Dr. Patrick Olayinka Tolani:, a legal practitioner is a main resource person in area of stakeholder’s relationship management in the renewable energy landscape in Nigeria. In this interview with Ayobami Adedinni, the Chief Executive Officer, Community Energy Social Enterprises Limited, CESEL speaks on the potentials of the renewable energy sector, project financing among other issues.
Growing concerns over energy security, and the threat of climate change have all stimulated investment in the development of alternatives to conventional oil, what can you say about the Nigeria’s alternative energy industry?
As with every other developing country, Nigeria is still a starter in the development of alternatives to conventional energy sources. No doubt, the occurences of the last few weeks whereby the entire country was thrown into darkness underscores the fact that we are still too fragile in energy supply.
The blackout experienced throughout the country was because of a fire incident which engulfed a segment of the Escravos-Lagos Pipeline System (ELPS). This demonstrates that we need more work and investment to guarantee energy security in Nigeria.
For a population that is said to be about 170 million people, about 7,000MW of electricity supply is still abysmally low. You also need to take into account that our transmission capacity is still a little bit below that figure. We are also aware that about 2,000MW of that amount is under-utilized because the DISCOs are not distributing all that is available to be sold a daily basis.
All those should leave any right-thinking person worried about energy security in Nigeria. When we juxtapose that with the self-generation devices that we have in Nigeria from heavy industrial generation to what is called “I pass my neighbour generators” you would agree with me that there are serious issues that need urgent attention in order to reverse the current trend.
As you aware, Nigeria is a signatory to the Conference of Parties otherwise known as the Paris Accord (COP21) and we have made commitment that under the “business as usual scenario” we will cut our emission by 20 per cent and 45 per cent conditionally.
The cheering news is that Nigeria is one of the leading emerging economies that has taken time to develop its Nationally Determined Contributions (NDCs) with a view to reducing carbon emission.
We have focused on Agriculture and Power and some priority projects in agriculture and power have been presented and approved at the Climate Finance Accelerated Workshop in London in September 2017.
I was privileged to have been one of the delegates that represented Nigeria at that event. Unfortunately, though, owing to lack of internal coherence in the coordination, the success achieved in London has not been carried through to achieve any tangible result in the country.
I hope something can done about this as urgent as possible because the financing architecture is there under Green Climate Fund (GCF).
My summation is that the alternative energy programme in Nigeria is making incremental progress; but the pace is rather too slow.
Is Nigeria ready for renewable energy?
From what I said earlier, there is no doubt that Nigeria is ready for renewable energy revolution.
This is more pertinent given that it is the best and most sustainable way to power the rural communities across the country without the perennial problems associated with other conventional forms of energy generation. There is no area in Nigeria without a natural resource that can be used to power the area.
The Northern part of Nigeria will benefit immensely from the use of solar PV given the prospect of sunlight in the North. The South-South can still benefit from gas and other renewable energy resources that the region can boast of.
Other parts of Nigeria, for instance, the North Central part of the country have great Hydro Power potentials. I believe we are more than ready to utilize these resources and get ourselves out of energy poverty.
I will give an instance.
Recently, one of the Governors in the South West asked my company to explore the potentials of eleven rivers with significant power generation potentials. When our company carried out the pre-feasibility study, it was apparent that nine of those rivers can generation at least 25MW of electricity. That is a significant opportunity that has been lying fallow in that state with the people coping with darkness daily.
I strongly believe that we are surely ready for the renewable energy revolution in Nigeria. The resources are there. So, what are we waiting for?
Let’s talk about sustainability. Stakeholders have said renewable energy is not a reliable source of energy because it is not stable, what’s your view on that?
I don’t think there is anything that is farther from the truth than that assertion. As a matter of fact, renewable energy resources are the most sustainable that we can use for our power generation in Nigeria in sustainable way.
Can anyone blow up the pipeline that supplies us with sunlight? The answer is: No. I agree that there are sometimes when we might not have as much sunlight as we might expect; but there are ways that such scenarios can be mitigated. That is why we have storage batteries.
In very serious situations where probably there is continuous rainfall for about three to five days, it is possible on those rare occasions to have back-up generators that can be used to charge the batteries to enable energy supply to continue.
Hydro Power projects have the potential to work for about 50 years once you get the turbine design and installation right and the right flow of the river is maintained.
Wind energy too is very reliable once you carry out the right survey prior to installation. My submission on this is that renewable energy is the most stable form of energy generation anywhere in the world.
Project financing still constitutes the highest hurdle in realizing Renewable Energy projects in Nigeria, what’s Community energy’s plan as regards this?
I believe that that narrative is changing now. There is no doubt that in Nigeria, project financing is still a big issue.
Our conventional banks are not in any way near a position where you can say that they understand the sector let alone lending their money into projects in the sector.
However, there are so many international financial institutions that have put their resources into changing the narrative. Any serious developer is aware that there is finance all over the place now.
All that is required is to have viable projects that can take advantage of the opportunities that are available in the sector.
There are also many organisations that are working to serve as interface between developers and investors globally. One of those is Shell Foundation in London.
They are helping us to develop the Nigerian Chapter of the African Mini-Grid Developers Association. This will not only help to assist us to gain access to cheaper materials; but also would link us with investors and financing opportunities globally.
Community Energy Social Enterprises Limited is working with so many development funders and we can say that we have been fortunate to gain access to finance since we got the grant of about $800,000 from the United States Trade and Development Agency (USTDA) last year to carry out feasibility study for 25 communities that will soon be powered through our Community Energy initiative.
From our experience, I believe that what is holding us back is not necessarily money; but lack of what it takes to develop bankable projects.
No financial institution will throw money at you just because you claim to be a developer; but you need to show that you have the capacity to do what you are claiming to do. You also need to have what it takes to engage with multiple stakeholders especially if you want to operate as a mini-grid developer.
There is also a labyrinth of legal and regulatory framework as well as licensing and permit regimes that you need to navigate. Those, to me, are the issues that a developer would need to worry about today and not just the issue of project finance.
The price of solar energy devices is on the high side making it challenging for rural dwellers to tap into it, how do you hope to break this barrier?
In the real sense, converse is the case. The prices of solar and other materials are coming down. 2016 was a peculiar year because we saw prices sky-rocketing; but that was because of exchange rate volatility in the country.
Since 2017, prices have stabilized and, as a matter of fact, are still going downwards. Addressing your concern which is about rural dwellers; the truth is that they cannot afford to own solar system without any form of support.
This is the reason that the Rural Electrification Agency has been working on how to extend electricity to rural areas.
Their intervention through the Rural Electrification Fund (REF) is designed to provide 70 per cent grant for developers who working to provide energy access to people in the rural area with the intention that the tariff to be charged in those communities would take the level of subsidy into consideration.
Other international financial institutions such as the World Bank, the Nigerian Energy Support Programme run by the European Union and the German Government through the Federal Ministry for Economic Cooperation and Development are also providing similar interventions facilities to enhance access to electricity in the rural communities at affordable tariffs.
I believe that programmes with such intention will increase energy access and achieve the objective of reducing energy poverty in rural communities in Nigeria.