Rwanda‘s energy balance shows that about 85% of its overall primary energy consumption is based on biomass (99% of all households use biomass for cooking),11% from petroleum products (transport, electricity generation and industrial use) and 4% from hydro sources for electricity. In April 2011 about 14% of the total population had access to electricity from the grid and the government has started a roll-out programme to rapidly increase this to 16% (350 000 connections) by 2012 and 60% by 2020.
Until 2004, Rwanda depended on a single energy source – hydropower – whose limited capacity relied on a dilapidated network with technical and commercial losses of around 30%, much of which is attributed to the lack of investment in the sector for the last 25 years. In recent years (2004-2006), Rwanda has suffered from acute electricity supply shortage and severe load shedding. Its installed generation capacity (mostly hydropower), has been severely constrained by regional drought leading to a rapid draw down of the reservoirs. Drought has also affected Kenya, Tanzania and Uganda, leaving Rwanda with no possibility of sourcing electricity from its neighbours.
In late 2004, the Government was forced to make a difficult choice: better expensive energy than none. Diesel generators were rented from private companies at a high cost and this in addition to high fuel costs increased tariffs by over 100% to about US$ 0.22/kWh. Average retail tariffs in the rest of the region are around US$ 0.10-0.12/kWh[1]; in 2017, average tariffs (life line tariffs) are around 0.12 for industries and 0.17 $c/kWh for consumers.[2] In order to realize its ambition of becoming a middle-income country, Rwanda will require strong, sustained economic growth with an average of 8-9% annual GDP growth (information as of 2007). To succeed in this move, the Government of Rwanda together with the private sector will endeavour to scale up the energy production and distribution so as to make the energy sector competitive in the sub-region. The Government of Rwanda is exploring mechanisms to improve modern energy services in rural areas, by implementing the Second Generation Poverty Reduction Strategy Program (EDPRS). The program focuses on promising options for rural energy supply, such as solar energy, wind energy and extension of the grid to rural areas[1].
The economic sectors with the highest potential for growth (agricultural processing, mining, tourism, IT) depend heavily on energy supply. The costs of electricity are very high at about US$0.21 per kWh. At the same time, due to the lack of electricity in rural areas, this reduces the efficiency of the social services (health, education and administration). The Government has a programme to provide all health centres and administrative centres and 50% of the schools with solar power if they are too far from the grid by 2012 and extend provision further to 100% of all schools by 2017. A number of special programmes are already under implementation. (update 2017: schools 64% and health clinics 100%[2]).