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Cablegate: Rwanda Energy Review - Energy Independence By

VZCZCXYZ0001
PP RUEHWEB

DE RUEHLGB #0417/01 1681446
ZNR UUUUU ZZH
P 161446Z JUN 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 5385
INFO RUEHDS/AMEMBASSY ADDIS ABABA 0170
RUEHRL/AMEMBASSY BERLIN 0055
RUEHBS/AMEMBASSY BRUSSELS 0241
RUEHJB/AMEMBASSY BUJUMBURA 0329
RUEHDR/AMEMBASSY DAR ES SALAAM 1144
RUEHKM/AMEMBASSY KAMPALA 1912
RUEHKI/AMEMBASSY KINSHASA 0464
RUEHLO/AMEMBASSY LONDON 0247
RUEHNR/AMEMBASSY NAIROBI 1240
RUEHFR/AMEMBASSY PARIS 0508

UNCLAS KIGALI 000417

SENSITIVE
SIPDIS

DEPARTMENT PASS DOC JSULLIVAN
DEPARTMENT PASS USTDA NGAZZETTA
DEPARTMENT PASS OPIC JFLEWELLING

E.O. 12958: N/A
TAGS: ECON EFIN EINV ENRG EPET ETRD PGOV KIDE OPIC
RW
SUBJECT: RWANDA ENERGY REVIEW - ENERGY INDEPENDENCE BY
2015? -

1. (U) Summary: With economic development strangled by the
high cost of imported energy, the Government of Rwanda (GOR)
has embarked on an ambitious plan of domestic energy
independence maximizing use of alternative energy sources.
The government is aggressively promoting hydroelectric power
and development of technologies to use methane gas from Lake
Kivu for power generation and production of synthetic fuels.
Geothermal energy, solar power, peat and biogas energy are
also being explored as possible energy sources. Recent
breakthroughs in methane gas extraction and construction of
new hydroelectric projects promise to provide Rwanda with
energy independence by 2015. End summary.

2. (U) Diesel thermal generators currently provide over 55
percent of Rwanda's 65MW minimum power needs. The GOR was
forced to turn to rented thermal generators in 2002-2004 when
four hydroelectric plants, constructed between 1959 and 1985,
failed due to drought and poor maintenance. The high cost of
petroleum (which has doubled over the last year) is
compounded by the unreliability and expense of transporting
diesel by truck from Kenya via Uganda or from Tanzania. With
Rwandan electricity costs now the highest in the region,
existing businesses are struggling to remain competitive and
new investors are turning away discouraged by high energy
costs. Niobium Mining Company in Kigali discontinued tin
smelting operations in 2006 due to expensive and unreliable
energy supply, according to management.

Land of a Thousand Hydro Plants
-------------------------------

3. (U) The GOR has responded by aggressively promoting new
hydroelectric projects and exploring other alternative energy
sources. Although hydroelectric energy is sensitive to
drought, Rwanda's hilly geography (the country is known as
"the land of a thousand hills") is favorable to hydro
exploitation and during normal rainfall conditions it is the
most economical source of energy available to the country.
New hydroelectric facilities under construction at Nyabarongo
and Rukarara are expected to generate 37MW of power by 2012.
Feasibility studies are also underway at three additional
sites at Rusomo and Rusizi that could provide up to 320MW of
power. Efforts to promote micro-hydro power production are
well-advanced. The GOR has identified 333 potential sites
with a total potential of 100MW. Twenty-one of these
projects have been funded and are expected to add 13MW to the
national grid by 2010.

Methane: Use it Before it Kills You
-----------------------------------

4. (U) On May 15th, a government funded $15 million pilot
project extracted and "flared" methane gas from Lake Kivu.
This is the first time this extraction technology has been
successfully tested anywhere in the world. Lake Kivu has
estimated reserves of 55 million cubic meters of methane gas
trapped below 400 feet. The methane has been slowly
accumulating at the bottom of the lake over thousands of
years. Scientists say that if the methane is not vented it
could burst to the surface releasing a poisonous cloud
(similar to the one that erupted from Cameroon's Lake Nyos in
Q(similar to the one that erupted from Cameroon's Lake Nyos in
1986 killing 1,700 people). The GOR estimates Lake Kivu's
methane reserves could yield up to 350MW of energy annually
to Rwanda for the next 50 years. When completed next month,
a small power plant connected to the pilot project will use
methane to generate 5MW of power for the national grid. By
2012, the government believes methane-to-power production
will reach 80MW.

