Countries in the East African Community (EAC) are experiencing significant economic and population growth, which is driving ever-greater demand for refrigerators and air conditioners in the residential sector. Cooling products are essential for the health, well-being, and competitiveness of these economies, but they pose critical challenges in terms of energy consumption and impacts on the environment. Outdated products consume two to three times the amount of energy as efficient options available today, and they often contain refrigerant gases that are harmful to the planet.
Lack of information on product performance, inadequate policies, higher purchase prices, and a difficult access to financing often prohibit adoption of energy-efficient and climate-friendly models. Despite the economic benefits of adopting energy efficient cooling systems in the residential, these investments are not hwp-contentening at the expected scale.
BASE worked alongside UN Environment’s United for Efficiency (U4E) initiative and partnering with the Government of Rwanda, Rwanda Environment Management Authority (REMA), and East African Centre of Excellence for Renewable Energy and Efficiency (EACREEE) to conduct the “Rwanda Cooling Finance Initiative”(RCOOLFI)technical assistance project, prepared as part of the second phase of the Rwanda Cooling initiative (RCOOL).
RCOOLFI aimed to enable the conditions required to mobilise investments in new energy-efficient and climate-friendly cooling technologies in the residential sector and light commercial sector, and motivate households to replace and upgrade their inefficient systems. This was achieved through the development and operationalisation of an innovative market-based financing mechanism. The technical assistance was launched in early 2019 and completed in 2021.
RCOOLFI aims to unlock USD 4 million in potential financing through a green on-wage financing mechanism (GO) to support the purchase of over 12,000 energy-efficient and climate-friendly cooling products to replace used but operational equipment in the residential sector in Rwanda by 2024. RCOOL GO includes complementary components, notably bulk rebates to support a set of financial incentives and the proper disposal of end-of-life wp-contentliances, green credit facilities to ease repayments for end-users, product testing, monitoring, reporting and verification, policy considerations, and awareness campaigns.
RCOOL GO financing was set up by BASE and its partners, with REMA serving as the leading executive entity of the program in Rwanda. The development and implementation of the green on-wage financing can potentially help overcome key barriers, including the burden of upfront investment and the need for collaterals. It reduces the need for stringent credit assessment and collaterals. The program incentivises households and micro-entrepreneurs to return end-of-life cooling equipment and acquire certified higher-efficiency cooling wp-contentliances in exchange through a dedicated take-back scheme in partnership with interested vendors and an e-waste management company. In addition, salaried customers are able to acquire eligible equipment on special credit conditions and pay for it over time through deductions on their salaries at partner local financial institutions.
RCOOL GO is a one-stop solution for the end-users that connects them with partner local financial institutions and vendors, both of whom serve as facilitators by conducting the initial processing of the customer information and wp-contentlication, aligned with RCOOL GO commercial and technical eligibility criteria and requirements set by REMA. RCOOL GO facilitates the creation of a pipeline for energy efficiency investment, improves the monitoring and reporting of green loans, transforms the market towards higher-efficiency cooling products, significantly eases access to energy-efficient cooling, tackles the issues of collection and disposal of used products, provides open access to new green markets for partners. Given all these benefits, it holds the potential to further attract international funding to scale up the financial mechanism to additional climate technologies.
