Innovative private micro-hydro power development in Rwanda

Under the “Private Sector Participation in Micro-Hydro Development Project in Rwanda”, four newly registered Rwandan companies are each constructing a micro-hydro electricity plant (100–500 kW) and building a low-voltage distribution grid. These companies financed their plants through their own equity and debt with support from the PSP Hydro project. This support comprised a subsidy of 30–50% of investment costs, technical and business development assistance, project monitoring and financial controlling. The experiences gained so far have important implications for similar future micro-hydro energy sector development projects and this paper puts forward three key messages: (i) institutional arrangements rather than technical quality determine the success of such projects; (ii) truly sustainable rural electrification through micro-hydro development demands a high level of local participation at all levels and throughout all project phases, not just after plant commissioning; and (iii) real impact and sustainability can be obtained through close collaboration of local private and financial sector firms requiring only limited external funds. In short, micro-hydro projects can and will be taken up by local investors as a business if the conditions are right. Applying these messages could result in an accelerated uptake of viable micro-hydro activities in Rwanda, and in the opinion of the authors elsewhere too.