The first time people in Gbamu-Gbamu village, in Ijebu-East Central Local Council of Ogun state saw electric power was in February this year when a local renewable energy firm, Rubitec Solar built an 85kw solar hybrid mini-grid with over 100 million euros financing from GIZ, a German development agency.
Like in Gbamu-Gbamu, so also in many rural communities in Nigeria, new investments is improving energy access for over 75million Nigerians without grid power in a market worth over $9.2billion and experts are calling on local investors to get in the game.
“80 percent of investment flows into the off-grid sector are coming from outside the country and local investors run the risk of getting into the game late,” warns Ify Malo, Nigeria Campaign Manager for Power For All, a decentralised renewable energy advocacy, citing the African Progress Report, at a capacity development workshop for energy reporters in Lagos on November 12.
Malo said that no investor will come into any sector without a promise of value hence the sector offers vast opportunities waiting to be tapped.
Many Nigerians are yet to be weaned from the false narrative about solar being unreliable and unable to power heavy equipment. There also the concern that solar is too expensive. However, the falling cost of solar panels and battery is making the sector attractive especially in Nigeria where market opportunities are huge.
According to the World Bank’s Off-grid Solar Market Trends Report for 2017, Nigeria is the second largest market in the world for off-grid electricity with 8% of global off-grid households. The Nigerian Rural Electrification Agency (REA) says Nigeria’s mini-grid market is worth $9.2billion a year and solar home systems can save Nigerians $4.4bn a year in energy cost.
In the last three years, organisations like the United States Africa Development Foundation, (USADF) African Development Bank (AfDB), GIZ and Heinrich Boell Foundation, have ramped funding and advocacy about the prospect of off grid to deliver energy access for millions of Nigerians without power.
According to BusinessDay calculations, about $500 million worth of funding has come into the Nigerian off grid space this year alone, backed by technical and governance support.
The World Bank has provided the Nigerian government, a $350 million loan for the development of rural electrification projects in the country. In October, Shell-seeded, All On, announced partnership with the African Development Bank (AfDB); the Nordic Development Fund (NDF); Global Environment Facility (GEF); and Calvert Impact Capital (CIC) towards a $58 million first close for the Off-Grid Energy Access Fund (OGEF).
CD Glin, the CEO and President of USADF told BusinessDay that his organisation has provided about $10million dollars in funding to different activities in Nigeria including off grid energy sector.
In Nigeria, All On headed by Wiebe Boer, is the only local investor focused solely on Nigeria’s off grid energy sector. All On has actively championed local investment through grants, seed funding and energy challenges where the most innovative ideas receive funding.
In July it gave four early stage energy companies $40,000 in funding for innovative renewable energy solutions ranging from a generator powered by water to an air conditioner that does not require electricity.
Last month, All On and USADF announced winners of another round of energy challenge, awarding $100,000 grant, half in the form of low interest loan between 7 and 10 percent over five years and half as grant to support 10 different companies providing energy solutions for productive use in agro processing to a solar power assembling plant.
“All On is working hard to encourage other local investors as well as local commercial banks to invest in the sector,” Boer, company CEO told BusinessDay.
He further said, “However, as it is a nascent sector with mostly unproven businesses, off grid energy companies are beyond the risk of appetite of most local investors,
We are confident though that as All On and other investors derisk off grid business and help them scale, we will see substantial local investment pouring in,” Boer said.