Page 4 - AfrElec Week 09

AfrElec COMMENTARY AfrElec
China’s solar plans for Uganda
Uganda cannot let Chinese investment in renewables leave it exposed to unsustainable debt, stranded assets and high tariffs, writes Richard Lockhart
UGANDA
WHAT:
China’s CEEC has revealed plans to build 500MW of solar in Uganda
WHY:
China aims to break into Uganda’s booming on- grid solar market
WHAT NEXT:
Uganda must be careful not to become exposed to excessive Chinese debt and expensive generation projects
CHINA Energy Engineering Corp (CEEC) has revealed plans to develop 500MW of solar gen- eration capacity in Uganda.
The state-owned energy conglomerate told the Hong Kong Stock Exchange that it aims to secure a $500mn framework agreement with Ugandan interests to provide engineering, pro- curement and construction (EPC) services to produce the necessary infrastructure.
The EPC contract involves two phases of work, with construction of 500MW of solar capacity to be carried out by China Gezhouba International, a subsidiary of China Gezhouba Group Co., for a total investment of $500mn.
However, Uganda’s Electricity Regulatory Authority (ERA) told local media that it had not yet received any application from CEEC for any solar capacity.
CEEC did not reveal any details about project locations or local or international development partners. CEEC’s statement said that it would reveal more details when it had completed a for- mal commercial contract agreement.
CEEC has considerable experience in Africa. In January, it said it had won a contract to build 500MW of distributed PV capacity in Egypt, with China Gezhouba Group again picking up the EPC contract.
Solar politics
Uganda’s grid-connected solar capacity cur- rently stands at 50MW, which was mainly West- ern built and supported by Western financial institutions.
There are a number of projects under devel- opment. Locally owned Xsabo Group aims to develop 150MW of grid-connected solar capac- ity across the country. Its 20-MW Kabulasoke Pilot Solar Park was opened in 2019 and is the largest solar park in East Africa.
Although solar is booming in sunny Uganda, the Chinese have also lodged plans to build a $1.4bn, 840-MW Ayago hydropower plant (HPP) in Uganda. This would add to the nearby 600-MWKarumaHPP,whichiscurrentlybeing built by China’s Synohydro and is due for com- pletion in 2020.
One result of this is that Uganda could suffer from over-capacity in future, with cur- rent demand at just 670MW, compared with 1,250MW of online capacity.
On the other hand, access to power is low at 28%, meaning that there is considerable unmet demand.
However, depending too much on Chinese investment and technology for large grid-scale projects leaves it exposed to some risks.
Uganda must make payments for the hydro
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w w w . N E W S B A S E . c o m Week 09 05•March•2020