Energy 4 Impact pioneers innovative model for mini-grid development, ownership in Rwanda

Energy 4 Impact is pursuing a new approach that involves community members in the development and operation of mini-grids in Rwanda.

Under the Sida-funded Scaling Off-Grid Energy in Rwanda (SOGER) programme, community-owned cooperatives will join forces with mini-grid developers to construct pico-hydro grids at 10 sites across Rwanda, providing clean energy access to about 7,500 people.

“Energy 4 Impact has put in place the necessary mechanisms, including hiring of a legal firm to facilitate the establishment of the relationship between the community and the developers. We have ensured the agreements are legally binding and that the benefits generated by the grant-funded pico-hydro plants over their life cycle benefit the community”.

Said Victor Hakuzwumuremyi, SOGER Programme Manager at Energy 4 Impact.

Under a Special Purpose Vehicle (SPV), community members, through cooperative societies, and mini-grid developers are jointly involved in the design, financing, development and operation of mini-grids to deliver renewable energy in remote areas for household and productive use.

This approach increases the level of community buy-in for the project and helps to raise the required funding. This in turn increases the projects’ chances of implementation and long term success.

As part of this plan, Energy 4 Impact has so far engaged local authorities and community members in two regions, where work on the projects is beginning, to create and register the community cooperatives.

These are Umucyo Cooperative in Mudasomwa, Nyaruguru District and Kodukaru Cooperative in Mpanga Sector (Nyankorogoma Site) Kirehe District. Kodukaru Cooperative holds 44.3% shares in the SPV whilst Nyankorogoma Hydropower Ltd, the developer, holds the remaining 55.7%.

In Mudasomwa, Umucyo Cooperative has a 35.4% stake while the developer, Hobuka Ltd, holds 64.6% of the shares in the mini-grid.

Mudasomwa is a 34kW pico-hydro with a cost of around $107,000. The community and the developer in Mudasomwa will raise 10% and 25% of the capital expenditure respectively. The community members will offer their contribution in cash or by working on the project during construction.

Energy 4 Impact will offer part of funding through a grant provided by the Swedish International Development Cooperation Agency. The remaining 15% will be raised through debt raised by the developer.

Initially, the mini-grid will connect 300 households, six grocery stores, three churches, two schools, a healthcare facility and an office to the power before expanding with time.

It will also supply power to three cassava mills, six shopping centres and seven bars and restaurants and other commercial enterprises or activities that are expected to emerge with the availability of the clean, reliable power.

Construction of the pico-hydro plant in Nyankorogoma will cost around $86,000. Again, Energy 4 Impact will provide part of the funding as a grant through the SOGER programme.

The developer will raise 10% of the cost, while community members will raise 7% through a cash contribution or by working on the project during construction. The outstanding 13% will be raised through debt by the developer.

Upon completion, the 11kW pico-hydro power in Nyankorogoma will connect 141 households, 17 commercial centres, three churches and one grain milling machine.

Since the community exports unprocessed maize, sorghum and cassava only to import back in processed form, it is expected the newly available power will create a platform for value added processing activities, as well as attracting new businesses to the area.

To ensure micro businesses profit from the power supply, Energy 4 Impact will provide support for productive use activities, empowering community members to engage in entrepreneurial activities that make use of the power.

The support includes advice on markets and supply chains, on the economics of their business case and accessing capital to acquire electrically powered equipment. With the productive use support, demand for electricity is expected to grow, thus enhancing each project’s commercial viability and sustainability.

The SOGER programme has a strong focus on gender and is implementing gender sensitisation activities across the productive use and pico-hydro sectors. “60% of the productive use businesses supported will be owned and operated by women. In addition, four pico-hydro developers are women-led businesses and all the pico-hydro developers are receiving gender sensitisation training as part of our support to them,” says Victor.

The SOGER project is aligned with the Rwandan government’s vision to achieve 100% electricity coverage by 2020 through blending both on-grid and off grid solutions across the country. For example, Mudasomwa is a remote area located 25kms from the main grid and has been identified by the Rwandan government as an off-grid area.

“While grid-extension may not be achieved any time soon in this and other remote areas in Rwanda, the government has put in place a policy framework that facilitates the development of mini-grids based off-grid electrification, which includes pico-hydro projects, such as those we support,” Victor says.

As part of these efforts, Energy 4 Impact is supporting 30 pico-hydro developers in total in Rwanda to set up power plants through grant financing, linkages with other investors or financial institutions and technical support.