Rwanda has one of the smaller energy sectors among sub-Saharan countries – but one with a lot of activity. The government is pressing toward two ambitious targets by June 2018: to increase Rwanda’s total power capacity to 563MW and access to electricity by its residents to 70%.
The government has several tools to hit its 563MW target: tenders, unsolicited proposals, a small hydro feed-in tariff, mini-grids and utility reform. Renewables supply most of the country’s power, with 57% hydro and 6% solar; the rest is mostly diesel. The capacity pipeline has solar and hydro falling just below 50% of the total by July 2018, with a natural gas recovery project and peat taking greater shares.
The Rwanda Electricity Group (REG) contracts new capacity through a competitive tendering process. Most large power projects go through this route. For unsolicited proposals, developers can approach the Rwanda Development Board (RDB) to start the process.
In 2014, Rwanda commissioned the largest PV project in sub-Saharan Africa outside South Africa – and the only one of significant size. The 8.5MW solar farm was developed by GigaWatt Global and built by Scatec Solar, which is also an equity investor. Norfund, FMO, OPIC and the Emerging Africa Infrastructure Fund were other investors in the $23.7m project.
Feed-in tariffs are the main support for small hydro and micro-hydro projects. Developers have complained that the current FiTs, at $67–$166/MWh, are not high enough to support new projects. The Rwanda Utilities Regulatory Authority (RURA), is considering whether to raise the FiTs, and needed to publish new regulations in 2015 to avoid the scheme lapsing.
RURA is also producing new regulations for mini-grids. The new regulations will simplify the licensing process and create three new forms of mini-grids. They will also provide for new ‘small power distribution providers’ serving up to 20,000 customers without being involved in generation. Operators are allowed to set their own rates; RURA will intervene if they are judged to be unfair.
The government issued a law in August 2014 splitting the former state utility apparatus into two parts – electricity, and water and sanitation. This was to increase effectiveness in operations, reduce cross-subsidisation and set each on a route to needing zero subsidy from the government.
The new electric utility, REG, is a wholly owned government enterprise. Operations are carried out by two subsidiaries – the Energy Development Corporation Limited (EDCL) and the Energy Utility Corporation Limited (EUCL). EDCL supports new capacity development – by itself and independent power producers. EUCL is a more traditional utility, operating generation and selling the power.
The 70% access target has two components – 48% of households gaining access through the grid and 22% through off-grid solutions. The Electricity Access Rollout Program (EARP)’s main focus is on grid extension. EARP is funded by the government, the World Bank and several other development agencies and banks.
New connections cost an average of $1,000 each, with 80% paid by EARP, 10% from the utility and 10% from the customer. In most cases, the customer’s share is paid by a low-cost loan from the utility and repaid via a charge on electricity bills.
EARP plans to mostly meet the off-grid part with distributed solar. A full survey of rural areas later this year will help to identify priority locations for the off-grid efforts.
Score Summary
Rwanda scored 1.41 in Climatescope 2015, placing it 17th on the list of countries overall. The country gained six places on its ranking in 2014 thanks to improved scores on Enabling Framework Parameter I and Clean Energy Investment and Climate Financing Parameter II.
The country was strongest on Parameter I, where it placed second globally, behind only Uruguay. This reflected growth in its already high proportion of clean energy generating capacity.
On Parameter II, Rwanda’s score rose sharply thanks to an increase in the growth rate of clean energy investment.
On Low-Carbon Business & Clean Energy Value Chains Parameter III, the country’s score was slightly better than average. It was supported by a relatively high number of distributed clean energy value chains and service providers.
Rwanda was ranked 47th on Greenhouse Gas Management Activities Parameter IV as it has no carbon reduction policies.