Mini-grids providing electricity to remote areas in Senegal

by Johan Burger

In Senegal in West Africa, the Senegalese Rural Electrification Agency (ASER) programme wants to deploy solar mini grids in 1,000 isolated villages in Senegal to deal with the total energy requirement. The project will provide access to electricity on a sustainable basis to the people in the most challenging locations through private rural electrification concessionaires. Currently, while many areas of the country still do not have access to electricity, the available energy sources are not sustainable.

Funding for the ASER programme received approval by the Green Climate Fund (GCF) Board. This will allow the Climate Finance Innovators (CFI) consortium, supported by the International Climate Initiative (IKI), to proceed with the project and will boost Senegal’s national ambition of universal access to electricity from renewable sources. The CFI consortium has provided technical support throughout all stages of the proposal. The West African Development Bank (BOAD), which serves as Accredited Entity towards the GCF, will manage the funds.

ASER will now be able to contribute significantly to the achievement of the goal set by the Senegal Government of obtaining universal access to electricity by 2025. The ASER programme will benefit approximately 39,000 newly electrified rural households within five years with a 32 MW solar PV mini-grid generation capacity. The initiative will also reduce annual emissions by an estimated 45,098 tons of CO2 annually and more than 1.1 million tons of CO2 over the project’s lifetime.

The ASER project will also accelerate and sustain the electrification of communities and businesses that remain outside the boundary of the Rural Electrification Priority Plan and Senelec (National Electricity Company of Senegal).

This project intends to develop replicable climate financing models in Ethiopia, Senegal and Uganda that are based on the CDM (Clean Development Mechanism) elements and activities.^[1]

POINT OF INTEREST

• With solar technology as the primary platform, renewable energy is making a significant contribution to providing electricity to the vulnerable at the bottom of the pyramid, not only in West Africa but throughout the continent. Increasingly, projects now utilise even smaller configurations, i.e., nano-grids where each dwelling relies on its own power system. The growth of renewable energy utilisation in Africa will continue and increase in pace and scope through efficiency increases and cost reductions. The smart option for foreign (and local) investors would be to tap this huge opportunity for sustainable investment on the continent.

INSTALLING MINI-GRIDS

Off-grid power, driven by economic growth, rising expectations, and falling costs for clean energy platforms, is trending in Africa. Winch Energy joined other leading off-grid players in January 2021 to launch its new Winch Energy IPP Holdings Limited (WIPP) platform. The consortium, composed of Total Eren, Itochu Corporation, Al Gihaz Holdings and Winch Partners, reportedly holds Africa’s most extensive mini-grid financing portfolio. WIPP recently completed its funding round for solar mini-grid projects in 49 villages across Uganda and Sierra Leone. The funding originates from Winch Energy Limited and NEoT Offgrid Africa (NOA). Previously, NOA invested more than US$36 million to electrify 25,000 homes and businesses in Ivory Coast and Nigeria. Other industry players and EU agencies also joined WIPP to provide funding.

The partners view the platform as an enabler for rapidly scaling up operations in Africa. CEO of Winch Energy Nicholas Wrigley views the joint effort as positioning Winch Energy as a future leader in large-scale off-grid renewables. He says the funding “stimulates economic growth and improves education and healthcare provision in remote communities.” NEoT Offgrid Africa (NOA) Director Frédéric Pfister sees the deal as positioning NOA as a critical player for financing mini-grids and other off-grid solutions such as solar home systems and commercial and industrial installations.

The mini-grids, based on Winch Energy’s proprietary technology, are “expected to be operational within the next 12 months, providing remote communities with affordable, clean energy and access to essential services.” The project will reportedly connect more than 6,500 customers in Uganda and Sierra Leone, supplying clean energy to over 60,000 people. It also provides for the installation of 6,000 portable batteries to provide people outside of the mini-grid catchment area with clean electricity. In addition, the project will provide internet to the communities through partnerships with telecommunication operators in both countries.

WIPP expects to expand its operations in Africa and aims to reach approximately US$100 million of operating projects in the next 24 months. Winch Energy is also active in Benin, Mauritania and Angola.^[2]

POINT OF INTEREST

• We also see increasing use of mini-grids to electrify homes and businesses. Until recently, many consumers had little choice but to remain a captive of the existing infrastructure. This is due to the high initial costs of many renewable energy systems. The solution was new business models to address the financing needs of different types of consumers. These innovative business models include rent-to-own solutions that are attractive for consumers. Larger businesses prefer to adopt a leasing model. This solution converts upfront capital expenses into tax-deductible monthly operating expenses. Leasing avoids large initial outlays and stabilizes monthly energy costs while providing access to more reliable and affordable electricity.

 

Additional reading

Anon. 2020. Green Climate Fund approves USD 88.9 million for ASER Solar Rural Electrification in Senegal. Climate Finance Innovators. 21 August 2020. Available at https://www.climatefinanceinnovators.com/wp-content/uploads/2020/10/CFI-ASER-GCF-press-release.pdf.

Bungane, B. 2021. Solar mini-grids coming to 49 villages in Uganda and Sierra Leone. ESI Africa. 16 February 2021. Available at https://www.esi-africa.com/industry-sectors/renewable-energy/solar-minigrids-coming-to-49-villages-in-uganda-and-sierra-leone/.  Accessed 14 April 2021.