In the last decade, China and seven other countries have attracted double-digit billion-dollar investments in renewable energy, a development that holds many lessons for Nigeria.
Compare to other countries, Nigeria’s renewable energy resource potential has not been fully exploited, mainly due to the low investment levels as a result of several factors ranging from poor policy implementation to lack of knowledge by the policymakers and regulators and more specifically, the absence of an enabling environment.
According to the 2019 report by research company BloombergNEF (BNEF), China has been the defining market for new clean energy asset finance over the last decade, attracting a gargantuan $700 billion which represents over two-thirds of all new clean energy asset finance for emerging markets tracked by BNEF from 2009-2018.
BNEF report noted that India and Brazil recorded the second and third highest investments of $79.9 billion and $56.3 billion, respectively while Turkey ($20 billion) and Mexico ($19.5 billion) followed well behind, trailed by South Africa ($17.2 billion), Thailand ($12.7 billion), and Chile ($11.5 billion).
BNEF report acknowledged that only South Africa saw its annual investment level rise in 2018, to $3.8 billion, largely due to the success of an auction program for new clean energy delivery contracts.
“In April 2018, the government signed power purchase agreements with 27 projects that had won contracts under auction rounds after three years of delays. The move helped restore some confidence in the South African market among investors,” BNEF report noted.
BNEF said Foreign direct investment (FDI) supporting clean energy set a new record in 2018 jumping from $22.4 billion in 2017 to $24.4 billion in 2018 with EU-based organizations remain the key foreign capital provider.
“Development banks represent the largest single foreign investor group and deployed a record volume of capital for clean energy in 2018. These institutions, which include the World Bank and others, invested $6.5 billion, up from $4.5 billion in 2017,” BNEF said.
BNEF report said Italian utility Enel remains the top overall provider of capital to clean energy assets in developing countries with $7.6 billion invested to date. The World Bank, Germany’s KfW and the U.S. Overseas Private Investment Corporation remain familiar names in the top ranks of clean energy investors between 2009 and 2018.
Nigeria, like other nations, has long recognised the potentials of renewable energy in the promotion of environmental sustainability. However, unlike countries such as China, Brazil, and Germany, Nigeria’s huge renewable energy potentials have not been fully utilised.
Nigeria depends on non-renewable energy despite its vast potential in renewable sources such as solar, wind, biomass and hydro. The total potential of these renewables is estimated at over 68,000MW, which is more than five times the current power output.
The exploration of these potentials and the production of renewable energy on a large scale would significantly increase Nigeria’s electricity grid and ease power shortages in the country. Electricity created from renewable sources is cleaner, more efficient and more easily replenished.
Stakeholders have said given Nigeria’s status as a fossil-fuel dependent economy with a large climate-sensitive agricultural sector, the development of a climate change policy and response strategy is critical; as climate change portends a serious threat to poverty eradication and sustainable development in general.
One of the key pillars of Nigeria’s Vision 20:2020 is investment in low carbon fuels and renewable energy which might fail to see the light of days due to challenges of effective implementation of policy.
DIPO OLADEHINDE
