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Access to reliable and affordable energy remains a considerable challenge in Rwanda. For Rwanda’s private sector to be competitive, the energy issue must be addressed as it is a crosscutting driver of economic growth. In order to fuel its growth, Rwanda’s target is to substantially increase its energy supply from its current level to 563 MW, and reach universal electrification of Rwanda, for instance 100% of households connected through off-grid and on-grid electrification by 2024.

BRD Strategic Plan 2018-2024 targets to invest USD 73.22 million in the Energy sector and catalyze private investment from other stakeholders. BRD’s interventions have been designed to address key constraints in the sector such as high startup costs and risks involved. Energy projects require significant time and financial investments, and their long-term nature requires specialized financing terms.

The challenges in the energy sector are mainly related to insufficient financing, inadequate collateral, lack of infrastructure, high cost of financing, risk aversion of financial institutions, human capital challenges, etc.

BRD has set up a Division of Energy Financing which is in charge of implementing the Bank’s intervention in the energy sector. These interventions are grouped into three main programs:

Energy Generation: The Bank provides solutions to energy developers through the provision of long-term financing (project financing, balance sheet financing, refinancing, etc). BRD also collaborates with other financial institutions to provide syndicated financing for larger projects.

Energy Efficiency: In line with the green economy initiative, the energy efficiency program intervenes by financing energy reduction capital projects, financing alternative energy products, etc. The Bank’s intervention in energy efficiency shall support in promoting higher energy efficient technologies. Rwanda’s current energy supply is dominated by biomass, but as the country’s focus is shifting towards renewable sources of energy, the Bank’s priority is on alternative energy sources of renewable energy like solar, biogas, clean cookstove, etc.

Technical Assistance: The Bank intends to partner with other stakeholders to develop technical capabilities of the different players in the sector. BRD’s technical assistance program, in partnership with the stakeholders, provides technical skills in early-stage development support, management and operations, and structuring energy deals among others. In-house expertise in packaging energy arrangements have been developed as the Bank’s goal is to be a hub for knowledge in energy financing by sharing lessons learned within the sector.

In a move to increase Solar Home System (SHS) installations and electrification of households in rural areas of Rwanda, the Renewable Energy Fund (REF) and Rwanda Energy Access and Quality Improvement Project (EAQIP) off-grid component 3a implemented by the Development Bank of Rwanda Plc. have launched a Results-based Financing (RBF) subsidy called “RBF Window 5”.

The Subsidy is designed to address the affordability of SHS faced by rural households through the reduction of prices for the systems at varying amounts allocated to Ubudehe 1, 2, and 3 categories with the aim of reaching the lowest income population in Rwanda.

The FRW 29.24 billion (US$ 30 million) subsidy window is funded by the World Bank and is expected to trigger at least 370,000 off-grid connections. It is expected that this RBF facility will boost uptake of REF funds thus enabling the project to connect Rwandan households using off-grid solutions. The subsidy will be channeled through eligible Off-grid Solar Companies (OSCs).

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WINDOW 5 RESULTS-BASED FINANCING SCHEME
Frequently Asked Questions (FAQs)Q1: What is results-based financing?
Results-based financing (RBF) scheme is different from traditional grants because incentives are disbursed upon delivery and independent verification of results. This means that participating companies will have to pre-finance their projects, either through loans or other sources of funds. This RBF provides direct financial support to beneficiary households and micro-enterprises to buy down most of the cost of a Solar Home System (SHS).

Q2: Does RBF provide grants to OSCs for their capacity building and marketing activities?
No. The RBF subsidizes the price of SHS products to final households and micro-enterprises. The participating companies must transfer the entire subsidy amount to its customers. The companies are expected to leverage their own resources for capacity building, marketing and any other operational activities. However, REF may provide certain technical assistance (training, orientations, etc.) to participating companies.

Q3: Can a company participate in Window 5 without participation in other REF windows?
Yes. Participation in the REF credit windows (Window 1, Window 2 or Window 4) is not mandatory for a company to participate in Window 5.

