Nov 28, 2022
Off-grid energy solutions is a promising prospect for delivering electricity to rural or remote households as cases in Sub-Saharan Africa (SSA) and Latin America have shown. But scaling and capitalizing on the full benefits of off-grid systems faces barriers in several areas, including policy responsiveness, investor appetite, and beneficiary affordability. More can and should be done through innovative financing and targeting programs to accelerate deployment, especially in low-income and conflict-affected states.
These were some of the salient themes to emerge from a Climate Investment Funds (CIF) Climate Delivery Initiative (CDI) virtual roundtable on, “Breaking Down Delivery Challenges to Rural Electrification via Off-Grid Solar: Experience from the Rwanda Energy Fund (REF) Project.” Lessons captured in a CDI case study on the REF Project released earlier this year, served as a kickoff point to discuss the challenges and solutions to delivering innovative electricity access at scale and appropriate pricing. The REF, the Government of Rwanda, CIF, and its implementing partner, the World Bank, engaged the private sector in off-grid renewable energy development. The Rwandan government set up the REF to provide credit lines to support off-grid electrification and create an enabling environment for the entry of enterprising, private sector off-grid solar system providers.
In setting the scene and providing a contextual overview, Dana Rysankova, Lead Energy Specialist at the World Bank, outlined the opportunities and challenges in attaining universal energy access in SSA. She noted that some countries in the region have universal access to electricity, such as Mauritius and Seychelles, and others like South Africa and Kenya are making significant strides in the right direction. But most states, especially those in fragile and conflict-affected situations (FCS) still lag. As she notes, the Rwanda project shows how leveraging decentralized energy technologies can scale up access to renewable energy options:
“[C]ountries don’t just have to build systems top-down which is how countries usually electrify: they start with a grid and electrify the cities and then it slowly grows from these cities to the rural areas. But with the decentralized renewable energy technologies, these technology innovations are enabling [and] you can go both top-down and bottom-up and therefore you can go faster [to increase energy access]. “
Rasmus Heltberg, Lead Evaluation Officer at the World Bank and author of the REF project case study, outlined several delivery challenges and solutions that emerged as lessons that could be applied to other countries. Whether navigating issues from identifying skills or regulatory gaps to generating private sector interest and addressing affordability issues among potential customers, the project demonstrates invaluable lessons on the degree of flexibility required to adapt to aspects that could influence project implementation, as he explains:
“On adaptive management, meaning adjusting on project implementation, it really paid off and this is where the government [of Rwanda] and the World Bank teams have to be commended. They relied on intensive, continued consultations with market participants, they were monitoring the market at all times, having access to data, and talking to the key players. And thanks to this they figured out they needed flexible mechanisms to respond to market developments, respond to people’s concerns.”
Federico Qüerio, Senior Energy Specialist at the World Bank, is based in Kampala, Uganda, and was on the ground in Rwanda where he led the REF project. From an insider’s perspective, he reflected on how the REF was specifically designed to deliver energy access and how, currently, it delivers at a rate of about 12,000 new electricity connections each month. Drawing on his involvement in the project, he notes that the REF was an important pillar that drove Rwanda’s universal energy access objectives but not without the crucial partnership between government and the private sector:
“It is really critical that government engages and benefits from the knowledge, experience, and efficiencies of the private sector. What we learned and experienced under the REF is that the strength of the government-private sector partnership has been key to supporting the implementation of the project.”
Carlos Alberto Jacome Montenegro, Regional Senior Energy Specialist at the Inter-American Development Bank (IDB), shared his insights from examples in Latin America on how energy access can also build country resilience. He cited an example from the Corn Islands in Nicaragua, where, like the Rwandan example, the government-private partnership was critical to rolling out renewable energy access, while also noting how solar mini-grid infrastructure across the islands withstood devastating weather events, especially in a region prone to hurricanes, cyclones, and tropical storms.
“In 2022, strong hurricanes, category four and five, hit the region and affected all the countries [in the region] including Nicaragua and Honduras. But the mini-grids were designed to support hurricanes. … The good lesson from the design of the mini-grids [is that] it was important to consider resilience.”
In wrapping up the panel discussion Johanna Galan, Energy Access Specialist at the World Bank, noted that while projects such as the REF in Rwanda have many lessons to draw out, the diversity of target countries may need “a few caveats”, as she says, because no plan or strategy can be a “one-size-fits-all”. Picking up on Federico Qüerio’s earlier point on government-private sector partnerships, she pointed out that what may be possible in one country may not be so in another:
“Rwanda has a strong private sector already, there are a number of companies active, [and] there are supply chains that were already going into some rural areas. That’s something we often don’t have in markets, particularly in an FCV [fragility, conflict, and violence] context, [they]may not have a lot of private sector actors, it might only be a handful. And that means that we need to think about the supply of products before we can think about stimulating the markets, ensuring there are enough private sector [partners] attracted, and there are sufficient products coming into the market, even before we can address some of the affordability constraints.”
The discussion forms part of CIF’s Climate Delivery Initiative (CDI) that builds an evidence base of data and experiences from previous climate finance projects to provide early identification of potential challenges as well as highlight innovative applications of solutions to overcome the barriers inherent in climate finance projects. This is in line with CIF’s broader mandate to serve as a learning laboratory for climate finance for its programs, as well as for the wider climate sector. Read more about the CDI here.
