Rwanda Energy Situation

1. Situation Analysis

1.1 Energy situation

Rwanda‘s energy balance shows that about 85% of its overall energy comes from biomass (99% of all households use biomass for cooking),11% from petroleum products (transport, electricity generation and industrial use) and 3% from hydro sources for electricity. In 2009 about 6% of the total population had access to electricity and the government has started a roll out programme to rapidly increase this to 16% by 2012 and at least 30% by 2020. The country has currently about 65 MW installed generating capacity (hydro and diesel) but there are a number of new sources coming on line within the coming years. The economic sectors with highest potential for growth (agricultural processing, tourism, IT) depend heavily on energy supply. While larger enterprises work mainly with expensive diesel generators, most of the small businesses in rural areas have no power supply. This limits their options for expansion and hinders productivity. At the same time, due to the shortage of energy, the greater part of the social infrastructure is unable to provide services efficiently.

 Hydro sector

There are only few providers of decentralized energy systems in the country. The PSP Hydro project will provide technical and business expertise to support the creation and development of economically sustainable small and micro energy providers. This will contribute to improve the power supply in Rwanda for productive applications (small and medium-sized enterprises), as well as the social infrastructure and electricity for households. A survey in 2007 prepared a micro hydro atlas which identified about 300 sites for small and micro hydro power which can be used for minigrids or connected to the national grid, depending on the location. There have already been a number of projects implemented through the Ministry with assistance of UNIDO, BTC and EU. These are constructed under direct supervision of the ministry and once operational, will be handed over either to the national power utility or will be managed through private companies or in joint venture.

Biomass sector

Biomass (firewood, charcoal and residues) remains practically the only source for cooking. LPG consumption is extremely low (consumption per capita is 1/50 only of Kenya, the market leader in the region) while kerosene is practically only used for lighting. The Government‘s Vision 2020 asks for a reduction of biomass consumption by 50% by 2020, but is it not clear what the alternative sources of energy will be. Government programmes have focused on the increase of wood production (already 80% of the country‘s firewood and charcoal come from eucalyptus) through plantations and agro forestry programmes and to increase efficiency in charcoal production and the use of improved stoves. Already over 50% of all households have improved stoves (different models depending on the fuel used) and the Government wants to increase this percentage to 100% while at the same time improving the efficiencies of the improved stoves.

Biogas

Biogas has been introduced in the country many years ago and Rwanda has gained international recognition for its programme in the prisons and large institutions. The Government in 2008 announced a policy to introduce biogas digesters in all boarding schools (estimated at around 600 schools), large health centres and institutions with canteens to reduce the consumption of firewood. The Ministry organised in 2009 a training programme for about 25 technicians and craftsmen. No further activities are taking place as there are no funds allocated to institutional biogas in the financial year 2009/10.

Activities in the domestic biogas sector started much later. It is estimated that over 120,000 households have dairy cows that are kept under zero grazing conditions to reduce soil erosion and also due to lack of grazing areas. These numbers are increasing due to the governments programmes to increase the number of families with dairy cows. The National Domestic Biogas Programme started in 2007 with the construction of 101 pilot digesters funded by Ministry and with technical assistance from SNV. GTZ/EnDev inputs became available Jan 2008. Since that time the focus has been on capacity building, training of technicians and entrepreneurs, awareness campaigns and promotion. In total another 201 digesters were build up to 30 Sept 2009. About 30 large biogas digesters have been constructed in institutions and Rwanda has received international recognition for the biogas systems that have been installed in the prisons over the last decade reducing firewood consumption by up to 40% and improving hygienic conditions. The Government has announced a policy for boarding schools, health centres and other large consumers to install biogas systems within the coming years.

Key problems of the energy sector

The following problems are noted for the energy sector:

• 1. Access to electricity remains low and in particular so in the rural areas even if roll out plans are implemented as *scheduled. Additional efforts are required to provide electricity to those will not be close to the national grid,
• 2. Costs of new connections are at least $500/household and are beyond the reach of most households in Rwanda,
• 3. There is general a lack of entrepreneurial capacity in the country and this hampers small commercial electricity projects,
• 4. The increasing population and rising incomes per capita will result in a higher demand for cooking energy,
• 5. Government wants a reduction of the consumption of biomass (firewood/ charcoal) but there are only few alternatives such as LPG and kerosene. However, these are more expensive while electricity is no real option due to the high costs and the low connection rate.

1.2 Policy framework, laws and regulations

Vision 2020 (published in 2000) is Rwanda‘s long-term development blueprint seeking to transform the country into a middle income position. The Policy statement includes a pillar on infrastructural development, including energy with high priority to access to electricity for the population but also a reduction of the use of wood energy from 94% in 2000 to 50% in 2020. The EDPRS refers to Vision 2020 and for the energy sector has four main elements:

• a) Increased access to electricity for enterprises, households, health centres, schools and local government administrative offices,
• b) Reduced costs of supply of electricity and the cost of imported petroleum products,
• c) Diversified sources of energy supply and enhance energy security, and
• d) Strengthened governance framework and institutional capacity.

The EDPRS requires the increase of electricity generation form a variety of sources such as hydro and methane gas. It specifically asks for at least 50 MW of additional hydro power to be installed before 2012. The EDPRS has specific targets for the number of electricity connections to be reached by 2012 (initial target 200,000 but this has been increased to 350,000), 100% of all health and social centres to be connected to the grid or equipped with PV systems and 50% of all schools covered. The power supply grid had an extension of about 3,230 km in 2006 and it is targeted to reach 5,000 km in 2012. The international donor Page 124 of 136 community has pledged 228 M$ to support the implementation of the five year National Electricity Access Programme (2009-2013). There are also targets given for improved cook stoves (from 40 – 100% coverage) and 20% of cattle farmers using biogas. The Ministry has updated its energy policy 2008 – 2012 covering the EDPRS period with assistance from the EUEI. The policy covers all types of energy: electricity, biomass, petroleum, methane gas, geothermal, wind, PV etc. A specific Biomass Energy Strategy (BEST) was developed more or less simultaneously. Initially the BEST focused on the charcoal value chain for the urban areas but this was later expanded with a special energy survey among the rural population and specific recommendations.

Some of the most important aspects of the policies for the EnDev programme are:

• 1. Electricity tariffs which are currently around 0.23 US$/kWh but are subject to further studies and recommendations in order to reduce the costs to consumers and businesses,
• 2. Feed in tariffs are mentioned but there are no clear policy guidelines as such that may guide investments in small scale renewables such as micro hydro. An overall study was carried out in 2008 describing the tariffs and tax structures. This is to be followed up by a special tariff study which is provided more details,
• 3. A new Law for the electricity sector is under preparation. This law will regulate the liberalisation of the electricity sector in Rwanda and set the basis for the creation of an electricity market similar to those in place in the EU countries or the US. The Government has a proposed a draft to the Parliament for its revision,
• 4. The two key interventions of the PSP Hydro project, the development of MHP plants to increase power capacity in the country and the consolidation of the participation of private MHP developers in the energy sector, are in line with the national energy policy and complementary to the Government‘s efforts.
• 5. In the biomass sector a three pronged approach is recommended
• a) on the supply side, increased wood production through higher yields,
• b) higher efficiency in the value chain through improved legislation, more efficient charcoal techniques and improved cook stoves, and
• c) Promotion of alternatives such as LPG, kerosene and peat.