5. (U) Investors are now scrambling to sign methane
concessions with the GOR. American company Contour Global is
near to signing a concession for a 100MW gas-to-power
facility in Kibuye, local Rwanda Investment Group (RIG) is
also negotiating a 100MW concession in conjunction with the
Agha Khan foundation in Kenya, and a German group (W&S) hopes
to sign a 50MW concession with the GOR within the next 6

months. Additionally, a number of investors including the
U.S. Rwanda Energy Company are bidding on a gas-to-liquid
(GTL) project producing up to 2,000 barrels daily of
synthetic diesel and/or aviation fuel produced from methane
gas.

Geothermal: There's Energy in Them There Hills
--------------------------------------------- -

6. (U) Based on studies conducted by the U.S Geographical
Energy Association and the French Bureau de Recherce
Geologique et Minieres (BRGM), the World Bank believes
Rwandan geothermal resources could potentially provide
150-300MW to the Rwandan national grid. The German
government is currently funding a geo-scientific assessment
to evaluate the geothermal power generation potential in
northwest Rwanda between the Virunga national park and the
Lake Kivu town of Gisenyi. The Kenya Electricity Company is
also exploring geothermal opportunities in Cyangugu
(southwest Rwanda) and hopes to sign an MOU with the GOR this
year to drill exploratory production wells.

Solar: It's Free if You Can Afford the Technology
--------------------------------------------- ----

7. (U) In June 2007, German company Stadtwerke Mainz AG,
inaugurated the first phase of a 250KW solar power plant on
Mount Jali just outside Kigali. The solar plant, the largest
in Africa, uses American photovoltaic technology and will be
expanded in several phases to produce up to 1MW of
electricity. Engineers from Stadtwerke Mainze explained the
Rwandan climate is favorable to solar power and noted the
Mount Jali facility is 40 percent more efficient than similar
facilities in Germany. Until now, the high cost of solar
power plants relative to output has been a disincentive to
larger solar energy facilities. However, rising petroleum
costs and the declining cost of photovoltaic cells could make
this technology more attractive in the near future.
Stadtwerke Mainze hopes to use the facility on Mount Jali as
a model to implement smaller scale solar energy projects in
rural areas (outside the national electrical grid) to provide
power to schools, health and administrative centers.

Biogas and Peat: Great for Cooking
----------------------------------

8. (U) Rwanda has estimated reserves of 155 million tons of
peat which the government hopes can be exploited for use in
heavy industry and as an alternative cooking fuel. The
largest Rwandan cement factory - Cimerwa located in Cyangugu
- is in the process of converting its equipment to use peat
as an energy source and expects to be 80 percent dependent on
peat energy by October 2008. RIG is also evaluating a
project to compress peat into briquettes as an alternative to
charcoal for domestic cooking needs.

9. (U) Households constitute the largest energy consumers in
the country and about 95 percent of household energy demand
is met by biomass (typically wood and charcoal). This has
contributed to the over-exploitation of forests and resulted
in a reduction of natural forest cover by two thirds since
the 1950's. In addition to using peat as an alternative
cooking source, the GOR is promoting the use of biogas. With
Qcooking source, the GOR is promoting the use of biogas. With
the support of the Dutch and German governments, the GOR is
implementing a National Domestic Biogas Program (NDPE) which
will distribute 15,000 biogas digesters to rural households
by 2011. The biogas digesters fed by animal and human waste
will provide rural households with a renewable supply of
biogas for cooking and lighting.

10. (U) Comment: Rwanda's Economic Development and Poverty
Reduction Strategy (EDPRS) sets a clear roadmap to expand
energy diversification, security and domestic access. Under
the plan, the GOR hopes to increase installed power
generation capacity from 60MW to 165MW by 2012. While this
power generation is relatively small scale, it will help

satisfy the country's short-term energy needs. The GOR
appears to be well-positioned to achieve this goal and could
well surpass it. If energy projects in the pipeline are
realized, Rwanda could be energy independent by 2015.
ARIETTI

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