Decentralized, small size solar central for rural electrification

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Decentralized, small size solar central for rural electrification

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
15% - 20% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
< 5% (CAGR)
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
The Yeleen Rural Electrification PPP costed a total of EUR 74.76 million, with private investments reaching EUR 42.13 million. The energy infrastructure component was around EUR 70.85 million (26).
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Affordable and Clean Energy (SDG 7)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Gender Equality (SDG 5) Sustainable Cities and Communities (SDG 11) Climate Action (SDG 13)

Business Model Description

Invest in the installation and maintenance services of decentralized small-solar plant to provide electricity to underserved rural areas not connected to the grid. Solutions can be small or micro solar centrals ranging from 10 kW to 10 MW. Revenues are driven from direct sale to rural communities through lump-sum payment or a pay-as-you-go model to poorer households.

Expected Impact

Investment in decentralized solar solutions improves rural electrification and access to clean energy, reduces reliance of communities on imported fossil fuels or biomass energy, reduces GHG emissions and improved health and economic outcomes.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Country & Regions

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Country
Region
  • Senegal: Dakar
  • Senegal: Nord
  • Senegal: Centre
  • Senegal: Sud
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
Senegal has achieved a national electricity access rate of 84% in 2023, yet rural electrification lags at 64% and over 30% of rural communities remain off-grid. Despite recent progress in power generation, over 60% of the population continues to rely on unsustainable cooking methods, such as firewood or charcoal causing health risks (1, 2).

Policy priority
The National Development Strategy 2025-2029 aims at achieving universal access to electricity, enhanced energy efficiency and demand management. The Strategie Gas to Power 2018-2025 targets the energy independence and the reduction of energy costs. The Nationally Determined Contribution's objective is to reduce the sector's emission of 35,3% unconditionally by 2030 (3, 4, 5).

Gender inequalities and marginalization issues
Stark disparities remain between electrification of rural and urban areas. Electricity access in urban center is of 97% compared to 64% in rural areas. This rural energy gap disproportionately affects women and youth who leave in majority in rural areas. Women also spend excessive hours on survival tasks such as fetching water or firewood and processing food manually. These unpaid burdens severely limit their time for education, income-generating activities, and childcare (1, 6, 7).

Investment opportunities introduction
Per capita energy consumption in Senegal increased of 301% from 2000 to 2023, reaching 0.417 MWh/capita. Opportunities include scaling renewables, transitioning from HFO to natural gas, grid upgrade, and transport and distribution. With existing reserves, developing the gas value chain is crucial to lowering costs and boosting industrial growth (4, 8, 9).

Key bottlenecks introduction
Despite strong energy potential, Senegal struggles with high electricity costs, sparse rural access, reliance on foreign investments for structuring renewable projects, limited support for local small-scale renewables, and risks from new fossil fuel reserves that might divert attention from renewables development (3, 10).

Sub Sector

Alternative Energy

Development need
Senegal remains highly dependent on fossil fuel, making the sector one of the biggest contributor to GHG emissions. Emissions are planned to increase by 22% from 2025 to 2030 following as business as usual scenario. The country needs to harness its solar and wind potential to reach its energy transition and universal electrification target by 2029 (3, 5, 11, 12, 13).

Policy priority
The National Development Strategy 2025-2029 targets a share of renewable of at least 40% by 2029. The Stratégie nationale des combustibles de cuisson propre et des biocarburants 2025-2035 set the pace for a clean cooking transition, through a diversified and accessible clean energy supply (3, 14).

Gender inequalities and marginalization issues
Only a small portion of rural Senegalese households have access to clean cooking fuels (LPG, biogas), leaving rural women particularly burdened with traditional biomass use—which drives health issues, time poverty, and limited economic opportunities. In addition, inequal access to electricity throughout the territory reinforces economical inequalities, with a strong correlation between access to electricity and poverty peaking in rural areas (11, 15).

Investment opportunities introduction
Senegal targets 40% renewables by 2030 and full electrification by 2029, with untapped theoretical solar PV irradiation potential averaging 5,798 kWh/m²/day and offshore wind capacity estimated at 45 GW—13 GW fixed and 32 GW floating (3, 11).

