A vision for energising Uganda’s economic transformation

Uganda is among the fastest growing countries in the world. Maintaining this pace of growth would amount to an economic transformation for the country. Uganda is still a low-income country, with a GDP per capita 40% below the sub-Saharan Africa average. However, in the last two decades, real GDP has grown by around 6% annually. The IMF is forecasting similar growth on the horizon, which would need to be sustained to meet Uganda’s development and poverty reduction goals, including reaching upper-middle-income status by 2040.

Energy systems must modernise and expand rapidly to meet these ambitions, prompting Uganda’s decision to develop the Energy Transition Plan (ETP). The objectives of the plan, stated by Uganda's Ministry of Energy and Mineral Development (MEMD), are:

  • Provide universal access to electricity and cleaner cooking by 2030.
  • Modernise and diversify Uganda’s energy mix and promote its efficient use across all sectors to support industrial growth, poverty reduction and socio-economic transformation.
  • Ensure secure and affordable energy supply.
  • Mitigate energy emissions in line with Uganda’s conditional climate commitments, which imply a 20% reduction compared to baseline emissions in 2030.
  • Position Uganda as an energy hub for the East African region.

This report, produced in close collaboration with Uganda, provides an ambitious yet feasible pathway for the energy sector to meet these strategic objectives.

Given Uganda’s point of departure, efforts must be stepped up to develop the country’s energy systems. Electricity and clean cooking access rates remain low, at around 45% and 15%, respectively, despite recent progress driven by strong government programmes. Modern energy consumption per capita remains low – around 30 times lower than the average in advanced economies. Solid biomass, largely firewood, charcoal, and bagasse used in buildings and industry, accounts for 90% of the country’s final energy consumption today.

Importantly, the country has many domestic energy and mineral resources that can help realise the energy transition. Uganda has ample potential for solar, hydroelectric and geothermal power. With the opening of the Tilenga and Kingfisher oil fields in 2025, Uganda is set to become an oil producer and exporter for the first time. Currently the country imports all its oil products. It also has new graphite and rare earth projects in Orom and Makuutu under development and holds important deposits of other critical minerals. These resources, if harnessed well, could reinforce the transition and contribute to Uganda’s economic growth.

The first step of the transition is reaching universal energy access

The rate of progress required to reach universal access is steep, but not unprecedented. Prior to disruptions from the Covid-19 pandemic, electricity access rates improved at 5% annually, and clean cooking rates around 1.5%. To reach universal access to electricity by 2030, over 800 000 households would need to gain a connection each year to 2030. Kenya, Rwanda, Bangladesh and India have all achieved similar rates of progress in the past. For clean cooking, Uganda would need to deploy more than one million improved biomass or clean cooking stoves each year to reach its target, roughly 4% of the estimated global clean cookstove market today.

Reaching universal access this decade relies on all solutions available. Grid connections reach around 45% of those without access today in the transition plan, leaving the majority of connections to off-grid systems by 2030. Smaller systems provide an important first step for many households with acute affordability challenges and are gradually provided with more robust connections over time. Similarly, liquified petroleum gas (LPG) and electric cooking reach more than half of those gaining clean cooking access by 2030, but improved biomass cookstoves are an important transitional solution for many rural households with limited means to pay for fuel on an ongoing basis.

Universal energy access delivers huge benefits for development, health and gender equality. Extending electricity access to rural areas provides an essential lifeline to modernisation, improving economic productivity, access to information, and allows for a more decentralised economy. It can power agricultural pumps and cold-chain infrastructure, which would improve agricultural production and connect farming to commercial markets. Universal access to clean cooking in Uganda can avoid around 50 000 premature deaths from indoor air pollution per year by 2030, and save households two hours per day in collecting firewood – with the greatest benefits accruing to women and children. It also reduces the country’s net greenhouse gas emissions by up to 17 Mt CO2‑eq by 2030, with potential to fund multiple projects via carbon credits. Efforts to reach universal access by 2030 contribute to the creation of 170 000 clean energy jobs for Ugandans, an important stepping stone into greater formal employment and higher wages.

Uganda’s economic development depends on rising use of modern energy

Achieving universal access is a critical first step, but Uganda’s growth and development also depends on rising use of modern energy. In the ETP, electricity consumption grows faster than any other source of energy at 14% annually, bringing Uganda from almost 80 kWh per capita today to around 1 750 kWh per capita in 2050, reaching above levels in Egypt today. Oil demand grows threefold, reaching almost 125 kb/d by 2050, driven by rapidly rising freight and passenger transport.

Rising living standards mean more appliances, more travel, and more commercial activity, making efficiency measures vital to keep energy demand growth in check. In buildings, energy performance standards, including on imported equipment, help to rein in growing energy consumption. Improved urban design and public transit help alleviate some demand for private vehicles, but these still grow almost sevenfold by 2050. Plans to implement more stringent age limits for second-hand vehicle imports and strong electric vehicle plans mean electric two- and three-wheelers outsell oil-powered counterparts by 2035 and electric cars in 2037. This helps oil demand peak around 2040, aided by planned increases in biofuel blending. Heavy freight, aviation, and inland shipping still rely primarily on oil out to 2050.

Industrial growth drives the largest increase in energy demand, especially within mining, cement and steel sectors. Light industry remains the largest driver of economic growth, but significant efficiency improvements and switching to modern fuels means these industries use three-quarters less energy per unit of economic output by 2050. Energy-intensive industries contribute to a steep increase in demand for high-temperature heat from fossil fuels. Coal imports have ticked up in recent years to support the cement and steel industries, but natural gas helps curb this growth in the ETP, relying on imports from Tanzania and small amounts coming from Uganda’s oil fields. In particular, future expansions of primary steel increasingly rely on natural gas-based production routes that can be switched to low-emissions hydrogen in the future.

