The first utility-scale solar PV projects developed under the 2010 Renewable Energy Orientation Law have been connected to Senegal’s grid. The country is well on track to hit its target of 20% renewable energy generation capacity by end-2017.
The first two renewable energy projects of the country, totalling 50MW, were connected to the grid in early 2017. Another 94MW are under construction and will be connected by the end of the year. In October 2017 the government issued an open tender for solar projects with a combined capacity of 100MW. This project is part of the Scaling Solar initiative led by the IFC. A 150MW wind project is also in the pipeline and will be built in stages of 50MW starting in 2018. Finally, an additional hydroelectric dam is in the making: Senegal will receive 80MW of the 240MW Kaléta dam when it is completed at end-2018. These projects will complement the country’s existing coal, diesel and hydro-electric power generation. They were all awarded to new producers entering an energy market that is becoming less dominated by Senelec, the national electricity operator.
By 2025, Senegal aims to diversify its energy mix and adapt to climate change by having renewable sources (excluding biomass) account for 15% of primary energy supply. Since late 2015, power off-taker Senelec is no longer subsidized by the government due to low commodity prices, and its improved financial stability has boosted investor confidence in the sector.
Early pioneers in Senegal’s solar industry face an environment not suited to efficient project development. Communication between layers of government administration and private investors can be arduous, and a lack of local expertise in renewable energy can be problematic. However, in order to increase energy independence, the Senegalese government has recently demonstrated the will to ramp up generation capacity. Current domestic power capacity stands at roughly 820MW for 15 million inhabitants, including entitlements from the neighboring hydroelectric dams, Manantali and Félou, both in Mali.
To meet the growing electricity demand of its population while reducing fuel-import dependence, Senegal is looking at renewables while also planning a 125MW coal power station. The country is also hoping to exploit recently discovered gas reserves off its coast (starting 2022). Thermal power stations, adapted to run on both diesel and gas (once it becomes available) will also be built in the next few years. The country’s generation capacity is forecast to reach 1.6GW in 2030.
Renewable energy will play a substantial role in building a stronger energy sector. The first competitive tender for solar PV projects was launched in 2016 through the framework of the World Bank’s ‘Scaling Solar’ initiative. This will auction 100MW of solar capacity, and the pre-qualification round closed in October 2016. It is the first tender in the framework of Senegal’s renewable energy law, which was ratified in 2011-12. The regulator is expected to publish the pre-selected players and call for bids soon.
Depending on the success of this first round, further rounds may be launched. In addition, the solar and wind projects that successfully negotiated contracts with Senelec and received government guarantees in 2013, are either running or in the process of being built. If all goes well, some 465MW of solar and wind capacity will be built by 2020, according to Senelec. Senegal’s rural electrification program opens up the sector further to independent power producers, which can apply for a 25-year monopoly on generation, retail and distribution of electricity in Senegal’s ten concession areas. Six concessions have already been allocated to companies or partnerships, including Electricité de France and Morocco’s National Electricity Office (ONEE). Slow development and a squeeze on profit have damped interest in the remaining concessions. The market for small-scale solar home systems is also growing in Senegal, with a number of local and foreign players selling products via distributors in rural areas.
On September 26, 2015, Senegal submitted its Intended Nationally Determined Contribution (INDC) to the United Nations, in which it committed unconditionally to cut greenhouse gas (GHG) emissions by 5% below the business as usual (BAU) scenario by 2030. This target concerns the energy sector (- 6%), industrial waste (-13%), agriculture (-0.19%), and forestry targets. It represents a total emissions reduction of 7 million metric tons CO2e by 2030. Senegal has assessed these goals will require $1.8 billion of investment. The country also committed to a further reduction of GHG emissions by 21% below the BAU scenario by 2030, conditional upon international support, and financing amounting to $5 billion.
Senegal saw a dramatic improvement in its performance in Climatescope 2017. The country scored 1.68, ranking it 11th worldwide, a leap of 27 places compared with the previous year. Among the 19 African nations assessed, it climbed from 13th to third. The jump reflected a vastly improved score on Clean Energy Investment and Climate Financing Parameter II.
On Enabling Framework Parameter I, Senegal was placed 31st, down from 23rd the year before. The score was supported by clean energy policies, including a clean energy target and energy auctions. It was also boosted by the country’s framework for distributed energy, plus its partially unbundled and privatised power sector, but hampered by a lack of installed clean energy capacity.
On Parameter II the country was third globally in 2017, up from 57th last year. This transformation reflected the injection of $393m into wind and solar power generating infrastructure, compared with $26m of solar investment recorded the previous year. The presence of loan and grant programmes bolstered the score, as did the low average cost of debt.
Senegal took 21st position on Low-Carbon Business & Clean Energy Value Chains Parameter III, unchanged from 2016. The variety of financial institutions active in the country’s clean energy sector was a positive factor. Set against this was the relatively low number of value chains and renewable energy service companies.
On Greenhouse Gas Management Activities Parameter IV, the country fell one place to 50th. The lack of a domestic climate change policy weakened its score, as did low levels of corporate awareness. Although it plans to reduce emissions in line with its Intended Nationally Determined Contribution, the scale of ambition is relatively modest.