Closing Nigeria’s energy gapSeptember 6, 2021
Engr. Ahmad Salihijo Ahmad, managing director and CEO of Nigeria’s Rural Electrification Agency (REA), talks to The Energy Year about the agency’s efforts to overcome power poverty and the importance of off-grid decentralised systems. The REA is a government agency tasked with the electrification of unserved and underserved communities.
What efforts is the REA making to address power poverty?
For decades we have battled with power poverty. In a vibrant country such as Nigeria that has a growing population and industries, the demand for electricity continues to rise. The energy gap cannot be fully closed through the efforts of the government alone. This is why we have designed programmes that encourage the private sector to participate alongside government agencies.
Energy poverty has huge costs – and it’s not just a question of having no lights. There are adverse effects on business, social structures, and the well-being of people in rural areas. The REA is leveraging various solutions to transform the situation in remote locations. These solutions include basic grid extension solutions, where we take power from the grid and extend it to rural communities. But in areas where people are far away from the grid, you have to use technologies such as mini-grids and solar home systems.
The Rural Electrification Fund [REF] and the Nigerian Electrification Project [NEP] have played a key role in this quest. We recently launched the Solar Power Naija programme – as part of the government’s Economic Sustainability Plan – and this aims to deliver power to more than 5 million homes in the country.
One of our critical strategies is to ensure that we have accurate data to help the private sector make the right decisions. It is important to understand where unelectrified Nigerians are, who they are, and whether they have the ability and willingness to pay for the power that we can take to them. We are also continuing to ensure that we have good sector co-ordination where we look to work with other top-tier agencies in other sectors like agriculture and healthcare where power is needed.
To what extent can an off-grid decentralised system help power rural communities?
Given our population size and the yawning gap that exists between power generated and what is actually being delivered to the communities, there are still millions of Nigerians who do not receive enough electricity to cover their energy needs. We have to take a different approach to see how we can leverage technology to power areas that are completely off-grid. It is here that the idea of a hybrid centralised-and-decentralised approach becomes applicable.
The deployment of off-grid decentralised systems is helping us to provide cleaner, safer and more reliable power. This adds to the centralised grid system we already have, enhancing it. In addition, extending our off-grid decentralised system is an opportunity to help meet the Nationally Determined Contribution (NDC) to which Nigeria is committed under the Paris Agreement. Besides this, we are using data-driven interventions that are useful in effectively transforming the socio-economic landscape of these communities. It therefore goes beyond the watts and volts and is more about how we can improve their livelihood.
The REA recently launched its Research & Innovation Hub. How important an impact does R&D have for the various types of renewables in this country?
The Research and Innovation Hub is a critical segment of what we do. In this vein, the REA is setting the tone of rural electrification and innovation in the country. Before we proceed to commit resources to technologies like biomass, bio-mechanisation, cold-chain storage and mini-hydro, we thought it was important to see some of these alternative technologies in practice. We want to be able to prove the concept in order, then, to deploy them in communities in such a way as to achieve the desired impact. For example, we are now looking at how to incorporate mini-hydro into the agricultural space.
That has opened up collaboration with other government agencies that can come in and leverage some of these pilots we have run. We want to prove that they are alternative and effective ways to provide electricity to rural communities. That was our main objective in designing the hub.
What have been the importance and impact so far of the REF?
Established in 2005, the Rural Electrification Fund is a state funding mechanism aimed at supporting the development of the on- and off-grid sectors while ensuring equitable regional access to electricity. It ensures we have the maximum economic, social and environmental benefits from rural electrification. It is the source of certain grants designed for private-sector developers.
There have been two tranches: the first call was very successful, with 12 mini-grids and about 19,000 solar home systems deployed. The second call is now underway, with 51 mini-grids planned across the country.
In addition to this, we are currently working with the EU, through Germany’s GIZ, on the Interconnected Mini-Grid Acceleration Scheme. This is a mini-grid programme that has a combined mini-grid and grid element. It is an interesting concept when you have a partnership with DisCos [distribution companies] to provide mini-grids that would augment the output of the DisCos in their willing buyer, willing seller arrangements. The REA is looking to develop more of that particular market.
What traction and international support are the REA’s various initiatives receiving?
