Rwanda’s Business Development Fund (BDF), in partnership with the Rwanda Green Fund (FONERWA), UN Environment’s United for Efficiency initiative and the Basel Agency for Sustainable Energy (BASE) have today launched the ‘Coolease’ financial mechanism to promote adoption of energy efficient and climate friendly cooling solutions in Rwanda.

The Coolease scheme is one of the first of its kind in Africa, and will enable suppliers and consumers of air conditioning and refrigerations products to transition to the latest technology without an upfront investment. This groundbreaking financial scheme has been developed through the Rwanda Cooling Initiative (R-COOL) and is in line with the Kigali Amendment to the Montreal Protocol, which requires all nations to phasedown refrigerants that are potent greenhouse gases.

Adopting more efficient cooling solutions saves electricity, which makes businesses more competitive, reduces strain on the electricity grid, mitigates air pollution and climate emissions, and preserves precious resources.

“With the National Cooling Strategy soon to be published, it is time to pivot from strategic planning to wide scale adoption of best practice cooling. Doing so requires us to have in place the policy instruments and financial mechanisms to enable this shift. That is why we are especially excited about today’s launch of the Coolease scheme. This innovative financial mechanism responds to the needs of both consumers and suppliers to access the kind of efficient cooling systems we need,” said Vicent Biruta, Minister of Environment.

The Coolease financial mechanism aims to overcome the challenges of the high costs and high-risk perception of energy-efficient products, competition with substandard and cheap equipment and the lack of accessible financing for the latest cooling technologies. It will also facilitate the creation of a pipeline to advance energy efficiency in Rwanda, open access to new markets for BDF and FONERWA, and attract international funding to capitalise a new Green Growth Guarantee Fund.

How Coolease Works

Coolease is provided by a financial institution to the client (typically an enterprise) through a finance leasing agreement, in which the air conditioning or refrigeration system is used as collateral. A dedicated leasing subsidiary is being set up by BDF to serve as a Special Purpose Vehicle to finance the cooling system for the client in exchange for monthly payments.

The technology provider installs the equipment and commits to providing high-quality maintenance, which is embedded into the Coolease agreement. A positive list describes which technologies are eligible for the programme, considering both their efficiency and refrigerant type. A Green Growth Guarantee Fund set up by BDF and FONERWA will cover part of the loss in case of default.

About the Rwanda Cooling Initiative

The Rwanda Cooling Initiative (R-COOL), funded by the Kigali Cooling Efficiency Program (K-CEP) and supported by the Rwanda Environment Management Authority (REMA), was launched in 2018 to showcase the benefits of a rapid and comprehensive transition to energy-efficient and climate-friendly cooling. The initiative has four main components:

• A Market Assessment to collect data on the current stock and future projections of refrigerators and air conditioners in the country, the impacts on electricity demand, the supply chain and key stakeholders we need to work with.
• A National Cooling Strategy to provide a multisectoral roadmap to adopt model regulations and supporting policies for refrigerators and air conditioners.
• A Financial Mechanism to provide the private sector with the support they need to invest in new and efficient cooling technology in the right way at the right price.
• National Policies to make clean and efficient cooling in Rwanda work including by creating minimum energy performance standards and product labels for refrigerators and air conditioners.

The market assessment found that the current market size of refrigeration and cooling is worth approximately 35 billion Rwandan francs. The Rwanda Cooling Initiative, with Coolease as one of several financial mechanisms to be pursued, will be critical to channel such private capital towards superior cooling solutions.

About the Business Development Fund

The Business Development Fund (BDF) promotes small and medium sized enterprise development by providing financial services that enhance the lending mechanisms of financial institutions. www.bdf.rw.

About the Rwanda Green Fund

The Rwanda Green Fund is a national fund for environment and green growth in Rwanda. The fund invests in transformational projects that advance the green economy and works with partners to develop financial instruments to facilitate green business. www.fonerwa.org.