Off-Grid Solar Seminar: The Role of Off-Grid Solar in Rwanda’s Energy Mix Going Forward

Off-Grid Solar Seminar: The Role of Off-Grid Solar in Rwanda’s Energy Mix Going Forward

UR-CST, Kigali – October 28th 2016


The Off-Grid Solar Seminar, focusing on the role off-grid solar does and will play in Rwanda’s energy mix, was organised by UCL USAR’s PhD student Iwona Bisaga (with support from UCL’s Pro-Vice Provost Regional Leadership Fund for Africa and Middle East) together with BBOXX and the University of Rwanda College of Science and technology (UR-CST), to bring together key stakeholders working in the energy sector and discuss key questions around the future of Rwanda’s electrification efforts in the context of its Rural Electrification Strategy and the launch of Rural Electrification Campaign lead by the Government of Rwanda. Speakers included representatives of the public and private sector, as well as development partners supporting off-grid efforts in Rwanda. Iwona Bisaga presented some of the early findings of her research focusing on the users of Solar Home Systems (SHSs) which she is conducting in collaboration with BBOXX- a manufacturer and distributor of solar systems in East Africa.

Ag. Principal of the University of Rwanda College of Science and Technology Dr. Leopold Mbereyaho opening the event and welcoming attendants to UR-CST.

1.3 billion people in the world have no access to electricity and some 600 million of them are in Sub-Saharan Africa. Sustainable Development Goals (SDGs) have set out a target of achieving universal access to reliable, modern energy sources by 2030, which might seem like a long time but given the relatively slow progress in extending access in places where it’s most needed- this timeframe suddenly becomes very tight. The International Energy Agency estimates that nearly $1 trillion of investment is required to achieve this goal, some $49 billion per year (IEA, 2015). Off-grid solar sector has to date attracted $511 million of investment, according to Bloomberg New Energy Finance report (2016), with Pay As You Go companies hitting a record $160 million in 2015. Still not enough given the capital-heavy nature of the off-grid market.

Morris Kayitare, Director of Primary and Social Energies Development at EDCL-REG outlining Rwanda’s Rural Electrification Strategy and the role of off-grid solar solutions.

In Rwanda, where the current electrification rate stands at 24%, rapid scale up will have to happen to reach 70% by 2018, as outlined in the Rural Electrification Strategy, and ultimately 100% by 2020. These ambitious targets will require high levels of investment in addition to the recognition and support given to off-grid electrification, which is supposed to make up 22% of access in the next two years. According to Morris Kayitare, Director of Primary and Social Energies Development at Rwanda’s EDCL-REG, grid expansion has now reached all districts, with 100% hospitals, 85% health centres and 92% sector offices now connected. The pace has been promising, with levels of generation (from mixed sources including hydropower, thermal and methane gas) growing year on year. However, given the challenging landscape and remoteness of rural populations in Rwanda, off-grid electrification, inclusive of off-grid solar home systems and mini-grids, should not be overlooked. It is now included in the Rural Electrification Strategy and has seen a strong growth in the last few years, with some 50,000 solar systems installed across the country to date, representing 2% electrification. This number will increase rapidly as companies such as BBOXX, Mobisol, and MeshPower continue to scale up. Laurent van Houcke, the COO of BBOXX, presented the vision the company has for extending energy access to remote rural areas while not forgetting about potential customers living ‘under the grid’ who choose Solar Home Systems because connecting to the grid network is often too costly for them. With end-to-end digitised operations, BBOXX are hoping for efficient and explosive growth that will allow them to provide reliable energy services in all of Rwanda’s 30 districts.

Laurent van Houcke, COO of BBOXX, presenting company’s vision to get where the grid cannot reach and electrify 25% of the country by 2020.

