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Pico-hydro’s potential in Rwanda assessed

As part of its Energy Small and Medium Enterprises programme (ESMEs), GVEP has completed a study which looks at the pico and micro-hydropower market in Rwanda
The study, which is an assessment of the potential commercial market for off-grid hydropower plants in Rwanda with a capacity to generate up to 50 kW, was conducted in collaboration with Entec AG, Switzerland, who have more than twenty years of practical experience in the development of pico and micro-hydropower technology in developing countries.

Some of the key findings and conclusions of the assessment include:

  • There is a potential commercial market for small-scale off grid hydropower plants in Rwanda. It is worthwhile to support the further development of this market through specific donor interventions.
  • The market is still in the early stages but site developers – while highly motivated and doing the best they can in a challenging environment – lack basic skills in hydropower engineering. Limited technical expertise of site developers and manufacturers is one of the main obstacles in quicker progress of this sector.
  • There is a strong demand for electricity services by offices, schools, health centres, local businesses and village communities in Rwanda. Though the government has embarked on an ambitious grid extension programme, many remote locations will remain non-electrified over the next fifteen to twenty years. Such areas have high demand for alternative electrification options.
  • Around 30 fully private pico-hydro plants have emerged over the years. There is a clear willingness-to-pay for electricity services with the help of beneficiaries, as well as  site developers devising appropriate systems to raise funds in a manner that isn’t burdensome to average household budgets with monthly fees between US$2.50 and $5 per household.
  • Site developers have been primarily investing their personal funds in sites which they operate as a business. Despite the pioneering and entrepreneurial mind-set, the financial and business assessment of these ventures is done by rough estimates. In order to accurately estimate the financial viability of a site and access funding through loans, it is necessary for the developers to understand the principles on which to operate a business, maintain accurate records and develop bankable proposals.
  • Limited access to third-party financing is an additional hindrance to the further development of the sector. Though site developers have found creative methods to raise funds, it needs to be stressed that the growth of their operations is still restricted due to a lack of funds.
David Disch, GVEP's Sustainable Markets Advisor stated: "Despite the government's target to reach one in two Rwandans with the national grid by 2017, there are many areas that will not have access to that luxury for a long time to come. Currently, a number of entrepreneurs do an amazing job to fill that gap but need assistance to scale-up and improve the quality of their services. As part of the preparation for upcoming Energy SME Programme in Rwanda, GVEP conducted this study to help advise the government on how it can supplement its efforts on grid extension through support to existing local enterprises that make a big difference to the people and economy in un-served and remote areas of the country".
According to Gerhard Fischer, Director of Entec Indonesia and co-author of the report, "The pico-hydro power sector in Rwanda, particularly for installations up to 50 kW, shows strong potential. Encouraging examples exist, showing that it is possible to build up the local know-how to handle this technology. Seed financing over a period of time for projects will help give the Rwandan hydro sector the chance to develop further and make it more appealing to prospective investors."

Additional information: Full report.
News date: 16/12/2011

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