REA MASTER PLANNING

WORKSHOP

Master Planning Methodology

NRECA International
September 2018
Uganda Master Planning Goals/Objectives
 Estimated national electrification rate is ~16% with notably lower rates
in rural areas.
 From 2003 through 2013, electrification rates increased, but not at a rate
that would achieve full electrification coverage by 2030
 RESP was redesigned in 2013 to define a systematic approach to expand
coverage using multiple electrification modalities - densification, grid
extension, implementation of mini-grids and stand-alone solar solutions
 The master planning process was designed to provide structure to
facilitate systematic planning, monitoring and program compliance with
multiple stakeholder groups
 REA has commissioned a series of larger, high impact projects and
programs – but this program is designed to provide guidance and clarity
of program accomplishments
Objectives of this workshop
 Share characteristics of the geospatial platform developed for the
master planning & program monitoring process
 Present the methodology, assumptions, and results of the master
planning process for all service territories
 Respond to questions and note comments for the purpose of
determining what changes may be required in updating the master
plan results
 Present/discuss next steps
Service Territories

• 13 service territories
established in 2013
• Six original service
providers
• UEDCL was engaged
to operate
infrastructure where
no other servicer was
present
Electrification Master Planning
 The master planning process has been used by electric
utilities since area coverage electrification began in the early
1900s.
 Master planning is the process through which load
projections are used to dimension grid infrastructure
investments in both served and unserved areas of an electric
utility.
 Master planning provides an investment roadmap for
multiple modalities of electrification including grid
intensification, grid expansion, mini-grid, and stand-alone
solar solutions.
Master Planning Steps & Components
- Update GIS for each service territory
- Implement willingness to pay surveys to understand
likely penetration rates & affordability constraints
- Digitize roads and housing structures
- Evaluate grid intensification potential
- Define grid expansion projects interconnecting
clusters of households
- Perform preliminary design defining costs and
revenue potential for each project in the GIS
Master Planning Steps & Components (2)

- Evaluate power quality and define system reliability

investments
- Identify & evaluate mini-grid projects
- Evaluate financial sustainability of the entire grid
service provider (enterprise level)
- Perform risk assessment
- Report results
Central Service Territory

 56,000 km2, 1.9 M households

 Three service providers:
 KRECS operates 160 km of
line & serves 3,715
consumers
 UEDCL 60 km of line
serving 2,210 consumers
 Umeme operates 5,613 km
MV line serving Kampala,
Jinja, & Entebbe towns
 46% of all households have
electric service today
Preparing the platform: Base Map
Preparing the platform: Road Network
Preparing the platform: MV System
Preparing the platform: Structures
Preparing the platform: All Layers
 Preparing the geospatial platform:
capital & operating cost parameters
Construction unit Unit Cost
33 kV feeders Item Unit Value
100 mm2 AAAC US$/km $28,000
50 mm2 AAAC US$/km $26,000 Electricity purchase price US$/kWh $0.072
25 mm2 AAAC US$/km $20,000
Distribution Transformers -single phase Annual O&M costs US$/kWh $0.03
10 kVA US$/unit $2,770
25 kVA US$/unit $4,800 Annual Adm. & General costs % 2.0%
50 kVA US$/unit $5,900
Other annual costs US$/kWh $0.003
LV network
LV 50 mm2 US$/km $14,000
Replacement reserve provision % 1.0%
Low cost 240V line w 25 mm2 Triplex US$/km $11,783
Service drops
Single phase service drop US$/customer $180
Three phase service drop US$/customer $230
Low cost single phase service drop US$/customer $148
Revenue parameters: consumption
levels and tariffs
Category Unit Penetration Rate Annual Growth