Q4: What are the eligibility criteria for a company to participate in Window 5 RBF?
Any participating company should go through the eligibility criteria provided in the Window 5 Operations Manual, Section 6.13. Failure to comply with the eligibility criteria will lead to suspension of the company from participating in Window 5. The company should comply with these criteria at all times. Whenever the company deviates from the eligibility criteria and the stipulated roles and responsibilities, a credible commitment in the form of a time-bound action plan needs to be prepared by the company and submitted to EDCL and BRD. EDCL, BRD and the World Bank team will closely review the action plan and decide accordingly.

Q5: What if a household changes Ubudehe category after the launch of the Window 5 RBF? How will this change impact the incentive level?
While Ubudehe categories may change, the Window 5 only considers the Ubudehe category of a potential beneficiary at the time of the eligibility check and fund reservation through the Eligibility Tool. Any changes to the Ubudehe category thereafter will not affect the incentive allocation for that particular customer.

Q6: Can two individuals from the same household apply for the Window 5 subsidy?
No. Once an individual from an eligible household buys a SHS and the sale is registered in the Eligibility Tool, all household members will be marked as ineligible. In other words – one subsidized system per household.

Q7: Can a household already having a SHS (subsidized or not) apply for the Window 5?
No. Only the households that have not yet connected through SHS are eligible for Window 5. Only the households identified as eligible under the Eligibility Tool check are qualified for Window 5. The households who are demarcated by National Electrification Plan as potential mini-grid beneficiaries are not eligible in Window 5.

Q8: Are companies able to claim incentives for SHS sold before the Window 5 started and register sales through the Eligibility Tool retroactively?
No. Companies are only able to claim SHS sold after the date of signature on the Grant Subsidiary Agreement (GSA) between the company and BRD. The GSA specifies the contract period and timelines for claim submission, verification and disbursement.

Q9: Can companies claim a subsidy for a refurbished system, in case one customer defaulted and the SHS is repossessed and provided to a new customer?
No. Companies can repossess a SHS from defaulted customers and redeploy the SHS to a new customer but not claim a subsidy on the refurbished system.

The company should report to EDCL the list of repossessed customers together with Claim Form. EDCL will check and deduct the subsidy from the claim if the repossessed customers have received the previous subsidy milestone. The company will not get the remaining subsidy amounts of those repossessed customers.

The company is not allowed to claim subsidy for another customer using the same repossessed SHS.

Q10: What is the incentive level for an eligible household?
The subsidy level is different for different Ubudehe categories. See Window 5 Operations Manual (Section 6.6 and Section 6.8) about the subsidy amount and the disbursement schedule.

Q11: Can the company claim all subsidy (per Ubudehe) amount regardless of customer contribution?
No. Claims can be submitted when the milestones identified for cash sales and PAYGO business models have been achieved.

Q12: What is the Eligibility Tool and when is it used?
The Eligibility Tool is a web-based tool, managed by EDCL, which supports the implementation of Window 5. The Eligibility Tool is linked to the OMIS, which is used to check customer eligibility and serves as a data repository for registered sales. The ET User Manual is provided in Annex 8 of the REF Window 5 Operations Manual.

The Eligibility Tool allows companies to a. pre-register sales and reserve funds for an interested customer for 15 calendar days, and b. register a sale once the contract is signed with the customer.

Each participating company receives user logins to access an individualized Eligibility Tool site. Apart from being able to perform the activities mentioned above, the site allows each company to review and adjust potential sales for which funds were reserved and get an update on the remaining budget allocated to the company and each Ubudehe category.

Q13: When should sales be pre-registered through the Eligibility Tool? What is the purpose of the fund reservation?
Following the eligibility check, companies should then pre-register interested customer to ensure that sufficient budget is available for the incentive at the time the contract is signed between the participating company and customers. At the time of pre-registration, funds required to subsidize the sale are reserved for 15 calendar days. During this period, other companies are not able to reserve funds for this customer. If a sale is not registered within 15 days, the reservation is automatically lifted and the household is free and eligible to purchase a subsidized SHS from other OSCs. OSCs are able to pre-register and reserve funds for each household only once.

