Unlocking Senegal’s Energy Market

The Government of Senegal has placed strong emphasis on positioning local content and capacity building at the forefront of unlocking industry growth in the country. Offers are currently being implemented by commercial banks, such as the Bank of Africa and Orabank to target small and medium enterprise development across the country’s energy sector. The underlying goal of these opportunities, which are also being developed by the private sector and foreign partners, is to increase the demand for petroleum-related services. 

Through the implementation of a robust and transparent framework for resource management and the design and application of local content regulations, Senegal will be able to make the most of its natural resources through the development of strategies that maximize the benefits of its natural gas. Continual, diversified investment in power and energy, including renewables and natural gas, while phasing out its heavy fuel oil use, has the potential to strengthen the country’s power sector. 

Invest in Africa (IIA) is a consortium of major operators such as Woodside Energy, BP, Cairn, and Kosmos Energy with the goal of developing local content capacity across the energy value chain. The organization unites partner banks and financial institutions to lower the risks associated with backing local ventures. These synergies between the private financial sector and the government are imperative for the market to move forward and achieve shared local content goals.  

The Mauritius Commercial Bank (MCB) has provided $60 million in investments to assist Senegal’s national electrification and gas use ambitions. The project finance facility has enabled Karpowership to operate its 235 MW powership off the coast of Dakar since August 2019, which contributes to approximately 15% of Senegal’s electricity supply. In line with the country’s Plan SénégalÉmergent, the powership is set to shift from using heavy fuel oil to gas, which would make it the first power generation source in the country fueled by gas. 

The country has also implemented the use of microgrids to improve accessibility. These consist of an independent electricity generation system primed for providing electrification to remote communities.  

Last year, Senegal inaugurated its first utility scale wind power project, the 158 MW Taiba N’Diaye wind farm, the largest solar park in West Africa with the potential to produce approximately 48 million kWh of electricity each year.  

To achieve universal access to electricity by 2030, Senegal must double its electrification rate, according to the UN. According to the IEA Africa Energy Outlook 2019, Senegal’s electrification rate is 69%, with a 92% rate in urban areas and merely 42% in rural areas. Achieving universal access to electricity will require more investment in diverse generation sources and modes of delivery, which includes both grid connections and independent micro-grids. The Agence Sénégalese d’Electrification Rurale proposed a portfolio of rural electrification projects for medium-voltage grid extension, mini-grids, and solar home systems.  

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Source: EnergyCapitalReport

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