The 5MW Siti 1 run-of-the river hydropower plant in Uganda’s Mount Elgon area has begun operations, generating electricity for 60,000 homes, schools and businesses in the area.

The project has been developed under the Global Energy Transfer Feed in Tariff (GET FiT), a dedicated support scheme for renewable energy projects managed by Germany’s KfW Development Bank in partnership with Uganda’s Electricity Regulatory Agency (ERA) and funded by the governments of Norway, Germany, the UK and the European Union. The GET FiT programme helps renewable energy sources become more affordable and therefore more accessible in Eastern Africa. GET FiT is providing a subsidy of EUR 2.9 million in the form of result based premium payments per kWh of delivered electricity.

Dutch development  bank FMO arranged a US$35 million senior loan for the financing of the project, together with the 16.5MW Siti 2 scheme. Both projects are developed and owned by Elgon Hydro Siti Limited which is majority owned by DI Frontier Market Energy & Carbon Fund K/S (Frontier Energy), a Danish private equity fund managed by Frontier Investment Management that is developing and implementing a portfolio of renewable energy projects in Eastern Africa.

Siti 1 is the first project out of a larger mandate with Frontier Energy to arrange US$83 million financing for five small hydropower project’s in Uganda, totaling 47MW. FMO syndicated 50% of the Siti projects to the Emerging Africa Infrastructure Fund (EAIF).

Uganda has one of the lowest electricity consumption per capita in the world, with an average electrification rate of 15%. The country’s power sector suffers from a shortage of generating capacity and a lack of reliable and affordable electricity is hindering a more sustainable economic growth.