After a 10-year career in banking working for top banks including Morgan Stanley, Goldman Sachs, Schroders and Barclays within Investment Management Operations, Yewande Olagbende, CEO of SOLAD, returned to Nigeria to make an impact in the power sector by deploying large number of solar systems to unserved communities including schools. In this interview with ISAAC ANYAOGU, she explains that Nigeria’s renewable energy quest will proceed faster with more support from financial institutions.
Solad, through its partners Viathan and Rensource, has successfully quietened generators at the Sura Shopping Complex in Lagos and Sabon Gari market in Kano, for the past three years, what are the key success factors for these ground breaking projects?
Indeed the projects are groundbreaking and are proving that alternative energy solutions can help provide power to the masses. Transparency is key, continuous community engagement, dialogue with the consumers and ensuring fit for purpose solutions.
Please provide a clearer insight into the nature of your partnership with Viathan and Rensource?
Viathan provides the gas supply to Sura complex. This is only possible via a dedicated 2 KM 11kv distribution network from the Island Power Plant financed by Sura Independent Power Limited. Solad provides the management oversight of Sura Independent Power Limited.
Rensource and Solad have a partnership in the operation of Virtus, which aims to provide power to 10 markets in South West Nigeria. Rensource also operates Sabon Gari market which Solad invested in.
Why did you choose to approach ‘Power as a Service’?
Power as a Service (PaaS) is a business model which provides consumers with power for an agreed fee and without the need for consumers to make an upfront capital investment. Solad strongly believes Power as a Service is the quickest and most affordable way to increase energy access and truly help in achieving SDG7 which is ‘Affordable and Clean Energy’ ensuring access to affordable, reliable, sustainable and modern energy for all. We have over 80mn Nigerians without access to electricity and to expect this number of people to invest in upfront capital costs, would be a non-starter.
Commercial banks have been reluctant to finance off-grid projects because they do not see a clear path to cash flow and profitability, to what extent does this assessment agree with your reality. Or experience? Simply put what has been your experience in your engagement with financial institutions for financing?
Solad has invested over $3.5mn in providing energy access to unserved and underserved MSMEs in Nigeria, an investment which has impacted over 10,000 MSMEs to date. We are currently engaging with local banks to finance our pipeline of markets and highlighting the viability of the projects and the importance of powering economic clusters in catalyzing economic growth.
To date only one bank has truly stood behind renewable energy projects and continues to do so. I would like to see more banks involved and making an impact in this space.
Operators – Solad inclusive – have canvassed a broad range of government incentives such as tax waivers and duty exemptions. Why should the government do this and what would be the benefits for Nigeria?
Government incentives such as tax waivers and duty exemptions have one purpose which is ultimately to increase energy access. If the cost of equipment needed for installations is too high your project can quickly become unviable and can lead to higher costs to the consumer.
However, with waivers and exemptions this reduces the project capex. I am not advocating for this to be long term, but instead as an interim measure until such a time where local production and/or assembly catches up. If we truly want to increase energy access, we cannot ignore the need for importing certain components.
During the recent Sustainable Energy 4 All webinar, you argued for developing the right energy infrastructure as critical for localising manufacturing of solar energy components, how can this be done?
The funding required for localization of solar energy components needs to be easily accessible without stringent conditions which make it unattractive to the companies applying. Companies which have undergone due dilignence through REA should be able to access funds quicker. This will help remove red tape and bureaucracy and lend more time to actually putting localization plans into effect, delivering quicker energy projects and removing the reliance on imports.
The thinking in the sector is that the off-grid sector should move from providing solutions at the micro level to scaling the service to power thousands of homes and businesses, what are the biggest constraints to achieving this objective?
The lack of local funding is a huge constraint in scaling energy access. The challenge is even where foreign investors step in to lend to indigenous companies, there is the added worry about the repatriation of funds. Local banks won’t lend and where foreign entities do lend they can’t get their funds out. Additionally, quicker licensing and registration approvals will also help speed up deployments.
The Federal Government is embarking on deep reforms to improve grid power for millions of Nigerians, to what extent are you bothered about what obtains in this space?
I am in support of any reform that brings reliable, clean and affordable power to the masses. In addition to the Federal Government’s solar initiatives, the plans to upgrade the grid infrastructure are also welcome. To put it in context, over 80m Nigerians do not have access to power so the more reforms which come in to tackle this dire situation, the better.
SMEs have proven to be a lucrative niche and many operators are targeting providing solutions to this group, what makes them so attractive?
Simply put MSMEs’ demand power for most of the day (at least 8 hours) and as such will consume steady power for their trading purposes. This makes this group attractive to operators. There are thousands of markets each with multiple traders willing to pay for reliable power to operate their businesses. This leads to increased productivity, business expansion, increased employment and ultmately economic growth.
Finally, what in your view are the best three steps that can help bring down the cost of solar power installations in Nigeria?
Removal of import duties and tax waivers on renewable energy components
Localization – manufacturing solar system components for standalone solar systems, manufacturing and/assembly of solar home systems
Accessible government funding with less stringent criteria for developers/SHS distributors
