The program will ensure that 1,100 rural schools and health centres will benefit from an energy supply using solar and battery technology.
The European Union will provide €106 million.
This includes €65 million under a 25-year long-term concessional loan from the European Investment Bank and a €41 million grant from the European Union budget.
The project will also be supported by €35.7 million financing from the World Bank.
The project will be implemented by Gambian electricity utility company NAWEC and will increase energy supply in the Gambia by one fifth. It is also expected to transform electricity access in rural communities through construction of a new photovoltaic plant at Jambur near Banjul, a new power transmission and distribution infrastructure.
Connecting one of the largest solar power plants in West Africa to communities across the Gambia will increase access to clean energy, create new economic opportunities and improve health and education for future generations, EIB Energy vice president Andrew McDowell said.
The new engagement represents the first European Investment Bank engagement in Gambia since 1991.