Financial close reached for the largest wind farm in West Africa
App. 640 million people in Africa are considered to be out of power. Energy is too expensive and investors are too afraid to invest in Africa. The hope is that all this is going to change with the first utility scale wind park in Senegal.
31st July 2018
Approximately 640 million people in Africa are considered to be out of power. Energy is too expensive and investors are too afraid to invest in energy development in Africa. the hope is that all this is going to change with the construction of the first utility scale wind park in Senegal, A park that has solid Danish fingerprints.
46 Vestas wind turbines must be ready by July 2020 to produce electricity equivalent to 15% of Senegal's current energy supply. The park, which will be located about 70 km north of the capital Dakar, is financed by loans from EKF Denmark's Export Credit. Without the loan from EKF, it was hardly possible to raise the money to finance the ambitious energy project.
EKF has made 140 mio. euro available in the form of an export loan with a duration of 17 years. This has helped to ensure that Danish Vestas received the order for the wind turbines, construction and maintenance of the park, which has a capacity of 158 MW. The park is expected to be able to provide green power for around two mio. people and to prevent the frequent power cuts in the capital Dakar.
In addition to EKF, the US Government’s development finance institution, OPIC Fund has accounted for some of the funding. The project owner is Lekela, a renewable power generation company that delivers utility-scale projects which supply much needed clean energy to communities across Africa. Lekela are optimistic regarding the renewa-ble energy opportunities;
"African nations have some of the best renewable energy sources on the planet. If we can harness these at scale and over the long-term, the energy gap can quickly be closed. However, the investment volume needs to be increased by a factor of five, and we need long-term capital. To attract this type of capital we need to be able to showcase successful energy projects and we hope the project in Senegal will make a difference," says CEO of Lekela Chris Antonopoulos.
Lekela has sponsored a number of renewable energy projects in recent years, this includes projects in South Africa, Egypt and Ghana.
Approximately 1 billion people globally are estimated to live without access to electricity, and it is not due to lack of focus: UN development goal No. 7 is about securing sustainable energy supplies to the world's poorest by 2030, and a number of African countries have developed ambitious energy strategies that will help create growth and development.
However, despite the fact that the potential is huge, only about 1 % of Africa's energy came from renewable energy in 2016. Instead, fossil-based power plants including coal and diesel make up much, but far from enough to meet the developing countries need for energy.
"Wind energy is a fast and sustainable way to solve the supply deficit, get rid of the dependence of fossil fuels and free a country from the fluctuations in oil prices. Onshore wind farms can be built and deliver electricity at a price that can compete with the price of constructing coal and diesel power stations, and the potential for Danish wind export to Africa is therefore very big," says Anette Eberhard, CEO of EKF Denmark's Export Credit.
In the case of Senegal, it has taken years to get the funding of the project in place. However the fact that the Senegalese energy company will buy wind energy at a fixed price and secure the supply line has been of great importance.
"We sense an increased interest amongst the banks and investors regarding participation in financing the renewable energy in developing countries. However, when they start analyzing the many risk factors with high political risk, high currency risk, poor infrastructure and an unstable and inadequate electricity grid, they are very often scared off. We would like to change that, since these are the kinds of risks that we are able to cover in EKF. For us, it is about contributing to the success of energy projects in order to attract more investors to future projects. It is also a matter of ensuring that Danish wind technology can be exported to new markets with great potential," says Anette Eberhard.
For further information please contact senior communication consultant Ulla Jepsen firstname.lastname@example.org +45 81710928.