The REA is involved in many areas of the energy transition across the country. Realistically, we will not be able to achieve our targets through “business-as-usual” alone. The support of international agencies is essential. Our interactions go beyond the World Bank and the AfDB [African Development Bank] and include the governments of France, South Korea and China and the US government’s Nigeria Power Sector Program, where we have continued to collaborate on a range of technical strategies for the power sector in Nigeria. We are also currently in talks with the Rockefeller Foundation. There is no shortage of support. We are tasked with carefully co-ordinating these resources to ensure we create a sustainable market.
Tell us more about the aims and implications of the Solar Power Naija project.
The Solar Power Naija programme is a venture valued at NGN 140 billion [USD 340 million] of concessionary debt financing that is coming from the Central Bank of Nigeria to private-sector developers who demonstrate capacity. The goal is to achieve 5 million connections and, in the process, create 250,000 jobs. A few months ago, the CBN disbursed NGN 7 billion [USD 17 million] to A-Solar, a private developer, involving an agreement with the Niger Delta Power Holding Company, to provide 100,000 solar home systems – the first tranche rollout under the Solar Power Naija programme.
There is also an emphasis on the localisation of some of the solar equipment that we are currently using in-country, especially the solar home systems. For instance, firms are encouraged to acquire some of this equipment locally.
Within the Solar Power Naija programme there is a lot of emphasis on localisation, especially local assembly, and there is a government agency called NASENI [National Agency for Science and Engineering Infrastructure], that has a mandate to facilitate firms’ efforts in this direction. Within the Solar Power Naija programme there have been particular efforts and guidelines regarding upstream assembly. It is growing but we still have to create the right environment for the private sector to involve itself further in assembly.
What is the rationale behind the Energizing Economies Initiative (EEI)?
The government launched the EEI in September 2017 as part of its wider MSME programme. Implemented by the REA, the venture aims to support the rapid deployment of off-grid electricity solutions to MSMEs in economic clusters – markets, shopping complexes and agricultural/industrial clusters – through private-sector developers. It is important to ensure that economic clusters remain fully energised as this will re-energise our economy.
Our role continues to be that of a facilitator that collects and processes data in order to understand the viability of these clusters. In turn, we can hand this data over to the private sector to make and recoup the investments. As part of the wider EEI, over 340 economic clusters have already been identified across the country. The total estimated electricity demand from these is 3-4 GW, representing a combined market opportunity of around USD 955 million annually. The objective is to connect over 100,000 establishments in these clusters, with 70% of the projects to be based on renewable energy. As of today, we have achieved over 86,000 connections and created more than 300 jobs.
Lastly, we have received a lot of support. We are in discussion with some of our development partners as well as state governments to further develop those clusters whose economic viability we have studied and we are actively engaging with the private sector to make the required investments.
What does the private sector bring to the renewable energy table and how key is public-private collaboration?
The first thing that comes to mind is expertise. You need the expertise to deliver some of these renewables projects. Secondly, you also need private-sector funding. As the government, we do not have enough resources to cater for all unserved Nigerians that lack access to power. The private sector ensures that these projects remain sustainable. Hence, the government has to leverage private-sector commitment to make them commercially viable. It’s a win-win situation.
Therefore, the government creates the environment where it provides concessionary loans, grants and subsidies through the NEP and the REF and provides expertise about where and how you go about electrification. In turn, the private sector has the expertise and financing to enter into these sorts of arrangements and drive them forward.
How would you summarise the REA’s overall achievements to date?
Closing the energy gap hasn’t been easy but we have worked to ensure that we provide rural communities with various types of power. In doing this, we want to reinvigorate the renewable energy landscape in Nigeria. This will obviously not be achieved overnight. Data-driven strategies will be crucial in moving forwards.
So far, our mandate of powering Nigeria one community at a time is progressing. In total, we are looking at more than 50 mini-grids to be finished in the next 12-24 months. Under the EEI, we have achieved over 80,000 connections. Our grid connection and mini-grid efforts are also trying to link communities that are not too far from the grid.
In addition, during the pandemic, we kick-started our Energizing Health Programme, which is currently being anchored by the World Bank. Through it, we will deploy 100 mini-grids of 50 kW each for 100 isolation and treatment centres. We have already deployed four mini-grids in different isolation centres. We are looking to do another 400 primary healthcare centres as well. During the Covid-19 pandemic we saw that critical infrastructure was needed within our healthcare system, which requires reliable power for cooling systems and ventilators.
As an agency, we are going through reforms to ensure that all of our processes are being refined. We want to align all of our technical standards across our programmes and see how we can improve them to meet the needs of every Nigerian who is at present without power.