Senegal (2014)

Degree of reliance on imported energy: 

Total capacity of the interconnected system was 584 MW in 2012, 90% of which was provided by imported liquid fuel-based thermal plants (of which 117.5 MW were under IPP arrangements), with the rest mostly imports of hydroelectric power from regional hydro plants (the most prominent being Manantali).

Senegal imports approximately one tenth of its electricity from the Manantali and Felou hydro power plants in Mali through the interconnected regional network with Mauritania and Mali.

Main sources of Energy: 

Total capacity of the interconnected system was 584 MW in 2012.   Energy consumption in Senegal is dominated by wood fuels (53% of total).  Electricity demand has been growing rapidly at a rate of about 6.2% per annum over the last decade (although it has slowed down since 2005 as a result of lower economic growth) and peak demand reached 449 MW in 2011.

About 90% of electricity in Senegal is generated using oil products. Imported crude oil is processed and refined by Senegal’s only refinery, Société Africaine de Raffinage (SAR). Refined oil products are also imported directly, as SAR’s processing capacity covers less than 40% of the market.

Senegal experienced rapid electricity demand increase in the past decade due to economic growth. During 2012, peak electricity demand reached 466 MW, almost double the 234 MW of 2000. The power demand profile rises seasonally during the hot months of June to October. Overall production in 2012 reached about 2,800 GWh, of which about 51% was provided by IPPs. The majority of this is based on diesel and Heavy Fuel Oil (HFO) power plants.  SENELEC’s total installed generation capacity is 371 MW, of which only 294 MW are fully functional. Total installed generating capacity owned by IPPs is estimated at 212 MW, including 92 MW consisting of emergency containerized rental diesel units.

Traditional biomass accounts for 54% of Senegal’s primary energy supply, oil products for 40% and other resources, including coal and hydro power, for the remaining 6%. All oil products are imported, making Senegal’s trade balance very vulnerable to oil price volatility. The only renewable-based electricity injected into the grid is from the Manantali hydro power plant in Mali, as part of the Western African Power Pool project.

Country: 

Senegal

Extent of the network: 

In 2011, Senegal’s national access to electricity was estimated at 40%, with an urban electrification rate of 70% and rural electrification of 22%. 47 MW of non-grid connected installed capacity serves isolated centres in areas away from the main grid.

Capacity concerns: 

The electricity sector in Senegal is characterized by its small size (584 MW of installed capacity in 2012) and its high dependence on expensive imported fuel in the absence of significant local modern energy resources. Such high costs, compounded by poor management of the sector, have led the sector in a continuous downward spiral. Société Nationale d’Electricité (SENELEC), the public electric utility’s under-capitalization and structural operating deficit (caused by insufficient tariffs and lagging budget transfers) perpetuates inefficiency by preventing it from investing in required maintenance of aging assets and in less fuel-intensive generating plants that could improve its cost structure in the long-run. And the dire state of sector finances is a disincentive to foreign companies investing in future Independent Power Producer (IPP) projects on a large scale. The deepening sector crisis was marked by record power shortages in 2008 and 2011, with as many as 270 days of load shedding registered in the latter year, which could only be alleviated in 2012 by resorting to the very expensive rental of short-term generation capacity.

Potential for Renewable Energy: 

Solar
Senegal is endowed with a large solar energy resource. Over most of country’s territory, the solar irradiation is above 2 000 kWh /m2/year for Global Horizontal Irradiation and above 1,800 kWh/m2/year for Direct Normal Irradiation (Ministere des Energies Renouvelables, 2011). This provides good prospects for photovoltaic solar power projects. The falling prices of photovoltaic panels and system components make solar a very attractive solution, particularly when the costs of the alternatives – imported oil products – are high.

Wind Energy
Senegal’s wind power potential is concentrated along the coast and in particular the section of the coast between Dakar and Saint-Louis. In a study carried out by the Senegal Meteorological Service, wind velocities of 3.7-6.1 m/s were observed in the 50 km-long coastal strip between Dakar and St. Louis.

