Electricity costs set to go lower over cheaper power

Thursday December 6 2018

REG

Rwandan households and industrialists are expected to enjoy low electricity tariffs as more energy from cheaper sources enters the grid and government moves to switch off the expensive. PHOTO | Cyril NDEGEYA  

By KABONA ESIARA
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Households and industrialists are expected to enjoy low electricity tariffs as more energy from cheaper sources comes on-board.

The government expects an additional 255.8MW electricity generation from the ongoing peat-to-power, methane gas-to-power and hydropower projects, which are in different phases of completion.

When all are completed, the country’s installed generation capacity is expected to increase to 475MW by 2024, from the current 220MW, amid concerns of low demand.

Peak demand reached 140MW, and utility officials say the reserve margin — emergency power bank — has grown to 15 per cent, which means there is no more load shedding in the country.

 Installed generation capacity

According to government officials, the 30MW electricity generation plants owned by SoEnergy, a Colombia independent power producer, will be decommissioned. The plants use fuel to generate power. They were built in different parts of the country including Birembo, Mukungwa and Kigali Economic Zone in Masoro as emergency backup.

“At the moment, we have enough installed capacity to serve the load. We will not use fuel generated power by February 2022,” said Ron Weiss CEO Rwanda Energy Group, a government power utility company.

“We have a generation plan, and SoEnergy will have to take the machines out the country because their power capacity will not be needed any more. We shall terminate their contract,” he added.

The 8MW methane-to-power extension by KivuWatt, a subsidiary of ContourGlobal, an American power firm, will be delivered this year. This is in addition to the 26MW added to local grid in 2016 from KivuWatt.

Turkish firm Hakan’s 80MW-peat -to power plant is expected to be commissioned in 2022.

The government also expects the regional Rusumo Falls Hydropower to add 26MW in 2021; the Rusizi III is set to add 48.3MW in 2023; Symbion’s 50MW is set to be commissioned in 2022 and the Nyabarongo II 43.5MW hydropower plant is expected to be commissioned in 2024.

Investments

A combination of direct investments in the power sector by the government and private power producers has helped the country to boost its generation capacity.

Starting this year, most of the power generation projects are being developed by independent power producers.

Investors in the power industry have been attracted to the country due to attractive long-term power purchase agreements and concessions, which they signed with the government.

Most independent power producers have a 25-year agreements, a period they say is not enough for them to recoup their investments.

Costs

The additional power capacity is a relief to households, manufactures and businesses grappling with high power costs, which are piling pressure on their operational costs.

High power costs in Rwanda, according to the private sector, is making businesses less competitive in a region where energy costs play a central role in determining the price of consumer goods and services, and attracting foreign investors.

The average cost of electricity for small, medium and large industries without smart metres is Rwf107 ($0.12) per kWh in Rwanda.

For small, medium and large industries with smart metres, the average tariff rate is Rwf95 ($0.10) per kWh, with the small industries spending more on power bills at Rwf117 ($0.13) per kWh,

Households pay Rwf89 ($0.09) per kWh for the first 15 units while their counterparts in Uganda pay Ush150 ($0.04) for the same units.

As part of a campaign to reduce losses this year, Rwanda Energy Group said the plan is to reduce power losses by one per cent to reach 18.6 per cent. During the 2016-2017 financial year, the utility company recorded a power loss of 21.1 per cent, but this reduced to 19.6 per cent in the last financial year.

“Power consumption in newly connected households is not high enough to cover the costs of being connected. The average annual cost of each connected consumer is around $50,” experts said.