Modelling the Macroeconomic Impacts of Renewable Energy Expansion in Uganda.

Großmann, A. & Hohmann, F. (2023): Modelling the Macroeconomic Impacts of Renewable Energy Expansion in Uganda. Policy Brief, Quarter 3, 2022/2023, Eschborn, Bonn.

Abstract

Uganda committed itself to protect the climate and environment by signing the Paris Agreement and submitting the Nationally Determined Contributions that targets a low-carbon development pathway and reduction in the vulnerability of the population, environment, and economy. Therefore, expansion of renewable energy capacity as one of the strategies in the energy sector has significant mitigation potential. Government plans to increase the installed renewable energy capacity to 4,575 MW by 2040.
To explore possible benefits and challenges from this policy plan, the e3.ug model was applied to evaluate the socio-economic and environmental impacts.
The results from the simulation of this policy scenario with the e3.ug model indicate that renewable energy expansion is of advantage for Uganda. Economic, social, and environmental benefits are possible. Economic growth is accelerated, and additional jobs are created. Positive effects can be expected not only in manufacturing sectors directly profiting from the renewable energy expansion, but also income-induced impacts can be seen in agriculture, transport, and trade.
However, policymakers should support the expansion of renewable energy sources to achieve these benefits and limit implementation barriers. This also includes support for the use of electricity e.g., in the industry and residential sector, which is not yet very widespread in Uganda.