Heifer International Uganda held a ground-breaking event in Kiboga district last week to mark the start of engineering works for the solarisation of five dairy cooperatives’ milk collection sites planned across the central and southwestern Ugandan milk shed under the PREO-supported Solar for Sustainable Income in Dairy project. The solar facilities will replace inefficient, polluting, and expensive diesel generators, thereby reducing post-harvest losses and increasing profitability for small-holder farmers.
Many milk collection points across Uganda are off-grid so, to preserve the milk collected in the cooling tanks they rely entirely on diesel-run generators, which account for 40% of the dairy producer organisations’ operating costs. The collection points that are connected to the main electricity grid also make heavy use of back-up generators during the frequent power outages that can last up to eight hours a day.
With € 1M funding from PREO and Heifer International, the Solar for Sustainable Income in Dairy project aims to demonstrate that solar-powered technologies have the potential to transform rural dairy value chains at the national scale. Access to adequate, affordable, and sustainable energy for milk storage at the dairy cooperatives can increase the volume of saleable output and on-farm returns for millions of low-income dairy farmers. Through this project Heifer International Uganda will also seek to mobilise collaboration between key players, such as solar technology suppliers, impact investors, dairy cooperatives and processors, to hasten the widespread adoption of solar technologies in rural dairy production at the national level.
The event that took place in November at Dwaniro Dairy Farmers cooperative’s Migina milk collection and chilling centre, was attended by representatives from local and national government as well as the dairy and solar technology sectors.
Johnson Kwesigabo, the Dwaniro Dairy Farmers Cooperative’s Chair, told attendees how nearly half of the cooperative’s operating costs go into purchasing fuel for their diesel generators. Despite their collection centre in the nearby village of Dwaniro being connected to the national grid, it still relies primarily on generators because of unreliable power supply. The greater affordability and reliability of solar power for their chilling units will drastically reduce severe milk waste.
William Matovu, the Country Director of Heifer International in Uganda, underscored the urgent need to improve the cost-effectiveness of dairy processing and storage. “Skyrocketing fuel prices are curbing the growth of the dairy value chain due to increased operating costs. The installation of solar PV systems will significantly reduce costs for producers whilst also cutting carbon emissions from generators by 90%. With enhanced efficiency resulting in greater volume of output, renewable energy is set to increase incomes for all actors in the dairy value chain.”
With an estimated 5,300 MW power generation capacity by means of hydropower, biomass, solar, geothermal, peat and wind the Ugandan industry is well positioned to achieve growth through renewables energy access. Speaking at the launch, Dr Isabirye Brian, the commissioner for renewable energy at the Ministry of Energy and Mineral Development, highlighted government efforts to drive the clean energy transition. “Whilst the full energy potential of renewables has yet to be realised, the government is keen to promote the use of climate-friendly energy through tax breaks and consumer subsidies as well as rural electrification projects.”
Innovative financing model
Through PREO’s support, the Solar for Sustainable Income in Dairy project is also pioneering a financing model called the Power Purchase Agreement (PPA) that enables dairy cooperatives to avoid the upfront costs of buying solar energy generation and storage and pay only for the electricity consumed. The ten-year PPA also gives dairy cooperatives the option to purchase the solar-powered units at any point from the financier who takes on the technology risks. Arun Gopalan, Project Manager at Energy 4 Impact, stresses that “innovative financing models are needed to scale up productive use of energy opportunities in the dairy value chain in sub-Saharan Africa. We want more dairy producers to benefit from clean energy without being disincentivised by the steep initial cost of these systems or concern about their possible obsolescence a few years down the line. The Off-grid dairy cooperatives that are part of the Solar for Sustainable Income in Dairy project are expected to save as much as UGX 2 bn (~Euros 511,000) over the life of the energy assets. Greater uptake of such systems will encourage financiers to invest more in the development of solar assets for dairy cooling”.
Coming to an end in June 2023, this two-year project is expected to increase the volumes of procured, bulked, chilled and sold milk. It will not only boost the incomes of dairy farmers working with the five supported cooperatives, it will also encourage the wider dairy industry to embrace the use of renewable energy systems at key stages in the value chain.
About Heifer International
Since 1944, Heifer International has worked with more than 39 million families around the world to end hunger and poverty in a sustainable way. Working with rural communities across Africa for 48 years, Heifer International supports farmers and local food producers to strengthen local economies and build secure livelihoods that provide a sustainable living income.
For more information, visit heifer.org