Investors in Renewable Energy, Regulators Chart a Way Forward in Risk Management
Critical stakeholders and regulators in the nation’s renewable energy sector have agreed on what is possible about removing obstacles to investing in on and off-grid Renewable Energy (RE) electricity generation. Bennett Oghifo reports
There are many unnecessary obstacles to investing in on and off-grid Renewable Energy (RE) electricity generation in the country. In realisation of this fact, some investors in RE and the regulatory bodies deliberated on what these obstacles are and how to surmount them.
The issues and the way forward in ensuring sustainable investment in RE sector were discussed with plans to have sub-committee brainstorming sessions to fine-tune the whole process.
The 2-day Grid-Connected Renewable Energy Forum was organised by the Global Environment Facility (GEF)/United Nations Development Programme (UNDP), in collaboration with the Energy Commission of Nigeria (ECN), the Federal Ministry of Environment, Federal Ministry of Power, Works and Housing and other stakeholders in conformity with the implementation of a 5-Year project entitled “De-Risking Renewable Energy NAMA (Nationally Appropriate Mitigation Action) for the Nigerian Power Sector”, which commenced last year.
The UNDP-GEF intervention recognises that a large number of licensed IPPs for both on and off-grid Renewable Energy (RE) electricity generation in the country are faced with many challenges.
Thus, the Forum discussed internationally recognised De-risking Renewable Energy Investment (“DREI”) methodology in addressing barriers and risks hindering private-sector-driven Grid-Connected Renewable Energy (RE) business in Nigeria and also created opportunity for Independent Power Producers (IPPs) to deliberate on issues and challenges hindering their progressing to financial close. They also discussed equipment procurement and construction, as well as recommended ways the De-risking Project could be structured to minimise the barriers.
In a goodwill message, Senator Oluremi Tinubu, Chairman Senate Committee on Environment stated that Nigerians are aware of the opportunities and benefits that renewable energy sources provide toward economic development and environmental quality of the nation.
She said, “It has been shown to be actually cheaper and more sustainable with a much lower environmental impact than conventional energy technologies. These environmental effects, in turn, negatively impact health and wellbeing of the people.
“Therefore, as law makers, we remain committed to enacting, amending subsisting Acts and adopting appropriate policies that would help to reduce environmental pollution and achieve a cleaner and greener economy.”
She commended the United Nations Development Programme, Global Environment Facility and other collaborating stakeholders “for organising the forum in putting together such a wonderful platform for deliberation.”
Welcoming participants, Director-General/CEO Energy Commission of Nigeria (ECN), Prof Eli Jidere Bala recalled that in June 2017, UNDP in collaboration with national stakeholders in the renewable energy sub-sector “launched a GEF-supported project titled: ‘De-Risking Renewable Energy NAMA (Nationally Appropriate Mitigation Action) for Nigerian Power Sector’. Nigeria got this support because the nation lies within a high sunshine belt and thus has enormous solar energy potentials.
“The mean annual average of total solar radiation varies from about 3.5 kWhm-2 day-1 in the coastal latitudes to about 7 kWh-1 2day-1 along the semi-arid areas in the far North. On the average, the country receives solar radiation at the level of about 19.8MJm-2-day- 1.
“Unfortunately, the inherent risks in large-scale RE development in Nigeria has made it difficult for policy makers in the sector to reach some agreements with prospective private investors willing to exploit these huge renewable energy resources in the country.
“With regards to financing opportunities, domestic financial sector is not financially buoyant to provide low cost local capital for renewable energy investments. Therefore, IPPs now depend on international Development Finance Institutions (DFI), who require partial risk guarantee (PRG) from Federal Governments. As we speak, none of the utility-scale pipeline projects have actually secured DFI financing.
“The UNDP-GEF project is geared towards the implementation of policy and financial de-risking instruments aimed at identifying and addressing barriers hindering large-scale renewable energy development in Nigeria. Tackling these barriers will result in building a successful first ever IPP solar PV project in Nigeria connected to the national grid to serve as a demonstration project that will enable us evaluate the technical, institutional and economic viability of on-grid RE projects in Nigeria. It will also help in building local capacity to foster rapid adoption and replication of grid-connected solar projects.
“It is against this background that this 2-day Forum was organised to identify and sensitise all Independent Power Producers (IPPs) with interest in renewable energy development and create a platform for them to deliberate on the issues and challenges hindering their progressing to financial close, equipment procurement and construction; as well as recommend ways the De-risking project can be structured to minimize the barriers. The specific objectives of the meeting are to: *Create awareness among Stakeholders on the project: “De-Risking Renewable Energy for the Nigerian Power Sector”; Establish the current status and challenges of on-grid renewable electricity generation in Nigeria.
“It Is our collective believe that stakeholders in this Forum will frankly discuss whatsoever is standing as a barrier to electricity generation from renewable energy sources and proffer long-standing solutions that will move the Nigerian renewable energy sub-sector forward to a greater height.”
Prof Eli Jidere Bala thanked “GEF and UNDP for their sustained contributions towards eradicating energy poverty in the country.”
