The Government and the World Bank Group have signed a financial agreement to enhance power connectivity through off-grid solutions.
The deal was signed by Finance and Economic Planning minister Claver Gatete and World Bank’s country manager Yasser El Gammal.
The $50 million (about Rwf42 billion) funding will play a key role in scaling-up the country’s Energy Renewable Programme (SREP) and help increase access to electricity through off-grid technologies, Gatete said during the signing ceremony in Kigali yesterday.
It will also help facilitate private-sector participation in renewable off-grid electrification, he added.
The money will be channelled through Development Bank of Rwanda (BRD) under the newly-created Rwanda Renewable Energy Fund.
In support to the recently approved Rural Electrification Strategy, the Rwanda Renewable Energy fund Project (REFP) will catalyse private sector investments in off-grid renewable energy access by addressing main constraints that face households and private companies in the off-grid market.
Germaine Kamayirese, the state minister for energy, said the project will assist the Government establish a Renewable Energy Fund (REF), which will help overcome financial barriers to scaling up the deployment of standalone home systems and renewable energy mini-grids in Rwanda.
The fund will allow qualified savings and credit co-operatives (SACCOs) and commercial banks to open local currency lines of credit to provide affordable loans to their customers – both households and small businesses, for solar systems purchases.
It will also facilitate collaboration between Rwandan financial institutions and private sector to ensure quality provision of off-grid services and provide direct financing to qualified mini-grid developers.
“The objective is to increase electricity access in Rwanda through off-grid technologies and facilitate private-sector participation in renewable off-grid electrification,” Gatete said.
Presently, about 30 per cent of Rwandan households are connected to electricity, while the country’s total installed power capacity is around 208 megawatts.
Recently, the Government launched a new peat power plant in Mamba Sector, Gisagara District, with expectations to increase national energy production capacity by up to 40 per cent.
Rwanda currently generates about 208 megawatts of electricity with a target of at least 563 megawatts by 2018.
According to energy experts, investing in off-grid solutions is an important step forward towards realising the country’s energy targets.
“I hope that the Renewable Energy Fund becomes a vehicle to crowd-in resources to the off-grid electricity sector, attracting financing from both private sector and development partners,” said El-Gammal.
The Government aims to provide 445,500 new off-grid connections, which will give about 1.8 million people access to off-grid electricity.
These new consumers will use electricity for the first time and move away from expensive and harmful fuels such as diesel, kerosene, and dry cell batteries.
The new project will also ensure SACCOs and commercial banks gain knowledge and experience in lending to a new sector, which can then support further investments.
According the Ministry of Infrastructure and REG officials, grid connections under the Electricity Access Rollout Programme (EARP) and related initiatives growing improved from 110,000 households in 2010 to over 590,000 households by August 2016.
On average, 75,000 new households are connected onto the grid annually since 2011, which means that about 30 per cent of Rwandan households are connected on the grid presently compared to 10.8 per cent in 2011.
Over 2.8 per cent of the population is served by off-grid power source like solar energy.