Hydro
Senegal has about 3 billion cubic meters per year of renewable groundwater resources, excluding those groundwater resources that overlap with surface water. Total water withdrawals in 1987 were 1.4 billion cubic meters, of which 92% is for agriculture, 3% for industry and 5% for domestic use. The Senegal River represents a significant hydroelectric potential estimated at 1,200 MW and partially exploited at Manantali plant (200 MW) commissioned in 2002, providing electricity to Senegal, Mali and Mauritania via a 225 KV interconnection line.

Biomass and Biofuel
Solid biomass (agricultural and agribusiness by-products) and liquid biofuels also have potential in parts of the country. As mentioned earlier, biomass is the dominant source of energy in Senegal providing more than 50% of the national energy balance. Biomass resources, such as agricultural by-products (approximately 3.3 million dry tons of agricultural residues) agribusiness (rice husk, bagasse, peanut shells, cotton stalks, etc.), also have the potential for grid-distributed and off-grid electricity generation (Ibid). Plant species (plant oil, jatropha curcas, cat-tails, sunflower, cotton, castor, sweet sorghum etc.) also have potential for biofuel production.

Potential for Energy Efficiency: 

The residential sector consumed the majority of the primary energy supply in 2008, with 46% of total final consumption being attributed to the sector. The high use of inefficient traditional biomass fuels for heating, lighting and other domestic purposes contributes to this, with the entirety of the country’s final biomass supply being consumed by the sector. The residential sector also consumes the highest proportion of electricity supply to the country, at 36%. Consumption has risen at an annual average of 6% over the last decade, and growth is forecast to increase to an average of 10% for the following decade.

The potential for efficiency in rural households is also recognised by the government, and programs have been put in place as part of the current rural electrification program to improve lighting efficiency in rural households, primarily through subsidised CFL-lightbulb distribution. The promotion of the use of alternative fuels for cooking, for example agricultural waste products, has also been suggested as a source of energy efficiency improvements in the residential sector.

Ownership: 

Electricity
Recognizing the electricity access challenges and limited financing,the  Government of Senegal (GoS) pursued reforms to promote private sector participation.  The foundation of these reforms rests on the 1998 Electricity Law (98-29), which provided the sector legal, regulatory, and institutional framework. The law promotes private sector involvement in electricity generation and distribution through delivery of  concessions and licenses under the oversight of an independent electricity sector regulator, established later as the Commission de Régulation du Secteur de l’Electricité  (CRSE). The law also calls for scaling up rural electrification by transferring responsibility to service rural areas from SENELEC - the national power utility who used to have a monopoly in electricity generation, transmission, and distribution - to a dedicated rural electrification agency, set up in 1999 as the Agence Sénégalaise d’Electrification Rurale (ASER)

The national electricity utility (Société Nationale d'Electricité du Sénégal – SENELEC) is a state owned enterprise which has a monopoly for transmission and distribution. It also owns about half of the generation capacity, with the remainder being owned by Independent Power Producers (IPPs) which generate electricity and sell it exclusively to SENELEC.

Structure / extent of competition: 

Senegal was among the first countries in SSA to introduce private sector participation in the power sector in the late 90s. The first IPP was GTi, a 52 MW combined cycle oil-fired power plant commissioned in 2000. The second IPP was Kounoune, a 67.5 MW power plant commissioned in 2008. The track record of IPPs in the country has been mixed, mainly as a consequence of variations in the quality of fuel delivered, grid instability and other technical difficulties which have reduced electricity output from these plants. Some of these issues have been resolved and the Government of the Republic of Senegal (GoS) remains committed to relying on private sector investment to bridge the generation gap.

SENELEC is the concessionaire for the transmission and distribution network in Senegal (with the exception of Manantali interconnection) and operates in a monopoly condition for the purchase and sale of wholesale power.

Existence of an energy framework and programmes to promote sustainable energy: 

Letter of Development Policy for the Energy Sector
In October 2012, the GoS adopted a Letter of Development Policy for the Energy Sector. The Letter of Development Policy outlines the sector policy objectives of the newly elected government to improve the sector’s performance in the medium term. The main axes of the Letter of Development Policy for the Energy Sector are: (a) ensuring energy security and increasing the energy access for all; (b) developing a policy mix combining thermal generation, bio-energy, coal, gas, and renewables and seizing the opportunities of regional interconnections; (c) continuing and accelerating the liberalization of the energy sector by encouraging independent production and institutional reform of the sector; (d) improving the competitiveness of the sector in order to lower the cost of energy and reduce sector subsidies; and (e) strengthening regulation of the sector.

