Rwanda, a small, landlocked country in East Africa, has demonstrated an impressive commitment to moving past the tragedy that befell them in the early 1990’s. Today, the country is ambitiously running forward with its development goals, including energy access. In 2010, only 11% of all households had access to grid electricity, but this number grew rapidly to 22% by 2014. Electrification of rural areas still remains low at 15%, but the government strives to reach a target of 80% by 2030 . Such an undertaking is ambitious, as electricity access is more than simply a technical issue; the financial challenges are frequently overshadowed, but are an equally important aspect to consider in rural electrification policy. Rwanda’s energy ambitions are enough to spark the interest of any researcher in the field of rural electrification, and they have certainly captured our attention.
The Universal Energy Access Research group at MIT has had the privilege of providing assistance to the government of Rwanda in achieving their electrification goals. Over the past two years, the team has been developing the Reference Electrification Model (REM), a planning tool to identify the best mode of electrification for a particular region. For each building, the tool calculates whether the least cost solution for electricity needs can be met by grid extension (that is, the extension of the centralized electricity network) or off-grid solutions (microgrids or isolated systems). Such a tool provides a means to develop a quantitatively backed regional electrification plan based on least cost optimization.
Policymakers may use REM to analyze the effects of various scenarios, in order to understand the costs and technical implications of implementing various electricity planning policies. Entrepreneurs may be interested in the tools design capabilities and cost analytics, or as a way to identify relevant markets. For regions where grid extension may not be timely, REM offers the additional benefit of accelerating electrification with off-grid solutions. Off-grid systems are often simpler to plan, coordinate, and install. This is particularly relevant to India, where electric utilities have long been bankrupt with limited resources to extend the grid. Once installed, the utilities are frequently unable to provide the maintenance for decent quality of service. Note, however, that this is a generalization of India’s electrification challenges; the full story is complex and has been the subject of many books and research articles.
In May, the research team – consisting of 12 graduate students, post doctorate students, researchers, and professors, and led by Professor Ignacio Perez-Arriaga and Dr. Rob Stoner– travelled to Rwanda to meet stakeholders and visit a village where a pilot microgrid could be installed. As we discussed the potential application of REM for large scale electrification planning for the country, the interest shown and feedback provided by the Rwandan government and partners left us both impressed and optimistic. We identified several factors important for the country for pushing forward with a serious rural electrification plan:
- The support of a collaborative, forward thinking government that is both capable of and committed to progress;
- Engaged and vibrant mix of stakeholders, including many development agencies looking to invest in the electrification efforts; and
- A large entrepreneurial community strongly interested in pursuing off-grid electrification investment.
However, to provide access to electricity we confront a challenge that plagues the sustainability of rural electrification efforts everywhere: securing project financing. The rural population, in general, will not be able to support the full cost of their electrification. The cost of providing electricity to such locations, often in remote regions far from the cities, is inherently higher than in urban centers. This high upfront cost, coupled with the modest earnings of rural inhabitants, results in a gap in financing which can be filled with a subsidy. But who will pay the subsidy (e.g. foreign aid grants, the Rwandan government, charitable company donation, or another entity), how large will it be, and what form will it take (for example, one time, or reoccurring)? These questions – which were discussed during our visit – are some of the most challenging as they deal with the question of project sustainability and scale. For large-scale rural electrification to proliferate and endure, the need for a subsidy must be seriously addressed. Indeed, the challenge of ensuring rural electrification is complex, and spans across multiple disciplines. As Rwanda aggressively strives for universal energy access, we hope the technical details from our model may inform policy needs to ensure that energy access is quickly and efficiently achieved.
 Taken from the document “Sustainable Energy for All: Action Agenda”. Final Draft for Cabinet Approval. Ministry of Infrastructure. March 2015 and other public documents by MININFRA.