The world is in a race for a climate mitigation agenda aimed at averting the eminent dangers posed by climate change. As the global leaders gather in Glasgow, UK for the COP26 UN Climate Change Conference, energy transitioning has emerged as an important pillar of addressing climate change. The International Renewable Energy Agency (IRENA), headquartered in Abu Dhabi, is on the right course of rallying multilateral efforts behind energy transitioning as a pathway to a sustainable future.
With 166 member states, IRENA stands out as a uniquely global energy hub and a source of guidance and support for stakeholders across the world. Through its 2021 World Energy Transitions Outlook, the Agency presents to member states policy frameworks necessary to advance a transition that is aligned with a global net zero future, while being just and inclusive.
With over 300 partners collaborating under IRENA’s climate investment platform, stakeholders with viable projects in renewable energy and climate investment around the world can bank on the Agency for resource mobilization. By 2020, the IRENA/ADFD Project Facility resulted in the selection of 32 renewable energy projects that benefited from $350 million in concessional loans and improved lives of over 2.5 million people around the world.
In Africa, IRENA has supported different national and regional programs and initiatives including Africa Clean Energy Corridor, a regional initiative to accelerate the development of renewable energy potential and cross-border trade of renewable power within the Eastern Africa Power Pool (EAPP) and Southern African Power Pool (SAPP). This is in addition to West Africa Clean Energy Corridor, a regional initiative supporting the creation of a regional power market in the West Africa Power Pool.
For IRENA, the expansion of renewables goes beyond the provision of reliable energy and climate protection. “Energy is the key to development in Africa and the foundation for industrialization. Like in Europe and other parts of the world, the expansion of renewables goes beyond the provision of reliable energy and climate protection. Economic development as a whole will benefit and new jobs and opportunities for entire industries will emerge,” wrote IRENA Director-General Francesco La Camera in a recent IRENA-German Federal Ministry for Economic Cooperation and Development joint report on renewables in Africa.
Energy transitioning has emerged as an important pillar of addressing climate change, one of the critical global challenges of our time. Carbon dioxide levels and other greenhouse gases in the atmosphere worsen the global warming, affecting lives and disrupting economies.
In the face of such challenges, mobilizing collective climate action is very vital in pursuit of environment-saving initiatives and global climate targets of limiting global temperature rise to 1.5°C and a net carbon zero future by mid-century under Paris Agreement and the Climate Ambition Alliance. Within this global framework of saving the environment, the Kigali Amendment to the Montreal Protocol signed on 15th of October, 2016 in Kigali – Rwanda is another landmark global commitment to reduce the production and usage of powerful greenhouse gases in a move that could prevent up to 0.5 degrees Celsius of global warming by the end of this century, while continuing to protect the ozone layer.
For Rwanda, whose first Permanent Representative Ambassador Emmanuel Hategeka presented his credentials to IRENA on 3 May 2021, increasing the share of renewable energy is enshrined in a clear national vision of becoming a green, climate resilient and low carbon economy by 2050.
Advancing environmentally friendly practices is an integral part of Rwanda’s development. This is further emphasized in a statement from H.E President Paul Kagame speech at a Climate Change Panel at World Economic Forum – Davos in January 2015: “As we look forward to development, we are not making a choice between environment and prosperity. We are rather looking at how we combine both because one supports the other.”
Ambitious plan, attractive incentives
Rwanda targets to achieve universal access to electricity by 2024 with a production capacity of 556MW of which renewable energy will constitute 60% of the energy mix mainly from hydro projects and solar energy. As of end August 2021, access to electricity in Rwanda is recorded at 65.4% with 47.6% grid connections while 17.8% accounts for off-grid connections. The current installed power generation capacity is 235.6MW.
To achieve the above target, the Rwanda Government has developed a Least Cost Power Development Plan that gives priority to renewable energy projects. These mostly include hydro projects (MHPP 33MW, HPP 133MW and hydro pump storage 80MW).
Solar power is also expected to contribute a significant share of electricity generation with solar power plants connected to the grid currently at 5% but as technology improves and prices of storage decrease, there is a plan to increase the share. IRENA’s analysis published in March 2021 shows that 543MW of on-grid solar PV could be cost-effectively deployed by 2040, and a number of small off-grid systems could be added in rural areas, increasing the share of renewable energy to above 60 percent.
Rwanda’s ambitious targets in renewable energy are built on sharp rise in renewables over the last decade. In terms of installed capacity, Hydro power grew from 48 MW in 2010 to 116.6 MW in 2020 while solar power reached 12.1MW from 0.3MW over the same period. The two constituted 54% of the total national installed capacity in 2020. In terms of energy generation, Hydropower increased from 177 GWh in 2010 to 527.1 GWh in 2020 while solar jumped from 0.3 GWh to 18 GWh with the two making 61% of the total national energy generation in 2020.
