• Monday, May 20, 2024
businessday logo

BusinessDay

Nigeria lags in renewable energy investment as peers lead charge

businessday-icon

As investment in renewable energy is surging globally and other African developing countries such as South Africa (SA) and Ghana, strive to take leadership in the sector, Nigeria apparently has yet to key into the sector despite the abundance of the mix of rich solar, wind, biomass and hydro energy resources in the country.

Last year, Africa had about $4.3 billion of the $268.7 billion invested worldwide in renewable energy, according to data from Bloomberg New Energy Finance, but South Africa accounted for most of it.

It had the biggest annual clean energy investment growth rate in the world last year, outstripping China, Japan, South Korea and a host of other economies, and entered into the global green power league.

The continent had about 36 projects, 28 were in South Africa, with Kenya, Nigeria, Ethiopia and Zimbabwe accounting for the rest.

“Last year, about $260 billion was spent globally, but Nigeria’s investment was almost zero. It was very low,” says Segun Adaju, project manager, Bank of Industry/UNDP Access to Renewable Energy.

He listed factors such as lack of awareness and application of available technologies, finance and lack of policy framework as obstacles to investment in the sector.

He continued: “Government should create an enabling environment to encourage and attract investors and project developers. These people are business people and they are looking for the best market to put their money. That is why they are going to other African countries such as Ghana.”

Analysts believe that Nigeria needs to join the growing league of countries harnessing renewable energy as the costs of technologies to capture that energy are rapidly falling and becoming economically

competitive with fossil fuels. They add that it further reduces the risk of climate change and creating jobs, fostering economic growth, and improving electric power supply.

Patrick Mgbenwelu, director and head, Project and Structured Finance, FBN Capital, said the government might have to look to the private sector and international banks for funds to develop its renewable energy, as a lot of banks in the country do not understand the dynamics for financing that type of project.

He said: “I think the first few projects that might take off might have to be transactions which are funded by the government, with some collaboration from the private sector, but they might need to bring in one or two international banks who have done it before. Many Nigerian banks though, are willing to lend, but because they really don’t understand the type of due diligence that is required on this task, I don’t think we will see much investment in the sector from them.”

Anita Okuribido, president, Council for Renewable Energy, Nigeria, who spoke at a recent BusinessDay Conference, who echoed that Nigeria had not invested appreciably in renewable energy, otherwise known as clean energy system, stressed the need to fully integrate green sources of energy in the nation’s energy mix, to increase power generation.

The power minister, speaking recently with visiting Business Group from Britain about the huge investment opportunities in renewable energy to generate electricity as alternative source of power, alluded to the lack of policy as a setback to investments, adding that the ministry was committed to formulating a workable policy on renewable energy and energy conservation.

Just last week, minister of power, Chinedu Nebo, said the federal government was planning to build more dams for hydro power uses, to complement the existing hydro power stations in the country, adding that the country needs a robust super grid network which is estimated to cost N3.4 billion dollars.

Nigeria is endowed with sources of renewable energy such as solar, wind, biomass, hydropower, geothermal and ocean waves, which can be transformed to supplement the energy from fossil fuel sources such as natural gas and oil, but little investment is seen in that sector.

In Nigeria, the government had in August 2012 said all was set to begin the construction of the 3,050 megawatts (MW) Mambilla Hydro Power project in Taraba State and the 700MW Zungeru hydro plant in Niger State, intended to give additional capacity to the nation’s power generation, which currently hovers around 3,500 to 4,000 MW.

In Sub-Saharan Africa, Ghana is at the forefront of the renewable energy revolution, as it is now on the lookout for investment of as much as $1 billion to develop renewable-energy resources over the next eight years, to extend reliable energy access to all of its citizens.

Plans are underway for UK-based Blue Energy to build Africa’s largest solar power plant (155-megawatt photovoltaic) in the country, which is expected to add 500 megawatts of power to Ghana’s electricity capacity.

Having put policies in place to exploit the country’s energy potential in solar, biomass, wind, as well as mini-hydro, the country is also partnering with private-sector operators to develop these resources.

Ghana, through its 2011 Renewable Energy Act, has established a system of feed-in tariffs, which is aiding the government in attracting foreign investment for its renewable energy schemes towards achieving its target of generating 10 percent of its electricity from renewable sources by 2020.

FEMI ASU