Off-grid energy space and what is possible in economy

Though there have been many low points associated with the outgoing government in Nigeria in relation to the growth and management of the country’s economy, what has happened in the off-grid energy space shows that a lot is possible in other sectors if the right steps are taken with the right investment, government’s support and smart regulation.

For growth and development to happen in the economy, we have always canvassed that the private sector should be allowed to play a leading role while the government supports through smart regulations. What has happened in the off-grid energy space is evidence of this, which not only validates our position, but also shows what can happen if competent people are empowered to act.

When this government first came to power on May 29, 2015, the previous government had already begun a National Renewable and Energy Efficiency Policy (NREEEP) which was meant to be the blueprint for sustained development, supply, and utilization of renewable energy resources within the economy for on-grid and off-grid. The Buhari government adopted this blueprint.

Under NREEEP, there was provision for complete tariff waivers for all solar use components (panels, TV, batteries, bulbs) to attract investments, create downstream jobs and build scale. It also instituted priority clearance at the ports for the above as observed with Kenya and Ghana to promote ease of doing business.

In 2016, the electricity sector regulator, the Nigerian Electricity Regulatory Commission (NERC) created a Mini-grid Regulation, which provides guidance on the operations of mini-grids in Nigeria with the objective to increase unserved electricity access and encourage the use of renewables on a small scale.

This regulation has become a game changer in providing energy access for previously unserved communities. Soon after this regulation was enacted, investors began taking advantage of the provisions that allowed cost recovery in the tariff model and optional license for energy systems below 1MW. This regulation helped to spur hundreds of new businesses and created thousands of jobs in the off-grid space. It also prioritized solar mini-grid applications at the NERC.

Another interesting policy implemented by this government is the National Content Development for Power Sector Regulation that aims to promote the deliberate utilisation of the local human workforce and material resources across the value chain of the Nigerian Electricity Supply Industry (NESI).

This policy empowered the NESI Nigerian Content Consultative Forum (NNCCF) to carry out periodic surveys to determine the national content participation in the sector. It provided for the specific inclusion of women’s participation in the local content regulation quota for jobs across NESI.

Perhaps, the most impactful policy yet is the Nigerian Electrification Project (NEP), a Federal Government credit facility initiative driven by the private sector, which seeks to provide electricity access to households, micro, small and medium enterprises (MSMEs) in off-grid communities across the country through renewable power sources.

NEP is being implemented by the Rural Electrification Agency (REA) in collaboration with the World Bank, AfDB, and other partners. This programme has increased electricity access to households and MSMEs. It helped to provide clean, safe, reliable and affordable electricity through renewable power sources to unserved and underserved rural communities. It has also developed a data-driven off-grid model for Nigeria that will become an exemplar for Sub-Saharan Africa.

The programme has ambitions aim to provide a reliable power supply for 250,000 MSMEs and one million households. Already, facets of the programme have led to the delivery of solar energy power to universities, markets, and hospitals across the country.

Read also: REA to build over 1000 mini-grids for off-grid communities

The most recent policy initiative which operators are excited about is the Solar Power Naija programme to support the economic recovery in response to the COVID-19 pandemic. The Federal Government launched an initiative as part of the Economic Sustainability Plan (ESP) to achieve the roll-out of 5 million new solar-based connections in off-grid communities.

The Solar Connection Intervention Facility will complement the Federal Government’s efforts in providing affordable electricity, through the provision of long term low-interest credit facilities to the Nigeria Electrification Project (NEP) pre-qualified home solar value chain players, expand energy access to 25 million individuals (5 million new connections) through the provision of solar home systems (SHS) or connection to a mini-grid, increase local content in the off-grid solar value chain and facilitating the growth of the local manufacturing industry and incentivize the creation of 250,000 new jobs in the energy sector.

Allowing private sector operators lead the charge to increase energy in underserved communities, creating forward-looking policies in conjunction with development partners and operators have opened the sector for investors like All On to play an active role seeding new businesses with grants and hiring competent people to manage the process.

All these, in our view, are economic growth enablers and this is why we urge the government to replicate this success across other sectors of the economy.