Key bottlenecks introduction
Despite strong solar and wind potential, Senegal faces several renewable-specific challenges such as high financing costs, weak storage capacity, grid congestion, slow regulatory implementation, limited technical competencies, and heavy reliance on imported equipment and materials (3, 16, 17, 18).

Industry

Solar Technology and Project Developers

Pipeline Opportunity

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Investment Opportunity Area

Decentralized, small size solar central for rural electrification

Business Model

Invest in the installation and maintenance services of decentralized small-solar plant to provide electricity to underserved rural areas not connected to the grid. Solutions can be small or micro solar centrals ranging from 10 kW to 10 MW. Revenues are driven from direct sale to rural communities through lump-sum payment or a pay-as-you-go model to poorer households.

Business Case

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Market Size and Environment

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

< 5%

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

In 2023, 43.5% in rural areas did not have access to electricity (23).

In Senegal, revenues in the electricity, gas and water production sector rose by 4.8% in 2025, year-on-year. The electricity production sector's revenues increased driven by a 3.5% surge in sales in 2025 (24).

In 2023, 25.8% of the Senegalese population did not have access to electricity (25).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

15% - 20%

ROI
Describes an expected return from the IOA investment over its lifetime.

20% - 25%

Benchmark with a PPP project in Burkina Faso, which has a solar irradiation slightly lower than Senegal at 5,5 kWh/m2/day. The project received grants for 30.5% of the project costs. In that context, the Equity IRR for private investment was of 16.2% based on a tariff of EUR 0.12/kWh (26, 27).

The PPP project financial return has been assessed taking into consideration the energy infrastructure (100 mini-grids and 100,000 solar kits) as well as the technical assistance and project management support offered by the AfDB (26).

In Senegal, if decentralized solutions are offered alongside productive solar powered agricultural equipment, ROI can reach above 20% (41).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Long Term (10+ years)

The AfDB supported project in Burkina Faso secured a loan with a maturity over 40 years (26).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

The Yeleen Rural Electrification PPP costed a total of EUR 74.76 million, with private investments reaching EUR 42.13 million. The energy infrastructure component was around EUR 70.85 million (26).

Market Risks & Scale Obstacles

Capital - CapEx Intensive

The high cost of establishing decentralized small scale solar systems for rural electrification might affect the profitability of the business model, if local financing institutions are not willing to engage at acceptable costs (10).

Lack of local qualified workforce might also impact the profitability of the business model or render it unsustainable as the costs may rise, while rural households income stagnates (28).

Capital - Requires Subsidy

As set electricity tariffs are not reflecting the cost of operating and maintaining the mini-grids, subsidies will be necessary to support the viability of the model (29).

Impact Case

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Sustainable Development Need

Despite Senegal having one of the highest electrification rates in West Africa, over 30% of rural communities remain without grid access, leaving millions of people in energy poverty (2).

In the poorest rural quintile, only 49.9% have access to electricity, while 30.4% of rural households still rely on solar or battery powered lamp for lightning. Kerosene, paraffin, and biomass are still used by more than 1% of the population with serious health and safety risks (31).

Decentralized solar solutions implemented until now often were undersized, causing power shortage once the production quota is reached (32).

Gender & Marginalisation

Women bear the brunt of energy poverty, spending hours each day collecting biomass and water for household use. The reliance on traditional fuels such as wood and kerosene exposes them and their children to indoor air pollution, leading to respiratory and eye health problems (33, 34).

Rural poverty intersects with energy poverty with the poorest households being excluded from grid access and unable to afford reliable alternatives, deepening social and economic marginalization. The majority of unelectrified households belong to the poorest households, many of which are likely to be female headed (35).

Expected Development Outcome

Decentralized, small-scale solar centrals can provide affordable, clean, and reliable electricity to rural and remote areas where grid extension is not technically or economically feasible. It also reduces reliance on fossil fuels and biomass, lowering GHG emissions and local pollution (36, 37).