The 2013-2017 plan for developing production facilities is based on an energy policy mix combining coal, natural gas, hydroelectricity, and renewable energies. In addition to the rehabilitation of SENELEC’s production facilities, which are in progress, this plan makes provision for the following additional capacities: the Félou hydroelectric power station of 15 MW in 2013, an IPP in the amount of 150 MW (liquefied natural gas) in April 2014, the IPP Tobéne (Taiba Ndiaye) of 70 MW in 2014, a coal-fired IPP (Sendou) of 125 MW in April 2015; an import of 80 MW from the natural gas powered plant in Mauritania in October 2015; a coal-fired IPP with Kepco of 250 MW between 2016 and 2017, and renewable energy projects. A standing inter-ministerial committee for monitoring energy projects has been instituted. The coming on stream of these new units will be accompanied, at current oil prices, by the phase-out of the electricity subsidy and will lead over time to lower costs for the user.

To react to the power crisis, in 2010, the GoS carried out a diagnostic exercise of the sector, which highlighted an increasing gap between fast growing demand and insufficient, costly, and unreliable supply of electricity, as well as SENELEC’s persistent financial difficulties, characterized by a significant operating deficit and high indebtedness. To tackle both technical and financial imbalances, the GoS developed a 2011 – 2015 electricity emergency plan, outlining the overall policy framework and strategy to steer the sector towards a sustainable path and ensure SENELEC’s financial and operational sustainability over the long run.

The GoS also set up a special fund to support fuel provision for electricity generation (the Special Fund for Energy – FSE). The FSE became operational in July 2011 and it finances fuel supplies to SENELEC and co-finances investments in new infrastructure, particularly generation expansion. The Fund’s revenues are financed through GoS budgetary transfers (including tariff compensation), charges on oil products, energy and telecommunications, and a contribution from SENELEC.
 

Current energy debates or legislation: 

The government appears serious in its efforts to develop the sector, actively pursuing investment and purchasing opportunities abroad, and issuing a candid assessment of past shortcomings. Capacity-building is also at the forefront, including technical training programmes conducted in cooperation with Germany. Nonetheless, certain challenges remain for Senegal to generate higher levels of private investment.

To date, discussions about implementing a feed-in tariff have not progressed beyond feasibility studies. In its October 2012 Energy Sector Policy Letter, the government stated only that it would continue to study the issue.

Major energy studies: 

N/A

Role of government: 

Council of Ministers
The Council of Ministers takes the major decisions related to energy, especially on-grid electricity.

Inter-Ministerial Committee on Renewable Energy
However, in order to coordinate and facilitate the integration of electricity from renewables into the grid, all matters relating to renewable energy need to be discussed and finalised in consultation with the key actors (MoE, MER, CRSE, ASER, SENELEC) in the Inter-ministerial Committee on Renewable Energy (Comité Interministériel sur les Energies Renouvelables, or CIER) before taking them for decision to the Council of Ministers.

Ministry of Energy (MoE)
MoE is in charge of on-grid electricity policy and closely monitors its implementation.

Ministry of Renewable Energy (MER)
MER is responsible for framing policies for the promotion of electricity generation from renewable energy sources and thus plays a key role in formulating policies and monitoring decisions taken in consultation with the MoE and other relevant stakeholders for promoting decentralised renewable energy applications.

Government agencies in sustainable energy: 

Senegalese Agency for Rural Electrification (ASER)
ASER is responsible for much of Senegal's off-grid rural electrification and power generation although some projects still fall under SENELEC's authority. ASER, which was established in 2000 but only became fully operational in 2005, has been given the responsibility of implementing the strategy for rural electrification (PASER). Villages close to the grid and the ones electrified before 2000 are under SENELEC control while all remaining rural localities are under ASER responsibility.

