Scaling Solar Senegal

Project description

On July 19, 2019, MIGA issued guarantees of up to EUR6.9 million (US$7.6 million equiv.) covering equity and shareholder loan investments by Engie Global Developments B.V. of the Netherlands (“Engie”), Meridiam Infrastructure Africa Fund FIPS and Meridiam Infrastructure Africa Parallel Fund FIPS, both of France (together,  “Meridiam”), in the Kahone Solaire SA and Kael Solaire SA solar plants in Senegal (“the project”). The guarantees have been issued for up to 15 years against the risks of war and civil disturbance, and breach of contract.

The project consists of the financing, design, construction, commissioning, operation and maintenance of two PV solar power plants with a total capacity of 79MWp (60MWac), including associated transmission facilities, to be located in the western part of Senegal. The Kael plant will be built 190km east of Dakar (close to the city of Touba) and have a total capacity of 35MWp (25MWac), while the Kahone plant will be situated 200km southeast of Dakar (close to the city of Kahone) and have a capacity of 44MWp (35MWac). The electricity output from the project will be sold to Société Nationale d'Électricité du Sénégal (Senelec), the national utility, under two distinct 25-year take-or-pay Power Purchase Agreements (PPAs). The plants will be connected to the national grid via a 300m underground transmission line (Kahone), and a 3km transmission line (Kael).

The project has been awarded to Meridiam and Engie through the Scaling Solar Program (“SSP”) developed by the World Bank Group (“WBG”) as a “one stop shop” program for governments to rapidly mobilize privately funded grid connected solar projects at competitive tariffs. This follows the first Scaling Solar auction in Zambia, which had delivered the lowest tariff in Sub-Saharan Africa, and aims at building on this success to further create viable markets for solar power on the continent.

Environmental Categorization

The project is a category B under MIGA’s Policy on Environmental and Social Sustainability. Click here to view the Environmental and Social Review Summary prepared by the International Finance Corporation (IFC) for their investment in the project. MIGA and IFC intend to present the project for consideration jointly to their Boards of Executive Directors.

Development Impact

1) Stakeholder effects: The project is expected to improve reliability of supply and reducing the average cost of generation. The investment adds 79 MWp of power generation capacity to the electricity grid, sourced at competitive tariffs. The additional capacity substitutes costly thermal capacity based on imported fuels and emergency plants.

2) Environmental and Social effects: Displacement of current and future thermal power generation by solar would result in reduced carbon emissions and pollution and contribute to climate change mitigation.

3) Market creation: By supporting the first IPPs procured under the Scaling Solar framework, the project demonstrates a competitive replicable model to scale solar PV in Senegal, that also contributes to establishing low tariff benchmarks.