Clean energy: Game-changer for Nigeria?

9 December 2020
Interview with Temalide Sesan, Lecturer on energy poverty, climate change and social development in Africa, University of Ibadan

Nigeria is the biggest and most attractive off-grid opportunity in Africa, and one of the best locations in the world for minigrids and solar home systems.

Evelyn Seltier of the International Trade Forum talked with Prof. Temilade Sesan about small businesses, women in agriculture and the role multilateral institutions can play in promoting clean energy across the country.

What is Nigeria’s market potential for clean energy?

Nigeria’s market potential for clean energy is vast. The national electricity grid, mostly fossil-based, only serves 57% of the country’s population, leaving a huge supply gap. Longstanding subsidies on grid electricity are being removed while capital grants and low-interest loans are being provided for clean energy investments, making the latter increasingly competitive.

There is a real opportunity to build a new culture of dependence on clean energy technologies, especially among the 70% of rural dwellers nationwide not connected to any form of electricity. This is already happening on a small scale – for example, solar lanterns are replacing kerosene lamps in rural and urban areas alike with a new generation of robust technologies and intensive marketing to the last mile. Adopting a similar approach to integrating larger-scale, green technologies could boost their acceptance among users.

In a recent article, you said investing in clean energy is an exciting opportunity to nurture micro, small and medium-sized businesses within the sector. Why and how is this possible?

In a country where the official unemployment rate stands at 27%, many Nigerians have learned to generate jobs for themselves. For the most part, however, the dearth of power supply increases the cost of doing business and erodes profits for fledgling entrepreneurs.

Consistent Energy, a local clean energy company, shows the possibilities with its attempt to address this problem directly. The company runs a scheme which provides barbershops with solar home systems and then allows the proprietors to pay in instalments equivalent to the sums they would otherwise spend buying petrol for their generators.

Entrepreneurs at every level, from those who hawk cold drinks in city traffic to ‘cold room’ operators – the ubiquitous neighbourhood shops that sell perishable food items out of portable freezers – could benefit from clean energy services with options for payment that are tailored to their operational realities.

How do women, particularly living in rural areas, benefit from this investment?

Prescribed gender roles often mean that women and men experience energy interventions differently. Even where households are connected to electricity, women benefit the most when they can use the energy in the spaces where they work. In addition to being largely responsible for domestic work, women often run cottage businesses out of their homes, and access to even low-end technologies such as portable solar lanterns makes a big difference to their working conditions, especially after dark.

Moreover, women do most of the small-scale agro processing in rural areas, and investments in clean energy sometimes help them to mechanize labour-intense tasks. However, identifying the types of investment and delivery mechanisms that would be most suited to the needs and capacities of rural women is critical.

In your view, what more needs to be done to seize the market’s full potential?

There is a need to expand the strategy for clean energy provision beyond minigrids. A new federal government initiative that will provide low-interest loans to businesses to facilitate the installation of five million solar home systems in off-grid rural communities is a step in the right direction. To further drive demand for these systems, the government could partner with the private sector to provide consumer financing alongside the support it is giving to businesses.

Clean energy provision should be seen as just one component of a broader development plan, especially in rural areas. For example, launching a complementary programme to support larger-scale agro processing facilities would catalyse local economies and boost overall productivity, which would in turn increase the effective demand for clean energy in those areas.

What is the role of multilateral institutions in accelerating off-grid energy?

There have been several interventions by multilateral institutions in the area of clean energy, some of the more notable ones being the UN Development Programme’s Access to Renewable Energy and a $ 500 million investment by the World Bank and the African Development Bank to support capital subsidies for mini-grid development.

One area in which more support is needed locally is financial and technical assistance (including for R&D) to strengthen local manufacturing and distribution of clean energy technologies. Multilaterals could also help to promote institutional and governance reforms at the national level that would facilitate the equitable distribution of clean energy access.

How do you see Nigeria’s future on the market for green energy?

Nigeria has a long way to go in developing its market for green energy: according to the World Bank, renewable energy penetration in the country stands at 82%, but most of that is from biomass used for cooking on inefficient stoves. However, with the right national-level policies, much can be achieved.

The renewable energy target set by the Rural Electrification Strategy and Implementation Plan (10% of rural electricity generation by 2025) is very promising, as is the Federal Ministry of Environment’s commitment to meeting its Nationally Determined Contributions under the Paris agreement (the Green Bonds recently launched to finance sustainable infrastructure projects is an example). Combined with strategic support from international actors, the clean energy sector stands a real chance of becoming a game-changer for the Nigerian economy.