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Uganda, Siti II

Delivering 16.5MW of clean hydropower to stimulate economic development

sitiII UPDATE

Context

Uganda has an electrification rate of 18%. In recent years population growth and accelerating industrialisation have seen demand for power grow by 7% to 9% annually. The Government of Uganda is committed to developing the country’s renewable energy sector, highlighting hydropower as a major pillar of its Second National Development Plan. Uganda’s rivers and topography offer potential for small hydro plants to deliver baseload power as part of a wider renewable energy mix.

Project
Siti Elgon Hydro (Siti II) will develop a 16.5MW run-of-river hydropower plant on the slopes of Mount Elgon. The plant will be built downstream of Siti I, a small hydro plant also supported by EAIF, with the two coming together to form a cascade hydro scheme. Siti II will be built, owned and operated by Elgon Hydro Siti and is the largest of four plants being developed in Uganda by lead sponsor, DI Frontier Market Energy and Carbon Fund. Siti II required long-term finance to be bankable. EAIF and the lead arranger, FMO, provided senior debt to the project with a loan tenor of 15 years, longer than loans available from domestic commercial banks. Long-term finance will enable the Uganda Electricity Transmission Company (UETCL) to invest in its network whilst keeping costs affordable for its customers. EAIF's experience working in Uganda's energy sector enabled it to share specialist technical and financial knowledge with DI Frontier, a company with limited assets in Uganda.

Impact
Affordable, reliable power will transform living standards and underpin the growth of small businesses. Costing US$0.09/kWh, Siti II’s hydropower is cheaper than diesel generation and the plant will enable UETCL to replace some of its diesel-fired plants. Siti II will create 192 construction jobs and 23 local people will gain long-term employment. It is anticipated that businesses in the area will undertake some legal and accountancy functions. EAIF and FMO are working with DI Frontier to deliver Siti II as part of a four-plant portfolio which will collectively deliver approximately 33MW of power to Uganda’s national grid. The approach enables swift replication of projects which benefit from the economies of scale offered by the wider portfolio. Adopting a portfolio approach could enhance the bankability of small-scale renewables across sub-Saharan Africa.