National Agency for Solar Energy (ANDES)
ANDES is a new agency set up by Senegal in response to the 2010 mandate it received from the heads of states of ECOWAS countries to promote solar energy in the sub-region.

Intersectorial Committee for the Implementation of Synergies between Energy and other Strategic Sectors (CIMES)
CIMES is a multi-sectorial group comprising, among others, the relevant ministries, civil society, private sector and donors. The group worked towards including energy issues within the National Poverty Reduction Strategy and is considering the energy gaps to meet development goals, and the contribution of renewable energy to these goals.

Energy planning procedures: 

To implement Decree no. 2011-2013, an order establishing the creation of a selection and approval committee was initiated, to enable on the one hand promoters and investors to obtain a certificate (approval) to develop their projects, and on the other to enable the government to obtain an overview in planning its requirements in terms of independent electricity generated from renewable sources of energy to inject into the grid.

Therefore, until 21 December 2012 renewable energy projects were the subject of an in-depth study by this Committee, in compliance with article 19 of law no. 2010-21 establishing the Framework law on Renewable Energy. However, it should be noted that after 21 December 2012 the Government will exclusively use calls for proposals for all new generation projects within the country.

Rural electrification, using both conventional and renewable energy resources has been defined as a key sector to reduce poverty and increase rural living standards. Senegalese authorities plan to reach a 30% rural electrification rate by 2015, and a 60% rate by 2022. Responsibility for meeting the target is in the hands of the Senegalese Agency for Rural Electrification (ASER), an autonomous body reporting to the Ministry of Energy

Based on an economic assessment of conditions for electrification, ASER has defined 10 concessions and has launched tenders for electrification of these areas in a competitive bidding process. Each bidder will be required to indicate the percentage funding that they will provide; the remainder will be provided by the government. Each bidder will also be required to develop a local electrification plan, defining the technologies to be used. To date, the following concessions have been awarded:

  • Concession for Dagana-Podor : awared to ONE-Maroc
  • Concession for Mbour : awarded to ONE
  • Concession for Kaffrine-Tambacounda-Kédougou; awarded to EDF

Complementing these concessions are small local projects (ERILs) developed by local sponsors such as community associations and villages. These will also be funded through private–public financing; to date, the level of bilateral funding has been significant.

Through this model there is the potential to attract the private sector into rural electrification and with it the associated finance, skills and implementing capacity. While the programme is still in process, the experience of Senegal suggests a number of actions that may be useful in implementing a rural electrification programme, based on a concession structure, including:
- definition of an agency with responsibility for rural electrification and autonomy to define the programme and method of operation for achieving objectives;
- transparent approach to tendering and awarding concessions;
- approach based on an understanding of economic conditions and viability;
- extension of decentralisation at government level into rural electrification; and
- integration of renewable energy into the implementation framework.

Energy regulator Date of creation: 

An independent Electricity Regulatory Commission (Commission de Régulation du  Secteur de l’Electricité – CRSE), was established in 1998.

Degree of independence: 

CRSE is an independent authority, responsible for regulating the production, transport, distribution and sale of electric energy in Senegal. It also provides consultancy services to the Ministry of Energy. The Board of the organisation is comprised of three members, including a Chairman appointed by governmental decree. Funding for the organisation comes from fees derived from licensed sector actors, and appraisal fees for the CRSE's services.

Regulatory framework for sustainable energy: 

The regulatory framework in Senegal comes in the form of decrees promulgated from time to time. The two most important and recent decrees for implementing the Law on Renewable Energy were issued in December 2011. They lay down the conditions of purchase and remuneration for electricity generated by renewable energy plants, the conditions for the connection of these plants to the grid, and the conditions for purchase and remuneration of surplus electricity from captive power plants generating electricity from renewables. However, reduced taxes and customs duties applicable to renewable energy equipment are only considered on a case-by-case basis. The decrees are therefore aimed at eliminating inefficiencies, decreasing the cost of supply to consumers, and promoting development funding for the energy sector.

The implementing decrees of the Renewable Energy Law are as follow:
Decree No. 2011-2013 provides conditions of power purchase and remuneration for electricity generated by renewable energy plants and the conditions of their connection to the grid. It also provides the formula for the avoided cost which serves as a reference for calculating the power purchase price cap. It also contains elaboration on renewable power purchase obligation and feed-in tariffs for different renewable energy technologies.

