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RENEWABLE ENERGY INVESTMENT IN NIGERIA –PROSFECT AND CHALLENGES

By:Mr. Lawal Y. Gada Project Manager

BOI/UNDP AtRE Projectlygada2001@yahoo.com; lgada@boinigeria.com

Tel: 08035854295, 08026500526

RE Investment in Nigeria – Prospects and Challenges by: L.Y. Gada. 1

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SYNOPSIS

Introduction

Why Renewables?

Global Perspectives

Africa’s Overview

RE investment in Nigeria

Prospects & Challenges

Way Forward

RE Investment in Nigeria – Prospects and Challenges by: L.Y. Gada. 15

Introduction• The potential of Renewable Energy (RE) investment in Nigeria is very

enormous . This is due to the obvious gab in the supply of conventional energy coupled with global covenants for Climate Change mitigation and adaptation which tends to promote Renewable Energy development as alternative to conventional fossil fuels that releases Greenhouse Gases (GHG) into the atmosphere, the opportunities for RE investment therefore cannot be overemphasised.

• There is no doubt that country has abundant renewable energy resources such as higher intensity solar energy resource throughout the country; large forest and farmlands that can be used to cultivate plants like Jatropha curcus for bio-fuels; wind energy potentials; large number of dams and other water resources that can generate energy through hydropower generation most of which are under-exploited.

Introduction Cont...• The global Investment in Renewable Energy across the

globe is increasing significantly from $33 billion in 2004 to $211 billion as of June this year, 2011. In Africa, total investments in renewable energy on the continent rose from $750 million in 2004 to $3.6 billion in 2011, largely due to strong performance from Egypt and Kenya which are in the Northern and Eastern parts of the continent.

• In Nigeria, investments in renewable energy have a large potential for growth given the large gap between energy demand and supply and the enormous renewable energy options available. This gab can only covered by we (the stakeholders here present: financial institutions and RE service providers).

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Why Renewables

• Global Warming/Climate Change – UNFCCC Kyoto Protocol• Depletion of fossil fuels (petroleum, coal, etc) – Energy

Security; • Escalating costs of conventional sources of energy; • Environmental protection; • Need to achieve key Millennium Development Goal

(increased access to electricity). • Africa has the lowest per capita consumption of energy in the

world; • Africa’s average energy consumption per capita: 0.66 Tons of

Oil Equivalent (TOE) vs 1.8 TOE world average (est. 2008)

Why Renewable Energy Options?

• The option to close the wide energy demand-supply gap is Renewable Energy.

• This is energy supply options from natural resources which can be replenished (infinite and renewable)

• Sources include sun, wind, biomass, hydro, geothermal etc.

• These sources are found in abundance in Nigeria and it has been estimated that the potential energy that can be generated from these sources is about 600,000 MW.

Barriers to Investment in RenewableIn Nigeria

Sustainability question. Maintenance Procurement Branding Risk Associated with Security risks Project risks Human/personnel risks Technical risks Political risks Policy –law to promote Renewable Energy Options

Barriers to Investment in RenewableIn Nigeria (Cont...)

Knowledge/awareness Knowledge to the financial institutions Awareness by the general public on RETsCapacity Technical know-how by the service

providers Knowledge by the policy makersLack of incentives

Way forwardPolicy to promote investment in RETsCapacity Building for Financial Institutions and

RE Services providersEnlightment campaigns to create awarenessSynergy between the different financial

institutions and Development finance institutions

Exploring other funding sources like CDM, CIF, CEF, etc.

Thank you

Lawal Y. Gada.Project Manager

BOI/UNDP AtRE Projectlygada2001@yahoo.com

Tel: 08035854295, 08026500526.

aAccess to Renewable Energy (AtRE) Project

• AtRE Project was initiated in continuation of UNDP’s support to Private Sector (MSMEs) Development and UN’s commitment towards ensuring universal access to modern energy services.

• BOI was chosen as the Implementing Agency (IA) for the project because of its strategic position between the Financial Institutions, MSMEs and Government.

• The UNDP/BOI AtRE is an intervention project aimed at expanding renewable energy services for rural and peri-urban MSMEs.

