Power Africa Success Story: Expanding Renewable Energy to Electrify Senegal

Power Africa Success Story: Expanding Renewable Energy to Electrify Senegal

Commentary
Posted on: 18th December 2020
By Multiple Authors
Delphine Hennegrave
Energy Governance Advisor, Power Africa
Poppy Lindsley
Programme Associate, Power Africa

The Challenge

Thirty per cent of Senegal’s households did not have access to electricity in 2019. And while 70 per cent electrification nationwide is among the highest rates in sub-Sahara Africa, it hides strong disparities between urban areas – where 92 per cent of households have electricity – and rural areas, where the access rate is just 42 per cent.1“Plan Opérationnel pour la Mise en Œuvre du Programme D’électrification Rurale Acces Universel SE4All » https://www.acces-universel-electricite.sn/vision-et-objectif.html Lack of power has a devastating impact on people’s ability to run a business, undergo medical treatment or even attend school. Recognising this, the government of Senegal has set a target of 100 per cent access for 2025 as part of its national development strategy (the Plan Sénegal Émergent), with new renewable energy technologies playing a crucial role. 

Working to Solve the Problem

The Tony Blair Institute (TBI), through its work with the Power Africa programme, has supported the Government of Senegal in this initiative by helping leaders improve and reform their energy sector – in particular in efforts to make renewable energy more accessible across the country. The Senior Advisors Group is an advisory facility for government leaders in power sectors across sub-Saharan Africa, which is run by TBI in partnership with Power Africa. Advisory engagements help leaders set out policy directions and deliver on their priorities, in areas ranging from off-grid market development to cross-border power trade.

Recent technological progress has made solar-powered energy generation a realistic option for both rural and urban households. As a result, energy services can be delivered in many ways, from individual solar home systems to mini-grids serving a limited area, or even as upgrades to the traditional, centralised power grid. To enable the rollout of these delivery options, both private and public companies are supporting efforts to increase access. Central functions of government also play a key role, as they take responsibility for overall planning and for regulating new markets.

In this new reality, managing the intersection between the state and the market becomes a critical task for governments. It is their job to make sure electricity is delivered to end users, universally across the country, and to all income groups. Instead of simply directing one or two public utilities, governments now need to identify and support the right enabling factors that will provide enough incentives for private players to offer their services, while at the same time ensuring customers are protected in terms of quality and price.

In Senegal, the Government has taken significant steps in that direction. In August 2018, it set up a coordination mechanism: The Off-Grid Multi-Stakeholder Working Group. This group brings together more than 50 different stakeholders from a variety of institutions such as private sector companies, development partners and government bodies. It tracks progress, facilitates coordination between the multiple initiatives and actors, provides recommendations and supports the implementation of best-practice enabling policies. Power Africa, along with TBI, has accompanied the government along the way, providing extensive technical advisory. 

To deliver on an ambition as complex as universal electricity access requires an understanding of the inner workings of the country’s legal and tax systems as they relate to energy distribution, and introduces new decrees that make the green energy business more attractive. Among the Working Group’s main achievements are amendments to the Electricity Law and implementing decrees that have been submitted to clarify the off-grid policy space and make it more appealing for private investments, with extensive support from TBI and the Power Africa Off-grid Program (PAOP). These amendments have been included in the ongoing review of the Electricity Law and could help unlock $550 million in development funding.2The Millennium Challenge Corporation Power Compact Fund is designed to increase reliability and access to electricity in Senegal by providing USD 550 million in grants to improve the transmission network ($403 million), increase electricity access in rural and peri-urban areas ($63 million) and improve the overall governance and financial viability of the sector ($87 million) ($87 million being for program Admin and M&E). The amendments are expected to be adopted early next year.

In June 2020, the Working Group also obtained the signature of the Ministry of Finance and Ministry of Petroleum & Energy on a decree to grant Value-Added Tax (VAT) exemptions on 22 pieces of equipment used in the production of renewable energy from solar, wind and biogas, including solar kits and solar pumps. This significant milestone will substantially lower the costs (by up to 18 per cent, the existing VAT rate) of equipment that meets defined quality standards and will make it more affordable to households and small businesses. The Working Group is currently facilitating the implementation of the decree, clarifying procedures and training more than 120 customs and tax agents to recognise eligible products; TBI will play a central role in launching this ambitious training programme.

The Working Group has also presented its recommendations to the government for the adoption of international technical standards for off-grid products, and to strengthen laboratory testing of equipment entering the Senegalese markets. The enforcement of such standards will protect customers from buying products which are unsafe, unreliable or not durable.

What Success Looked Like

The Working Group has proved an effective – and now indispensable – mechanism for the government of Senegal to deliver on its ambitious Electricity Universal Access agenda. It has facilitated collaboration between the private and public sectors to bring new energy technologies online, integrating them with centralised systems, and boosted their introduction to consumer markets. Through this platform, the private sector is now sharing its technological knowledge and progress data with the government, which in turn can track the performance of its policies towards the universal access target and make more evidence-based decisions.

Most importantly, the effect on actual access to energy services is expected to be significant. To reach its goal, the Senegalese Universal Electricity Access Plan requires that at least 230,000 new people be connected with electricity access through solar home systems solutions, and an additional 235,000 through mini-grids by 2025. Through the work led by the government with technical advisory support from Power Africa and TBI, close to 500,000 people will have access to more affordable clean-energy solutions, with a guaranteed level of quality, in the next five years.

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