Sterling bank provides financing for solar energy projects
Sterling Bank, the only Nigerian bank with a functional renewable energy practice is making available financing for renewable energy projects for industrial, small business and residential users in Nigeria.
Sources with knowledge about the matter informed BusinessDay that five companies including Abuja based BlueCarmel and Elec3city, have signed a memorandum of understanding to provide off-grid power to industrial and residential users respectively.
BusinessDay also gathered that Segun Adaju’s Consistent Energy Ltd is also a beneficiary of the project, the other beneficiaries are yet to be confirmed. Some of the beneficiaries confirmed say that they have had discussions with the bank over the matter.
“Our firm is in talks with the bank,” says Segun Adaju, who doubles as the president of Renewable Energy Association of Nigeria (REAN), a trade association of alternative energy entrepreneurs.
The challenge of huge upfront costs involved in acquiring solar energy is the strongest discouraging factor for rapid solar energy adoption in the country. To set up a 2KV system capable of power a refrigerator, 5 lighting points, a television and sound system set, a user would be required to pay as much as N700,000- N800,000 in a three bed-room apartment. Systems that can power an entire building including air conditioners and pumping machine could cost between N2M – N4M.
Considering that the lifespan of solar panels is over 20 years and good batteries can last up to five years, the cost over time is cheaper than buying diesel which pollutes the environment.
However with financing from the bank, a residential users can acquire a loan of N800,000 which the bank pays to the supplier who procures the and installs the solar infrastructure which the customer repays over a 12 months period at the interest rate of 27%.
“The beauty of the arrangement is that the solar energy supplier has the duty of ensuring that only high quality batteries and solar panels are provided for the customer wherever he can get it. The customer will have a two year warranty and contributes zero equity. All he needs is a salaried account with a verifiable BVN,” said Ernest Akale, CEO of Elec3city.
Nigeria’s city centres are replete with shards of broken solar projects from constituent projects of politicians who awarded the contract to their cronies, who in turn purchase substandard solar infrastructure and built phony projects.
Others are due to lack of maintenance as actions as simple as failing to routinely wipe the dust off solar panels can reduce their lifespan.