Decree No. 2011-2014 provides the conditions of power purchase of surplus renewable energy-based electricity from self-producers. It has fixed the maximum intake from renewable energy sources (variable power), determined the purchase price, conditions of purchase of surplus energy and connection to the grid, and other conditions.

Law No. 2010-22 of 15 December 2010 of the biofuel sector. A law on the orientation of the biofuels sector, was adopted in 2010 with the aim of creating favourable conditions for the development of the biofuels sector and providing answers to the problems of economic growth, based on a policy of energy self-sufficiency through the development of biofuels. The law therefore covers all components of the biofuels sector including production, processing, storage, transport, marketing and distribution. It determines the operating environment for all forms of biofuels and the conditions and standards for their production and exploitation on Senegal’s national territory and/or through international cooperation.

Regulatory roles: 

CRSE has the role of promoting competition, efficiency and economy in bulk power markets, regulating electricity tariffs, improving the quality of supply, advising the government on the removal of institutional barriers to bridge the demand supply gap, thus safeguarding the interests of consumers.

Role of government department in energy regulation: 

The Ministry of Environment is partially responsible for regulation of the energy sector in the country, in its capacity as the DNA of the CDM in the country. The Ministry is also responsible for proposing changes to the current legislative structure for energy, including regulatory mechanisms.

Regulatory barriers: 

Significant experience with Independent Power Producers (IPPs) generating electricity for the national grid (from conventional sources) and the opening of the power-generating sector to renewable sources through the LPDSE 2008 should have increased the involvement of renewable-based IPPs. However, no mechanism exists yet to set appropriate feed-in tariffs (FiTs) and Power Purchase Agreements (PPAs) from renewable-based electricity generation for the grid.

Licensing, operation and sales of electricity are regulated by the Regulatory Commission of the Electricity Sector, which is also mandated to approve tariffs for electricity supply, regardless of the installation’s size. This process is time-consuming and acts as a barrier to the implementation of small local projects, thus limiting their expansion. A measure to alleviate this constraint could include exempting installations below a certain capacity (e.g., below 100 kW) from requiring regulatory body approval for proposed tariffs, and instead allow approval at the local and community level.

References: 

IMF (2013): Senegal: Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding Available at: http://www.imf.org/external/np/loi/2013/sen/060313.pdf  Accessed 19th February 2014

The World Bank (2013): Project Performance Assessment Report Senegal Electricity Sector Efficiency Enhancement Adaptable Program Credit (APC) Available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/10/04/000333037_20131004141442/Rendered/PDF/812430PPAR0Sen00PUBLIC00Box379839B0.pdf Accessed 19th February 2014

Vilar (Ed.) (2012): “RENEWABLE ENERGY IN WESTERN AFRICA: SITUATION, EXPERIENCES AND TENDENCIES“ Available at: http://www.ecreee.org/sites/default/files/renewable_energy_in_west_africa_0.pdf Accessed 21st February 2014

World Bank (2013): PROJECT APPRAISAL DOCUMENT ON A PROPOSED INTERNATIONAL DEVELOPMENT ASSOCIATION PARTIAL RISK GUARANTEE IN THE AMOUNT UP TO US$ 40 MILLION Available at: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/12/03/000356161_20131203113016/Rendered/PDF/790700PAD0P143010Box379877B00OUO090.pdf  Accessed 20th February 2014

www.irena.org (2013): Senegal Renewable Readiness Assessment. Available at: http://www.irena.org/DocumentDownloads/Publications/IRENA%20Senegal%20RRA.pdf Accessed 20th February 2014

IRENA (2011): Renewable Readiness Assessment Case Study Available at:  www.ecowrex.org/system/files/repository/2011_rra_senegal_-_irena.pdf‎ Accessed 18th February

Oxford Business Group (2013): Sénégal: Diversification des sources d. Available at: http://www.oxfordbusinessgroup.com/economic_updates/s%C3%A9n%C3%A9gal-diversification-des-sources-d%E2%80%99%C3%A9nergie#english Accessed 20th February 2014