Renewable energy is the future Nigeria is yet to scratch

As poor electricity output continues to pile more misery on businesses in Nigeria, experts are convinced that divestment into renewable energy is critical to finding a lasting solution. FRANK ELEANYA makes the case that government should create an enabling policy environment in attracting necessary investments in renewable energy.

Electricity supply shortage has been with many of us for as long as we can remember in Nigeria and most parts of Africa. It was the way business was done in the past and still is, going by statistics.

A World Bank study disclosed that of the 1.1 billion people on earth without access to electricity, about half live in Africa. And while the World Bank’s Global Tracking Framework shows progress is being made to deliver electricity to those without, most of it is taking place in Asia. In Africa – by extension Nigeria, it’s a different story.

At present, Nigeria has a generation capacity below 2,000megawatts (MW). This is why attention is sluggishly shifting to renewable energy as a viable alternative. The World Bank estimates that there are 126 renewable independent power projects (IPP) in 18 sub-Saharan African countries, accounting for an installed capacity of 11gigawatts (GW) and $25.6 billion in investments.

According to Bloomberg New Energy Finance study, the most attractive markets for solar panels up to 2020 at the moment, are not in sub-Saharan Africa. On the list are Brazil, Chile, Israel, Jordan, Mexico, the Philippines, Russia, South Africa, Saudi Arabia, and Turkey. Global capacity could reach 1,760 to 2,500GW in 2030, compared with 227GW at the end of 2015. Prices are also projected to fall below competing natural gas and coal plants according to the International Renewable Energy Agency.

The future, from the above, clearly belongs to renewable energy investments. For people living in sub-Saharan countries like Nigeria however, seeing a decrease in the price of renewable energy may take a longer time than is projected for the rest of the world unless the government takes drastic measures to accelerate development in the area.

On the other hand, investors in renewable energy are peaking up activity mainly because of the huge potentials in the power sub-sector. With investments already at $25.6 billion, experts say the number could be in multiples in the coming decade if the government can put in the necessary framework and create an enabling environment for first time and existing investors.

Chima Muoneke, Director of Schimatic Blue Energy who spoke to BusinessDay said, “Renewable energy in Nigeria is a high risk venture. No doubt the potentials are there for return on investment (ROI), but investors are worried about the amount of risk involved. In Nigeria, as well as other sub-Saharan African countries it is too high. There is an economic risk to consider, there is a technology risk and so on.

“The technology used for renewable energy sources are not from here (Nigeria). They are imported. The cost of bringing them here is huge. The business environment in the country is also stifling and does little to encourage businesses. Investors want to invest in a business where the ROI is guaranteed,” Muoneke said.

According to some estimates, Africa needs up to $50 billion each year to reach universal access by 2030. The Buhari administration through the Ministry of Power, Works and Housing, has set an ambitious goal of increasing electricity access to 7 percent and 90 percent by 2020 and 2030 respectively. To attract this sort of investment and investors, experts that gathered at the NESG/Heinrich Böll Roundtable on Nigeria’s Energy Mix Strategy and the Future of Renewable Energy, noted that government policies should be relaxed to allow for more off grid solar to produce more than present power output.

The government, said Muoneke, need not bother itself with the business aspect of the sub-sector. What it needs to do, he said, is to clarify the rules that guide players in the field. The entry and exit rule should be clear so that investors can predict trends in the market. The investors should be the drivers of the business and they should adopt realistic tariffs especially in solar systems.

One of the challenges faced by the regulator of the sub-sector, Nigerian Electricity Regulatory Commission (NERC), Muoneke noted, is lack of enforcement. It is not enough to have a regulatory framework, it should be enforceable. Investors in renewable energy should abide the regulations and this can only happen if the NERC can enforce.

There is also a need for long-lasting and more robust structural features. Infrastructural development should look at the long term. Some stakeholders are already seeing the potential of creating a renewable energy hub in northern Nigeria. While this is desirable and will go a long way to address chronic electricity shortage in other parts of the country, a better position should be for the IPPs to spread across the region. Northern Nigeria may have all the elements necessary like the sun and wind for generating renewable energy, other parts of the country equally boast their share amount of these elements. Besides it is necessary to prevent a situation where one region believes the other is marginalising it because of what it has.

The Bank of Industry has done a commendable job of providing several rural settlers across the country access to power through its ‘Rural Electrification Project.’ Communities including Bisanti, in Katcha LGA of Niger State; Ogbekpen, Ikpoba, in Okha LGA of EDO State; Onono, Onbmabu in Ife-North LGA of Osun State; Anambra West LGA of Anambra Statr; and Kaltunga LGA, Gombe State have all benefitted. While the significance is not lost, stakeholders believe that sustainability plan should always go with projects like these.

The future of renewable energy in Nigeria is bright and one expert sums it this way, “Africa’s green energy is capable of replicating the success of mobile communications in the early 2000s wherein there was pent-up demand for telecommunications services and that demand was quickly met over a short period of time.” It is therefore time to scratch it.

FRANK ELEANYA