• The Project is to facilitate investment in renewable energy options and linkages for enterprise development.

aExpected Outcomes of (AtRE) Project

• Improve access to reliable and renewable energy service options for MSMEs

• Develop capacity of stakeholders to facilitate investments in renewable energy sector

• Establish and maintain policy level dialogue.

aDeliverables of (AtRE) Project

• Increase the number of RE projects in Nigeria• Increase the level of RE services accessed by MSMEs• Train and build the capacity of project developers• Train and build the capacity of financial institutions• Capacity development and support for public policy

formulation and development at Federal and State level• Develop guidelines and tools based on best practices for

disseminating information to project developers, financial institutions and policy makers

• Dialogue to influence RE policy development• Dialogue to support RE energy planning

aBenefits of (AtRE) Project

• Economic development through empowering MSMEs

• Job creation• Poverty alleviation• Financial Inclusion• Achieving the MDGs• Improving the environment• Reducing rural-urban migration

aProject Board

1. Ms. Evelyn Oputu, MD/CEO BOI - Board Chairperson2. Mr. Ade Mamonyane Lekoetje, Country Director UNDP3. Janthomas Hiemstra, Deputy Country Director UNDP4. Dr Patrick Kormawa, UNIDO Rep in Nigeria & Director Regional Office5. Honourable Minister of Finance6. Mr. Kingsley Moghalu, Deputy Governor, Financial System Stability, CBN7. Prof. A.S. Sambo, DG/CEO Energy Commission of Nigeria & SA to the President on

Power8. Engr Mrs. Bahijjahtu Abubakar, National Coordinator, National Renewable Energy

Project9. Chief Kola Jamodu, Chairman Manufacturers Association of Nigeria (MAN)10. Mr. Aigboje Aig-Imokhuede, MD/CEO Access Bank Plc & Chairman, Sub-

Committee on Economic Development, Bankers’ Committee11. Alhaji Aliko Dangote, Chairman Dangote Group of Companies12. Lawal Gada, Project Coordinator, AtRE

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• Project officially launched and document signed – June 16, 2011

• PMU Management Team recruited and commenced implementation of project in September, 2011

• Organised State-level stakeholder forums and compilation of database of stakeholders in RE in 10 states + FCT in October 2011

• Launched the BOI/UNDP/State Energy Access Challenge Facility for Enterprises – Oct-Nov, 2011. where winning applicants accessed a grants of up to US$30k

• Engaged NABTI/ECN to create an interface between research institutes and industries in renewable energy best practices

AtRE Project Activity Update

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• Working with Scheider Electric to Replicate and commercialise the ‘Access to Energy’ program launched in Asore Village, Ogun State for BoP with Support from BOI

• Conducted different RE Training programme for Capacity Development for our stakeholders: eg. Banks, RECs, MFI.

• Engaging with the Policy makers at State and Federal Level to increase activity in RE

• Evaluating potential RE project proposals for prospective funding

• Initiating collaborations with development institutions such as KfW, Adaptation funds, IFC, ADB, World Bank, etc to increase the level of renewable energy funding

AtRE Project Activity Update

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• Engaged consultants and service providers to conduct Business Plans and Feasibility studies to different RECs, especially the winners EACFEs

• Working with Renewable Energy Programme of Federal Ministry of Environment to deliver energy solutions to various states in Nigeria including women through – Rural Women Energy Security (RUWES) Initiatives.

• Identifying clusters of MSMEs to deploy creative Renewable energy services

AtRE Project Activity Update

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• Developed a comprehensive communication plan towards increasing awareness of rural MSMEs and households to adopting renewable energy options

• Conducted studies on the Comparative cost between RE and Fossil Fuels such as Petrol and Diesel

• Engaged consultants who conducted the mapping of banks activities in renewable energy finance

• Engaging with MFIs to develop financial products to deploy RE solutions for BoP

• Holding an Investment Forum, December 15, 2011

AtRE Project Activity Update

aBoI and Renewable Energy

• In partnership with Ebonyi State and UNIDO in the development of a 5MW biofuel RE Plant using Rice Husk

• This project will serve a cluster of MSMEs who are engaged in Rice processing

• BOI is collaborating with various state governments such as Ondo, Osun, Kwara and Niger in areas of small hydro power projects to serve clusters of SMEs.

• Provisions of financial support for clusters of cooperatives who ordinarily have been excluded from access to finance due to collateral constraints

• Facility for the Bottom of the Pyramid (BoP) -RUWES

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• Standards for Renewable Energy Products• Technical Know-how (capacity of the industry

player)• Financing by Commercial Banks• Awareness on the positive impact of RE• Funding for the Project Management Activities• Sustainability question

aChallenges

aCollaboration and Support for AtRE

• Investment in Renewable Energy Projects• Training/Capacity building for renewable energy

project stakeholders• Technology Transfer• Funding for the management and expansion of the

Access to Renewable Energy project• Policy development• Multilateral and intergovernmental collaboration• Projects Monitoring and Evaluation• Project Management Support (Unfunded

Bugdet)

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Conclusion

Renewable Energy & Climate Change by: L.Y. Gada. 23

Economic Growth/Climate

Change Mitigation

Think Globally

Act Locally

Renewable Energy

Development

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Thank You