Overview
As the Ugandan government prioritized the expansion of its power production, foreign investment in the sector has increased. The Electricity Regulatory Authority estimates that as of December 2024, installed electricity capacity in Uganda was 2,048 megawatts (MW) with demand at 985 MW, leaving a surplus of 1063 MW. Uganda’s largest hydropower project, the 600 MW Karuma Hydro Power Dam, came fully online in September 2024, after years of delays. With an annual energy sales growth rate of 17%, additional electricity generation investment is required to avoid a deficit. Analysts believe a large demand exists, particularly among industrial consumers, due to Uganda’s unreliable transmission and distribution systems. Despite these energy projects, Uganda has one of the lowest electrification rates in Africa, primarily due to an overreliance on biomass sources in the energy mix, constrained electricity transmission and distribution infrastructure, limited access to off-grid solutions, limited productive use of energy, and uncoordinated intra- and inter-sectoral planning. Inclusive of off-grid solutions, 76.4% of Ugandans have access to electricity in urban areas; however, access drops to 42.4% in rural areas, and averages just 51.5% nationwide. As of December 2024, Uganda had approximately 4,962 km of transmission lines, exceeding the government target of 4,354 km by 2025. Some existing generation capacity cannot be distributed due to insufficient transmission infrastructure and total energy losses in 2024 were estimated at 17%. Additional investment is also needed to enable the export of electricity to other countries in the region. The Electricity Regulatory Authority regulates licensing, generation, transmission, and distribution. Uganda’s power tariffs are set on a quarterly basis, and the average tariff to consumers is $0.19/kWh ($0.09/kWh for large industrial users), with the first 15 units of power subsidized. The government-owned Uganda Electricity Distribution Company Limited is the largest energy distributor in Uganda, distributing 93% of all electricity in the country. The concession for private power distributor Umeme ran out in March 2025, and the government took over in April 2025. The U.S. government has in the past provided transaction advisory services to generation projects to reach financial close or commercial operations.
Opportunities
Investment opportunities remain in small and medium hydropower generation projects, especially those that can help balance the distribution network and support ancillary services including storage. The government plans to add at least 1,600 MW from three large hydropower projects: the 840 MW Ayago Power Dam, 400 MW Kiba Dam, and 392 MW Oriang Power Dam. The government has prioritized development of the Kiba Power Dam; feasibility studies are complete, and the project is now awaiting funding. The government seeks private investment in transmission and plans to build 13,000 km of new transmission lines over the next 20 years, along with associated substations, switching stations, and transformer capacity, with a total estimated cost of approximately $4.8 billion. In distribution, the government seeks private sector investment to develop mini grids for over 650 target communities, which were mapped and identified with U.S. government support. According to the Electricity Regulatory Authority, there are another 19 undeveloped small hydro station sites around the country.