Despite its huge energy needs, Nigeria has not made much progress in diversifying sources of power supply through renewable energy. However, the ongoing collaboration between the Bank of Industry (BoI) and the United Nations Development Programme (UNDP) to invest in and utilise renewable energy resources may renew the hopes of electricity consumers, particularly the Micro, Small and Medium Enterprises (MSMEs). Assistant Editor CHIKODI OKEREOCHA reports.
Succour may soon come the way of industrialists, particularly operators of Micro, Small and Medium Enterprises (MSMEs). The operators, most of who are weighed down by the rising cost of operation due the perennial unreliable electricity supply from the national grid, may soon heave a sigh of relief, courtesy of the ongoing partnership between the Bank of Industry (BOI) and the United Nations Development Programme (UNDP).
The partnership is on providing alternative source of power supply through renewable energy.
Specifically, the collaboration is focused on increasing the national capacity to invest in and utilise renewable energy resources to improve access to modern energy services for MSMEs and households. This is in the hope of catalysing, promoting and supporting an expansion of off-the-grid renewable energy services for MSMEs to support private sector-led economic development.
To achieve this, BoI as implementation agency for the project tagged: “BOI/UNDP Access to Renewable Energy Programme”, has already disbursed about N75.8 million to two alternative power firms. They are GVE Projects Ltd and Arnergy Solar Ltd. The firms would provide solar home systems to off-grid communities in six states, which come under the pilot phase for the take off of the project. The states include Anambra, Delta, Niger, Osun, Kaduna and Gombe.
The intervention, according to BoI Managing Director, Mr. Rasheed Olaoluwa, would involve the National Agency for Science and Engineering Infrastructure (NASENI) and local meter manufacturers. Olaoluwa, who spoke recently in Lagos while presenting cheques to the indigenous alternative power firms, explained that UNDP, which has 50 per cent stake in the project, contributed $1.6 billion. He said the project was divided into the Stand alone, which costs N31.6 million, and the Micro-Grid, which costs N44.2 million, making it a total of N75.8 million.
The medium term vision is to have 100, 000 homes installed with solar systems in the next five years through a combination of micro-grid and stand-alone solar home systems. The overall objective of the project, The Nation learnt, was to build the capacity of MSMEs to incorporate renewable energy options either as a business in, itself, or as service for business development and encourage financial institutions to increase investment in renewable energy through better understanding and assessing of credit and financing risks of renewable energy investments and services.
BoI and UNDP also hoped to encourage government to develop and implement renewable energy policies and regulatory frameworks that will facilitate renewable energy options for MSME development in Nigeria. This would ultimately open up the nation’s industrial space for more entrepreneurs most of who have, for long, been hard hit by poor supply of electricity from the national grid.
Indeed, as Olaoluwa observed, the less than 4,000 Megawatts (MW) electricity supply from the national grid relative to the conservatively estimated 40, 000MW electricity demand for a leading African economy such as Nigeria, with a population of 170 million people, is grossly inadequate. He noted that most of the country’s old central power plants had lost their economies of scale and could no longer deliver competitive, cheap and reliable electricity to more remote customers through the national grid.
The BoI boss pointed out that renewable energy sources such as hydro (16 per cent), wind (three per cent) and solar (one per cent) are growing in relevance and commercial adoption on a global scale and that the recent Group of Seven (G7) meeting in June had agreed to de-carbonise the global economy by phasing out the use of fossil fuel by the end of this century, over the next 85 years, hence the need to embrace other source of energy.
In opting for renewable energy, BoI also believes that the absence of reliable power and energy supply is an established challenge for MSME operations in Nigeria. The development financing institution observed that most private sector institutions rely on backup generators with high environmental and economic cost hence, improving MSME and household access to hydro, wind, solar power, biomass and geothermal energy supply to power enterprise operations is critical.
If BoI succeeds in its latest move to provide succour to MSMEs through renewable energy, it would break Nigeria’s inertia in joining the league of other countries that have made significant progress in diversifying their energy sources. A number of African countries have embraced renewable energy, leaving Nigeria, which ironically has more energy needs given her population and economy size.
