environmental management plans, and resettlement policies. In option 2, the total cost of the project amounts to US$264 million, with a cost overrun of only 5 percent. If constructed, the Ayago hydroelectric power station will cost Uganda an additional US$800 million for an equal output of 100-MW. Therefore, it becomes clear that constructing a 100-MW solar PV power plant would be a more cost-effective way to provide electricity to the national grid, thus increasing electrification in rural areas.
The installation of a 100-MW solar PV power plant would diversify Uganda’s portfolio of electricity generation resources and more cost-effectively provide electricity to rural Uganda. While climate change has increased the frequency of drought in East Africa, the government of Uganda must look towards a shift in investment from future large-scale hydroelectric projects to cheaper and more reliable 100-MW solar projects. The Jasper solar project in rural South Africa can be used as a model for designing, implementing, and operating a 100-MW solar power plant. We do not have to choose between electricity and the environment. With a commitment to solar power, we can increase electrification rates in rural Uganda without threatening the important resource that is Lake Victoria.
Photo of solar field at the Agahozo Shalom Youth Village in Rwanda by Sameer Halai on Flickr
Justin Giannantonio is a graduate of the University of Pittsburgh’s Graduate School of Public and International Affairs. His master’s work focused on renewable energy development in sub-Saharan Africa, with an emphasis on international development policy. Justin interned as a policy analyst at the Uganda National Renewable Energy and Energy Efficiency Alliance, where he worked on numerous energy needs assessments for small-scale solar development projects in Northern Uganda. He worked alongside the CEO to create a comparative policy analysis of Uganda’s current draft energy policy to those in Kenya and Nigeria. His findings and recommendations were presented to the Uganda Ministry of Energy and Mineral Development.