SEforALL

The Federal Government’s (FG) recent launch of the Energy Transition Plan (ETP) in Nigeria aims to usher in an increase in the development and adoption of renewable energy projects in the country. However, with access to funding still being a huge challenge to solutions developers, it is pertinent that there are strategies aimed at de-risking investments in energy companies.

For Africa, reducing energy poverty is just as important as achieving climate action goals. Vice-President Yemi Osinbajo stated this at the virtual launch of the ETP. Professor Osinbajo added that Nigeria would need about $410 billion, approximately $10 billion per year, to implement the plan fully.

The goals of the energy transition plan include bridging the energy access deficit and reducing emissions across five major sectors of the economy. These sectors include Cooking, Industry, Oil and Gas, Power and Transport. From the set frameworks, the ETP is expected to lift 100 million Nigerians out of poverty, encourage the adoption of modern energy services, enable an equitable energy transition in Africa that includes gas and create jobs.

One way to boost economic growth by reducing energy poverty and emissions is by providing clean energy solutions for businesses. According to the 2021 State of Entrepreneurship in Nigeria Report, Micro, Small and Medium Enterprises provide 49.8 per cent (%) of the country’s Gross Domestic Product (GDP).

According to the World Bank, the electricity access deficit in Nigeria leads to about $29 billion in losses for businesses. Hence, business owners must have clean energy solutions to run their businesses effectively. However, due to a lack of funding, how can solutions developers de-risk investments in their energy companies?

At the launch of the ETP, Prof. Yemi Osinbajo also announced the Universal Energy Facility (UEF) launch in Nigeria. The UEF is a result-based funding facility that aims to scale energy access for productive uses in sub-Saharan Africa. The facility is sponsored by Sustainable Energy for All (SEforALL) in collaboration with several international donors and provides incentives to companies that deploy renewable energy solutions.

The UEF, which already operates in Sierra Leone and Madagascar, initiated its first programme in Nigeria called the Stand-Alone Solar for Productive Use (SSPU). According to SEforALL, the main objectives of the SSPU programme include:

• De-risking investments in solar energy companies by providing incentives that enable these companies to expand their services to Small and Medium Enterprises (SMEs).
• Improving electricity access for Small and Medium Enterprises (SMEs).
• Phasing out dirty energy sources such as fossil fuel generators.

The SSPU programme, which would pay 40 per cent of the Capital Expenditure (CAPEX) for each deployed unit, will ensure the provision of clean energy solutions for businesses to operate. This would go a long way in enabling solutions providers to access more funding.

De-risking investments in energy companies is just as crucial for Nigeria. This would boost the development of more renewable energy projects, help the country achieve its carbon emissions goal, create jobs and improve economic growth.