Electrification through solar mini-grids improves rural living conditions, enabling a better access to basic services such as healthcare (cold chain for vaccines, powered clinics), and productive tools such as water pumping, as well as public lighting known to increase safety (37).

Solar systems enable the creation of local jobs in installation, operation, and maintenance, strengthening rural economic ecosystems (37).

Gender & Marginalisation

Provided that small scale solar centrals are accompanied by expansion in access to clean cooking devices, increased access to electricity would reduce women time poverty, lowers household air pollution and related health risks, and frees women’s time for productive and income-generating activities (36, 37).

By targeting underserved, and potentially poorest households, decentralized solar systems help narrow inequality gaps in access to energy, benefiting marginalized groups (37).

Primary SDGs addressed

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.9.1 Mortality rate attributed to household and ambient air pollution

Current Value

Senegal's mortality rate caused by air pollution is 146 per 100,000 deaths in 2019 (38).

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.1 Proportion of population with access to electricity

7.1.2 Proportion of population with primary reliance on clean fuels and technology

Current Value

Senegal's nationwide electricity access rate is 84%, with 98.5% in Dakar, 92.2% in other urban areas and 66.6% in rural areas (2, 31).

In 2022, 33.5% of the population primarily relied on clean fuels and technology. In rural areas, this rate was around 8.8%.(39)

Target Value

Senegal has committed to a universal electricity access by 2030 (3).

Senegal targets universal access to clean, sustainable and affordable cooking energy by 2035 (2, 14, 40).

Secondary SDGs addressed

Gender Equality (SDG 5)
5 - Gender Equality
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities
Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Households and communities currently without grid access, especially in rural remote areas benefit from a clean energy source.

Gender inequality and/or marginalization

Women relieved from time-consuming biomass collection and facing reduced exposure to indoor air pollution and gain employment opportunities.

Planet

Rural communities reducing reliance on unsustainable sources of energy such as biomass or oil, lowering GHG emissions and deforestation pressure.

Corporates

Renewable energy SMEs and project developers directly engaged in deploying, operating and maintaining decentralized solar systems. SMEs in rural areas having access to energy.

Public sector

Rural electrification agency (ASER) and Ministry of Energy, Petroleum and Mines achieves national electrification targets. Local municipalities experiencing cleaner environments and improved public safety with street lighting.

Indirectly impacted stakeholders

People

Rural populations in neighboring villages benefiting from local economic growth, job spillovers and market activity enabled by electricity.

Gender inequality and/or marginalization

Women entrepreneurs launching small businesses thanks to reliable power supply, along with more study time in electrified homes, improving educational outcomes and future opportunities for youth.

Planet

National environmental stakeholders benefiting from reduced fossil fuel imports and improved air quality.

Corporates

Upstream suppliers of solar equipment, batteries, and digital monitoring systems benefiting from increased economic activities. Downstream businesses (telecom operators, agro-processors, digital service providers) relying on rural electricity access to develop their services.

Public sector

Ministry of Healthcare and Public Hygiene, Ministry of National Education benefiting from electrified clinics and schools.

Outcome Risks

Poor system sizing, limited storage capacity or lack of maintenance could lead to service interruptions and loss of trust from customers.

Limited funds and access to affordable financing for communities, SMEs and households could hinder adoption and adherence.

Improper planning or lack of end-of-life management for solar batteries could lead to environmental pollution from hazardous waste and soil contamination.

Gender inequality and/or marginalization risk: Without specific inclusion programs, women may be excluded from decision-making on energy systems or employment opportunities.

Impact Risks

Extreme weather events could damage solar infrastructure and disrupt supply.

Inadequate training and capacity-building for local technicians may lead to poor system management and dependency on external support, limiting community ownership and increasing the operational costs.

Gender inequality and/or marginalization risk: If subsidies or targeted financing are not implemented, poorest households and marginalized women risk not benefiting from increased access to electricity. High upfront connection or tariff costs could exclude the poorest households, perpetuating inequality.

