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At the end of 2015, the Government of Rwanda was awarded a US $840,000 grant from the African Development Bank-hosted Sustainable Energy Fund for Africa (SEFA) to promote green mini-grids (GMGs) and pave the way for private investments in this sub-sector. The project is expected to support Government efforts to provide electricity connection to at least 145,000 rural households and improve off-grid access rate from 5% to 22% by 2018.
Green mini-grids are village or district-level electrical distribution networks that serve the needs of communities too distant to be economically connected to the grid in the near to medium term, but densely populated enough to offer economies of scale in power delivery compared with individual home systems. The International Energy Agency has estimated that 40% of investment required to achieve universal electricity access by 2030 can most economically be achieved through mini-grids.
“Given the low 5% rural access rate to electricity in Rwanda, combined with gradual population growth and significant untapped renewable energy potential, GMGs can provide robust and cost-effective energy access solutions,” Kurt Lonsway, AfDB’s Manager for Environment and Climate Change, said after the approval. The project is developed by the Ministry of Infrastructure and will be implemented by the Rwanda Energy Group, the government utility. It includes mini-grids feasibility studies for up to 20 small hydro sites and a corresponding roll-out plan targeting local private developers. It is complementary to ongoing AfDB interventions in Rwanda’s energy sector including: the Scaling Up Energy Access Project, the regional electricity grid interconnection and power generation projects, the Climate Investment Funds’ Scaling-Up Renewable Energy Programme in Low Income Countries (SREP), and the Sustainable Energy for All (SE4All) Action Agenda which includes assessments of feasibility and potential to provide investment incentives.
“When completed, the project will promote private sector participation in the nascent and promising green mini-grids market in the country,” said Negatu Makkonen, AfDB Resident Representative in Rwanda.
The project is one of SEFA’s Country Programmes of enabling environment support for GMGs that will address sector planning, regulatory and policy interventions and market development activities in up to six countries in 2016-2017. In addition, in June 2015 SEFA approved a grant of US $1 million to the SE4ALL Africa Hub to promote the scaling-up of GMGs in Africa through the regional GMG Market Development Programme.
SEFA’s support to green mini-grids is fully in line with AfDB’s commitment to support energy infrastructure, climate change mitigation and adaptation. The project is part of the AfDB’s “New Deal on Energy for Africa”, and is aligned with Africa Renewable Energy Initiative (AREI)’s objectives of increasing renewable energy penetration.
Launched in 2012, SEFA is a US $95-million multi-donor facility funded by the governments of Denmark, the United Kingdom, the United States and Italy. It supports the sustainable energy agenda in Africa through grants to facilitate the preparation of medium-scale renewable energy generation and energy efficiency projects; equity investments to bridge the financing gap for small- and medium-scale renewable energy generation projects; and support to the public sector to improve the enabling environment for private investments in sustainable energy. SEFA is hosted by the Energy, Environment and Climate Change Department of the AfDB.