Rwanda is focussing on a bold renewable energy policy to achieve the adequate and reliable electricity provision that is a prerequisite for economic growth. Could this also be the key for the many African countries where daily blackouts are a fact of life? Stephen Williams examines the issues.
The central East African landlocked country of Rwanda has one of the most ambitious renewable energy plans of any African country – indeed, of any country in the world. By the end of this year, it wants to ramp up renewable energy to account for 90% of electricity generation.
However, currently, more than 85% of the country’s 11 million population have no access to the national electricity grid. Those that do are centred in the capital Kigali. That is one of the lowest percentages in Africa – only exceeded by neighbouring Burundi, Chad, and Liberia.
USAID’s Africa Infrastructure Programme (AIP) says Rwanda can expand the small and medium enterprise sector, promote development of clean energy, increase electricity penetration, and avoid generation of up to 500,000 tons of CO2 while creating tens of thousands of jobs through the expansion of the economy.
It states: “The AIP is reviewing all forms of renewable generation to expand the current system and reach the unserved population. Rwanda has hundreds of potential micro-hydro sites that could double the country’s generating capacity and expand electrification rates to 35% of the population in 10 years.
“AIP is conducting a comprehensive assessment of the necessary tariff structure for micro-hydro, solar, geothermal, and wind sources and providing assistance in applying the structure to the power purchase agreements with the first group of micro-hydro projects.
“This renewable energy feed-in tariff framework will encourage private-sector investment in the sector to expand generation capacity.” While nobody is suggesting that renewable energy systems are a silver bullet for all of Africa’s energy challenge, Rwanda seems convinced that a low carbon strategy is appropriate for the country.
It is as if the Rwandan government has taken to heart the words of the 2004 Nobel Laureate, the late Wangari Maathai, of Kenya, who commented: “Africa can leapfrog the polluting and carbon-intensive development model that is the legacy of most Western countries.”
Maathai was also on record as saying that Africans should show global leadership on an issue that is critical to the future of the planet. For Rwanda, which has posted impressive economic growth, averaging 8.5% in the five years to 2010, adding energy security derived from renewable energy systems to the list of reasons that the country has become an investment magnet – including the ease of doing business, a strong rule of law and a vibrant ICT sector – would transform the economic climate.
Currently, Rwanda’s main energy source is biomass, especially timber fuel from the fast-growing eucalyptus tree. Yet the government says that Rwanda has over 1,000MW of electricity-generating potential, from geothermal, methane gas, peat deposits, biogas, regional hydro, small-scale hydro and solar photo-voltaic arrays.
As a government paper, Green Growth and Climate Resilience, published at the end of last year noted: “Rwanda has chosen to embark on a low carbon development pathway. To do this, it needs to reduce its dependence on oil, which has the benefits of supporting energy security, reducing vulnerability to oil price spikes, channeling finances into the local economy, creating jobs, promoting economic development and reducing greenhouse gases (GHG) emissions.
“Rwanda is in the fortunate position of having a renewable low carbon energy resource mix which is the foundation for a low carbon economy. Although diesel is currently used for 39% of electricity production, this can be phased out and replaced with geothermal, hydro and solar which are all clean energy sources.”
One unconventional source of energy is Lake Kivu’s proven methane reserves. At a depth of hundreds of metres below the surface, the bottom of the lake has unexploited energy to meet Rwanda’s needs for 200 years.
Rotting vegetation gives off a constant regenerating supply of methane gas that has already been partly exploited by the Bralirwa Brewery on the banks of the lake. The Brewery used the methane for most of its energy needs until 2004 when the generating plant developed a fault.
But this is a resource that could cut the country’s reliance on imported oil, currently amounting to 2.3% of all imports and costing some $28m a year.
There is another issue too. As the Green Growth and Climate Resilience strategy paper clarifies: “Lake Kivu, shared by DRCongo and Rwanda, hosts methane gas (mixed with CO2) which, left unexploited, poses a safety risk and if released into the atmosphere, is a potent greenhouse gas.
