Business - August 8, 2022

UK Funded Solar Programme to Cushion Nigeria’s Energy Crisis

ebubejulius August 8, 2022

5 min read

United Kingdom’s minister for Africa, Vicky Ford, stated in March that the Nigerian energy sector will receive $12 million (N6 billion) in concessional funding.

Ms. Ford claims that the fund will support Nigeria’s COP26 obligations and assist in lowering the risk faced by pension and insurance funds when investing in energy access initiatives.

The funding will assist Nigerian investors by allowing them to concentrate on low-carbon energy projects that are off-grid. Additionally, it will be combined to reduce transaction risk and encourage domestic institutional investment from regional insurance companies, pension funds, and other local institutional investors.

This will facilitate the expansion of domestic funding for Nigerian SME cold storage facilities, solar mini-grid and home systems, clean cooking infrastructure, and other qualified off-grid clean energy infrastructure.

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“This is a clear demonstration of the strong partnerships between our countries and the UK’s commitment to supporting Nigeria, especially in your low carbon energy sector,” Ms Ford said.

“The UK is committed to increasing both renewable energy and energy access in Nigeria, driving clean, sustainable and resilient growth. As the world looks to transition to clean growth, we are witnessing an era-defining opportunity for the private sector.

This transaction is particularly exciting as it brings together UK government support with the institutional capital, which is essential to grow the sector at scale,” she added.

In his remarks, Nigeria’s minister of state for electricity, Godwin Jedy-Agba, stated that the country began its shift to clean energy in 2014 with the execution of the nation’s first solar energy hybrid project in the states of Lagos, Kaduna, and Borno.

According to Mr Jedy-Agba, “whereas all efforts have been geared towards unlocking private sector activity in the clean energy transition, one major challenge continues to be private sector access to local currency financing.”

Together with InfraCredit, a Nigerian company that offers local currency (Naira) guarantees to improve the credit quality of financial instruments issued by qualified infrastructure project sponsors, both funds would be mobilised.

Uche Orji, the chairman of InfraCredit and managing director of the Nigerian Sovereign Investment Authority (NSIA), stated:

“InfraCredit is pleased to be working with FCDO to mobilise private investment from domestic pension funds and other institutional investors into such an important developmental area as low carbon energy access.

This programme is aligned with NSIA’s other clean energy initiatives which aims to deliver up to 250-500MW of renewable energy capacity in Nigeria that will reduce annual CO2 emissions, alleviate poverty, create jobs and support local economic growth.”