The following are the challenges facing the energy sector:
- There are high upfront costs of renewable energy technologies which makes the energy quite expensive. This has slowed down the development of hydropower, solar power and geothermal sources of energy.
- The development in the energy sector requires mobilisation of funds from both public and private sector and the mobilisation of funds exercise takes some time.
- The energy development exercise must be made in an environmental friendly manner and requires consultations with environmental groups. The consultation process has of recent become challenging and is taking a bit of time.
- There is at the moment no adequate power for heavy steel, textile and aluminium processing plants.
- There is a challenge of low consumption levels of modern energy as the majority of Ugandans depend on wood fuel. The income levels of the households in the rural sector are at moment quite low to afford electricity.
- There is also a challenge of the ability for both the public and private sector investors to supply the required energy within the timeframe, in the volume needed and at affordable cost by the consumer.
- The cost of finance of financing projects has also become high leading to increased costs of projects and the price of the energy.
- Lack of inadequate and efficient power supply system with the main issues arising from stunted generation capacity growth, a poor transmission and distribution infrastructure and poor utility commercial practices.
- Sustainable development is difficult to achieve in the short run because of challenges of addressing poverty issues in order for the rural community to afford to use r the power.
- There are institutional and legal weaknesses, especially in the areas of the downstream petroleum industry, renewable Energy, Energy conservation/efficiency and atomic Energy applications. There is need for continued sector reform
- High start up costs for renewable energy technologies.
- Rising international oil prices which makes it expensive to generate electricity
- The demand for power is continuously increase hence the need of massive investment to meet the demand.
- Energy supply is unequally distributed across the country and the provision of electricity has been limited to mainly urban and semi-urban areas