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The off grid renewable energy space which most experts describe as the future of the Nigerian power sector have been said to enjoy an investment capacity of up to $200 million in the last few years. This was disclosed in Lagos by the Head of Power and Infrastructure, Corporate and Investment Banking, Standard Bank, Abiodun Oni, at the Nigeria Off Grid Investment Opportunities Workshop organised by Energy Mix Limited to give more insight to potential investors in the sector.
According to him, this figure would continue to increase because there is a lot of support from global financing for renewable and what is required further to spur the market more is access to commercial lending windows to accelerate growth.
Oni said the Developmental Finance Institutions (DFIs) like the World Bank and other multilaterals were putting a lot of efforts into renewables. He said global institutions that have clean technologies and clean environment standards are also investing. Adding that: “So in the equity side we see a lot of financing is going into developing renewable energy projects.”
Stating government’s efforts, Oni noted that power was core infrastructure for economic development of which government cannot run away from, and at the moment their strength in advocacy, policy and regulation creation is towards the establishment of an enabling environment, as well as the initial capital to support the early stage development.
He however cited lack of data as the challenge in Nigeria as both the commercial and the private sectors do not have the statistics.
Giving his take on the capital intensiveness of the sector, he remark that there efforts to access the capital markets especially the pension market because it provides liquidity for a long period like 10-year tenure.
“What we need to do is establish the right mechanisms to allow projects access that kind of window, already the first infrastructural bond was issued in December of last year. So I believe if we can unlock that space then it will be a significant advantage for the renewable energy sector,” Oni observed.
The Founder of Energy Mix Limited, Noma Garrick, who described the workshop as an avenue to give more insight and clarity to issues regarding financing and legal aspects of the market to potential investors, pointed out that renewable energy is the future of the Nigerian power sector, and the huge cost involved in building mega power structures and large generation plants at the moment is very high.
Garrick explained that looking at it from a small scale perspective such as mini grids, standalones, solar, there are lots of opportunities for investors to come in, but the need to rest their fears on financing and legal issues is necessary. He advanced that various stakeholders in the nation’s power value chain are doing their best, adding that: “but basically in terms of covering the entire country, I think is a tall order to leave that to them”.