Rwanda to benefit from $9 million financing for Solar Energy
Rwanda has received a boost following the endorsement of a financial instrument by the Global Innovation Lab for Climate Finance which will accelerate the deployment of solar home systems.
The institution approved the piloting of solar securitization in Rwanda that will improve the financial capacities of developers to enable them to expand and meet the demands in the local market.
Among the hurdles developers are facing include the fact that considering that systems are financed by customers, sales have been relying on the solar developers’ ability to leverage their own balance sheets which are often constrained.
Rwanda targets to connect 300,000 households annually to off-grid energy solutions if it is to meet the 2024 access target.
It is anticipated that by 2024, off-grid solutions will contribute up to 48 percent of Rwanda’s national electrification.
Through the Solar securitization: By pooling solar home system loans into tradable asset-backed security and providing solar developers access to more liquid capital markets, the intervention aims at increasing the developers’ ability to leverage and allow for a rapid expansion of the solar market.
According to the Global Innovation Lab for Climate Finance, the first issuance will be at US$ 9 million and will enable the deployment of solar home systems for 175,000 households. Eligible loans from the solar home companies will be pooled into a special purpose vehicle (SPV), overseen by the trustee.
The instrument is under development by both Access to Finance Rwanda, and the Development Bank of Rwanda (BRD).
Rwanda was selected as the first market based on the considerable market, institutional influence, high economic growth rate, and a positive regulatory and political environment.
51 percent of Rwandan households are connected to electricity, with 37 percent connected to the national grid and 14 percent connected through off-grid systems, mainly solar.
Source: The New Times