Why Renewable Energy is Not Thriving in Nigeria

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Segun Adaju

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Participants at a solar energy workshop list factors militating in investments into the renewable energy in the country

| By Anayo Ezugwu | Nov 2, 2015 @ 01:00 GMT |

INVESTMENTS flow into the alternative source of energy in the country is limited by a combination of factors including lack of investments, high import tariff and cost of credit on renewable energy technologies. Participants and stakeholders in the energy sector identified these factors at the just concluded 2015 Nigeria Alternative Energy Expo, NAEE, organised by the Africa Sustainable Energy Association and Mathesis Consulting with support from the federal ministry of power.

The participants also noted that lack of guarantee on return on investment discourage investors from the sector. Segun Adaju, chief executive officer, Blue Ocean Nigeria, said that high import duty on equipment was a major contributor to the high cost of solar electricity provision. “When we were bringing in some equipment for a pilot project on solar energy, ordinarily, the solar systems ought to be duty free, but Customs told us that the battery components were not included. So, they collected 25 percent duty. When you add that to the high interest rates charged by banks, the cost of transporting and installing the equipment as well as maintenance, it becomes very discouraging,” he said.

Also, Olabisi Uwaoma, manager, a solar business solution, Total Nigeria Plc, described the cost of importation, transportation and installation of solar energy equipment as huge. “Total is into solar electricity generation for its gas stations. We intend to expand rapidly to serve our host communities, but the policy environment is not helping.

“Renewable energy is not our core business, it is something we are just going into, but you find out that we are spending so much to bring in the facilities and even install them. If you bring in this equipment with inverters and batteries, they tell you it is only the panels that are duty-free, they collect 25 percent.”

Others, who spoke said investors were not coming because they were not sure of how to recoup their investments due to lack of a viable electricity billing and payment system in communities. But Abayomi Adebisi, director, renewable and rural power access, federal ministry of power in his submission, differed with them on technology and funding.

Adebisi argued that the technologies and funding were readily available in the country, noting that investors were more concerned about how to recoup their investments in the short term. “Investors are not coming because they are not sure of how to get their money back, and I agree with them to a large extent. But people must pay for the energy they consume to maintain and sustain power generation.”

To address this challenge, he said the ministry had designed smart meters currently in use in Gwami Village on the Abuja-Kaduna Road. He said that the meters function on smart cards that are loaded by an operator at the control room located in the community.

Adebisi said the ministry had also developed software that could automatically disconnect users when their credit ran out to enable online payment. He said that the facilities were available in commercial quantities, and urged potential investors in the sector to take advantage of the opportunity.

“This is an opportunity for us stakeholders to come in and take advantage of the abundant renewable energy sources in the country. The law says that you don’t need licensing to generate one megawatt of electricity and below in the country. So, this gives us latitude as investors,” he said.

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