Senegal’s renewable energy plan lacks clarity: NRGI

Senegal has large gas-to-power ambitions but needs to provide clarity on its long-term renewables plans, an NRGI report has said.

The report said the country would benefit from generating electricity from some of its gas. Still, authorities should carefully consider the scale of the country’s “gas-to-power” ambitions and how they relate to its renewable energy plans.

According to the report, recent plans to develop over 3 gigawatts (GW) of gas-to-power capacity by 2050 may need to be revised.

“Senegal may not be able to extract enough gas to feed the power plants; it may also struggle to raise sufficient funds (at least US$ 2.2 billion) to build the necessary infrastructure,” it said.

The report further noted a more balanced energy mix, with a stronger emphasis on renewables alongside gas, that offers Senegal a more secure pathway but necessitates a cohesive long-term strategy and international support.

Senegal’s participation in a Just Energy Transition Partnership (JETP) has led to increased medium-term renewable power generation goals — possibly to around 1 GW by 2030. To reach them, Senegal’s development partners must deliver the promised financial and technical support.

“If Senegal realises only those plans that are published, gas will comprise 75 percent of installed capacity in the long-term. The absence of a long-term plan for renewables could lock the country into this large role for gas, inhibiting the intended catalytic effect of the JETP and preventing the government from fully leveraging the country’s solar and wind potential.”

The report comes at a time when Senegal’s newly-elected government is determining how to meet its goal of achieving universal access to electricity.

“The new administration’s aspirations of high-quality, low-cost universal access are clear in the electoral program of Coalition Diomaye Président. However, how it will pursue these ambitions and the extent of convergence or divergence with previous administrations remains unclear,” said the report.

Balanced approach

Papa Daouda Dienne, Africa Senior Economic Analyst at NRGI, told Gas Outlook that over-expanding gas-to-power might risk marginalising renewable energy development despite its potential to address immediate energy needs. He said a range of factors and dynamics can lead a country to long-term gas dependency, several of which are already present in Senegal.

“Take-or-pay contracts could lock Senegal into using gas for decades to avoid financial penalties, limiting flexibility in the energy mix. Gas infrastructure technology like combined-cycle gas turbines (CCGT) need long-term use to be profitable, potentially competing with renewable energy options. Opportunity costs of investing in gas may reduce available funds and attention for developing renewable energy infrastructure, hindering transition efforts.”

Dienne further said that a balanced approach is needed to ensure gas complements rather than dominates, enabling Senegal to benefit from cleaner, cheaper, and more secure renewable resources while reducing long-term dependence on gas.

Elizabeth Obode, Senior Strategy Consultant at Oliver Wyman for the Middle East and Africa, told Gas Outlook that Senegal has historically experienced high levels of energy poverty, and where there is energy poverty, socio-economic poverty is not far behind.

She said that more power for Senegal, regardless of source, holds the potential for socio-economic development to raise more Senegalese out of poverty.

“To understand fully the implication of more gas-to-power capacity as opposed to renewable energy capacity, it is best to analyse through the lens of the Energy Trilemma. The trilemma speaks to the difficult balancing act of ensuring that energy is available, the available energy is accessible and the environment is protected.

“In other words, its balancing energy security, energy access and sustainability. Using the trilemma as a guide, we see that Senegal does not have energy security.”

Attracting private investment

Dienne noted that the gas-to-power sector is facing challenges due to a reduction in international public finance earmarked for oil and gas projects. He said African investments in gas-powered electricity generation have significantly decreased, from $11 billion in 2015 to $5 billion in 2023.

He blamed this on the decline in public funding which makes it harder for Senegal to attract private investment for its gas projects, as private investors are often hesitant to commit without substantial public financial backing.

“Recent commitments by major jurisdictions, like the U.S. and EU, to end international public financing for gas projects have led to stricter financing criteria, making it difficult for gas projects in Senegal to secure the necessary funding.

“As a result, the Senegalese government may need to rely on its already strained budget to cover the infrastructure costs, potentially impacting its goal of reducing energy costs.”

Obode said gas-to-power generation has not been shrinking. She said we are seeing an increase in the share of electricity generated from renewable energy sources — but electricity is not replacing existing gas-powered capacities; it is instead becoming an additional source of power.

“Financing is tricky, but the recognition of natural gas as a transition fuel could sway investor sentiment to finance natural gas projects. For a country much reliant on diesel, coal and burning wood for charcoal, natural gas is a welcome alternative. That is a transition, in and of itself. Also, with the soon-to-kick off African Energy Bank, there could be potential financing on the horizon.”

Responsible resource governance

Obode said Senegal has a great opportunity to transform itself and blaze the trail for responsible resource governance and environmental stewardship. She believes that avoiding the so-called ‘resource curse’ should be top of mind in Senegal.

“Extravagant government spending and refusal to diversify the economy should be avoided at all costs. In this case, doing this would increase both citizen and investor confidence. Fiscal responsibility and environmental stewardship should be watchwords as Senegal begins its new chapter.”

Dienne further said that a more transparent and inclusive approach would enable Senegal’s government to refine and implement its energy plans by ensuring that all stakeholders, including the public, civil society, and investors, are informed and involved in decision-making.

“This approach will help manage public expectations by clearly communicating the goals, risks, and benefits of energy projects, thereby fostering public trust. Additionally, transparency and inclusiveness increase credibility with investors, who are more likely to commit to projects that are seen as stable, well-planned, and supported by the public, reducing perceived risks and enhancing long-term investment prospects.”