On-grid solar is coming to Sub-Saharan Africa – Rwanda is taking the lead

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On-grid solar is coming to Sub-Saharan Africa – Rwanda is taking the lead

Among its many natural treasures, Africa has one infinitely valuable resource: the sun. At last, large-scale solar photovoltaic systems can harness its power to provide carbon-free electricity to people who need it the most. 

Rodríguez-Manotas, Judit, Padmasai Lakshmi Bhamidipati, and James Haselip. “Getting on the Ground: Exploring the Determinants of Utility-scale Solar PV in Rwanda.” Energy Research & Social Science42 (2018): 70-79. doi:10.1016/j.erss.2018.03.007.

https://www.sciencedirect.com/science/article/pii/S2214629618302305

While people in the West are focused on artificial intelligence and cryptocurrencies, in the developing world 1 billion people still live without electricity. The United Nations’ 7th Sustainable Development Goal aims to ensure “universal access to affordable, reliable and modern energy services” by 2030. Progress is slow, but steady. Small-scale, off-grid, “pay-as-you-go” solar installations have been spreading across Sub-Saharan Africa, but larger, on-grid installations are still lacking.  

Rwanda has stood up to the challenge. An 8.5 MW solar project located in Rwamagana, 60 km outside Kigali, was completed in 2014. It became the first utility-scale solar installation in Sub-Saharan Africa. A recent paper published in Energy Research and Social Science outlines the factors that led to the project’s success. Judit Rodriguez-Manotas from University of Denmark and her colleagues aimed to see if this project could be viewed as a sign of a broader shift away from donor-dependency to market-driven investments. Lessons learned could also inform other low-income countries looking to transition toward a thriving, low-carbon economy.

Using a “Multi-Level Perspective” analysis, the researchers looked into various factors that enabled the project. They categorized their findings into global, country-specific, and technology or innovation-specific levels. Global influences included the decreasing cost of solar photovoltaics, increasing willingness and pressure to address climate change, and volatile oil prices. Rwanda, in particular, proved to be the right place for this solar installation. During the last 25 years, the country has experienced relative stability and economic growth, which increased investor confidence. With limited domestic energy resources and a large rural population still without electricity, Rwanda is also in dire need of new generation capacity.

The Rwamagana project got on the ground with record speed. Gigawatt Global, a multinational solar developer, worked closely with government agencies to overcome the most significant challenge: financing. They signed a long-term power purchase agreement, a contract that is critical for the financial viability of any renewable energy project. Tax exemptions and a financial guarantee from the Rwandan government helped provide a stable investment environment. The developer purchased political and currency risk insurance as well to ensure investor’s confidence.

The study highlighted several key takeaways from this project. Support from the Rwandan government was crucial for the project’s success: the local electricity regulatory agency and the Ministry of Finance both helped create a safe space for private contract negotiations. Rwanda’s ambitious goal to electrify at least 70% of its population by 2018 and become a middle-income country incentivized greater collaboration between the government and the private sector. The solar developer’s expertise in technology development, manufacturing and financing all proved valuable.  

The study concluded that foreign technology expertise is greatly needed for any clean energy project to be successful in low-income countries. However, projects could only gain traction if developers learned how to negotiate effectively with local governments. Achieving universal access to electricity and creating thriving, low-carbon economies are both ambitious goals. We must be bullish yet humble in our quest – take financial risks, bring technical expertise, and seek out local knowledge to make much needed progress.

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