Nigeria’s offgrid sector saw significant funding both from local and international sources in the past year. One of the biggest funds came to Rubitec Solar who built an 85kw solar hybrid mini-grid in Gbamu Gbamu, Oyo state, with 500 million euros financing from GIZ, a German development agency.
With an off-grid market estimated at over $9.2billion, there are vast opportunities for companies willing to take a risk in a market where over 75million Nigerians are without access to reliable electricity.
The 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 and the Nigerian Rural Electrification Agency (REA) says 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, close to N300bn worth of funding has come into the Nigerian off grid space last 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.
ISAAC ANYAOGU
