Scaling Solar Senegal – 1st tender round completed and First steps in project development in developing countries – who provides the money?

Scaling Solar Senegal – 1st tender round completed
The first tender round for PV projects under the Scaling Solar programme in Senegal has been completed with two winning projects with the total capacity of 60 MWp. In total, 14 bids were submitted by 8 out of 13 qualified bidders. According to the information announced by the Electricity Sector Regulatory Commission (CSRE), the winner was Engie in cooperation with Meridiam offering prices of 3.80 €cent/kWh for the Kahone location and 3.89 €cent/kWh for the Touba location.

First steps in project development in developing countries – who provides the money?
Two specific funding programmes, amongst other tools, counteract the higher threshold for on-site feasibility studies for project developers in developing countries. They are compared below by way of an example.

Funding of feasibility studies provided by Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG, member of KfW Bankengruppe) offers German and European companies (with annual turnover of up to EUR 500 million) support with concrete preparatory activities for the implementation of an investment project in the areas of infrastructure and renewable energies. To be eligible for funding the project must still be in line with the goals of the German Development Cooperation programme.

Funding is granted in the form of direct allowances of up to 50% of the costs of the feasibility study but no more than EUR 200,000. The funds are provided by the Federal Ministry of Economic Cooperation and Development (BMZ). A form template is available for filing the application.

Projects applying for funding under the ElectriFI Programme should be one step further. The programme financed by the EU and Power Africa provides risk capital in the form of debt capital, quasi equity, equity and arm‘s length guarantees in emerging and developing countries. The funds under the ElectriFI Programme are intended to help projects reach a stage where they are advanced enough to obtain financing. Financing options and repayment modalities can be structured according to the expected cash flow of the projects and the programme also provides funds for higher-risk projects.

The programme is aimed at supporting projects in the area of renewable energies and focuses on decentralised solutions. So, the intention is that at least 1,000 new power connections to the grid are planned per project. Other funding criteria refer to the installed capacity, created jobs, leverage effect regarding the invested capital, and sequestrated greenhouse gas emissions.

The level of funding to be granted ranges from a floor of EUR 500,000 up to a maximum of EUR 10 million. On request, funds can also be granted in national currency. Previously, an application could only be filed as part of auction rounds. Currently, the programme is being overhauled to offer the possibility of continuous filing so filing of applications will soon be possible again.

Thus, both programmes include elements relating to development policies but with DEG they are more distinct. The programmes also differ in respect of project ”maturity”. To be eligible for funding under the ElectriFI Programme, projects must be more advanced. Diverse financing options are available also under this programme but no direct allowances can be obtained as is the case for the DEG Programme.

We have already successfully assisted with the filing of applications as part of feasibility studies in developing countries and will be happy to assist you with advice on this issue and exploring further funding and financing possibilities.