“Although using the methane to generate electricity will result in carbon emissions, the benefits of domestic energy security, safety and a possible smaller global warming potential, make this an attractive energy source. “
The Green Growth and Climate Resilience document draws attention to another natural source of energy. “Rwanda also hosts vast black peat deposits which are largely unexploited and could contribute to domestic energy security in the short term,” it reports, but adding the caveat that “with high carbon emissions the peat is not a good long-term option.”
Finally, the paper concludes: “[A] domestic energy mix will enable all consumers of energy – industry, services and the public – to lower their GHG emissions. More importantly, it will enable Rwanda to provide enough electricity for its growing economy. In addition, Rwanda has access to the East Africa Power Pool, which in the future may provide regional energy security for 10 African countries.”
According to the report, the biggest challenge for low carbon development is transport – petroleum products will still have to be imported to supply the needs of the transport sector.
Although some work is being done on growing jatropha for biofuels near Akagera National Park in eastern Rwanda, the limited land, growing population and high water requirements for biofuels makes growing biofuels crops a poor option for Rwanda. More innovative and cost-effective solutions could include producing ethanol from municipal solid waste and from methane in Lake Kivu. Oil exploration in Lake Kivu, too, may solve domestic energy security, but will not reduce carbon emissions. The multiple energy sources that the lake provides have, in fact, added further complications.
“Until a cleaner, cheaper alternative is available,” the report says, “the focus for transport and energy must be on efficiency and demand reduction. This is a win-win option for domestic and industrial consumers of transport and energy who save on costs while freeing up capacity to extend electricity access across the country and reducing GHG emissions.”
Falling renewable costs
In fact, Rwanda’s low carbon development pathway could not really come at a more opportune time. Worldwide, the cost of two of the primary means of generating renewable energy – solar and wind – have dropped considerably. One estimate suggests that the purchase price of photo-voltaic cells (the components in solar panels) and wind turbines have fallen by 75% over the past three years.
Furthermore, the UN secretary-general Ban Ki-moon has launched a “sustainable energy for all” initiative that underscores the idea that renewable energy is a viable prospect for poor countries, even though start-up costs are comparatively high.
With the UN’s backing, support for renewable energy projects is more easily obtained from the donor community and the development finance institutions.
What is particularly interesting about Africa’s energy and power conundrum is that Africa, thanks to the AU, is the only continent that can negotiate with the international community with a virtually unanimous voice (Morocco is the only African country not to be a member of the AU).
This enables Africa to obtain funding from a number of sources such as the Special Climate Change Fund, the Least Developed Country Fund created by the United Nations Framework Convention on Climate Change; the Adaptation Fund under the Kyoto Protocol; the Global Environment Facility; the World Bank and various other international institutions.
Having established a National Fund for Climate and the Environment (FONERWA), Rwanda intends to leverage funding through these sources, recognising that one of the biggest challenges in implementing its clean energy strategy will be access to finance.
FONERWA is intended to be the centrepiece of Rwanda’s green energy financing plan, and will work to leverage private investment for low carbon initiatives. There is huge potential to attract private investment – both domestic investment and regional and global funds – focusing on green economy investments.
As was recently reported by the UK’s Financial Times newspaper, institutional investors and wealthy individuals are being increasingly attracted to the renewable power sector.
It is not difficult to understand why. Power generation in a market where demand is bound to remain high, and where feedstock (such as wind and solar energy) costs almost nothing, makes a great investment.
And Rwanda is doing its best to add extra incentives for both domestic and foreign investment. The country is already looking at environmental fiscal reforms, i.e. taxes to make environmentally damaging behaviour more expensive, and tax exemptions and subsidies to make environmentally beneficial behaviour more attractive.
Renewable energy technologies are to be exempted from VAT and import duties, and feed-in tariffs will soon guarantee a market for renewable electricity sold to the national grid by independent power producers.
Kigali’s new Green Special Economic Zone will investigate financial and fiscal incentives to companies to comply with voluntary energy efficiency and building standards; and a green investment index is to be established to attract climate-friendly foreign direct investment by ranking Rwandan companies’ environmental and financial performance.
Low carbon projects will also seek funding from carbon markets, which allow new initiatives that abate GHG emissions to raise funds by selling “carbon credits”.
