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:
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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.
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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.
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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.
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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.
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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.
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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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