15 December, 2022 Member article

Designing mini-grid systems around productive uses of energy to spur rural development in Senegal

7 December 2022 – ARE Member Energy 4 Impact has embarked upon a 11-month project in eastern Senegal to demonstrate that designing off-grid renewable energy systems such as green mini-grids around productive uses of energy can be an effective approach for improving their commercial viability, whilst also fostering economic opportunities for the people they serve. By working together to integrate strategies that boost demand for electricity through local capacity building, customer financing and equipment supply, public and private stakeholders can drive sustainable development in marginalised rural parts of sub-Saharan Africa.

With funding from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), Energy 4 Impact will achieve its demonstration effect by focussing on an underperforming solar-powered mini-grid in the remote village of Goumbayel. Tackling both supply- and demand-side challenges, the Promotion of productive uses of energy for mini-grid operators in Senegal project will catalyse productive uses of energy activities within the community, making it commercially viable for the plant to extend its energy services to a greater number of customers on a more sustainable and reliable basis.

Off-grid project developers and governments across sub-Saharan Africa are discovering that putting rural electricity infrastructure in place does not automatically lead to uptake in communities that cannot afford to pay for electricity services. Without sufficient demand, most mini-grid business models struggle to achieve viability, consequently failing to achieve the anticipated socio-economic benefits of rural electrification.

The Goumbayel solar mini-grid plant is no exception. Built in 2018, it has a 30 kWP generation capacity that is not met by local demand: the plant currently serves only 38 households amongst a 2000-strong local population. The Goumbayel plant also supplies community institutions such as schools, water and forestry services and a health facility, but still only 60% of its generation capacity is utilised. Unable to raise enough revenue to meet its operating costs, the plant shuts down for extended periods each day to save money, further stifling demand and locking the operator in a cycle of unprofitability.

A cost-effective way of breaking this cycle is to support local enterprises and industries – which typically have higher and more predictable electricity needs – to capitalise on the power supply, whilst also ensuring the plant has sufficient capacity to meet the increased demand.  Integrating productive use of energy into existing economic activities will in turn generate more income for communities and mini-grid developers.

Through this project, Energy 4 Impact plans to improve the productivity and profitability of eight enterprises by connecting them to the mini-grid and linking them up with suppliers of appliances such as freezers, agricultural processors, grinders, sewing machines, welders and hair salon equipment. To boost their chances of success, the businesses will also receive training on managerial, technical, financial and organizational skills. Domestic users will also be made aware of benefits of connecting to electricity to light their homes and power electric cooking appliances and ICT devices.

To ensure the plant has enough production capacity to meet increased demand, Energy 4 Impact will offer technical assistance to the mini-grid operator on doubling their power output with an upgrade of the solar field. Currently only operational between noon and 9pm, the plant will also soon supply power for 21 hours each day. The higher turnover resulting from this intervention will also help the operator retain their well-trained technical staff and ensure the smooth operation of the plant.

This virtuous cycle of enhanced energy provision and consumption is a vital catalyst for development in the poorest and most remote communities. As the programme gathers pace, the supported enterprises will be able to offer a wider range of much-needed goods and services to the local population. Other benefits for the community include a boost in food security thanks to more efficient processing of agricultural produce as well as enhanced access to water at a lower cost thanks the acquisition of a more powerful electric pump for local borehole. At least 50% of the supported businesses will be led by women or will have most women and the project will avoid nearly 50 tonnes of CO2 per year when compared to using diesel-powered equipment.

By gathering evidence and lessons through the course of this project, Energy 4 Impact aims to establish best practice for designing commercially viable mini-grid projects capable of improving the socio-economic status of rural communities. As Mathieu Dalle, Energy 4 Impact’s Programme Director in West Africa, explains,

We want the Goumbayel plant to stand as a compelling example of what can be achieved with a holistic approach that goes beyond energy access to focus on demand stimulation with productive use alongside access to skills, technology and finance. The subsequent body of evidence will be used to persuade key players in local and national government as well as mini-grid developers to integrate such solutions into their plans to scale up off-grid renewable energy solutions. With more effective interventions in place, rural communities can start to overcome the social and economic disparities holding them back.