Rural Electrification: Projecting a $10 Billion Market

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The Nigerian Rural Electrification Agency, in conjunction with the World Bank Energy Sector Management Assistance Program (ESMAP),the Rocky Mountain Institute (RMI), Climate Investment Funds (CIF), and UK Department for International Development (DFID), hosted a five day summit in Abuja,Nigeria, with the theme “Upscaling Minigrids for Low Cost and Timely Access to Electricity Services”.

The initiative for this summit was based on a joint analysis that found that developing off-grid alternatives to complement the national grid will create a $9.2B/year (N3.2T) market opportunity for mini-grids and solar home systems that will save $4.4B/year (N1.5B) for Nigerian homes and businesses and subsequently unlock the nascent mini grid market in Africa.

The high-level forum was designed to accelerate action on scaling up mini-grids to help countries reach universal energy access by 2030, and was the fourth in a series of successful events on mini-grids organized by the global community in the past two years.  This is the first time this event was held in West Africa and was a clear indication of the commitment of the Federal Government of Nigeria towards supporting investment in off-grid electrification initiatives and the vast investment opportunities in Nigeria for the development of mini-grids and roll out of solar home systems which have a combined potential market of $9.2 billion annually.

A common challenge to mini-grid market growth is the fact that investors view the market as being too risky, which makes gaining access to adequate project financing rare and the market rate debt expensive.

Getting off-grid Electricity solutions to a commercially viable scale in Nigeria has the potential to unlock an enormous market opportunity in sub-Saharan Africa, across 350 million people in countries with smaller demand and/or less-robust economies.

However, at the event, it was clear that many stakeholders agree that Nigeria is well positioned to not only address market barriers but also to showcase to other nations that mini-grids are commercially viable.

In his speech, the Honourable Minister of Power, Works and Housing, Babatunde Raji Fashola SAN, reiterated that “I see only opportunities in Nigeria and not challenges and policies have been developed to help entrepreneurs fast-track energy access for underserved populations.” He also commended the instrumental partnership of the World Bank in developing the power sector and the Rural Electrification Agency for developing data to help private developers reach the communities they need.

In her presentation, the Managing Director, Nigerian Rural Electrification Agency, Mrs. Damilola Ogunbiyi, said that “The aim of Rural Electrification Agency is to roll out 10,000 mini-grids rapidly to support the underserved communities in Nigeria and with the current regulatory landscape, Nigeria is the best market to do mini-grids. The off-grid will be treated as importantly as the on-grid in Nigeria.”.

According to  Mr. Mac Cosgrove-Davies, Global Lead Energy, Access, World Bank, “In Nigeria, 80 million people lack access to electricity and millions suffer from unreliable service. The World Bank and the Government of Nigeria are working together to make mini-grids a viable solution to bridge a large share of the electrification gap in the country, and the Rural Electrification Agency will be the implementing agency for the fund”.

The event brought together more than 600 global participants from over 50 countries which included Governments, global organizations, the private sector, academia, NGOs and the media, to discuss ways to facilitate fresh investments in the sector as well as to accelerate the deployment of mini-grid systems. The summit ended with a site visit to 37.8 kW Bisanti solar mini-grid, constructed by GVE Projects Limited in collaboration with the Bank of Industry (BOI), United Nations Development Program (UNDP), and Institute of Electrical Electronics Engineers (IEEE) located in Katcha Local Government Area of Niger State, Nigeria.

Source: Energy News

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