Following the beginning of work on Senergy, West Africa's largest solar power plant, last May, Proparco has stepped in again with a loan of €18.4 million to finance the construction and operation of a second 30 MWc photovoltaic plant in Senegal. Proparco will also act as arranger for this operation.
Leveraging and duplicating expertise
The "Senergy" solar power plant launched in May 2016 and scheduled to be commissioned in the second quarter of 2017 was previously the biggest such project in West Africa. Proparco was the main project backer and the sole debt finance partner. By investing in this new "Ten Merina" project, Proparco is reiterating its commitment to developing solar power in Africa. The future power plant will be located 120 km north-east of Dakar in Merina Dakhar, not too far from the first plant.
Ten Merina will have similar features to the Senergy project: a generating capacity of 30 MWc using similar technology and combining the French expertise of investment specialists Meridiam and Solairedirect (a subsidiary of French energy provider Engie). In addition to building the solar plant and operating it over a 25-year period, the project also involves building network connection infrastructure on behalf of Senelec, the national power utility.
The big difference with the Senergy project is that construction work will be carried out by the French construction specialist – and joint project shareholder – Eiffage, which will also work alongside Solairedirect providing maintenance services once the plant is up and running. The plant will also be built in a shorter time (10 months instead of 12, by leveraging past experience and using more workers) and the Belgian investor BIO will help finance the project.
The project was initially developed by Tenergie, a French company that operates around a hundred solar and wind power plants. In late 2015, the project company was acquired by Eiffage which continued with its development and hooked up with Meridiam in order to leverage the latter's experience working on Senergy and to help with raising funds and getting to financial close. Based on their successful work together on Senergy, Meridiam asked Proparco to arrange financing for this new project.
The total project cost amounts to €43 million, including €34.4 million of debt borrowed over 18 years. Proparco is lending €18.4 million and also helped to complete project financing by syndicating the balance of debt financing requirements to BIO, a Belgian bilateral development institution which put up another €16 million under the same terms and conditions as the loan granted by Proparco.
Reiterating the commitments made at COP 21
In the wake of Senergy, this new project consolidates the diversification of Senegal's energy mix which had previously been very highly reliant on fossil fuels (90% of the entire mix) and confirms the country's intention to turn the commitments made at COP 21 in December 2015 into concrete initiatives. By directly replacing oil burning power stations, the new solar power plant will help to cut annual greenhouse gas emissions by over 33,290 tonnes of CO², a pretty sensible strategy for a country with constant, abundant sunshine. The plant will develop Senegal's energy offering and provide the equivalent of 228,311 people with low cost electricity every year.