Impact Classification

C—Contribute to Solutions

What

Improved rural electricity access especially in areas not connected to the grid, reduced usage of biomass and fossil fuel, reduced GHG emissions.

Who

Peri-urban, rural and non-grid connected households, women, youth, SMEs/cooperatives.

Risk

The high cost of access risks excluding the poorest, under-sized/poorly maintained systems will decrease the benefits, gender exclusion, weak governance might lower adoption.

Contribution

Contributes to the 40% renewable energy and universal electrification targets of the Government (3).

How Much

Has the potential to electrify the 30% rural population off-grid and avoid GHG emission, with solar electrification saving around 7,965 tonnes of CO2 over 20 years (37).

Impact Thesis

Investment in decentralized solar solutions improves rural electrification and access to clean energy, reduces reliance of communities on imported fossil fuels or biomass energy, reduces GHG emissions and improved health and economic outcomes.

Enabling Environment

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Policy Environment

Strategie Nationale de Developpement 2025-2029: identifies the development of solar energy as key for a fair energetic transition and achieve the universal electrification objective by 2029 (3).

Nationally Determined contribution: plans the installation of 6.18 MWp as part of the promotion of solar electrification for isolated systems outside the interconnected grid. (5).

National Action Plan for Renewable Energies: identifies solar mini-grids as a solutions and targets the construction of 783 renewable or hybrid mini-grids by 2030 (50).

Financial Environment

Financial incentives: The Special fund for the Energy sector is providing subsidies to SENELEC and concessions operators in order to ensure the same tariff across the energy sector, including for off-grid supply (30).

Financing incentives: The Renewable and Efficient Energy Fund (REEF), financed by the FONSIS, among others, provides subordinated debt to renewable energy, energy efficiency and solar off-grid projects (30, 45).

Financing incentives: SUNREF is a green credit line financed by AFD to finance smaller renewable energy and energy efficiency projects. The credit line is available in Orabank and Societe Generale for instance (30).

Fiscal incentives: Material for the production of renewable energies, such as PV solar panels, solar thermic collector or panel, photovoltaic inverters, certain type of batteries, are exempt of VAT (44).

Regulatory Environment

Loi n° 2010-21 portant loi d’orientation sur les énergies renouvelables: establishes the legal framework for renewable energy in Senegal. It allows self-consumption, and sets conditions for grid access and energy sales. It includes provisions for fiscal incentives (42).

Loi n° 2021-31 du 09 juillet 2021 portant Code de l’Electricité: is Senegal’s unified legal framework for the electricity sector. It states that for decentralized rural electrification concessions are awarded by tenders from the entity in charge of rural electrification (43).

Loi n° 2023-15 du 02 août 2023 portant Code de l'Environnement: sets the obligation to conduct an environmental evaluation for project of category 2 and an environmental and social assessment for project of category 1 (with major environmental risks) (46).

Decret n° 2023-285 relatif aux projets d'électrification rurale décentralisée: allows a private company to provide public electricity with a decentralized mini-grid in areas outside priority programs or concessionaire plans, through a competitive tender under a concession agreement (47).

Every decentralized mini-grid system needs to comply with the Directive on Minimum Technical and Environmental Standards for Rural Electrification in Senegal (48).

Marketplace Participants

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Private Sector

Energizer, GAUFF Engineering, COSEER Energies Renouvelables, Ilemel Energy Solutions, LittleSun,

Government

Senegalese Rural Electrification Agency, National Agency for renewable energy, Ministry of Energy, Petroleum and Mining, SENELEC.

Multilaterals

GIZ, KfW IPEX, IsDB, ISFD, AfDB.

Non-Profit

Fondation Energies pour le Monde, FONDEM

Public-Private Partnership

The Senegal Rural Electrification Project is developed by private sector actor under PPP.

Target Locations

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country static map

Senegal: Dakar

semi-urban

Senegal: Nord

The Matam region presents one of the lowest access to electricity rate of the country (31).

Senegal: Centre

semi-urban

Senegal: Sud

The region of Tambacounda is the region with the lowest access to electricity, together with the Kédougou and Kolda regions (31).

References

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