Off-Grid Solar Market Assessment & Private Sector Support Facility Design
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ECREEE: OFF-GRID SOLAR MARKET ASSESSMENT AND PRIVATE SECTOR SUPPORT FACILITY DESIGN REGIONAL OFF-GRID ELECTRIFICATION PROJECT Off-Grid Solar Market Assessment & Private Sector Support Facility Design SENEGAL REPORT JULY 2019 SENEGAL REPORT 1 ECREEE: OFF-GRID SOLAR MARKET ASSESSMENT AND PRIVATE SECTOR SUPPORT FACILITY DESIGN TABLE OF CONTENTS LIST OF FIGURES ...................................................................................................................... 5 LIST OF TABLES ........................................................................................................................ 7 ABBREVIATIONS AND ACRONYMS ..................................................................................... 9 ACKNOWLEDGEMENTS ....................................................................................................... 12 KEY DEFINITIONS .................................................................................................................. 13 EXECUTIVE SUMMARY ........................................................................................................ 16 I. STATE OF ENERGY ACCESS AND ENABLING MARKET ENVIRONMENT ....... 33 1.1 Country Overview ....................................................................................................... 35 1.2 Energy Market ............................................................................................................ 36 1.2.1 Energy Sector Overview ....................................................................................... 36 1.2.2 Electricity Access: Grid and Off-Grid .................................................................. 36 1.2.2.1 Off-Grid Market Overview ............................................................................... 37 1.2.2.2 Demand and Supply/Generation Mix ............................................................... 40 1.2.2.3 Transmission and Distribution Network ........................................................... 41 1.2.2.4 Least-Cost Electrification Analysis .................................................................. 44 1.2.2.5 Inclusive Participation ...................................................................................... 53 1.2.3 Key Challenges ..................................................................................................... 54 1.3 National Policy and Regulation ................................................................................. 57 1.3.1 National Electricity/Electrification Policy ............................................................ 57 1.3.2 Integrated National Electrification Plan ................................................................ 57 1.3.3 Energy and Electricity Law .................................................................................. 58 1.3.4 Framework for Stand-alone Systems .................................................................... 58 1.3.4.1 Existence of Specific National Programs ......................................................... 60 1.3.4.2 Financial Incentives .......................................................................................... 60 1.3.4.3 Standards and Quality ....................................................................................... 60 1.3.4.4 Concession Contracts and Schemes .................................................................. 60 1.3.4.5 Specific Business Model Regulation ................................................................ 61 1.3.5 Capacity Building and Technical Assistance ........................................................ 63 1.4 Development Initiatives .............................................................................................. 67 1.4.1 National Government Initiatives ........................................................................... 67 1.4.2 DFI and Donor Programs ...................................................................................... 68 1.4.3 Other Initiatives .................................................................................................... 70 SENEGAL REPORT 2 ECREEE: OFF-GRID SOLAR MARKET ASSESSMENT AND PRIVATE SECTOR SUPPORT FACILITY DESIGN II. OFF-GRID SOLAR PV MARKET ASSESSMENT ......................................................... 71 2.1 Demand – Households ................................................................................................ 72 2.1.1 Overview of Household Market Segment............................................................. 72 2.1.2 Analysis of Household Market Segment Demand ................................................ 79 2.1.3 The Market for Household Devices without Consumer Finance .......................... 87 2.1.4 The Financed Market for Off-Grid Solutions ....................................................... 90 2.1.5 Consumer Perceptions, Interest and Awareness ................................................... 94 2.2 Demand – Institutional ............................................................................................... 96 2.2.1 Overview of Institutional Market Segment........................................................... 96 2.2.2 Analysis of Institutional Market Segment Demand .............................................. 96 2.2.3 Ability to Pay and Access to Finance ................................................................. 100 2.3 Demand – Productive Use ........................................................................................ 102 2.3.1 Overview of Productive Use Market Segment ................................................... 102 2.3.2 Analysis of Productive Use Market Segment Demand ....................................... 105 2.3.3 Ability to Pay and Access to Finance ................................................................. 114 2.4 Supply Chain ............................................................................................................. 115 2.4.1 Overview of Commercial Market for Solar PV Equipment ............................... 115 2.4.2 Overview of OGS Companies in Africa and Level of Interest in the Region .... 117 2.4.3 Solar Market, Products and Companies in Senegal ............................................ 119 2.4.4 Overview of Business Models ............................................................................ 122 2.4.5 The Role of Non-Standard Players in the Market ............................................... 125 2.4.6 Equipment Quality and the Impact of Uncertified Equipment ........................... 126 2.4.7 Local Capacity to Manage Business Development, Installation and Maintenance .. 126 2.4.8 Capacity Building Needs of the Supplier Market Segment ................................ 127 2.5 Key Market Characteristics ..................................................................................... 129 2.5.1 Barriers to Off-Grid Solar Market Growth ......................................................... 129 2.5.2 Drivers of Off-Grid Solar Market Growth .......................................................... 130 2.5.3 Inclusive Participation ........................................................................................ 131 SENEGAL REPORT 3 ECREEE: OFF-GRID SOLAR MARKET ASSESSMENT AND PRIVATE SECTOR SUPPORT FACILITY DESIGN III. ANALYSIS OF THE ROLE OF FINANCIAL INSTITUTIONS ................................. 133 3.1 Introduction to Financial Products for the Off-Grid Sector ................................ 133 3.1.1 Financial Products for End-Users ....................................................................... 133 3.1.2 Financial Products for Suppliers/Service Providers ........................................... 134 3.2 Financial Market Overview ..................................................................................... 136 3.2.1 Market Structure ................................................................................................. 136 3.2.2 Financial Inclusion .............................................................................................. 139 3.2.3 Commercial Lending Environment..................................................................... 147 3.2.4 Lending to the Off-Grid Solar Sector ................................................................. 151 3.2.4.1 Programs Supporting Financial Institutions in Off-Grid Solar Lending ........ 152 3.2.4.2 Key Barriers to Off-Grid Solar Lending ......................................................... 152 3.3 Financial Institutions ................................................................................................ 154 3.3.1 Development Finance Institutions ...................................................................... 154 3.3.2 Microfinance Institutions .................................................................................... 155 3.3.3 Informal Financial Institutions ............................................................................ 157 3.3.4 Impact Investors .................................................................................................. 159 3.3.5 Crowd Funders .................................................................................................... 160 3.4 Summary of Findings ............................................................................................... 161 ANNEX 1: TASK 1 METHODOLOGY ................................................................................. 166 ANNEX 2: TASK 2 METHODOLOGY ................................................................................