Pre-feasibility Study on Promoting the Financing of Investment in Renewable Energy and Energy Efficiency

Although the share taken up by renewable energy (RE) in the energy mix has gone up over the last few years, electricity generation in Senegal still mainly relies on fossil fuels, especially diesel. The fossil-fuel-based electricity supply cost is very high. In addition to being expensive, electricity supply is not enough for households and businesses because the rate of electrification is still very low, especially in the rural areas. To improve the current situation, promoting RE and energy efficiency (EE) is a major theme in Senegal’s energy policy. Promoting RE can help diversify Senegal’s energy mix, provide more electricity supply, and reduce power generation costs, thereby improving businesses’ operating conditions, speeding up economic growth and improving the population’s living conditions in a sustainable manner.   In this context, the German financial assistance is aimed at establishing, by cooperating with Senegal’s government, a green line of credit, which is a mechanism meant to promote the financing of investment in RE and EE across the financial sector.  

Econoler was hired to conduct a pre-feasibility study to analyze the potential of establishing this green line of credit and to develop recommendations on how to operate this mechanism. Econoler’s assignment mainly involved analyzing the framework conditions and developing an approach for implementing this project. As part of this assignment, Econoler will carry out the following tasks:

• Analyzing the institutional framework, particularly the national strategy for promoting RE and the political will to create a green line of credit;
• Assessing the actors in the financial sector, their RE and EE-related services, their willingness to offer financing for RE and EE products and identifying two or three potential partner financial institutions;
• Identifying the target groups, their needs and demand of financing for RE and EE projects;
• Assessing the relevant actors in the financial and energy sectors, their capacities, and their needs and motivation to invest in RE and EE projects;
• Proposing technical assistance to help build the capacities of the institutions concerned and the potential partners for the green line of credit.

  Additionally, Econoler examined and recommended options for developing the green line of credit project based on the discussions held as part of the study with the ministry in charge of implementing this project, the potential partner financial institutions and other energy-sector actors.   Now, the study can serve as the basis for KfW to implement the green line of credit.