kWh/cust- 30% 50% 60% Years 2-5 Years 6-10

Residential
month 30 22 18 3% 2%

kWh/cust- 70% 85% 100% Years 2-5 Years 6-10

Commercial
month 41 26 15 3% 2%

Item Unit Value

End user Tariffs
Fixed Charge
Domestic US$/month $0.996
Commercial US$/month $0.996
M. Industrial US$/month $0.996
Energy Charge
Domestic US$/kWh $0.206
Commercial US$/kWh $0.186
M. Industrial US$/kWh $0.171
Connection charges
Domestic US$/Connection $20.0
Commercial US$/ Connection $20.0
Industrial / Other US$/ Connection $20.0
t
Project definition: identifying/evaluating
load with clustering analysis
Grid expansion projects for CST
Grid expansion project results (CST)
Number Length of
Voltage Number of
District Feeder of 33kV network
kV existing HHs
projects [km]
Mitanya Hoima 33 2 1,209 20
Kiboga Hoima 33 2 3,594 65
Kyankwanzi Hoima 33 5 8,004 122
Luwero Wabigalo 33 6 1,285 31
Nakasongola Wabigalo 33 4 3,093 98
Wakiso Busunju 33 4 3,493 59
Mpigi Mutundwe 33 4 3,899 32
Mitanya Busunju 33 1 598 8
Mitanya Kasanda 33 19 14,840 276
Mubende Kakumiro 33 6 3,672 96
Mukono Nakifuma 33 3 6,125 61
Mpigi Mityana 33 1 597 14
Mitanya Mityana 33 4 4,060 57
Mpigi Masaka central 33 3 4,079 47
Mubende Mubende 33 12 5,425 109
Kyegegwe Mubende 33 1 1,391 30
Kyegegwa Mubende 33 28 10,809 326
Kyenjojo Mubende 33 1 102 2
Kayunga Kayunga 33 25 5,493 92
Buikwe Mukono2 33 1 965 20
Total 132 82,733 1,566
Grid expansion project financial results
# projects Project Cost per NPV
Cust.
District Feeder projects with + Cost US$ Customer US$
Year 10
analyzed results Million US$ million
Mitanya Hoima 2 2 974 $1.04 $1,066 $0.034
Kiboga Hoima 2 2 2,896 $3.19 $1,103 $0.089
Kyankwanzi Hoima 5 5 6,450 $6.40 $992 $0.285
Luwero Wabigalo 6 5 969 $1.13 $1,164 $0.022
Nakasongola Wabigalo 4 3 1,474 $1.92 $1,305 $0.008
Wakiso Busunju 4 4 2,815 $2.93 $1,042 $0.107
Mpigi Mutundwe 4 4 3,142 $2.27 $721 $0.243
Mitanya Busunju 1 1 482 $0.46 $963 $0.023
Mitanya Kasanda 19 19 11,958 $13.02 $1,089 $0.385
Mubende Kakumiro 6 6 2,959 $4.12 $1,393 $(0.015)
Mukono Nakifuma 3 3 4,936 $3.88 $786 $0.343
Mpigi Mityana 1 1 481 $0.66 $1,371 $(0.001)
Mitanya Mityana 4 4 3,272 $3.18 $970 $0.153
Mpigi Masaka central 3 3 3,287 $2.94 $894 $0.185
Mubende Mubende 12 12 4,371 $5.25 $1,200 $0.081
Kyegegwe Mubende 1 1 1,121 $1.46 $1,305 $0.006
Kyegegwa Mubende 28 20 5,558 $7.04 $1,266 $0.058
Kyenjojo Mubende 1 1 82 $0.08 $1,013 $0.003
Kayunga Kayunga 25 24 4,371 $4.53 $1,037 $0.169
Buikwe Mukono2 1 1 778 $0.97 $1,253 $0.009

