Key View: The delay to the start of generation at the Rusumo Falls hydroelectric dam until 2023 will also delay the start of largescale electricity exports to neighbouring Burundi and Tanzania. Additionally, this will delay progress on the electrification of its rural population by 2024, although opportunities in the off-grid market will remain. Rwanda’s plans to diversify its energy mix, as well as its good track-record of public-private partnerships, renders the attractiveness of the economy's comparatively small energy sector disproportionately to various private investments. The utilities sector will continue to offer significant opportunities in the water and water treatment sub-sectors, where pressure for major drainage-related infrastructure investment in Kigali remains acute.

• In October 2021, the opening of the 80MW Rusumo Falls hydroelectric dam was postponed until 2023, following an audit of the project by auditors from Rwanda, Tanzania and Burundi.
• In July 2021, the Rwanda Environment Management Authority approved a USD11.2m loan from the Nordic Development Fund to assist with upstream wetlands management measures and drainage investment in Kigali in an attempt to reduce the severity of flooding in the capital.
• In July 2021, the Rwandan government noted that it was continuing to seek expressions of interest (EOIs) for an engineering, procurement and construction (EPC) contract for an urban waterborne sewage network and a wastewater treatment plant around Kigali’s central business district. The USD81.8mn project involves installing East Africa’s first urban waterborne sewerage system and developing a 12,000 cubic metre (cu m) per day capacity wastewater treatment facility in its first phase. The government has a backlog of upgrade projects for 40 existing sewerage systems in the capital, which is estimated at USD30mn.
• In June 2021, the African Development Bank (AfDB) approved a financing agreement worth USD84.2mn with the Government of Rwanda. The package, which was provided in support of the country’s 100% electrification by 2024 objective, coveres grid strengthening investments in secondary cities with high loads as well as the construction of 595km of medium-voltage and 1,620km of low-voltage connections in six districts in southern Rwanda.
• In February 2021, the Rwanda and Burundi governments initiated the mobilisation of funds for the USD190mn Akanyaru Multipurpose Dam Project on the Akanyaru River. The 52m tall reservoir is expected to store 333mn cu m of water and supply water for drinking and the irrigation of 124.7sq km of land in both countries. The project will also produce 14.5MW of power. The Nile Equatorial Lakes Subsidiary Action Program Coordination Unit will design, prepare tender documents, assess environmental and social impact, and prepare a resettlement action plan of the project.
• In February 2021, the Rwandan parliament approved a USD147.5m loan from the AfDB for a multipurpose water project in Nyagatare. The project, to be executed by the Water and Sanitation Corporation, will include the construction of a dam on Muvumba River with a daily production capacity of 24,000cu m of water and 35mn cu m of water storage. The project will also include the construction of a power plant generating 740kW of electricity. The plant, slated to be completed within a year, will supply water to the Tabagwe, Gatunda, Karama, Rukomo, Nyagatare, Rwempasha, Musheri and Rwimiyaga sectors.
• In December 2020, Ruzizi III Energy invited EOIs for an EPC contract for the Ruzizi III hydropower project on the Ruzizi River involving the construction of 3.8km and 8km tunnels. The 147MW power plant, located on the border between the Democratic Republic of the Congo (DRC) and Rwanda, will comprise a 45m high dam. The nearly USD489.7mn project will also include the installation of a 3km 220kV power line connecting the plant's substation in Rwanda to the Kamanyola substation in the DRC.
• In September 2020, the World Bank agreed to provide USD150mn to the Government of Rwanda for the Energy Access and Quality Improvement Project in the country. The financing comprises a USD75mn grant and a USD75mn loan. The USD288mn project has also received support from French development agency AFD, the Opec Fund For International Development and the Saudi Fund For Development. The project is divided into three components, which include increasing access to the electricity grid, rehabilitating the Ntaruka Hydro Power Plant and increasing access to off-grid electricity.

The country's rapidly expanding population and rising consumption of electricity per household will lift peak domestic consumption from 165.1MW in 2021 to 262.7MW in 2030, based on annual consumption increases of 6.4%, according to the grid load forecast cited by Rwanda's transmission network operator, Rwanda Energy Group (REG), in its September 2021 transmission master plan. Demand from commercial users is expected to rise over the course of the decade: the first industrial parks at Bugesera (Phase I) and Rwamagana will open in 2022, with six further parks expected to open by 2025, as well as Phases II and III of the Bugesera development.

Rising demand is driving investment in domestic grid strengthening as well the expansion of the electricity network: REG notes that it has USD169.3mn of funded projects awaiting commencement in addition to USD189.5mn in active projects. The expansion of the domestic network is coinciding with the creation of interconnections between Rwanda's electricity grid and neighbouring Uganda and Kenya. Further interconnections are expected to be established over the medium term.

An upgrade of the current 220kV line between Mbarara and Masaka in south-west Uganda with a planned 400kV transmission line is expected to enable sustained export volumes, and the construction of a 64km 220kV line connecting Kigoma with the Burundi border via Gisagara began in 2020.

Rwanda’s success in channelling private financing into its energy sector and in diversifying the latter beyond its current reliance on hydropower and diesel lays solid bedrock on which to attract further private investment in diverse generation projects. Currently, peak demand and reserve during peak in Rwanda is largely served by diesel-fuelled power plants as the country’s hydropower plants’ contribution to supplying peak demand is strongly exposed to seasonal variations in water availability. Hydropower is currently responsible for around 47% of the country’s energy generation, according to state-owned REG. Significant short- to medium-term non-hydro capacity additions will be delivered through public-private partnerships (PPPs). The Gisagara peat-fuelled power plant came online in 2021. The power plant is designed, financed, built, owned and operated by Turkey-based firm Hakan Mining and Electricity Generation. Shareholders are, next to Hakan Mining and Electricity Generation, Quantum Power, an investment platform focusing on power, energy, natural resources and related infrastructure in Sub-Saharan Africa; and Morocco-based project development company Themis. Lenders include Africa Finance Group, the Finnish Fund for Industrial Corporation, the Export-Import Bank of India, the Eastern and Southern African Trade and Development Bank, the Development Bank of Rwanda, and the African-Export Import Bank.

Rwanda’s Lake Kivu contains significant reserves of methane. The size of the reserves, as well as the imperative to decrease the resulting health hazard for surrounding communities by reducing the reserves, will likely continue to attract investment into methane power stations. Shema Power Lake Kivu has begun construction of a 56MW methane power plant that will separate the methane from the water offshore and transport it to an onshore thermal power station. The company holds a 25-year concession and will sell electricity to REG under a power purchase agreement (PPA). The project follows the construction of KivuWatt power plant, another PPP. The power station was built by Finland-based Wärtsilä and Rwanda-based Fair Construction.

Electricity demand from commercial users is expected to rise over the course of the decade: the first industrial parks at Bugesera (Phase I) and Rwamagana will open in 2022, with six further parks expected to open by 2025, as well as Phases II and III of the Bugesera development. As demand from the industrial parks is expected to be constant throughout the day, it will help to smooth fluctuations in power demand, which has until recently been largely driven by consumer behaviour, peaking in the evening.

Rwanda's domestic energy generation mix is likely to remain dominated by hydropower, with the upcoming completion of major hydropower projects limiting the scope for other utility-scale renewable energy generation projects. The country has seen the rapid expansion of small-scale off-grid solutions: the government has identified rooftop solar panels as a technology to permit the electrification of remote rural communities. In 2018, the Abu Dhabi Fund for Development provided a loan of USD15mn on concessional terms to support the installation of 0.5mn rooftop systems for rural inhabitants, for example.