As Nigeria commences the gradual easing of the lockdown that was introduced in Lagos State (the commercial hub), neighbouring Ogun State, and Abuja, the nation’s capital, to combat the spread of COVID-19, the negative economic effects of the disruptions caused by the COVID-19 pandemic continue to be on the rise. The major sectors of the economy are heavily impacted, including the oil and gas sector which is responsible for the majority of the country’s revenue. The Minister of Finance, Budget and National Planning, Zainab Ahmed, recently stated that the Federal Government will amend the 2020 budget with an oil price assumption of US$20 per barrel, while the Director-General of the Budget Office of the Federation, Dr. Ben Akabueze, stated that oil revenues are expected to fall by more than 80%¹. The Nigerian power sector is also not spared from the harsh realities of the COVID-19 pandemic².

Off-Grid Renewable Energy Solutions – Benefits

With the gradual easing of the lockdown and the need to spur economic activities as we begin the journey towards recovery, the need for steady and affordable power supply cannot be overstated given the proven link between access to energy and economic development. As reflected in Goal 7 of the Sustainable Development Goals³, there is a need to ensure access to affordable, reliable, sustainable and modern energy for all. Considering the obvious economic situation that we are all faced with due to the COVID-19 disruptions, this should be an immediate objective.

The problems bedeviling grid-supply of electricity in Nigeria have been variously debated, both pre-COVID-19 and during the COVID-19 period. It is safe to say that these problems, such as technical and non-technical losses, non-cost-reflective tariffs, massive indebtedness, transmission infrastructure/capacity, fuel supply challenges etc., will also be debated post-COVID-19; hopefully, with a firm resolve to implement strategies and plans to tackle them definitely.

However, to further push the Nigerian economic recovery efforts, there is a need to step-up the contribution of off-grid renewable energy solutions to the much-needed electrification of Nigeria. Scaling up the contribution of off-grid renewable energy solutions (in both urban and rural areas) will undoubtedly reduce the burden on the grid and improve access to affordable, reliable, sustainable and modern energy for households, micro, small and medium enterprises, large enterprises and critical public facilities in the road to economic recovery.

As recongised in Nigeria’s 2015 Renewable Energy Policy, “energy constraints are limiting our economic growth”. In this COVID-19 era and post-COVID-19, we must deploy both on-grid and off-grid energy solutions for economic growth.

According to the 2015 Renewable Energy Policy, the application of renewable energy has the potential to raise Nigeria’s growth rate and deepen its effect on real sectors of the economy, enhance the modernization of agriculture, increase the quality of life, create jobs, support productive use and business development, improve social service delivery and reduce the adverse environmental impacts on growth and consumers. The economic justification provided in the 2015 Renewable Energy Policy for the deployment of renewable energy sources still rings true in this new COVID-19 reality that we are all faced with.

Given the above benefits of renewables, which are indeed critical in the COVID-19 era, concerted efforts by all stakeholders must be made to improve the contribution of off-grid renewable energy solutions to Nigeria’s power needs.

Stakeholders Actions – A step in the right direction

In this regard, the Rural Electrification Agency (“REA”) must be applauded in the swift steps it took to deploy solar mini grid for selected health centers⁴. Hopefully, the REA will scale-up the deployment of off-grid solar solutions in the coming weeks and months in line with its outlined plans⁵ to:

• Provide emergency electrification at COVID-19 isolation centers across the country and reference laboratories across the country;
• Collaborate with development partners on accelerating grant disbursement to qualifying developers of solar home systems and solar mini-grid projects;
• Continue the implementation of the Rural Electrification Fund disbursement for projects; and
• Engage the Central Bank of Nigeria (“CBN”) towards the inclusion of energy access companies and off-grid developers under the COVID-19 intervention programme of the CBN.

In addition to government efforts, private sector players have also stepped in. All On, an impact investing company, announced a N180 million COVID-19 solar relief fund to power emergency health care in Nigeria⁶, moratorium on loan interest payments⁷ and the funding of the solar installation at Eleme hospital isolation facility in Rivers State⁸. It is recommended that more private sector players should direct their COVID-19 palliatives towards the deployment of off-grid renewable energy solutions to power the economic recovery.

Further, businesses can also tap into the investment opportunities associated with the off-grid renewable energy market, for example, the Nigeria Electrification Project (“NEP”) - a Federal Government initiative that seeks to provide electricity access to households, micro, small and medium enterprises in off grid communities across the country through renewable energy sources. The REA and the African Development Bank (AfDB) had earlier in March 2020 unveiled another phase of the NEP worth US$200 million to provide electricity to over 500,000 people across 105,000 households. ⁹ The components of the project include solar hybrid mini grids, energy-efficient appliances for productive use, the energizing education programme, and technical assistance and capacity building.

The CBN Governor, Godwin I. Emefiele, also recently noted the need to build a base of high-quality infrastructure, including reliable power, that can engender industrial activity. As part of its medium term (0-3 years) policy priorities, the CBN plans to focus on 4 main areas including renewable energy. According to the CBN Governor, the CBN will support the financing of environmentally friendly energy production over the next 3 years¹⁰.

Another funding source that businesses seeking to provide off-grid renewable energy solutions may explore is the COVID-19 Energy Access Relief Fund – a EUR100 million targeted concessionary debt fund aimed at enabling off-grid energy companies in Sub-Saharan Africa (which includes Nigeria) and Asia to maintain existing energy services and retain staff for the delivery of future services.¹¹

Given that the demand for reliable and affordable power will be on the rise, particularly as households, businesses and governments at all levels seek to recover from the adverse economic impact of COVID-19, this market demand for reliable and affordable energy creates opportunities for companies and investors in the off-grid renewable energy space. Indeed, and as echoed by the CBN Governor, we can all turn the COVID-19 tragedy into an opportunity. 

Conclusion

As the countries around the world accelerate plans to secure victory over the COVID-19 pandemic and implement economic recovery policies, the rapid steps implemented by government agencies, development partners and the private sector to deliver off-grid renewable energy solutions in Nigeria provide a beacon of hope during this gloomy period. However, further actions are required to step-up the contribution of off-grid renewable energy solutions to the electrification of Nigeria and its economic recovery – a good place to start would be the focused implementation of the various strategies and incentives articulated in the Nigerian Renewable Energy Policy.

1. George L, Akwagyiram A. May 5, 2020. Nigeria's government expects economy to contract by 3.4% in 2020. Reuters. Retrieved May 6, 2020 from https://www.reuters.com/.
2. Anyaogu I. Apr. 30, 2020. COVID-19 unravels Nigeria’s failing electricity market. BusinessDay. Retrieved May 6, 2020 from https://businessday.ng/; NERC Order on the Transition to Cost Reflective Tariffs in the Nigerian Electricity Supply Industry dated Mar. 21, 2020.
3. The Sustainable Development Goals are a set of 17 integrated goals adopted by all Member States of the United Nations in 2015 as a universal call to action to end poverty, protect the planet and also ensure that all people enjoy peace and prosperity by 2030.
4. https://rea.gov.ng/.
5. https://rea.gov.ng/.
6. https://www.all-on.com/.
7. https://www.all-on.com/.
8. https://www.all-on.com/.
9. https://rea.gov.ng/.
10. Letter from the CBN Governor titled; “Turning the COVID-19 tragedy into an opportunity for a new Nigeria”.
11. https://www.energyaccessrelief.org/. See https://www.gogla.org/advanced-search?combine=covid for further funding opportunities.