Experts say mini-grids, powered by renewable, can move Nigerians from poverty

The conversation around mini-grids powered by renewable energy has been unceasing in Nigeria as the industry stakeholders continue to express optimism about the scalability of this alternative energy system, and as a result, this relentless push for mini grids is gaining traction as the sector continues to grow and expand.

In Nigeria, energy access and reliability which has been described as closely linked with poverty can only be overcome by providing people with a steady stream of electricity in order to carry out various economic activities. A recent report by Brookings Institution showed that Nigeria has the highest number of poor people in the world, a sad but true reality as a whopping 87 million people are languishing in extreme poverty and a major way to lift these people out of the dire conditions they are in is electricity.

This issue aforementioned and others were thoroughly addressed by the industry players at Sustainable Conversations, themed mini-grids; bridging the electricity gap through renewables, organized by ThistlePraxis Consulting and IHS Towers.

Ify Malo, country director, Power for All, who was present at the event spoke on the issue and said that “looking at the issues around electricity, it is actually a poverty issue, there is something we call the energy ladder, and if we don’t get people climbing that ladder from tier 1 to tier 5 using much more sophisticated methods of energy access, we are going to have a lot more people remaining in poverty.”

She also said that the gap would continue to grow until more people are given electricity to bridge this gap. And that the only way to do that was through renewable energy, mostly three quarter of Nigerian un-electrified are living in rural and deep rural communities.

Energy access is a problem majorly faced by rural inhabitants who don’t have access to electricity at all while unreliability is faced by urban dwellers, who are paying for electricity but are not getting enough or even getting at all to meet their energy needs.

“There are so many communities in Nigeria that have not seen electricity,” Malo lamented.

Sanusi Ohiare, executive director, Rural Electrification Fund, Rural Electricification Agency (REA) who echoed the sentiments, said that, REA in conjuction with Rocky Mountain Institute carried out a study and found out that almost 100 million Nigerians don’t have access to electricity, which means half of Nigerians don’t have access to electricity.

He said the gap is huge, and that more needs to be done to bring more players especially renewable energy technologies. “Minigrids are not just solar, there are other technologies that can be found within a site. So we are looking at mini hydro, small wind farms, but mostly solar,” he said.

There was also a consensus on how to scale up and meet the ever growing demand and the experts all agreed that a healthy mix of foreign and local investment is required, in order for players to be able to access funds at affordable rates. Most mini grids projects are funded through a mix of private equity and debt which limits the size of projects the players can undertake. Despite the challenge of adequate funding, indigenous companies are driving the space.

Malo noted that it was surprising to see that the majority of the mini grid development that has been seen in Nigeria has been from local players rather than foreign.

“I haven’t seen one foreign company deploy one mini grid in Nigeria, despite the fact that they are more capitalized than the local players,” she said.

Ohiare also added that “since, it has been proven that the renewable energy technology and business models work, what we are focusing on is scaling up.”

“We don’t want people to pilot anymore, we want serious players to come in and scale up. We have potentially 10,000 mini grids sites in Nigeria from our analysis and we are looking at 2023 to meet that target. For buying and servicing generators sets alone, Nigerians spend up to $15 billion yearly.”

“The business is here for investors that want to come in, and they should look to scale up, like 50-100 minigrids at a time,” he encouraged.

They also advised the government to look to other energy sources and newer energy technologies rather than pumping more money into the main grid, which was described as comatose.  “The more we put money in to the existing grid, the more comatose and backward we become, there are newer innovations, and technologies and this is what the future looks like,” Femi Oye, chief executive officer, Greeen Energy Biofuel (GEB).

For investors, the industry players advised potential investors to invest in mini grids powered by renewables because of the short timeframe involved in its deployment. The duration it takes to set up a mini grid in comparison with expanding the existing national grid was also a benefit potential investors were encouraged to key into. “A national grid can take years to deploy, whereas it takes 2 weeks at most, to deliver a project,” Oye said.

He also gave an example of the 65 kilowatts (KW) system his company deployed in Sokoto system. “We are more subscribed and we are looking to expand,” Oye noted.

A pioneer in the sector, Ifeanyi Orajaka, founder and chief executive officer, GVE Projects Limited also spoke on mini grids journey so far. He said that “as a company and comparing with other regions, I would say we are leading in the space in Sub-Saharan Africa and currently have about 0.5 megawatts (MW) operational capacity, powering about 5200 households. We have been struggling to meet up with demand.”

The effect of this growth has been felt in the development of other infrastructure like education, health and so on.

Abdulmumini Yakubu, coordinator, Nigerian Renewable Energy Roundtable (NiRER) also added that over 26 million Nigerians can be most effectively provided with power via 8000 isolated mini grids providing 4 GW.

The current atmosphere is said to favourable to potential investors and remains an exciting time for mini grids.