FINANCIAL TIMES: Senegal’s journey from blackouts to gas and green energy Progress is swift, but universal access to electricity will take time

In the control room of the Cap des Biches power station on the outskirts of Dakar, a framed photograph of Senegal’s president Macky Sall hangs on a wall overlooking a bank of computer screens showing data from the plant’s five generating units. The presidential portrait hints at the importance of a facility which accounts for about 10 per cent of domestic power generation and acts as a symbol of the country’s progress towards making electricity more reliable and widely available. “This is the brain of the power station and the engines are its heart,” says Gionata Visconti, the plant’s Italian manager, gesturing towards an adjacent building where throbbing combustion engines powered by heavy fuel oil generate 86 megawatts of electricity when running at full capacity. “Blackouts have dramatically reduced since we started operating in 2016 and electricity prices have decreased,” he adds, standing beside a telephone which provides a direct hotline to grid operators at the country’s state-owned power utility, Senelec. Cap des Biches is run by ContourGlobal, a UK-listed power company. It was developed with $132m of financing from the Overseas Private Investment Corporation (Opic), a US government agency which supports development in emerging markets, and the International Finance Corporation (IFC), the World Bank’s private sector investment arm. As such, the plant, beside a sandy Atlantic beach with palm trees lining its access road, is a showcase for the combination of private international capital and development finance which has helped overcome the power shortages which until recently bedevilled Senegal. “The government has put a lot of focus on power production,” says Massaer Cisse, senior manager in the Dakar office of Deloitte, the global consultancy. “In the past five years, power generation capacity has increased by 25 per cent.” A solar array near Thiès in western Senegal © Xaume Olleros/Bloomberg Senegal has relatively high levels of electricity access compared with the rest of west Africa, with 61 per cent of the population connected to a reliable supply. Yet there is a big divide between the 88 per cent connection rate in urban areas and 40 per cent in the countryside. About 1.2m households across Senegal have no access to electricity, according to Power Africa, the US development programme aimed at closing the continent’s energy deficit. That leaves the government a long way from its goal of universal access to electricity by 2025. A big expansion in renewable power will be critical. So far, only 80MW of solar power has been installed and most of the country’s 864MW of generating capacity involves burning of heavy fuel oil. However, plans are under way for a further 350MW of solar and wind projects which would represent one of the biggest and fastest buildouts of renewable power in the region. There is a divide between 88 per cent connection rate in urban areas and 40 per cent in the countryside A French alliance of Engie, the utility, and Meridiam, the infrastructure investor, this month won an auction to build 60MW of capacity as part of the IFC-led Scaling Solar scheme, at a 60 per cent lower cost than past solar projects in Senegal. Faheen Allibhoy, IFC country manager in Senegal, says falling costs make renewables an attractive option in a country with plentiful wind and sun. Until now, electricity prices have been inflated by the cost of importing fuel oil. A further 158MW is due to come from a wind farm planned at Taiba N’diaye, 80km north-east of Dakar, by Lekela Power, a joint venture from Mainstream, the Irish renewables developer, and Actis, a UK private equity investor focused on the developing world. Like the Cap des Biches plant, the Taiba Ndiaye wind farm is receiving support from the US Power Africa programme in the form of $250m of Opic financing. Chris Antonopoulos, chief executive of Lekela, says his company is ready to start construction of what will be west Africa’s largest wind farm as soon as final approval is received from Senegalese authorities. It will take about two years to complete. Ms Allibhoy cautions that more investment in transmission and distribution infrastructure is needed to absorb rising amounts of renewable power, the intermittent nature of which makes for more volatile supplies. “We’ll have gone from zero renewables to 20 per cent [of generating capacity] by the end of next year,” she says. “It is extraordinary progress but we are reaching the technical limits.” In the longer term, the government is counting on newly discovered offshore gas reserves providing a further source of domestic power generation after production starts in the 2020s. The Cap des Biches plant is designed to be converted to burn gas, rather than oil, once supplies are available. However, as with renewables and the grid network, heavy investment will be needed in gas processing and distribution infrastructure before the promise of cheap and plentiful gas-fired power can be realised. In the meantime, some investors are focusing on smaller-scale local projects to fill gaps in access. A Senegalese start-up called Oolu, for example, provides off-grid solar panel and battery kits to rural households for a low monthly fee paid through mobile phones. The company has received investment from Y Combinator, the Silicon Valley fund which has backed companies including Dropbox and Airbnb. With demand growing at 40-50MW per year, a range of energy sources will be needed to keep expanding Senegal’s power system. As Mr Cisse at Deloitte says: “It’s going to take a lot of investment and a lot of co-operation between the public and private sectors.”