The Multilateral Investment Guarantee Agency of the World Bank Group (MIGA) has issued guarantees of $9 million for the Rwanda’s first interconnected grid network, with solar generation units installed within village networks.
The guarantees go to Oikocredit, Ecumenical Development Cooperative Society U.A., Triodos Groenfonds and Triodos Emerging Markets Renewable Energy Fund for their investments in ARC Power Rwanda Ltd. of Rwanda, a subsidiary of Arc Power Ltd., UK. The guarantees will protect against the risk of breach of contract for up to eight years.
The installed units will each directly serve 25 to 30 users, including schools, health centers, local government offices, small and medium enterprises, commercial centers, and business parks, and households within the villages. The project is expected to connect approximately 30,000 new customers living in 150 villages to the Rwandan national grid for the first time, benefitting around 118,000 people.
The project has launched a clean cooking program, enrolling influential women leaders as ambassadors to facilitate the adoption of the electric cooking technology among other women in the community.
“MIGA’s guarantee will support Rwanda toward its ambitious goal of achieving universal energy access by the end of 2024,” said Hiroshi Matano, MIGA Executive Vice President. “Access to reliable and affordable energy is a fundamental catalyst for sustainable economic growth.”
Instead of a stand-alone mini-grid system, ARC Power is constructing the transmission and distribution infrastructure, which will connect their generation facilities to users. Among ARC Power’s assets, the transmission and distribution assets to be interconnected to the national grid will be transferred to the national utility upon completion for an agreed price. The solar generation units will be owned by ARC Power and will directly serve the village productive users.
The project will provide village households with a more sustainable and affordable energy source by matching the end-user electricity tariffs with the national grid tariffs. This approach is significantly cheaper than tariffs under a captive mini-grid system with battery storage units.
“We are proud to work with MIGA, Triodos, and ARC Power in bringing interconnected solar energy to more small and medium enterprises, community organizations and households in Rwanda,” said Alexander Remy, Equity Officer Renewable Energy at Oikocredit. “Increased access to clean, sustainable energy helps people improve their living standards and empowers them with opportunities for income-generating activities.”
“ARC Power’s innovative hybrid model, providing both off-grid and on-grid clean energy solutions, offering clean and affordable solar energy to Rwandan households and businesses and aligns perfectly with our clear and ambitious impact goals. As such, the company is a great addition to our portfolio,” said Marius Groenenberg, Principal Investment Manager at Triodos Investment Management.
Rwanda has ambitious plans for universal energy access, aiming to provide electricity to 100 percent of the population by the end of 2024. The energy access rate in Rwanda currently stands at 72 percent. Over the last decade, the country has made significant progress in improving access to electricity through both grid extension and off-grid initiatives. Urban areas currently have nearly 100 percent access. As of 2021, rural households with access to electricity reached 38 percent, according to the World Bank.