It is expected that off-grid will scale 20 times in the period 2015-2018, which can only be made possible with adequate levels of financing and investment flows, favourable policies and coordinated efforts among the public and private sector, and the development partners supporting energy work in Rwanda. Among them, GIZ who are the implementing body of Energising Development- a multi-donor partnership promoting sustainable access to modern energy services for households, social institutions and medium-sized businesses in Africa, Asia and Latin America. In Rwanda, their work currently consists of three strands: the PSP Hydro promoting the micro-hydro private sector, and the Results-Based Financing (RBF) for solar lighting and village gird, which is implemented through Uruwego Opportunity Bank. With a EUR 5 million budget, the RBF facility aims to support off-grid solar companies by offering an incentive to partner companies, based on their sales or village grid installations, which aims at mitigating end user risk . Whether one solar light or a village grid, the amount of the grant depends on the size of the system, which translates into the level of service provided to the end-user: the more it is, the higher the grant (with a maximum of EUR 20 per unit sold for solar lighting and up to 70% of the investment costs in the case of a village grid). RBF subscribed companies can then use the grant money in any way they deem suitable for their businesses to grow. According to Simon Rolland, the Country Project Manager at EnDev Rwanda, feedback from participating companies has so far been very positive with a high recognition of the market-driven approach and the suitability of this initiative for mitigating end-consumer risk, as well as the incentives it creates for sustainability and performance. Yet off-grid is not without challenges in the region, claims Simon- access to working capital and currency risk remain problematic for the sector and the need for raising local debt financing is more pressing than ever if the sector is to hit its targets. Justus Mucyo, the Managing Director of BBOXX Rwanda, has seconded this as being the key to unlocking the off-grid solar potential in the country during the panel discussion. In addition, all speakers agreed that well-defined policy for the implementation of the Rural Electrification Strategy is of crucial importance, with badly designed donor or government programmes in the off-grid space carrying risk for an unfavourable market distortion. Another threat, particularly to solar systems, are cheaper, poor quality products entering the market from distributors offering no warranty or after-sales services, which can have a damaging effect on the users (as well as solar’s reputation) as no support is offered in case systems break.

Simon Rolland, Country Project Manager at Energising Development (EnDev) Rwanda, speaking about the work EnDev are doing with the private sector to support off-grid electrification.

The need to focus on end-users and their needs was highlighted in the early findings of Iwona Bisaga’s PhD research which she is conducting on SHS customers in the Northern part of Rwanda. In order to maintain the overall high satisfaction levels among those who have adopted SHSs, it is important to recognise that a considerable proportion of them see off-grid solar as a permanent solution for having access to energy in their households and therefore the need to provide adequate, reliable services is a must. All or most of energy needs are met by SHSs for approx. 75% of adopters, however, majority have aspirations for owning more lights (in order to light up all rooms in their houses), a TV (for access to information and entertainment purposes), more phone charging ports (fow own use as well as for income generation), and other appliances such as shavers, blenders or irons. Worth noticing is the fact that, based on Iwona’s findings, women and children are the ones who tend to use the systems more as they are the ones who spend more time at home, yet it is usually the man in the household who is the registered owner of the product. In this research, female users were deliberately targeted in order to better understand their needs and aspirations as often the primary users of SHSs. For them, having the ability to shift some of the chores into the evening (instead of early morning hours) and having children stay around the house in the evening, as well as allowing them to study after dark, is what matters most. Getting access to appliances which could create opportunities for income generation (such as shavers to run a barber shop) has been mentioned as desirable, yet it needs to come at an affordable cost.

One of the most interesting findings was the setting of energy targets, or imihigo, as they are known in Rwanda (literal translation of imihigo is performance targets), at the household level. Over 40% of SHS users interviewed have reported having energy targets in their households at the time of purchasing their systems. Well over 50% have reported there being energy targets at the umudugudu (village) level now. Such grassroot, bottom-up energy planning is quite unique and not commonly seen among households in countries lacking energy access. Its significance should not be overlooked: knowing that households and villages set such targets could help SHS providers better target future customers and improved understanding of how households decide to set and execute their energy imihigo could be a valuable learning for other countries with high proportions of those still living off the grid.

Listening to customers’ voices and collecting their feedback for service improvement, financing and sound policies, as well as closer collaboration among all stakeholders involved dominated the discussion between the speakers and the diverse audience, among whom were EU delegates, banks’ and telcos’ representatives, Power Africa, DfID, EPD Rwanda, Mobisol, as well as students from UR-CST. A great addition to the planned talks and discussions was the announcement of the African Centre of Excellence in Energy for Sustainable Development by Prof. Etienne Ntagwirumugara of UR-CST. The Centre is being established under World Bank’s Eastern and Southern Africa Higher Education Centres of Excellence Project (ACE II) and is supported by the governments in the region. Prof. Ntagwirumugara called for cooperation and local partnerships, particularly with the private sector in the energy sector with whom the Centre aims to work closely in order to train future leaders and equip them with skills which are most needed for the sector to thrive.

Iwona Bisaga