Discussing the financing of renewable energy projects for productive use in Senegal

GBE Senegal organized a three-day sensitization workshop on the possibilities to improve and expand the financing offers for renewable energy projects, especially for productive use in rural areas of Senegal. Around 80 financial institutions, government structures and project developers participated.

A key characteristic of renewable energy installations is that they require high initial investments, whereas the subsequent operational costs are very low. The investments therefore pay off in the medium to long term (under the pretext of a well-elaborated and profitable project design). To afford the high initial investments, especially project developers in rural areas with little available capital, are dependent on getting a credit. Increased cooperation with the financial sector is therefore crucial for the continuous development of the renewable energy market. Some financial institutions in Senegal already offer financial products for renewable energy projects, but interest rates are relatively high and loan terms are short. Financing offers adapted to customer needs and project risk for the assets of productive use renewable energy projects are not yet established, or only very sparsely. 

One of GBE’s intervention areas is to support the facilitation of access to commercial financing for project developers for the productive use of renewable energy. An important element thereto is to sensitize the financial sector for the demand and commercial potential of renewable energy projects and to thereby stimulate the improvement of appropriate financial product offers. Therefore GBE Senegal organized together with the National Renewable Energy Agency (ANER) a three-day awareness workshop (June 22 to 24, 2021) for about 80 representatives of banks, microfinance institutions, insurance companies, government institutions, renewable energy companies and agricultural cooperatives. Among them were the World Bank, KfW, the state guarantee fund FONGIP as well as the state investment fund FONSIS, 7 Senegalese banks ((BNP Paribas, SGBS, BNDE, LBA, Coris Bank, Orabank, BHS), 23 microfinance institutions, two prominent renewable energy associations as well as state actors such as the Rural Electrification Agency or the Ministry of Petrol and Energy.

The workshop helped strengthen the network, between the financial and renewable energy sectors and led to lively discussions on forms of increased cooperation. The participants were sensitized on the commercial potential of productive use renewable energy projects and important aspects for the evaluation of a corresponding financing application were explained to them, such as the legal framework and possibilities for quality control of renewable energy equipments and installations. In addition, guarantee and credit offers for financiers of renewable energy projects in Senegal were presented. All presentations and discussion pursued the overall goal of contributing to the improvement and expansion of available financing offers for renewable energy projects in Senegal. Moreover, the event was an opportunity for GBE Senegal to present projects supported in the quest for commercial financing to the financial institutions that were present. The first banks and microfinance institutions have already expressed their interest as potential financing partners.