Total 132 121 62,375 $66.48 $1,066 $2.188

 Summary of REA & GIS Project Costs

Item - US$ 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
Million
Identified grid
expansion
projects $5.30 $6.54 $7.94 $6.78 $6.89 $7.22 $6.48 $7.89 $6.33 $5.12 $66.48
Ongoing REA
expansion
projects $4.81 $4.81 $4.81 $4.81 $6.01 $25.23
Total
$10.11 $11.35 $12.74 $11.58 $12.89 $7.22 $6.48 $7.89 $6.33 $5.12 $91.70
 Intensification Analysis
 Intensification is the process of connecting consumers who are close to MV
& LV lines
 KRECS serves ~3,715 consumers via 66 transformers: 56
consumers/transformer
 Using digitized households, all transformers were evaluated to determine
how many additional consumers could be connected.
• 8,043 consumers live within 1000 meters of existing transformers – 46%
are presently served
• Up to 150 consumers can be served by 50 kVA transformer
 Estimate 60% have resources to finance house wiring resulting in ~3,851
new connections
 Total cost: service connections: $693,000
LV additions: $805,000
Total: $1.5 million
Intensification analysis
System Reliability Investments
 As load is added by grid expansion and/or grid intensification, the
load-carrying capacity of distribution transformers, feeders and
substations can be challenged
 It is necessary to evaluate increases in load and the impact on
upstream circuit elements
 Load flow studies were conducted to evaluate:
• Existing distribution system and load levels.
• Distribution system after addition of existing REA grid projects.
• Distribution system with grid expansion & intensification projects
identified in master plan.
 WindMil software graphically shows acceptable voltage levels (in
black) and low voltage levels (in red)
Base Case Analysis
Adding in REA load & intensification
Add Capacitor Bank & Voltage Regulator
CST with expansion projects through 2027
System Reliability Investment Summary
Voltage
Capacitor Bank Cost
Year Feeder Name Regulator
(US$)
Unit Unit
Mutundwe_ Mityana 1 20,000
2020
Nkonge_ Mubende 1 55,000
Total 2020 $75,000
Mutundwe_ Mityana 1 $20,000
2022-2027
Nkonge_ Mubende 1 $55,000
Total 2022-2027 $75,000
Total System reliability capital investments $150,000
Mini-Grid Identification & Evaluation
 Grid electrification will not reach all villages and housing clusters
in the CST
 Mini-grid potential exists in a limited number of areas that are
clearly beyond the reach of grid expansion
 Mini-grid technology comes in many variations – for purposes of
this analysis, we consider mini-grids that will employ solar-battery
charging systems with low voltage distribution systems
 Mini-grid project identification assumes a minimum cluster size of
50 households and provision of Tier 3 service
Mini-Grid Consumption & Cost Estimates

Category Unit Penetration Rate Annual growth

kWh/cust- 20% 50% 75% Years 2-5 Years 6-10

Residential
month 12 10 10 1.5% 1%

kWh/cust- 50% 75% 100 Years 2-5 Years 6-10

Commercial
month 25 25 25 2% 1%

Item and size Unit Rate

Solar PV plant generation infrastructure
PV Panel arrays (w/inverters) US$/kWDC $2,500
Batteries – Lithium Ion batteries w/inverter US$/kWh $450
Enclosure for Batteries/Inverters (1 per mini-grid) US$/Unit $5,000
Mini-grid identification/analysis
Consu
DC Solar Cost per
Town/Villa mers Project Cost Cost of service
# District Households array custome
ge (year US$ US$/kWh
kW r US$
10)
1 Nakasongola Mayirikiti 97 87 20 $122,169 $1,400 $0.49
2 Kamirampan
86 78 19 $126,716 $1,634 $0.53
Nakasongola go
3 Nakasongola Kikooge 91 81 18 $118,465 $1,463 $0.54
4 Nakasongola Soweto 79 70 16 $96,218 $1,366 $0.53
5 Nakasongola Nakayonza 54 48 12 $81,818 $1,689 $0.62
6 Luwero Lukowe 143 129 29 $179,008 $1,391 $0.45
7 Luwero Manywa 79 69 15 $97,444 $1,404 $0.59
8 Nakaseke Kyabigulu 62 54 12 $75,508 $1,386 $0.63
9 Nakaseke Bidduku 62 55 13 $81,637 $1,471 $0.56
10 Kalangala Nakibanga 135 119 25 $142,426 $1,201 $0.49
11 Kalangala Kisaba 310 275 57 $342,718 $1,244 $0.57
12 Kalangala Buzingo 68 61 14 $105,774 $1,741 $0.61
13 Kalangala Buwanga-i 79 70 16 $93,743 $1,331 $0.52
14 Kalangala Lwanabatya 137 120 25 $135,796 $1,128 $0.46
15 Kalangala Buyange 145 127 26 $140,349 $1,101 $0.46
16 Lwazi_bugo
104 92 20 $108,480 $1,174 $0.47
Mukono mbe
17 Kalangala Bubeke 260 230 48 $251,139 $1,090 $0.39
18 Ntuwa -
66 59 14 $77,891 $1,320 $0.53
Kalangala bunjazi
19 Kalangala Buyovu 98 87 19 $108,733 $1,248 $0.49
20 Kalangala Kazi bugaba 151 134 28 $150,341 $1,125 $0.43