Q14: When does a sale need to be registered through the Eligibility Tool?
Sales should be registered through the Eligibility Tool immediately after the contract between the company and the customer is signed, and SHS installed. This ensures that there is sufficient budget to cover the corresponding incentive. If a company decides to register sales outside of the 15 day reservation period, there is a risk that 1) the entire incentive budget has been allocated to other households, or 2) another company has reserved funds for the household, which will take precedence. Hence, the company would need to cover the remaining gap itself. This function is available only in the complete functionalities of the Eligibility Tool.

Q15: How frequently can participating companies claim for the subsidy payment?
Participating solar companies can submit one claim quarterly in case the number of customers served is lower than 500. If the claims are for more than 500 costumers OSC can submit two claims per quarter per milestone. In this event, companies can effectively claim one subsidy per milestone every 6 weeks.

Q16: How much is the maximum threshold of subsidy amount per participating company?
There is no minimum maximum threshold of subsidy per participating company. The companies are eligible for any subsidy amount they have requested for in the application form which will be assessed by BRD through an appraisal process and approved based on their capacity. Based on performance of the OSC over time, BRD may reduce the agreed amount for the company or accept additional fund requests (noting that any review of additional funding requests will take into account the company’s progress on already-allocated funds). This review will take place every 6 months or as soon as the agreed amount is expected to get fully utilized. The companies are encouraged to apply for next tranche of subsidy amount immediately after the 70% of the approved subsidy funds are committed, as evidenced by the Eligibility Tool or at least two (2) months before the expected utilization of the approved tranche. This will avoid the financing gap and ensure smooth continuity of the installation of solar systems by the company.

Q17: What type of business models are allowed under Window 5?
Companies are free to apply any type of business models, i.e. PAYGO, cash, SACCO, etc. However, at the time of application, the company should provide different prices of different sales models.

Q18: Is there any cost the Window 5 charges to participating companies?
Yes. BRD charges 4% of the subsidy amount plus 18% VAT as a management fee. The company has two options: this fee will either be paid upfront, at the time of signing GSA or it will be deducted from confirmed subsidy amount, at the time of disbursement. This fee will slightly reduce the actual subsidy amount for final beneficiary households.

Q19: Will my company be suspended from the program?
Yes. The company may be suspended from the program if the failure rate is >10 percent in two consecutive claims. The detail provision about suspension is provided in the Operations Manual (Section 7.5.6).

In a move to support the government of Rwanda’s target of reducing the percentage of households that use firewood for cooking from a baseline value of 79.90% in 2017 to 42% by 2024, the Development Bank of Rwanda Plc has launched a Clean Cooking Results-based Financing (CC-RBF) subsidy scheme. The CC-RBF will be implemented by BRD and EDCL.


The subsidy is designed to address the affordability of clean cooking technologies through the reduction of system prices at varying amounts allocated for Ubudehe 1, 2, and 3 categories, and aiming to reach up to the lowest income population in Rwanda.

The subsidy window is co-financed by the World Bank’s Clean Cooking Fund through Rwanda Energy Access and Quality Improvement Project (EAQIP). The CC-RBF expects to trigger at least 500,000 households (of which 25% are supposed to be female-headed households) gain access to clean cooking technologies. The RBF will benefit 2.15 million people.

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CLEAN COOKING RESULTS-BASED FINANCING SCHEME
Frequently asked questions (FAQs)

Q1: What is results-based financing?
Results-based financing (RBF) scheme is different from traditional grants because incentives are disbursed upon delivery and independent verification of results. This means that participating companies will have to pre-finance their projects, either through loans or other sources of funds. This RBF provides direct financial support to beneficiary households and micro-enterprises to buy down the cost of a clean cooking product.

Q2: Does RBF provide grants to the companies for their capacity building and marketing activities?
No. The RBF subsidizes the price of clean cooking products to final households. The participating companies must transfer the entire subsidy amount to its customers. The companies are expected to leverage their own resources for capacity building, marketing and any other operational activities. However, CC-RBF may provide certain TA (training, orientations, etc.) to participating companies.

