Scaling renewable energy solutions in rural Nigeria

On the sideline of the 30th Nigerian Economic Summit, which took place last week in Abuja, the Embassy of the Kingdom of the Netherlands co-hosted a special dinner session, with the theme, “Catalysing Economic Transformation through Scaling Renewable Energy Solutions in Deprived Climes in Nigeria”. It dovetails into this year’s NES theme, which focused on the imperatives for accelerating economic growth and development in Africa to speed up the continents’ transformation through institutions, investments, integration, industry, and innovation.

Indeed, there is an urgent need to leverage the extensive potential of green energy to transform the regional economic horizon. Again, Nigeria has the largest economy in sub-Saharan Africa with an estimated population of more than 220 million as of 2023. Sadly, despite the immense natural resources and renewable energy endowments, a significant amount of the economy is powered largely by small-scale generators, and almost 50 percent of the population has limited or no access to the national grid.

The reality is heart-rending. Yet, there are limitless possibilities for an economic quantum leap if the table could be turned. According to a report by the Rural Electrification Agency, developing off-grid alternatives to complement the grid could create a $9.2 billion-per-year market opportunity for mini-grids and solar home systems that will save $4.4 billion per year for Nigerian homes and businesses.

For the avoidance of doubt, deprived climes are those parts of Nigeria, rural and urban, that have been left behind in development. These include areas that are not yet connected to the national grid or, where connected, do not enjoy any priority considerations for electricity supply. Effectively, this means that most citizens are on this list considering that even in developed urban areas the power supply is epileptic, and cannot be counted upon for standard living and seamless business operation. The irony of the power situation is that there are many Nigerians who are not touched by the grid even while they are connected to it.
This is why it is exciting that the NES side event was driven by the Dutch Government, a nation that generates more renewable energy than it needs.  Therefore, in extending diplomatic friendship to us, it recognises the need to encourage private-public sector stakeholders to share their opinions and engage in discussions about improving rural electrification and clean cooking, as well as policy instruments that promote electricity access, productive energy use, carbon reduction, and drive energy businesses in Nigeria.

The speakers, aptly representing industry, government, and civil society, reflect the abundance of human capital that just needs the right fillip to synergise for national transformation. The Managing Director of Rural Electrification Agency, Abba Aliyu; the Deputy Country Director of SNV Netherlands Development Organization, Susan Essien; the Advisor Sustainable Energy Access of Nigeria Energy Support Programme, Chinemere Nwosu; the Chief Executive Officer of Powerstove Limited, Okey Esse; and the programme officer, off-grid energy of Diamond Development Iniatives, David Arinze.

There is a consensus that what is required is invariably tied to five-pronged action plans. There is a need to mobilise local funding, provide private sector counterpart funding, enhance the capacity of the vehicles delivering this infrastructure (to the rural communities), distribute renewable energy enhancement funds, and strengthen government structure and internal systems. This will enable the country to move away from small-scale projects, and closer to bigger ones. It will also stimulate demand in the ecosystem, as well as incentivise the critical players in the sector to enable them to bring in their finance.
Meanwhile, there is so much wisdom in the words of Michel Deelen, the Consul General of the Kingdom of the Netherlands, when he set the tone through his keynote address. “As long as alternatives are cheaper, people will move to the next step. The first thing we look at is price, if the alternative is too expensive, people stick to what they have. For instance, the logistics for providing cooking gas in rural areas, make it uncommon. As the price of diesel and petrol spikes, it makes solar comparatively more advantageous. You can make a difference if the price is right. Have we reached that place where the price is right?”

I totally agree. The purchasing power of the target market always plays a crucial role. For instance, access to clean cooking, which is a national problem, has proven difficult because most of the rural areas are forest-dependent households. The question is then, what will it take to scale? Many stakeholders would say financing. Plus, the right policies and legislation at federal and subnational levels, and new levels of partnership among stakeholders. There is no singular strategy that stands alone, therefore all of them are needed to ensure that rural Nigeria benefits from a system that works in synergy under a centripetal national spirit.

As a country, we need to take hold of every opportunity offered to us, especially by strategic foreign partners who have succeeded in the green transformation of their home states. The Solar Marketplace initiative was developed by the Dutch Government as part of its commitment to promote renewable energy adoption in Nigeria. With a central goal focused on creating inclusive sustainable trade and development in Nigeria, and between Nigerian and international businesses, it aims to boost economic growth, ensure environmental sustainability, increase access to clean energy, and enhance the quality of life for communities nationwide.

Business owners sign up to showcase their business offerings to local and foreign businesses, financiers, investors, and consumers; while accessing credible data, policy and regulatory information, knowledge products, and market intelligence on the Nigerian solar sector. Investors and financiers sign up to leverage the marketplace’s deals room and get access to credible businesses and ready project portfolios actively seeking investments and fellow investors/financiers seeking co-investors. Consumers sign up to browse the database of quality solar technologies, solar providers, and consumer financiers, and identify the right solar solution for their needs. Renewable energy ecosystem partners and players sign up to access credible data, knowledge products, and market intelligence on the Nigeria solar sector, while also taking advantage of the bespoke business and investment facilitation support from the marketplace’s secretariat.

In the words of Mrs Olu Verheijen, Special Adviser to the President on Energy, “This is where governments come in as part of the responsibility to ensure that no one is left behind by implementing targeted and transparent energy subsidies to the most vulnerable segments of our population, delivered as cross-subsidisation or direct payments…. As our electricity market evolves and as we scale up the deployment of technology through metering and other forms of revenue assurance, we will be able to improve the quality of data required to deliver these targeted benefits for the poorest and most vulnerable among us.

There are indeed some exciting prospects ahead of us as a government and as a country, and we will be counting on the close support of the National Economic Summit Group and other stakeholders to turn the vision into a lived reality for the people of Nigeria.”

However, I believe that energy efficiency is given less attention than it requires. Statistically, energy efficiency accounts for approximately 40% of the possibility of reducing greenhouse gases. Specifically, findings show that energy intensity, access, and security are positively associated with carbon emissions, ecological footprint, and economic growth. This suggests that economies should simultaneously achieve economic and environmental goals by decoupling energy consumption from economic growth, which can be accomplished through improvements in energy efficiency.  This goes beyond clean cooking, though in rural Nigeria clean cooking is at the core of energy efficiency mechanics. Government and businesses should introduce deliberate procedures to mainstream energy efficiency across the rural electrification value chain.