Rwanda gets go-ahead to transform its energy sector, builds on multi-program synergies to develop renewables
At its governing body meetings this week, the Climate Investment Funds (CIF) endorsed Rwanda’s Investment Plan (IP) to significantly develop much-needed off-grid electricity access for households, productive uses, schools, health centres and institutions throughout the country, particularly in rural areas. The plan, to be implemented with support from the World Bank and with the African Development Bank as a key partner, was awarded an indicative allocation of $50 million.
Designed under the CIF’s Program for Scaling Up Renewable Energy in Low Income Countries (SREP), the IP will work through a Renewable Energy Fund (REF), which will be created by the Government, and is designed to help Rwanda deliver its target to connect 48% of the households to the grid and to offer 22% sustainable off-grid solutions, including solar home systems and mini-grid connections. This is part of the country’s commitment to reduce rural poverty from around 45% to 20% by 2018 and, as an important component of that, to increase electricity access to 70% by June 2018.
In particular, the plan aims to unleash the potential of the private sector by facilitating private investment through a range of potential financing instruments. These may include equity and debt, credit enhancement instruments, consumer finance, as well as grants and results-based-financing (RBF) to cover viability gap financing and improving affordability of off-grid energy services.
“We very much welcome today’s SREP endorsement and the doors it opens for transforming our renewable energy development, particularly where on-grid connections are difficult,” stated Robert Nyavumba, Energy Division Manager in Rwanda’s Ministry of Infrastructure. “We are pleased that this plan helps provide sorely needed energy services to our rural population, while at the same time it breaks down barriers and allows the private sector to engage in building an effective renewable energy market.”
The plan includes three main areas of support to be developed over the coming months:
- Stand-alone solar PV systems: to build markets and private sector capabilities to develop stand-alone solar PV systems, raising solar PV product standards and promoting dissemination of systems that are certified to international quality standards.
- Mini-grids: to finance mini-grid projects, and to demonstrate the benefits to local communities and the commercial and technical viability of business models to trigger further market growth.
- Technical assistance/enabling environment: to address market barriers through market development including awareness campaigns, improving technical standards of equipment, addressing training and other technical capacity needs in the supply-chain, increasing institutional and regulatory capacity, and assisting local financial institutions in appraising renewable energy projects.
Some expected results from the projects under the IP include:
- Enhanced energy security through a diversified energy mix.
- Improved access to electricity, particularly in isolated areas where the grid cannot currently reach.
- Job creation and income generation, especially in rural towns, and the development of management and technical skills through knowledge transfer by reputable companies/manufacturers of different technologies for sustainability of the program.
- Improved quality of life in rural areas with better education, health and public security, especially for women and children.
- Improved gender equality and women’s socioeconomic status.
- Improved access to communications as a result of electrification that helps boost the use of communications through mobile phones, televisions, and the internet, thereby improving access to information and empowering local communities.
Endorsement of the plan also helps strengthen the country’s multi-front approach to transforming its energy sector targets. To accomplish this, the country is structuring a number of efforts with partners to create a synergistic approach to renewable energy development. In addition to the SREP endorsement, Rwanda is developing actions through the UN-based Sustainable Energy for All (SE4All) Africa Hub and the Sustainable Energy Fund for Africa (SEFA), both of which are hosted by AfDB. With the Africa Hub, the country is developing its SE4ALL Action Agenda, and under SEFA, appraisal has begun for a Green Mini-Grid Country Programme which will complement the SREP work. In addition, the country has joined in a multi-country partnership under the Ruzizi III hydropower project, due for imminent approval at the AfDB, which is poised to transform East African energy in Rwanda, Burundi, and Democratic Republic of Congo (DRC).
“With Rwanda coming on board with their SREP plan, we look forward to the country’s important contribution to building synergies for effective transformation of Africa’s energy sector,” said Kurt Lonsway, Head of the AfDB’s Environment and Climate Change Division and CIF coordinator. “As the world undergoes a dynamic shift in addressing the urgent impacts of climate change, Africa stands in a special position because of its equally urgent need to build its energy sector and take its rightful place in the world’s economic development. Rwanda’s efforts to create synergized approaches by working through multiple programs and with multiple partners can serve as an important model for us going forward.”
About the Climate Investment Funds (CIF)
Established in 2008, as one of the largest fast-tracked climate financing instruments in the world, the $8.1 billion CIF provides developing countries with grants, concessional loans, risk mitigation instruments, and equity that leverage significant financing from the private sector, MDBs and other sources. Five MDBs – the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), Inter-American Development Bank (IDB), and World Bank Group (WBG) – implement CIF-funded projects and programs.