Summary sheet
The project will finance the deployment of solar home systems in Benin. The solar home systems are composed of a solar panel, a central unit (including battery storage, an energy management system / charge controller and communication technology) and several appliances and will be sold on a payment plan basis to individual beneficiaries located in Benin under pay-as-you-go contracts.
The operation aims at facilitating access to energy for households and micro-entrepreneurs in Benin by financing the design, production, distribution, installation and payment plans of about 107 000 Solar Home Systems. These Solar Home Systems provide basic, clean energy services, such as lighting and phone charging to households without grid access, who otherwise have to rely on inferior and more expensive alternatives. The operation is expected to significantly improve the living conditions of the final beneficiaries and thereby generate high development impact
The EIB financing will support the Promoter in providing clean and sustainable energy to currently un-electrified households in Benin, replacing the use of polluting fossil fuel alternatives. The operation thereby contributes to Climate Action, Environmental Sustainability and sustainable economic development goals and is therefore aligned with the current and upcoming National Indicate Programme, as well as with EIB lending priority objectives.
Such clean energy solutions, as financed by this project, suffer from market failures linked to the non-internalisation of the climate, environmental, and health benefits from sustainable energy solutions, which inhibit a stronger uptake of solar home systems and result in an overuse of polluting fossil fuel alternatives.
SHS companies suffer from financing constraints due to the relative novelty of this business model and the credit risk from providing payment plans to low-income clients without formal employment. The resulting difficulty to raise funding restrains the possibility of companies to offer the PAYGo (lease-to-own schemes) which are critical for the affordability of SHS.
EIB financing enables the Promoter to finance the growth of their business and offer affordable rates to end customers. It is expected that the operation will create a very high social benefit, by providing clean and reliable electricity and replacing polluting and harmful off-grid alternatives. The promoter has a solid governance system in place which appears well suited for the governance risks of the promoter's business environment.
The operation is expected to have overall significant positive environmental and social impact by providing clean energy to households that are currently un-served or under-served by the grid and mostly reliant on polluting and dangerous energy sources. Limited negative environmental impacts could arise from health and safety issues related to the inappropriate handling of batteries (notably at the time of disposal) and disposal of old devices (e.g. kerosene lanterns, candles, flashlights and generators for lighting). Considerable e-waste is only expected to arise from the operation in five to seven years and the Promoter is looking into potential e-waste handling schemes in the country/in the region, to ensure the maximisation of the re-use of components, whilst ensuring the appropriate handling of polluting items like batteries.
The Bank will require the Promoter to ensure that implementation of the project will be done in accordance with the Bank's Guide to Procurement.
Documents
News & Stories
Inside the project
How and Why
Transforming access to electricity in West Africa
Why
- Around 600 million people lack access to electricity in sub-Saharan Africa
- In Benin, only 40% of the population has electricity
- Households rely on kerosene for lighting and cell phone charging, which are expensive, polluting and inefficient
- Clean, sustainable energy sources like solar devices and solar home systems are expensive
How
- Pay-as-you-go solution to unlock solar home systems for 20 cents a day
- Customers don’t bear the full cost of the solar systems, such as solar panels and mini grids
- Deployment of 107 000 high-quality solar home systems in Benin
Sectors & Countries
PLAY VIDEO
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Story
Unlocking solar systems at less than 20 cents a day
In Benin, there’s a significant disparity between access to electricity for urban residents (70%) and people living in rural areas (18%). About five million people lack access to electricity. Only 10% of households are currently using off-grid solar products.
Clean and sustainable energy sources like solar devices and solar home systems for off-grid households are expensive, a challenge to low- and medium-income households.
ENGIE Energy Access, the leading pay-as-you-go and mini-grids provider in Africa, provides a pay-as-you-go solution. Customers can make small payments to unlock the system for a day or week of usage at a time, until they have paid the full price and the systems are permanently unlocked.
This payment solution makes the affordability of basic electricity more accessible and affordable. Customers don’t have to pay the full cost of the solar system upfront and are able to repay the cost of the equipment over some years at less than 20 cents a day.
Off-grid solar power devices can also lead to a significant reduction in household air pollution by removing kerosene lamps from the picture, reducing health issues and accidents.
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More than one million households don’t have access to modern and sustainable energy in Benin alone.
Off-grid solar power tackles energy distribution challenges in Africa
Off-grid solar energy solutions, such as solar home systems, offer immediate access to affordable, clean and reliable electricity in places where grid or mini-grid connections aren’t economically or technically feasible yet.
It tackles the “last-mile” distribution problem of bringing critical goods and services (such as lighting, mobile phone charging, radio, television, and refrigeration) to remote, rural communities using solar powered technologies.
“Ultimately, this new initiative will provide economic, social, education and health benefits for households and micro-entrepreneurs who cannot be connected to the national electricity network,” says Romain Constant, an investment officer at the European Investment Bank.
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