Rwandan Government Uses Ecological Diversity to Energize Electricity Production

AA: Geothermal Drilling Begins in December

AA: Contourglobal Wins Award for Kivuwatt Project

AA: Turkish Investor to Double Power Output

AfDB: KivuWatt ESIA Summary

BBC: Lake Kivu gas: Turning an Explosion Risk into a Power Source

Bloomberg: Rwanda Aims to Boost Electricity Capacity by as Much as 1,000 Megawatts

ContourGlobal: KivuWatt

RDB: Energy Brochure 2012

In 2011, Rwanda enacted a plan to generate more electricity at cheaper prices by diversifying its production methods to include domestic sources of power. Currently, Rwanda produces approximately 85 MW (megawatts) of electricity—40% of which originates from expensive imported diesel fuel and 59% from geothermal sources. As a result of Rwanda’s reliance on imported diesel, the price of electricity in Rwanda is expensive at 22 cents/kwh (kilowatt hour), compared to neighboring countries Burundi and Uganda at 8.19 and 11.22 cents/kwh, respectively.

Rwanda plans to expand its power generation to 1000MW by 2017 by utilizing inexpensive domestic biomass, methane, geothermal, and hydropower sources. Dry peat (biomass composed of an accumulation of partially decayed vegetation) is a valuable natural resource for Rwanda. A Turkish investor, Hakan Mining and Generation Industry and Trade Inc.is building a 100MW peat power plant. The plant will be built along Rwanda’s southern border in Akanyaru with the goal of producing power in 3-5 years. Rwanda has enough peat to fuel that plant for approximately a hundred years if it maintains a 100MW capacity. Rwanda is also investing in a unique power plant which burns methane gas harvested from the explosive waters of Lake Kivu. The Lake Kivu project is expected to produce 100MW of power by 2014. Also, Rwanda’s nascent geothermal resources on the southern slopes of the Karisimbi volcano could generate up to 700MW of power, once they are developed in December, 2012. Last but not least, Rwanda is partnering with Burundi and Tanzania to build four regional hydro-electric plants that will generate 174MW of electricity for the Rwandan people. These domestic sources of power will produce electricity that is considerably less expensive than the diesel fuel that Rwanda currently uses.

Rwanda’s natural resources present opportunities to reduce the price of electricity by reducing the cost of generating it, but the goal to increase power supply from 100MW to 1000MW will be difficult to achieve in five years.

Troubles With India’s Power Grid

The Economist: An Area of Darkness
The Economist: The Future is Black
The Economist: Powerless
Ernst & Young: Ready for the Transition
FT: Fantasies of Power in Muddle-Along India
NatGeo: Indian Power Outage Spotlights Energy Planning Failure
NYT: An Electrical Grid is Pressed to Its Limit
RBI: RBI Releases Annual Report for 2011–12
WSJ: India’s Power Network Breaks Down
WSJ: Investment in Infrastructure is Plunging

On July 30 and 31 of this year, two blackouts in northern and eastern India caused more than half of the country’s population to lose power for multiple hours. Power outages of shorter duration and effect have become a daily part of Indians’ lives, and they are indicative of serious problems with India’s power supply system. India’s power grid will become a hindrance to future economic growth if India does not address the grid’s weaknesses. Underinvestment in energy infrastructure, a poor system of energy allocation, and environmental and resource constraints on India’s power supply are some of the problems with India’s power supply chain.

The Indian government must invest in energy infrastructure to accommodate a modern industrialized economy that is heavily reliant upon electricity and connectivity for daily business operations. Many industries in India are struggling in part because India’s power supply chain is unreliable, outdated and non-existent in many parts of the country. Currently, 300 million people are permanently without power, and, in the areas that do have power, supply is consistently below the levels needed to keep the electricity running without interruption. For example, some villages only have electricity for four to six hours a day. The distribution of the electricity from the grid to users is also problematic because the government sets artificially low electricity prices that bankrupt state-owned firms responsible for distribution, and thus, these firms cannot afford to purchase all of the needed electricity from the power companies. Moreover, the delivery system itself needs updating to address reliability concerns, which could cost about $110 billion to accomplish, according to one study. Despite these issues, the government plans to invest only 2.1 trillion rupees (about $38 billion) this year in infrastructure, down from 3.9 trillion rupees (about $70 billion) last year.

The way that India allocates energy is also flawed. States give a daily estimate to the government of how much power they expect to need the following day. The government imposes fines if states exceed the quotas calculated based on these daily forecasts, but these fines are not enough to maintain energy discipline. When demand upon the grid exceeds the available capacity, generators automatically shut down in the areas of excess demand to prevent damage to the system. Many government officials and analysts blame the power outages on the fact that some Indian states exceeded their electricity quota and triggered large numbers of generator shut downs. However, India’s power grid does not have enough capacity to tolerate much demand volatility.

India’s electricity capacity has been strained by environmental and resource issues. This year’s drought negatively affected hydroelectric power generation and increased demand for electricity at the same time. Farmers have had to increase their normal electricity usage in order to hydrate their crops, and they have no incentive to conserve energy because they receive free electricity. Coal production, which state-owned Coal India controls, has also been inadequate. Thus, for power companies to keep up with demand, they have to purchase coal from foreign sources, which is more expensive than domestic coal. Low coal production has a significant effect upon the country’s power supply because about 70% of India’s power is coal generated.

