A new frontier has opened up for Nigeria and other West African countries for economic growth, on the heels of the climate change economy which presents opportunities for African countries to commercialise renewable energy production through exportation to Europe.
It is an interesting frontier, though unconventional, but with a proactive private sector response, Nigeria could be on its way to economic success.
The renewable energy industry is on the front page of the global energy market with an expenditure budget that could amount to USD1.5 trillion in 2022.
This has therefore presented the country with the opportunity to grow local technological capacity into a new business model that is integrated into a global framework.
While investigations by EnergyDay revealed that Nigeria may have adopted a modest target to grow its renewable energy to 30% by the year 2030, the World Bank, in consensus with the economic commission for Africa, said the country could be losing out on current investment opportunities.
The World Bank particularly mentioned that Nigeria needs to use global demand for renewable energy as a peg to attract Foreign Direct Investment. But the country risks this huge economic opportunity due to its limited ambitious targets.
EnergyDay is not just in agreement with the perspective of the international development financial institution, but we have taken the lead in promoting the adjustment of the country’s policy perspective on this subject.
We are of the opinion that the country is rather too fastidious in holding on to natural gas at the expense of taking advantage of other opportunities.
Although, it is indisputable that natural gas is our primary energy resource, which is our energy transition fuel, this should not preclude Nigeria from taking advantage of other non-conflicting opportunities.
Morocco, for instance, within the African continent, is at the forefront of exporting renewable energy to Europe at a cost that is largely funded through the green bond mechanism.
Tunisia and Algeria are planning to link their marine renewable energy through the Strait of Sicily to Italy. Morocco is also planning to export energy to Spain through undersea high-voltage direct-current cables with 3.6GW capacity. Greece and Egypt are in the final phase of an agreement for a submarine interconnector with 2GW capacity.
There is nothing stopping Nigeria with its abundant renewable energy resources including hydroelectric, solar, wind, tidal, and biomass, from taking advantage of this huge energy export opportunity to supply current energy demand of the EU.
The World Bank has positioned itself as a partner to finance some of these energy projects. The bank said its core mandate is to finance critical needs of green growth and adaptation in Africa.
The bank said it stands ready to partner with stakeholders across West Africa on this journey. It said, “Green and sustainable bonds, together with the increased level of transparency that they bring with them, can help many countries in the region in their journey towards securing market financing for future investment.
This view is even more strongly echoed by Hanan Morsey, United Nations Economic Commission for Africa (ECA) Deputy Executive Secretary, who declared that “ECA has demonstrated that a green recovery, based on green investments, can generate up to 420% better returns in gross value added and up to 250% better returns in job creation.”
Jean-Paul Adam, another senior executive of the UN ECA in charge of Technology, Climate Change, and Natural Resources Management, also said, “Africa has low private sector investment and high costs of capital to invest in green, sustainable, or social sectors.”
“While Africa has 23 percent of official climate finance, it has less than 1% of global green bond issuances and is paying twice more than similarly rated peers to access markets.”
He said Africa faces multiple challenges today that include: debt burden and historical high cost of borrowing; recovery post COVID; climate change related issues; energy and food shortages due to the Ukraine war.
These challenges, according to him, make it even more necessary for African states to benefit from new ways to raise money from private investors in a transparent and efficient framework and at reasonable rates.
EnergyDay acknowledges the past effort of the Nigerian Stock Exchange to grow the Nigerian Green Fund initiative and commends the considerable success recorded thus far, but going forward, we strongly urge members of the organised private sector, within the renewable energy sector, to become more audacious in taking advantage of global opportunities.
Nigeria has specific Renewable Energy generation targets which include working towards off-grid solar photovoltaic (PV) of 13GiggaWatt, but this target is too modest in the circumstances considering the huge global opportunity at our disposal.
The Power Purchase Agreements (PPAs) for the 14 solar independent power producers (IPP) projects in 2016 are clear examples of the country’s commitments within this space, but the projects are heavily hampered by funding constraints, technology issues, and poor capacity in terms of knowledge-transfer and corporate governance defects.
The success of Shiroro hydropower in successfully raising green funds some three years ago is laudable, but this is too minimal compared to the fact that there are over 20 hydropower projects that are presently awaiting funding support from the FDI market.
Since 2016, the Pan Africa Solar Project for 75 MW has remained unfinished.
Nigeria Solar Capital Partners’ 100 MW project has been on hold for the past 7 years.
Multidesable Limited is also yet to complete 100MW in Nasarawa State; these are scanty examples of solar electricity projects that could gain completion through the injection of cheaper funding support.
EnergyDay therefore urges private sector players to take urgent advantage of the World Bank’s sovereign green fund and other international financing opportunities to develop additional infrastructure to boost the present investment in electricity production.
Nigeria should lead other West African countries to champion the course of generating sufficient electricity for domestic needs and develop capacity to undersea electricity cables running to southern Europe and onward to the European power grid.