Attractive incentives and facilitation package have been put in place to facilitate investments in renewable energy and energy efficiency in Rwanda. For private developers in the power sector, incentives include provision of investment certificate for the investor’s special treatment, a variety of non-fiscal and fiscal incentives, tax exemption including VAT on importation of some RE equipment, free repatriation of profits, preferential corporate income tax of 15%, Corporate income tax holiday of up to seven years for energy projects producing 25MW with 50M investment and provision of RDB aftercare support to registered projects with Investment certificate.
Rwanda also offers investment facilitation for Renewable Energy projects, including Power Purchase Agreements of 25 years as minimum, Established Legal Framework to stimulate Public Private Partnership, Standard Independent Power Purchase Agreements, Renewable Energy Fund (REF) to support Off Grid solar and Clean Cooking Technologies development, Result Based Financing and Technical Assistance to increase private sector players and consumer capacity through studies, trainings and awareness campaigns
Stepping up cooperation with IRENA could give an impetus to ongoing Rwanda’s energy transitioning.
“Enhanced partnership with IRENA will promote exchange of knowledge and best practices in renewable energy. We will work together in resource mobilization efforts to implement our Nationally Determined Contribution especially for renewable energy targets. We look forward to scaling up in our cooperation in renewable energy transitioning for a greener future of Rwanda,” Ambassador Emmanuel Hategeka said.
The growing Rwanda-IRENA cooperation opens doors to public and private entities in Rwanda and East Africa. In addition to knowledge and best practices exchange, actors can share projects for consideration by partners collaborating under IRENA’s climate investment platform.
Some key ongoing and new projects in Rwanda that may attract IRENA partners under climate investment platform
- Capitalization of the Renewable Energy Fund to support in addressing the affordability challenge for low-income households through the Result-Based Financing framework, managed by Rwanda Development Bank and Rwanda Energy Group/ Energy Development Corporation Limited. The project encompasses Support to private companies through low-cost loans or direct equity; Grants to strengthen the Standalone Systems value chain, Grants to establish a testing or verification center for Standalone Off-grid System components, Establishment of a regional production and assembly center for off-grid systems, Support of off-grid connected households towards higher tier access energy level and Support in establishing productive use opportunities from Standalone systems owners
- Construction of Green City. The Green City Kigali is a key project that will develop a blueprint that can be replicated across the country. The project has some parallels with Masdar City in Abu Dhabi in terms of sustainability and green technology. The costing of Green City Delivery is estimated at $5 billion over the next decade. The first phase requires approximately $86 million for the construction of 1,680 housing units.
- Financial support (Equity, Concession loans, Grants, RBF) in the dissemination of clean cooking technologies in institutions like schools, hotels and restaurants and households by adopting energy efficient cooking fuels such as LPG, high efficient pellets, briquettes and wood stoves. Its key component include Capacity building and awareness campaigns, Provide equipment to the National Clean Cooking Testing Lab, Improved Cook Stoves and LPG Subsector.
- Energy Efficiency in the Transmission and Distribution Infrastructure with major components of Investment in the dissemination of smart meters to allow for the establishment of the time-of-use tariffs, Upgrade of Transmission and Distribution Infrastructure to n-1 capabilities and Upgrade of transformers in six Secondary Cities
- Energy Efficiency for appliances. This project envisages the Capitalization of the Cool Lease Fund for the dissemination of energy efficient cooling appliances plus Awareness and promotion of dissemination of efficient lighting appliances.
- Renewable Energy Generation project with a focus on Rehabilitation of Nyabarongo I Hydro Power Plant; Construction of small hydropower plants with a total installed capacity of around 20MW and Installation of Pump Storage at Nyabarongo II Hydro Power Plant.
- Proof of concept for transportation and cooking with methane gas (compressed) from Lake Kivu, currently a PPP project under development.
IRENA underlines that East African region including Rwanda requires significant levels of investment in its power generation infrastructure “To meet the needs of rapidly growing economies, the East African region including Rwanda requires significant levels of investment in its power generation infrastructure. It is important that such long-term planning decisions are well-informed and present a balanced picture of all potential pathways including renewable energy options,” said Francesco La Camera, Director-General of the International Renewable Energy Agency.
Rwanda joined IRENA in June 2009 and has been an active member since then. Renewable energy is expected to play a central role in delivering Rwanda’s ambitious Nationally Determined Contribution (NDC), submitted to the United Nations Framework Convention on Climate Change in May 2020 that features a 38% reduction of greenhouse gas emissions compared to business as usual by 2030. The country’s efforts to limit its contribution to climate change and adapt to the consequences over the next decade will require approximately US $11 billion.