Electricity is at the heart of meeting rising demand in a cost-effective and sustainable manner

The power sector becomes the backbone of Uganda’s energy systems, with all growth met by low-emissions sources. Electricity rises to become the single largest source of energy consumed by 2040, growing to reach 56% of total final consumption by 2050. The grid today is already 99% renewable, with only a small amount of oil-based generation used in critical situations. Low-emissions sources of energy maintain this share all the way through to 2050, even while generation grows nearly forty-fold. Solar power is the leading source of low-cost generation, with country-wide solar resources better than global leaders, such as Spain. Hydro and geothermal resources together meet over one-quarter of generation by 2050 and, along with battery storage, play an important role in integrating solar and wind. Uganda has plans to develop nuclear power and is in Phase 2 of the IAEA’s Milestone Approach, with plans to bring on the first facility in the early 2030s.

A strengthened, interconnected grid is essential to Uganda’s vision to become a regional energy supplier. The country has existing or planned interconnections with all of its neighbours in the East African Power Pool. Reinforcing and better utilising these links helps lower costs, improve reliability and security, and enhance resilience against climate change and physical disruption. It also plays a key role in integrating rising shares of variable renewables, which reach around 45% by 2050, similar to levels seen in Uruguay. Uganda would need to accelerate domestic end‑use electrification efforts and greatly expand electricity exports to realise prior ambitions of installing 52 GW of generating capacity by 2040. These efforts could include earlier adoption of carbon capture, utilisation and storage (CCUS) and electrolytic hydrogen.

Leveraging emerging major extractive industries for growth

Uganda’s oil production and new refinery help meet growing domestic and regional demand in the ETP. Production of crude oil peaks around 230 kb/d by the end of this decade – 0.2% of global oil supply today. Even with Uganda’s efforts to peak domestic oil consumption in 2040, demand in the Greater Horn of Africa region remains higher than the region’s production. The planned Hoima refinery would reduce the need to import refined products and its output covers Uganda’s domestic demand, although meeting regional needs without importing would imply further refining expansion. In the ETP, best efforts are made to mitigate emissions from Uganda’s oil and gas operations. This includes a target for methane emissions intensity per barrel that is half of today’s global averages and powering oil and gas operations with low-emissions sources of electricity. Revenues from oil and gas can be reinvested in renewables and other clean energy infrastructure needed in the ETP.

The country’s critical mineral deposits present a meaningful economic opportunity and would help secure global clean energy supply chains. Uganda has identified deposits of graphite, rare earths, copper and cobalt, all at varying stages of development. Uganda is pursuing plans to develop processing and beneficiation of these minerals domestically, with estimated potential production of 100 kt/y for graphite and 3 000 t/y of mixed rare earth elements by 2030. These operations could be important anchor buyers for utilities and mini-grid developers, which could reduce the use of expensive diesel generation common in remote mining operations today. 

The Energy Transition Plan lays the groundwork for Uganda’s net zero ambitions

In the ETP, Uganda meets its Nationally Determined Contribution (NDC) to the Paris Agreement in 2030 and peaks energy-sector emissions around 2040. Energy-related greenhouse gas emissions reach just above 20 Mt CO2‑eq by 2030, in the range of Uganda’s mitigation targets specified in its conditional NDC, and peak at around 23 Mt CO2-eq in 2040. In a scenario where Uganda did not take further action, energy-sector emissions would reach 30 Mt CO2‑eq in 2030 and would not be on course to peak even in 2050. Efforts on mitigating methane from oil operations and biomass use are essential to meeting this target. Continued efforts on efficiency and electrification via a largely decarbonised electricity sector contribute the most to the 2040 peak in energy-sector emissions.

Through the development of the ETP, Uganda has set a target to reach net zero emissions in the energy sector by 2065. Continued electrification delivers around 40% of the energy sector emissions reductions needed to reach net zero after Uganda peaks its emissions in 2040. The rest comes from switching to low-emissions fuels in heavy industry, aviation and road freight, as well as introducing CCUS. Global progress on commercialising such technologies and lowering their costs would support Uganda’s adoption of these technologies, along with international climate financing and carbon credits.

Implementation requires greater domestic and international partnerships

Annual energy investment needs to increase to USD 8 billion by the end of this decade, with USD 850 million required annually by 2030 to reach universal access. Realising this sharp increase in investment requires concerted efforts to involve the private sector. Over the last decade, development finance institutions financed about 80% of Uganda’s power investments, much of this through concessional funding, compared to a mere 10% from the private sector. Innovative financing models and additional concessional finance can help, alongside greater involvement from domestic institutions, including pension funds. Diversifying funding sources is critical to scale investment, better balance risks, reduce public financial strain and maintain affordable energy services.

Reinforcing Uganda's public institutions and the operating environment for the private sector is vital to realise the ETP. It is using the ETP as the basis for its new Integrated Energy Resource Master Plan. Delivering this requires greater investment in institutions, human capital, regulatory quality, and technological capacities. Uganda seeks to expand public-private partnerships to meet these goals. It also requires deeper regional co‑operation and international partnerships. It is important to note that the ETP is a high-level strategy, not a blueprint, and like all plans, must be revisited periodically based on experience with implementation as well as broader technology advancements and market trends. Still, the ETP sets clear targets for domestic institutions and the international community to rally behind and represents a meaningful commitment by Uganda on climate ambition which other African countries can follow on their road toward greater sustainable energy development and prosperity.