Low utilization of Renewable Energy Fund (REF) loans has slowed the pace of scaling up solar energy in rural areas despite an increase that has been recorded in recent years according to the Development Bank of Rwanda (BRD).
The fund is a joint project of the World Bank and the Rwandan Government which was launched in 2017 with the aim to supply 445,000 off-grid systems and benefit an estimated 1.8 million Rwandans of whom 52 per cent are women by the end of 2023.
The $48.9 million fund provides on-lending through SACCOs, commercial banks to households, Enterprises and Off-grid Solar Companies (OSCs) , direct financing of mini-grid developers and direct Loan financing to locally-registered Off-grid Solar Companies (OSCs).
The products were designed to address affordability of solar home systems which the lower-income population and solar companies identified as a key hindrance.
However, since its establishment in 2017, only 6 per cent of REF loans had been exploited by 2020 and the experts attributed the low uptake of the loans among the intended beneficiaries in the rural areas to issues of affordability of solar systems, limited collaterals for loans and weak marketing.
Mobisol technicians install a solar system in Bugesera. Photo: File.
Officials at BRD now say that the uptake of the loans has increased to 27 percent as of now.
Despite the target to connect 445,000 households by 2024, “Only 75,000 households have been connected” with two years remaining to meet the targets according to Liliane Igihozo Uwera, Special Project Implementation Unit (SPIU) Coordinator at BRD.
The project is expected to help the government reach its target for 100 per cent access to electricity by 2024.
Among these households, 69.1 per cent will be connected to the grid while 30.9 per cent will be using off-grid solutions.
As of October 2021, the cumulative connectivity rate is 67.1 per cent of Rwandan households including 48.6 per cent connected to the national grid and 18.5 per cent accessing energy through off-grid systems (mainly solar), according to data from Rwanda Energy Group (REG).
With the Renewable energy fund to increase demand for solar energy , Beneficiaries from Ubudehe 1 category are subsidised by 90 per cent, Ubudehe 2 by 70 per cent and Ubudehe 3 by 45 per cent.
The guarantee scheme also covers lending risks on loans provided by financial institutions to households as well as small and medium enterprises.
As opposed to what has been the practice, clients now will not need to pledge their property as collateral.
To benefit from either scheme, citizens approach lending institutions or solar companies to apply for solar loans while institutions apply at BRD for a maximum of US$1 million per institution.
Cana Challenge campaign
Uwera said that there is a new community initiative dubbed “#Cana Challenge” aimed at supplying solar energy to households from Ubudehe category one that can’t afford the products that offer loans to get energy.
Ubudehe 1 is the socio-economic class of the most vulnerable Rwandans
As per the National Electrification Plan, there are more than 850,000 households yet to be connected to solar electricity including 87,000 households in Ubudehe category 1, she said.
The campaign which started on December 24 last year seeks to provide solar home systems to some 10,000 families by …….