Q3: What are the eligibility criteria for a company to participate CC-RBF?
Any participating company should go through the eligibility criteria provided in the EAQIP Component 3b Operations Manual, Section 6.13. Failure to comply with the eligibility criteria will lead to suspension of the company from participating in EAQIP Component 3b CC-RBF. The company should comply with these criteria at all times. Whenever the company deviates from the eligibility criteria and the stipulated roles and responsibilities, a credible commitment in the form of a time-bound action plan needs to be prepared by the company and submitted to EDCL and BRD. EDCL, BRD, and the World Bank team will closely review the action plan and decide accordingly.

Q4: What if a household changes Ubudehe category after the launch of the CC- RBF? How will this change impact the incentive level?
While Ubudehe categories may change, the CC-RBF only considers the Ubudehe category of a potential beneficiary at the time of the eligibility check and fund reservation. Any changes to the Ubudehe category thereafter will not affect the incentive allocation for that particular customer.

Q5: Can two individuals from the same household apply for the CC-RBF subsidy?
No. Once an individual from an eligible household buys a clean cooking product all household members will be marked as ineligible. In other words – one subsidized system (with two single burners or one double burner) per household.

Q6: Can household already having clean cooking product (subsidized or not) apply for the CC-RBF?
If a household is already fully using a clean Cook Stove without stacking (i.e. using a traditional stove) at the time of registration, the household is not eligible for the CC-RBF subsidy. If a household has a clean cooking product, but still uses a traditional stove regularly, the household is still eligible for the CC-RBF subsidy.

Q7: Are companies able to claim incentives for clean cooking products sold before the CC-RBF started?
No. Companies are only able to claim clean cooking product sold after the date of signature on the Grant Subsidiary Agreement (GSA) between the company and BRD. The GSA specifies the contract period and timelines for claim submission, verification, and disbursement.

Q8: What is the incentive level for an eligible household?
The subsidy level is different for different Ubudehe categories. See the CC-RBF Operations Manual (Section 6.6 and Section 6.8) about the subsidy amount and the disbursement schedule.

Q9: What is the Eligibility Tool and when is it used?
The Eligibility Tool is a web-based tool, managed by EDCL, which supports the implementation of CC-RBF. The Eligibility Tool is linked to the CMIS, which is used to check customer eligibility and serves as a data repository for registered sales.

Basic functionalities of the Eligibility Tool allow participating companies to check the eligibility of potential customers and corresponding incentive levels. This function will be available to each participating company immediately after they sign the GSA with BRD.

The complete functions of Eligibility Tool allow companies a. To pre-register sales and reserve funds for an interested customer for 15 calendar days, and b. To register a sale once the contract is signed with the customer. The company may have to manually submit the pre-registration and sales record to EDCL until this complete function is available.

Each participating company receives user logins to access an individualized Eligibility Tool site. Apart from being able to perform the activities mentioned above, the site allows each company to review and adjust potential sales for which funds were reserved and get an update on the remaining budget allocated to the company and each Ubudehe category.

The CC-RBF will develop a dedicated Eligibility Tool for clean cooking program in Rwanda. The CCC will use the Eligibility Tool once it is developed.

Q10: How much is the maximum threshold of subsidy amount per participating company?
There is no threshold of subsidy amount for participating company. However, the company can sign GSA at a level of maximum FRW 500 million subsidy (contract) amount. Once the company utilizes the committed amount, BRD can renew the GSA for another round of the contract amount. BRD reviews the GSA every six months and may adjust the initially agreed amount.

Q11. What type of business models are allowed under CC-RBF?
Companies are free to apply any type of business models, i.e. PAYGO, cash, SACCO, etc. However, at the time of application, the company should provide the different price of different sales models.

Q12: Is there any cost the CC-RBF charges to participating companies?
Yes. BRD charges 4% plus 18% VAT of the subsidy amount as a management fee. The company has two options: this fee will either be paid upfront, at the time of signing GSA or it will be deducted from the confirmed subsidy amount, at the time of disbursement. This fee will slightly reduce the actual subsidy amount for final beneficiary households.