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, 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.