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ENERGYAccess 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, over the next three years, at the same time increasing access to electrification to 100% of households (48% on grid and 52% off grid).

Over the next five years, the Bank will invest USD 185 million in the Energy sector and catalyze additional USD 638 million 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, lack of infrastructure, risk aversion of financial institutions, human capital challenges, etc.

BRD has set up a Department of Energy Financing which will 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 will provide solutions to energy developers through a combination of products
including Debt and Equity Financing and provision of Long Term financing with long grace periods. BRD will also collaborate with other financial institutions to provide syndicated financing for larger projects. The Bank’s investment, together with its lending partners, will contribute to a generation of 66MW of electricity over five years.

– Energy Efficiency: In line with the green economy initiative, the Energy efficiency program will intervene by financing energy reduction capital projects, financing alternative energy products etc. The Bank’s intervention in energy efficiency will result in a saving of 6.6 MW. Rwanda’s current energy needs are 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, 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, will provide Technical skills in early stage development support, management and operations, and structuring energy deals among others. In-house expertise in packaging energy arrangements will be 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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RBF Window 5 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: What is the difference between EnDev Pro-Poor RBF and Window 5 RBF?

Both RBF schemes provide capital buydown subsidy for off-grid SHS. The procedure for participation, system installation, claiming, and verification are similar in both schemes. The major differences are in the subsidy amounts per Ubudehe, program duration, and subsidy disbursement timeline.  Window 5 RBF is a nationwide program however Pro-Poor RBF was focused only in five districts (Ruhango, Gisagara, Nyanza, Nyamagabe, and Huye).

Q4: Can a company currently in partnership with EnDev Pro-poor RBF be eligible for partnership with Window 5 RBF?

Probably. The company that has an active partnership with the Pro-poor program (or any other similar programs) is likely to fulfill the Window 5 eligibility criteria.

Q5: Can a company participate in Window 5 without participation in other REF windows?

Participation in the REF credit windows (Window 1, Window 2 or Window 4) is a prerequisite for a company to participate in Window 5. However, approved REF suppliers may claim subsidy up to FRW 200 million or up to the current value of the stock without having borrowed funds from any of the windows. OSCs can apply simultaneously to one of the credit Windows and Window 5. OSCs that have signed a loan agreement under the REF Window 4 will go through a shortened appraisal process for Window 5. As possible, loan applications under Window 1 and 2 will be fast-tracked to ensure timely appraisal and – potentially – approval of grant financing under Window 5. The following table summarizes the funding caps and requirements:

Policy
Cap on Earmarked Funds The earmarking of funds per OSC will be initially limited to up to FRW 1,000,000,000 (the cap will be reviewed regularly during implementation and adjusted as needed). Based on progress of the OSC over time, BRD may reduce the earmarked amount for the OSC or accept additional fund requests (noting that any review of additional funding requests will take into account the OSC’s progress on already-earmarked funds). This review will take place every 6 months or as soon as the capped amount is expected to get fully utilized based on the initial claim(s).
Calculation of Earmarked Funds per OSC The earmarked funds per OSC will be negotiated as part of the application and grant agreement process. The amount of earmarked funds will take into account the OSC’s sales to date as well as the credit amount requested or received by the OSC through the other REF windows. However, this amount will not exceed 1,000,000,000 FRW.
Borrowing Requirement (for OSCs claiming window 5 subsidy of FRW 200 million or more) Window 5 funds are meant to increase the utilization of credit from other REF credit windows. The OSC must secure credit from Window 1, 2, and or 4 as a pre-condition for claiming Window 5 subsidy (above FRW 200m, see next point).
Waiver of Borrowing Requirement up to FRW 200 Million All companies that have qualified as REF suppliers are eligible for a subsidy amount of up to FRW 200 million, even if these companies did not or will not borrow funds through window 1-4. Solar companies requesting for amounts above FRW 200 million will be required to meet the full Window 5 eligibility criteria, which includes acquiring credit from REF lending windows. In addition, OSCs that currently have stock in country will be eligible to a subsidy allocation equivalent to the value of their stock (selling price) in order to facilitate quick deployment/sales. In this case, the FRW 200 million threshold does not apply.

Q6: 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 6.12. 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.

Q7: 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.

Q8: 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.

Q9: 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.

Q10: 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.

Q11: 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.

Q12: What is the incentive level for an eligible household?

The subsidy level is different for different Ubudehe categories. See Window 5 Operations Manual (Section 6.5 and Section 6.7) about the subsidy amount and the disbursement schedule.

Q13: 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.

Q14: 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 Eligibility Tool allows companies to a. pre-register sales and reserve funds for an interested customer for 30 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.

Q15: 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 30 calendar days. During this period, other companies are not able to reserve funds for this customer. If a sale is not registered within 30 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.

Q16: 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 30 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.

Q17: 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. In this event, companies can effectively claim one subsidy every 6 weeks.

Q.18: How much is the maximum threshold of subsidy amount per participating company?

There is no threshold of subsidy amount for participating companies. However, the company can sign GSA at a level of maximum FRW 1 billion 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, or as soon as the initial amount has been utilized, and may adjust the initially agreed amount.

Q19. 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.

Q20: 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.

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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CC-RBF 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 6.12. 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 cookstove 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 6.5 and Section 6.7) 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 the clean cooking program in Rwanda. The CCC will assess the eligibility status through a manual process until the Eligibility Tool is fully 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.