Africa Energy Futures: Senegal

Over the last five years, how has the energy mix in your jurisdiction changed, and what have been the key drivers for that?

The Republic of Senegal launched the Energy Sector Development Policy Letter of October 31, 2012, pursuant to Act no. 2010-21 on the Renewable Energy Policy Law of December 20, 2010, and Decree no. 2011-2013 on the Implementation of the Renewable Energy Act. This decree sets the conditions for the purchase and remuneration of electricity generated from renewable energy sources by power plants and their connection to the grid. The 2012 Energy Sector Development Policy Letter aimed to diversify sources of energy generation. The Senegalese National Electricity Company signed several power purchase agreements with independent power producers to buy power generated from private companies to be injected in the public grid.

Moreover, sometimes the Senegalese National Electricity Company also buys the surplus of renewable energy generated by self-producers.

In 2013, the Republic of Senegal adopted its energy strategic plan, which aimed to increase the mix energy dynamic in the country for five years (2013-2018).

The energy mix refers to the development of power generation from coal, gas, hydro, solar and wind. Here below some percentages:

• Power generation from location: 5.2%
• Power generation from SENELEC: 31%
• Power generation from hydro: 5.2%
• Power generation from solar PV: 11.5%
• Power generation from wind: 3.8%
• Power generation from IPP (conventional): 27.4%
• Power generation from Mauritania (importation) :1.4%
• Power generation from Self-producer: 0.4%
• Power generation from Non interconnected grid: 4.7%

Between 2013 and 2018, plants were installed producing 143 MW of solar PV, 201 MW of heavy oil convertible into natural gas and 15 MW of hydroelectricity (from the Organization for the Development of the Senegal River infrastructures) and 125 MW of coal power.

In 2019, the government adopted an electricity roadmap for 2035 to increase access to electricity, make the energy mix more dynamic and reorganize electricity subsectors (production, transport and commercialization) as well as the governance of the sector. This roadmap is in line with the Senegalese Development Plan for 2035 adopted in 2014.

Total capacity will be increased in the next few years as Senegal has discovered 17 trillion-cubic feet of natural gas at the Grand Tortue Ahmeyim (GTA) gas field near the maritime border with Mauritania. Production is expected to start in around 2023. In this regard, a gas code was adopted in 2020 through Act No. 2020-06, following a National Strategy Plan called “Gas to Power” in 2018. The main objective of this strategic plan is to produce electricity from natural gas and to increase public access to electricity in Senegal.

What is the outlook for the energy and natural resources sector in your jurisdiction in the next five years? In particular please share your views on:

Key policy decisions which you anticipate will be taken by government

New electricity code: The Senegalese government adopted a new electricity code through Act No. 2021-31 of July 9, 2021. The main provisions of the act include raising awareness of regional electricity markets (West African Power Pool – WAPP) with third-party access to the grid, promoting renewables and increasing the energy mix using natural gas, boosting energy efficiency and the development of off-grid rural electrification. According to the code, the government will set up a national electricity holding with subsidiaries in each step of the electricity value chain, including generation, transmission and distribution and further regulation related to third-party access to the grid.

Regulatory authority: The electricity regulation authority was replaced by the Energy Regulation Authority set up by Act No. 2021-32 of July 9, 2021. The new body oversees the regulation of the energy sector, including downstream petroleum activities and midstream and downstream gas activities. It will also oversee third-party access to the grid.

Grid code: A grid code is also expected to be adopted in 2021. This code will allow third-party access to the grid according to WAPP regulations. It also separates the roles of infrastructure managers (gestionnaire de reseau) and system operators (opérateur du système).

WAEMU Energy Code: The West African Economic and Monetary Union (WAEMU) is working to adopt an energy code that will apply within its frameworks.

Key challenges that you anticipate will be faced in those policies, or any other relevant goals, being achieved.

The key challenges for the implementation of the policies mentioned above include:

• renewal of infrastructure as the current infrastructure is outdated;
• integration of renewable energies into the national grid;
• optimization of the energy mix with the new natural gas production;
• ensuring competitiveness of local production in the regional market (WAPP); and
• capacity building for the public administration regarding the new policies.

The Senegalese authorities plan to elaborate and implement a National Strategy of local content in the oil and gas sector.

The anticipated role that renewables and/or new technologies will play.

Renewables and/or new technologies will play an important role in Senegal:

• New technologies will can ensure the efficient use of power, including implementation of smart metering.
• They will contribute to the planning and management of power transmission, including at the regional level through WAPP.
• Renewables will play a key role regarding the ease of access to electricity and rural electrification.

What are the key investment opportunities you foresee in the energy and natural resources sectors in your jurisdiction over the next five to ten years?

In accordance with the gas to power government strategy, the key investment opportunities the energy and natural resources sectors are:

• activities regarding the generation of electricity from natural gas; and
• development of infrastructure to receive and transport natural gas.

In accordance with the renewable energy strategy of the country, the key investment opportunity is independent power producer projects for solar energy, battery storage and wind energy.

With particular focus on sustainability, and on reducing carbon emissions, how do you anticipate the energy and natural resources landscape in your jurisdiction changing over the next five to ten years? In that context, please comment on what you think could be achieved (and how it would be achieved) even if you consider that unrealistic (for reasons that you can explain).

As mentioned above, Senegal is implementing a gas to power program in the energy sector. The purpose of the program is to convert existing thermal power plants to dual-fuel and to build future thermal power plants using natural gas as a primary energy source. The exploitation of the GTA field will play an important role in promoting consumption of clean energy and will support implementation of the gas to power program.

It will involve some positive consequences for the state, investors, and the population. These advantages are:

• reduction of the supply of environmentally harmful fuels such as fuel oil to the national electricity company;
• phasing out the tariff compensation paid by the state (reduction of the state's expenses);
• reduction of the costs of access to energy for the population and companies in Senegal; and
• achieving universal access to energy by 2025, and providing a cleaner source of energy.

The use of power generated from natural gas and the phasing out of fuel oil for power generation will contribute to the reduction of carbon emissions in the country.

DLA Piper Africa is a Swiss verein whose members are comprised of independent law firms in Africa working with DLA Piper.