Rwanda innovates to power its economy - African Business Magazine
Rwanda innovates to power its economy

Rwanda innovates to power its economy

A $200m project to convert methane into electricity is poised to change the lives of nearly 2m people in the mineral-rich Central African region—a major relief for the economies of Rwanda, Burundi and Democratic Republic of Congo (DRC).

Located on the shores of Lake Kivu, one of Africa’s Great Lakes, lies the gigantic KivuWatt methane-fired power plant. The plant reflects Rwanda’s ambitions to be one of Africa’s technological pioneers – this is the only gas water extraction power plant operating in the world.

“This project is a positive step and it’s an indication of what is possible, to address our electricity challenges,” said President Paul Kagame during the launch of the project in May. “This milestone goes beyond just 26MW but tells us that in a short time we could actually address all these challenges we have”

The project, which is  being developed by American energy firm Contour Global, is found in Rwanda’s Karongi district, in the western province. Through a 25-year concession agreement with the government of Rwanda, the firm is carrying out the project in two phases. Phase I was completed in November 2015 and currently generates 26MW for the local grid – more than was initially expected. The next phase of the project will deploy 75MW to create a total capacity of over 101MW of clean power for the country by 2019.

Double advantage

“We are proud to operate a project that is mitigating the threat of environmental catastrophe while providing clean and reliable electricity to Rwanda,” said Joseph Brandt, president and chief executive officer of ContourGlobal. “Extraction of methane gas from Lake Kivu has a double advantage; reducing the risk of a possible outburst of the gas and resolving challenges of energy shortage”

The $200m project is being funded by concessional loans from financial institutions including the African Development Bank (AfDB), the Emerging Africa Infrastructure Fund (EAIF), the Netherlands Development Finance Company (FMO) and the Belgian Investment Company for Developing Countries (BIO). According to Negatu Makonnen the resident representative of the AfDB in Rwanda, the AfDB contributed $25m.

The project was first discussed seven years ago amidst lingering doubts over its viability due to the lake’s unique geological conditions. After several years of technical challenges and millions of dollars to design a system to exploit the energy potential it turned out to be practicable.

“Many people thought it was actually impossible to be successful with this kind of endeavour but I am happy today that things have proved to be different” said President Kagame at the launch.

Lake Kivu spans 2,400 square kilometres, and lies in the Eastern African Rift Zone. It is one of the world’s three so-called “exploding” lakes – a rare type of natural occurence in which dissolved carbon dioxide suddenly erupts from deep lake water – presenting a threat as well as an opportunity for local communities. It contains 60bn cubic metres of methane gas and 300bn cubic metres of carbon dioxide, with the highest concentrations at depths ranging from 270m to 500m.

An estimated 120m to 250m cubic metres of methane gas is generated annually in the Lake. The methane is estimated to be sufficient to generate 700MW of electricity over a period of 55 years. Experts say extraction of methane gas from Lake Kivu for electricity reduces the risk of a possible catastrophic outburst of the gas in the future. Rwanda’s share of the total generation potential is about 350MW, with the rest belonging to the Democratic Republic of Congo. Rwanda wishes to use this resource to develop methane for power projects and other uses such as fertiliser.

Lake Kivu methane was first tapped by Union Chimique Belge with a gas pilot plant at Cape Rubona in 1963 to supply the Bralirwa Brewery. The brewery converted one of its boilers to use gas in place of fuel oil. The pilot plant was recently shut down after operating for over 40 years. The government of Rwanda has developed a draft gas law and regulations to develop methane-based projects. This is currently under review by parliament and is expected to be gazetted soon.

Like most African countries, Rwanda lacks sufficient power to meet the needs of its growing population and economy. Only 18% of households are connected to the grid according to the National Institute of Statistics of Rwanda. The government has set an ambitious target of increasing connectivity to 70% by 2018.

The coffee- and tea-growing nation also has few alternatives to the costly import of diesel fuel. Hydro-power accounts for 97.37MW of electricity, with thermal energy contributing 51.7MW, and solar energy just about 8.5MW. This has led to serious electricity supply problems and high electricity prices that have negatively impacted on Rwanda’s socio-economic development.

According to Rwanda Energy Group, the firm in charge of electricity distribution, the country is also set to import some 30MW from Kenya on a five-year long arrangement expected later this year.

Unlike its neighbours Uganda and the DRC, Rwanda does not have significant deposits of oil or metals such as copper and gold. The small East African nation is developing power projects in a bid to transform its largely agrarian society and sustain growth that has averaged 7.5% since 2000, according to the International Monetary Fund.

The goal is to become a middle-income economy by 2025. In April, the state-run Rwanda Development Board said that foreign direct investment in Rwanda will probably rise 36% this year to $1.5bn.

In May Rwanda hosted the World Economic Forum on Africa. President Kagame called on investors to look at Rwanda’s energy sector to fuel the country’s economy and power it into the league of middle income nations over the next 10 years.

Diana Taremwa Karakire

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Written by African Business Magazine

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