125 mini-grids, $18.9 M, ~15,700 consumers

CST Mini-Grid Locations
Financial Analysis
 Financial analysis focuses on CST service provider viability
 Mini-grids managed by third party: not included in this analysis
 Summarize capital requirements including ongoing REA
investments, grid intensification, grid expansion and system
reliability
 Evaluate operating costs, revenue forecasts based upon increases in
consumer connections, energy sales and connection fees
 Evaluate working capital requirements
 Evaluate annual net revenues and overall viability
 Capital Investment Requirements

Item [in million USD} 2018-2022 2023-2027 Total

Ongoing REA grid expansion plan $ 25.23 $ 25.23
Additional grid expansion projects $ 33.45 $ 33.03 $ 66.48
Intensification activities $ 0.91 $ 0.59 $ 1.50
Network reinforcement projects $ 0.50 $ 0.50
Total distribution infrastructure $ 60.08 $ 33.62 $ 93.70
Non-distribution infrastructure $ 1.15 $ 1.15
Total CAPEX $ 61.23 $ 33.62 $ 94.85
Growth of Consumers & Consumption
Operating Cost Assumptions
 Cost of purchased power: US$ 0.072/kWh
 Electricity losses: Losses reduced from current levels to 15% over
five year period for existing lines. New construction assume 10%
loss rates
 Staff costs: Use existing staff costs and increase over time to
average costs per employee of US$5,000 per year.
 Distribution operation and maintenance costs: 1% of plant
value
 Customer costs: US$ 0.50 per customer-month
 Administrative & other costs: 20% of staff, distribution O&M
and customer costs, and 10% for other costs (insurance)
 Replacement reserve: approximately 1/3 of depreciation value of
plant in service
CST Operating Costs (USD millions)

Item 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Electricity purchases $0.45 $0.63 $0.84 $1.07 $1.33 $1.56 $1.80 $2.08 $2.33 $2.59
Staff costs $0.06 $0.10 $0.16 $0.23 $0.32 $0.35 $0.37 $0.39 $0.40 $0.41
Distribution
maintenance costs $0.15 $0.26 $0.37 $0.48 $0.60 $0.63 $0.66 $0.69 $0.70 $0.70
Customer costs $0.05 $0.08 $0.12 $0.16 $0.20 $0.25 $0.29 $0.34 $0.39 $0.44
Administrative & other
costs $0.11 $0.16 $0.20 $0.23 $0.24 $0.26 $0.27 $0.28 $0.28 $0.29
Replacement reserve $0.17 $0.28 $0.41 $0.53 $0.66 $0.74 $0.80 $0.88 $0.95 $1.00

Total Costs of service $0.99 $1.50 $2.10 $2.70 $3.36 $3.78 $4.19 $4.66 $5.06 $5.42
Cost per kWh sold1 $0.25 $0.26 $0.26 $0.25 $0.25 $0.23 $0.22 $0.21 $0.20 $0.19