In its current state, India’s power grid will be unable to cope with the demand for electricity, which is likely to double by 2020. Currently, India’s plans for developing energy infrastructure depend on nuclear energy and coal. Nuclear energy is unpopular, especially in light of the nuclear disaster in Japan last year. Moreover, the most modern coal-based power plants require a higher grade of coal than that found in India. This hurts demand for domestic coal sources and creates financial difficulties for the companies investing in such modernizing projects. India must address the investment, allocation and capacity problems that are hurting the power supply chain to guarantee its ascendency to developed nation status.

Asian Development Bank Extends Aid to India

ADB: Railway Sector Improvement Project: India
ET: Asian Development Bank to Provide a $150 million Loan to Indian Govt to Improve Rail Freight Services
India Government Bureau: India Gets $150mn ADB Loan for Rail Development
News Track India: Asian Development Bank Provides 67.6 Million Dollar Loan to Bihar Agribusiness
PIB: ADB Extends $150 million Loan to Develop India’s Railway System

On July 11, the Asian Development Bank (ADB) announced that it had granted a loan of $150 million to India as the first part of the Railway Sector Investment Program, to improve passenger transport routes and rail freight services. The total cost of the Railway Investment Program is $1.14 billion, of which the ADB will provide $500 million in four installments while the government of India will contribute a total of $644.6 million.

The Indian government will use the loan to lay down double-track line for about 840 kilometers (km) of rail routes and set up electricity through about 640 km all to help improve its rail services along some of the busiest freight and passenger routes in the country. The program will reduce fuel consumption and pollution as the tracks will allow easier passage of freight trains, while the electricity lines laid along the routes will help lower the amount of fuel needed and the emissions from using fuel, because electricity will power some items that had been powered by fuel previously. The program will also enhance railroad safety, as there will be more available tracks to use along the busiest routes so trains will not be congested into small areas of track. In addition, the program will increase the capacity of railway tracks as there will be double track lines laid, meaning that double the amount of traffic can transport goods along the lines. The increased capacity of the Indian railroad system to carry products and people will benefit consumers and producers of goods and services because it will make it easier for the goods and products to get to other areas of the country in a faster and more efficient manner.

The program is also set to improve energy efficiency, reliability, affordability of travel and environmental sustainability along some of the busiest rail travel routes. The program will improve energy efficiency because it will shift a large amount of the transportation of goods from road to rail, which is more environmentally friendly as a railcar can take bigger loads, which means fewer emissions into the environment. The program will improve reliability on rail travel routes because the laying of double tracks along busy routes will lead to less trains waiting to use certain tracks. The program will also improve affordability of travel because more trains will be able to travel along the routes since there is more track, therefore there is not as limited a number of tickets available each day. Thus, more trains means more tickets available for sale; therefore, consumers will be able to find cheaper seats as rail companies lower their prices to fill the extra seats available.

A $300,000 portion of the program provided by ADB will also promote sustainable transportation--a means of transport with low impact on the environment--by monitoring carbon emission reductions. The reductions in carbon emission will come from the shifting of a large amount of the transportation of goods from road to rail. The Railway Sector Investment Program will also pursue carbon credits, or a tradable certificate representing the right to emit one ton of carbon dioxide, under the United Nations Framework Convention on Climate Change (UNFCCC). The UNFCCC is an international environmental treaty was aimed at stabilizing greenhouse gas concentrations in the atmosphere at a level that is not dangerous to the climate of Earth.

The ADB supported the project because it believed that efficient transportation is essential for achieving higher levels of economic growth in India. The higher levels of economic growth will help sustain poverty reduction in the country and will contribute to more production and employment opportunities in India. Thus, the ADB is aiding India in modernizing their infrastructure and becoming more competitive in the global economy.

More Energy Sources Coming to Africa

Sources:
CNBC: Solar Power Rises in the Mideast, North Africa
OPIC: OPIC Board Approves $175 Million for Two Renewable Energy Investment Funds
WSJ: Power to More People


For the 600 million Africans living without access to electricity, help may be on the way. Governments, nonprofits, and businesses across the globe are increasingly looking for ways to provide electricity access throughout Africa.


On June 19, the U.S. Government’s development finance institution, Overseas Private Investment Corporation (OPIC), approved a $50 million investment for GEF Africa Growth Fund. The African Growth Fund aims to build and improve energy infrastructure across Sub-Saharan Africa, which will makes energy and agribusiness production more efficient. Specifically, the fund targets clean energy production and distribution, as well as  focusing on energy efficient technologies.

Private companies are also getting involved in increasing Africans’ access to electricity. These companies, such as Phillips Electronics, Dupont, and Siemens, are experimenting with pilot projects that provide solar-based electricity to small villages throughout Africa. Most of these projects provide electricity free of charge to African villages. For example, in Lomshyo, South Africa, residents can recharge batteries for their LED ceiling lamps by using rooftop solar panels—free of charge—rather  than buying kerosene for lamps when their energy source runs out. This enables them to use the money they once spent on kerosene to purchase other basic necessities, such as food, shelter, and clothing.

The ultimate goal of these companies is to sell solar energy infrastructure to national governments and nonprofits in Africa, who would then provide power to villages at a minimal price. Solar-based systems are appealing to governments and nonprofits because they increase access to energy at a lower cost rather than expanding traditional power grids.  In that sense, access to energy, which increases living standards, can be done more efficiently with solar-based electricity systems.

The longevity of these pilot programs is uncertain. However, the participation thus far by nonprofits and governments is encouraging companies to engage in these type of programs. South Africa, for example, supports solar companies by  guaranteeing to buy their output at a favorable price.

In terms of the number of people with access to electricity, Africa (42%) still lags far behind developing Asia (81%), Latin America (93%), and the average for developing countries world-wide (75%), but recent investment by governments, companies, and nonprofits is encouraging. If efforts continue, many more Africans may soon have access to electricity.