Solar: Affordable Power in Nigeria and Africa- Financing-Conclusion
FINANCING
A major concern for Off-Grid projects in Nigeria is access to finance. Local banks currently do not offer Off-Grid project funding, as the concept is still new to them.
The high capital cost and unfavourable interest rates are huge barriers to accessing finance. It is important not to borrow in foreign currencies as it becomes difficult to finance, when there is a local currency depreciation.
Some sources of funding
1. Green Bonds: This are bonds used to finance green projects only, in which their carbon emission savings are clearly articulated. The first pilot issue of N12.38bn green bonds in Nigeria, was completed in Dec. 2017 and was oversubscribed. It was billed to finance the Energizing Education Program (earlier mentioned) for N9.5bn
2. Green Climate Funds: These are global green funds developed to support green projects in developing countries
3. Rural Electrification Fund: To support the Federal Government of Nigeria’s rural electrification strategy, the Rural Electrification Agency (REA) has set up a Rural Electrification Fund
4. World Bank Support: The World Bank in partnership with the FGN has developed a five-year project: Nigeria Electrification Project (NEP), implemented by the REA. The World Bank’s contribution for NEP is $350m, of which $150m is allocated for Mini-Grids. Private Mini-Grid developers can access subsidies towards their upfront cost from REA
CONCLUSION
Mini-grids and Solar home systems can be used to provide reliable power to millions of un and underserved Nigerians while creating a dynamic market opportunity worth N3.2tn ($9bn) in annual revenue with a proven business model.
People need enough power to engage in income generating opportunities: an industrial sewing machine, small oil seed processing mill, an industrial welding machine. This will also reduce the rate of rural-urban migration.
The cost of kerosene is already high, so rural communities are already paying higher amounts for energy. I believe they will be willing to redirect that spending to Off-Grid energy if it offers a better and cheaper solution.
An affordable and reliable power creates a virtuous cycle: consumers are productive, which yields higher income, and further boosts their ability to pay.
To my initial question at the start of this project, I say YES it is possible to produce and scale power cheaply, and it will cost from as low as N26,000($72) for a Solar Home System and a N47m($130,000) for a Solar Mini-Grid serving 30 homes and an industries.
Thank you for reading,
Nero
REFERENCE
· Minigrid Investment Report 2018. Aug. 2018, Rocky Mountain Institute and the Nigeria Economic Summit Group.
· Investment Overview: Mini-Grids as an Emergent Frontier for Power Access in Nigeria. 8 Nov. 2018, Nextier EmPower Nigeria
· Power Sector Liquidity Crises. 20 Sept. 2017, Nextier EmPower Nigeria
· Powering Nigeria for the Future. Jul. 2016, Pwc
· Electricity Generation, Transmission and Distribution. 18 Jul. 2018, Nextier EmPower Nigeria
· Off-Grid Power Generation: Infrastructure and Challenges. 29 Nov. 2017, Nextier EmPower Nigeria
· FROM GENESIS TO DATE Understanding the History and Evolution of the Nigeria Electricity Supply Industry. 5 Jul. 2017, Nextier EmPower Nigeria
· Cost of Generating Power. 17 Oct. 2018, Nextier EmPower Nigeria
· Solar Power 101: The Basics You Should Know. 11 Oct. 2017, Nextier EmPower Nigeria
· NIGERIA MINIGRID INVESTMENT BRIEF. Dec. 2017, Rural Electrification Agency (REA)
· Solar for Business in Sub-Saharan Africa. 24 Jan. 2019, Bloomberg New Energy Finance
· The Power Sector’s Market Performance: 2018 Overview. 30 Jan 2019, Nextier EmPower Nigeria
· Electricity Facts Every Nigerian Should Know Part 1. 6 Feb 2019, Nextier EmPower Nigeria
· Electricity Facts Every Nigerian Should Know Part 2. 20 Feb 2019, Nextier EmPower Nigeria