37
 CST Revenues (USD millions)
Item 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Residential customers $0.70 $1.11 $1.62 $2.18 $2.80 $3.38 $3.98 $4.65 $5.28 $5.93
Commercial
customers $0.16 $0.19 $0.22 $0.26 $0.29 $0.32 $0.35 $0.39 $0.42 $0.45
Other customers
Total revenues from
electricity sales $0.86 $1.30 $1.84 $2.44 $3.09 $3.70 $4.33 $5.04 $5.70 $6.38
Revenues per kWh
sold $0.22 $0.22 $0.22 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23
Revenues from
connection fees $0.09 $0.10 $0.13 $0.14 $0.15 $0.14 $0.15 $0.17 $0.16 $0.16
Total revenues $0.95 $1.40 $1.97 $2.58 $3.25 $3.84 $4.48 $5.21 $5.86 $6.54
Revenues per kWh
sold1 $0.24 $0.24 $0.24 $0.24 $0.24 $0.24 $0.24 $0.24 $0.23 $0.23
CST Net Revenue Results through 2027
Item – US$ million 2018 2019 2029 2021 2022 2023 2024 2025 2026 2027
REVENUES
Total revenues from electricity sales $ 0.86 $ 1.30 $ 1.84 $ 2.44 $ 3.09 $ 3.70 $ 4.33 $ 5.04 $ 5.70 $ 6.38
Revenues from new connections $ 0.09 $ 0.10 $ 0.13 $ 0.14 $ 0.15 $ 0.14 $ 0.15 $ 0.17 $ 0.16 $ 0.16
Total revenues $ 0.95 $ 1.40 $ 1.97 $ 2.58 $ 3.25 $ 3.84 $ 4.48 $ 5.21 $ 5.86 $ 6.54
Total revenues per kWh sold $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.23 $ 0.23
EXPENDITURES
Electricity purchases $ 0.45 $ 0.63 $ 0.84 $ 1.07 $ 1.33 $ 1.56 $ 1.80 $ 2.08 $ 2.33 $ 2.59
Distribution margin $ 0.50 $ 0.77 $ 1.13 $ 1.50 $ 1.92 $ 2.28 $ 2.68 $ 3.13 $ 3.53 $ 3.95
Distribution margin per kWh sold $ 0.13 $ 0.13 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14
Staff costs $ 0.06 $ 0.10 $ 0.16 $ 0.23 $ 0.32 $ 0.35 $ 0.37 $ 0.39 $ 0.40 $ 0.41
Distribution maintenance $ 0.15 $ 0.26 $ 0.37 $ 0.48 $ 0.60 $ 0.63 $ 0.66 $ 0.69 $ 0.70 $ 0.70
Customer costs $ 0.05 $ 0.08 $ 0.12 $ 0.16 $ 0.20 $ 0.25 $ 0.29 $ 0.34 $ 0.39 $ 0.44
Administrative and other costs $ 0.11 $ 0.16 $ 0.20 $ 0.23 $ 0.24 $ 0.26 $ 0.27 $ 0.28 $ 0.28 $ 0.29
Total Costs of sales $ 0.82 $ 1.21 $ 1.69 $ 2.17 $ 2.70 $ 3.05 $ 3.39 $ 3.77 $ 4.11 $ 4.42
EBITDA $ 0.13 $ 0.18 $ 0.28 $ 0.41 $ 0.55 $ 0.79 $ 1.09 $ 1.43 $ 1.75 $ 2.12
EBITDA margin 14% 13% 14% 16% 17% 21% 24% 28% 30% 32%
Depreciation
Interest on debt service
Taxes $ 0.03 $ 0.05 $ 0.07 $ 0.10 $ 0.14 $ 0.20 $ 0.27 $ 0.36 $ 0.44 $ 0.53
Profit / loss for the year $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ 0.59 $ 0.82 $ 1.07 $ 1.32 $ 1.59
Margin as Percentage of Revenue 11% 10% 11% 12% 13% 15% 18% 21% 22% 24%
Return on equity 100% 58% 47% 41% 35% 97% 57% 43% 34% 29%
CASH FLOW
Project costs $ (11.67) $ (11.52) $ (12.92) $ (11.77) $ (13.34) $ (7.33) $ (6.60) $ (8.01) $ (6.46) $ (5.21)
Grant $ 11.67 $ 11.52 $ 12.92 $ 11.77 $ 13.34 $ 7.33 $ 6.60 $ 8.01 $ 6.46 $ 5.21
Loan
Net CAPEX $ (1.15)
Net Income (Profit/loss) $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ 0.59 $ 0.82 $ 1.07 $ 1.32 $ 1.59
Less Depreciations
Less Principal Payments
Cash flow from operations $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ 0.59 $ 0.82 $ 1.07 $ 1.32 $ 1.59
Net Cash flow $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ (0.55) $ 0.82 $ 1.07 $ 1.32 $ 1.59
NPV of Net Cash flow $2.61
Break & Thank You!