A micro-hydro company that is to supply electricity to health centres in remote areas of Rwanda is a reminder of how critical energy access is for achieving the Millennium Development Goals – as the 2015 deadline approaches. But before the acclaimed universal access can be met, small energy enterprises in developing countries must overcome significant challenges, not least finance.
Located in northern Rwanda, Shyira hospital overlooks the Musarara river. The valley doesn’t have an electricity supply so the hospital relies on a diesel generator to run life-saving equipment and to keep essential medicines refrigerated. A local business called SOGEMR is however, constructing a small dam on the river to supply electricity to the hospital and other health centres at Nyakigezi, Nyakiliba and Gatonde in the valley.
One of the company’s founders is a doctor from the Shyira hospital, who is tired of watching the hospital’s limited resources spent on diesel. The doctor’s hydroelectricity plant will initially sell any surplus power it generates to the national grid to get the necessary financial returns. But in time SOGEMR plans to set up a local distribution network which will give people across the whole valley access to electricity for the first time.
While the construction of the hydro project is supported by GIZ the Germany development agency in this first phase, GVEP is discussing a plan for assisting SOGEMR with building the local distribution grid. “This is an important pilot,” says James Wakaba, GVEP’s Africa Regional Manager. “Energy is essential for a functional health system. It’s needed to light operating theatres, refrigerate vaccines and sterilise equipment. The safety and effectiveness of many hospitals and health facilities in the developing world are compromised by lack of, or at best unreliable, power supplies. In Rwanda the potential is vast and energy enterprises like SOGEMR can have a direct impact on the country’s development targets.”
With regulation changing in Rwanda to become more private sector friendly, GVEP will assist SOGEMR to build a local distribution network from their site allowing them to sell their electricity directly to the customers. GVEP also hopes that with its help some more sites can be built in that area.
The Musarara pilot is one of the projects supported under the Supporting Energy SMEs in Sub-Saharan Africa programme which aims to assist energy enterprises by offering business training, access to finance and investme nt. The programme is funded by the Russian Government through a World Bank trust fund. GVEP is working closely with government agencies on ways to increase private sector involvement in meeting energy demand.
The importance of projects like the Musarara river dam has been thrown into relief recently – and is likely to become ever more so – as the 2015 deadline for the Millennium Development Goals gets closer. A number of recent reports, including a joint World Bank/IMF Global Monitoring Report in April, show that while more than two thirds of developing countries are expected to meet the goals on extreme poverty and hunger, far fewer are on track to meeting MDG 4 and 5 – reducing child mortality and improving maternal health.
More than ten years ago when the MDGs were launched, many energy practitioners around the world felt that by not including a target for energy access, the UN had missed a trick, because for people living in poverty, energy access is essential for a better life and therefore a prerequisite for achieving many, if not all, the MDG targets.
As well as being essential for the provision of safe and effective healthcare, modern energy is vital for generating jobs, industry, transport and modern agriculture. It removes the need to use traditional biomass fuels such as firewood or charcoal, which means girls, who usually collect firewood, can go to school, and women have more time to earn a living for themselves and their families. Reliable household lighting extends the productive working day and enables children to study for school in the evenings.
However, 1.6 billion people globally lack access to adequate energy services, mainly in sub-Saharan Africa and South Asia. Two million deaths annually are associated with the indoor burning of solid fuels in unventilated kitchens and 44% of these are children. In the Least Developed Countries and in sub-Saharan Africa, more than 50% of all deaths from pneumonia in children under five and chronic lung disease and lung cancer in adults over 30 can be attributed the use of solid fuels. Those who do manage to get to a healthcare facility may find their healthcare compromised by poor energy access at hospitals and clinics themselves.
While the statistics may still be daunting, the views of global leaders towards the importance of energy access have changed in the past 10 years. In April 2010 the UN Secretary-General’s Advisory Group on Energy and Climate Change (AGECC) published a report stating that by 2030 everyone should have access to modern energy services, making an explicit link between lack of energy services and poverty.
And the UN Secretary General Ban Ki-Moon has stated this position clearly, not for the first time at January’s Fourth World Future Energy Summit in January: “We need a global clean energy revolution – a revolution that makes energy available and affordable for all,” he said. “This is essential for minimising climate risks, for reducing poverty and improving global health, for empowering women and meeting the Millennium Development Goals, for global economic growth, peace and security, and the health of the planet.”
However, developing countries will still need to overcome a number of significant challenges, not least finance, before universal access becomes a reality.
The public sector in many developing countries will not be able to finance all the investment needed to satisfy the expected increase in demand as their economies develop. Securing the amount of private investment required is often difficult. Private and foreign investors are often put off by unfavourable conditions in many developing countries, particularly corrupt and fragile governments, and by the fairly low rates of return energy investments offer.
So, with the public sector often unable and the private sector reluctant, it is development agencies, like GVEP and others, which have stepped into the breach to finance and develop energy initiatives alongside local communities.
“Renewable energy projects like the Musarara power plant require high initial investments which has led to scepticism about their viability in the past”, explains James of GVEP. “But decentralised grids based on renewable sources and driven by the private sector like this have a lot of potential and with the right support, they can get off the ground.”
A recent research paper, The Economics of Renewable Energy Expansion in Rural Sub-Saharan Africa, released by the World Bank agrees, presenting compelling evidence in support of the argument that great potential exists for cost-effective decentralised renewable power in regions of rural sub-Saharan Africa, contrary to conventional beliefs that renewable energy remains too costly for large-scale application.
The World Bank’s research found that in contrast to more densely populated areas where grid extension is the cheaper solution to improved access, for remote and rural areas of sub-Saharan Africa, wind and solar power mini-grids are cost competitive and often the only alternative to diesel generators.
“These findings underscore the need for energy planners to pay closer attention to opportunities for renewable energy expansion now and not decades into the future,” adds James. “At GVEP, we want to capitalise on the new wave of high-level commitment and show that enterprises like SOGEMR can grow and move beyond pilot projects like Musarara. Not only is access to modern energy an essential part of the solution to problems of global poverty, but that in the right conditions, renewable energy can be an affordable and sustainable part of that solution too.”