Mandatory emission reduction credits for geothermal plants, micro-hydro dams, organic composting stations, energy efficient buildings, improved cook-stoves, biogas digesters, etc, can generate emission reduction credits to be sold through regulated markets such as the Kyoto Protocol’s Clean Development Mechanism (CDM).
The Green Growth and Climate Resilience strategy paper, referred to above, indicates that the government has identified geothermal as the most promising means of ramping up grid power generation.
And, according to Uwera Rutagarama and Theoneste Uhorakeye, authors of Geothermal Development in Rwanda: An Alternative to the Energy Crisis, “geothermal resources are seen by the government as an important development solution, serving to minimise the dependency on energy imports, save foreign currency and create conditions for the provision of a safe, reliable, efficient, cost-effective and environmentally appropriate source of energy. Initial exploration is underway; and analyses suggest that geothermal systems exist in Northern and Western Rwanda. Support for geothermal development in Rwanda has come from Germany’s Federal Institute for Geosciences and Natural Resources (BGR) and the oil major Chevron in conjunction with Rwanda’s Ministry of Environment and Natural Resources (MININFRA).
Geothermal generation involves pumping water deep underground to be super-heated, or finding existing hot aquifers, and using the resulting steam to drive turbines. It is recognised as a renewable, cost-effective, reliable technology and the East Africa Rift Valley has huge potential in this regard.
Rwanda shares this potential with 10 other African countries: Burundi, Djibouti, DRCongo, Eritrea, Ethiopia, Kenya, Malawi, Tanzania, Uganda and Zambia.
Exploiting the geothermal resources in the East African Rift Valley would significantly contribute to the economies of the countries involved, although to date only Kenya and Ethiopia have started to do so, building plants that already supply 210MW in total, or about one-fifth of Kenya’s total electricity generation capacity.
Significantly, the KfW (German Development Bank) has a Geothermal East Africa Initiative (GEAI) that provides a risk mitigation fund for geothermal projects. This is important, as the key to attracting private investors at the early stage of a geothermal development is to have a funding facility to cover the risk of drilling a well, on average costing at least $1m, that subsequently proves non-viable. The German bank works closely with the AU’s Department of Infrastructure and Energy, funding it with $27m. The EU Infrastructure Trust Fund has pledged a further $40m. Solar strides
In early 2010, the German Federal Ministry of Economics and Technology stated that the Kigali Solair (up to then the largest solar PV project in sub-Saharan Africa), injected 250 kW to Rwanda’s power grid.
Early last year, the Rwanda Utilities Regulatory Agency announced a renewable energy feed-in tariff that applies to small hydro schemes, but that is considered a preliminary step to establishing a feed-in tariff for solar-generated power that will further stimulate the development of the Kigali Solair project. The additional capacity, it is estimated, will contribute a further 1MW.
According to GtZ: “Rwanda is well-positioned to serve as an export market within the Great Lakes region. Since it is based mostly on procurement, current demand is extremely unpredictable and irregular. The future outlook however seems promising.
“High electricity prices, combined with some favourable policies indicate future opportunities in the solar water heater industry and also in the grid-connected solar PV market towards 2015.”
Already, Rwanda has inaugurated its first wind energy farm, located on Mount Jali overlooking the capital Kigali and powering the Rwandan Office of Information’s FM transmitter. Further wind farm projects are being developed mainly to serve community mini-grids (rather than the national grid) throughout the country.
But it is small-scale hydro and biogas systems, as well as solar PV to a certain extent, that hold out the biggest promise for Rwanda’s electricity provision. Off-grid solutions will be an important solution for many years to come, and they can act as an important intermediate stage towards the viability of grid connections. Small-scale hydro, where there are fast moving rivers and streams, are an excellent and affordable system of electricity generation for small communities.
So too, especially in rural areas, is the biogas solution. With Rwanda one of the most densely populated countries in Africa, but still mainly a rural society, biogas comes into its own as, to power biogas from animal effluent, the number of animals needed for generation at any scale makes economic sense only on large farms or in community-wide systems.
Essentially, Rwanda is demonstrating that renewable energy can underpin a development trajectory. Its policy model is particular to the country, but clearly holds out the promise of a green, clean future and one that can serve as a useful template for many other African countries.