For instance, about five per cent of South Africa’s energy supply is said to come from renewable energy. The Rainbow nation in April named preferred bidders for the fourth round of a series of renewable energy projects that will add about 1,000 MW to its power grid. Similarly, Kenya plans to triple its electricity generation by about 6,000 MW in the next five years, with more than 90 per cent of the planned output coming from renewable sources. Ghana is also said to be exploring renewable energy options including solar, wind, hydro and geothermal.
Why BoI’s intervention is timely
The rethink in favour of diversifying sources of power supply to guarantee improved electricity supply to Nigerians and operators in the industrial sector, especially MSMEs, is coming at an auspicious time. For one, the intervention is coming at a time the excitement and optimism that greeted the unbundling of the sector appears to have given way to frustration.
The handover of the power assets to private investors has brought agony and frustration to consumers as there has not been any visible improvement in electricity supply almost two years after privatisation. Rather than improve, electricity supply has worsened and tariff gone up as high as 100 per cent in some parts of the country.
However, BoI’s latest intervention appears to have renewed the hopes of electricity consumers, particularly MSMEs. As Divisional Head, Large Enterprises, BOI, Mr. Joseph Babatunde pointed out, there is a golden opportunity for rural communities to be empowered with affordable off-grid solar home systems that are operated on a Pay-As-You-Go (PAYG) basis rather than wait in vain for the national electricity grid.
Head of Arnergy Solar limited, one of the partners, Mr. Femi Adeyemo, said the project would run for 25 years and would be effectively done so that Nigerians can benefit from it. His optimism stems from the involvement of several stakeholders in the project including renewable energy service providers, financial institutions, MSMEs, government and policy makers, multilateral donor agencies, investors (including venture capitals and private equity firms), and relevant professional associations.
Govt’s efforts in renewable energy
The need to explore renewable energy is not lost on the Federal Government considering the fact that getting gas to fire the power plants has been a Herculean task. Unreliable supply infrastructure and pipeline vandals have continued to compromise its distribution to various plants. “Vandalism is taking a toll on us,” former Minister of Power Prof. Chinedu Nebo, said.
Prof. Nebo, who spoke to journalists in Lagos, added that: “A situation where our own compatriots vandalise the oil and gas pipelines, especially the gas pipelines that supply gas to the power stations, since 70 per cent of our power generation is from gas-fired turbines and 30 per cent is from hydro is regrettable. We have not been doing coal, we have not been doing renewable; we have not been doing biomass, so we really are hamstrung. So, the government is now working on diversifying to ensure that we have a good and robust fuel mix.”
He said Nigeria now boasts a draft National Policy on Renewable Energy and Energy Efficiency, At the presentation of the draft policy at a stakeholders’ workshop in Abuja, Director of the Electrical Inspectorate Services (EIS) in the Federal Ministry of Power, Abayomi Adebisi, said under the policy, 8,188MW will be achieved with renewable energy by 2020 on a medium term, while the long-term target is on the realisation of 23,134 MW by year 2030.
Adebisi said renewable energy would contribute 1.3 per cent this year to the national grid with a corresponding increase of 8 per cent and 16 per cent, between 2020 and 2030. “While large and small hydropower would contribute 2,121 MW and 140 MW to the renewable energy generation this year. It is also expected that solar accounts for 117 MW, with biomass electricity at 12.3 per cent,” he said.
Adebisi added that the policy development was being facilitated by some partners with a grant from GIZ, a German agency. “We sourced for grants from GIZ, then we pooled over 30 documents from people who had once done something on renewable energy. We got a committee of experts to develop the policy, and the draft was approved by the ECOWAS Centre for Renewable Energy and Energy Efficiency (ECREE) in May 2013,” Adebisi explained.
The power sector regulator, Nigerian Electricity Regulatory Commission (NERC) has also come out with a number of incentives aimed at promoting investments in renewable energy such as a guaranteed market for renewables, simplified licensing process, land access and a feed-in- tariff.
