As Nigeria struggles to find a solution to its energy supply crisis, local and international experts have continued to offer ways to transition to climate-friendly, low-carbon energy sources.
The World Bank, in collaboration with The Electricity Hub, a media organization focused on electricity, recently hosted the 69th monthly Energy Dialogue to discuss the federal government’s goals and ambitions for climate action, including challenges to a low-carbon transition and climate resilience across various sectors.
Nigeria’s Nationally Determined Contribution Commitments (NDC), Energy Transition Plan (ETP) and revised Climate Change Act call for ambitious measures to increase renewables and transition to low carbon energy sources.
The Carbon Neutrality Roadmap depicts a complete transformation of Nigeria’s energy sector. This will require achieving some unprecedented goals, such as adding 5 gigawatts of solar energy each year, electrifying 80 percent of the transportation fleet and converting more than 80 percent of the population to zero-emission cook stoves.
The amount of funding required to achieve these goals is truly unprecedented with some estimates suggesting that Nigeria will need $410 billion more than usual business spending over the next 30 years.
The Action Plan reported that the panel discussion at the Power Dialogue included the Head of the Green and Digital Economy Department, the EU Delegation to Nigeria and the Economic Community of West African States, Inga Stefanovic; Managing Partner, Business Process Solutions Consult Ltd. , the local partner of Nova Scotia Power Development Limited (NSPDL), Zakari Aliyu; Researcher and Communication, Nigerian Energy Transfer Office (ETO), Oluwagbemisola Akinsipe; and CEO of ClimFinance Consulting, Chinma George.
In its analysis of climate targets set by the federal government and plans to reach net zero by 2060, Olgagbesula noted that the Office of Energy Transition is beginning to link NDC goals to current ongoing projects through international financial assistance.
These projects include the Naija Solar Project and the Clean Cooking Expansion Plan, which seeks to provide clean energy sources for electricity and cooking and reduce carbon emissions in the country.
Regarding climate action plans in Nigeria, the Communications Officer highlighted that most of the solutions needed to reach net zero are not cost-effective. Therefore, there is a need for the government to implement policies that attract private sector actors to invest in climate-friendly solutions to achieve its objective.
For her part, Inga Stefanovic indicated that the EU is in a position to help Nigeria achieve its climate goals. She noted that the Federation cooperated with the Vice President’s office to assist in some studies related to the launch of the Clean Cooking Expansion Program.
But she noted that the EU’s ban on funding fossil fuel projects is strict. It has shifted its financing to renewable energy development and has started commercializing renewable energy projects in Nigeria.
The Delegation of the European Union to Nigeria and the Economic Community of West African States added that about 200 million euros were disbursed in grants to support the development of off-grid solar projects. Inga highlighted the latest EU programme, and indicated that the EU intends to support Nigeria’s energy diversification plans through engagement with stakeholders.
The European Union has already initiated co-financing opportunities with the German government. Inga added that the EU is looking forward to capacity development and training for small energy development companies to make them attractive to foreign and domestic investment.
Addressing the potential for improving decarbonization of the energy sector via renewable energy, Zachary Aliou noted that utility-scale solar projects can significantly improve energy access. He said about 14 solar companies have signed Power Purchase Agreements (PPAs) with the federal government over solar energy investments.
However, while this project has significant electrification potential, it has suffered setbacks stemming from exchange rate, payment and sovereign guarantee challenges.
In addition, the sector lacks sectoral maturity as it is not ready for bilateral trade. Hence, there is a need for the government to provide financiers with ROI guarantees for utility scale solar projects.
The Managing Partner also indicated that the Federal Government, through the Office of the Special Adviser for Infrastructure, and in collaboration with the Ministries of Energy and Finance, intends to create a blended funding provision for Independent Solar Power Plants (IPPS).
He revealed, “This agreement will see financial institutions such as InfraCorp, Africa Finance Corporation (AFC) and local banks provide naira lending opportunities to enable IPPS to access sufficient repayable capital for projects in the short term.”
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