How Nige­ria’s of­f­grid mar­ket ramped up fund­ing in 2018

Business Day (Nigeria) - - OFF GRID BUSINESS - ISAAC ANYAOGU

Nige­ria’s of­f­grid sec­tor saw sig­nif­i­cant fund­ing both from lo­cal and in­ter­na­tional sources in the past year. One of the big­gest funds came to Ru­bitec So­lar who built an 85kw so­lar hy­brid mini-grid in Gbamu Gbamu, Oyo state, with 500 mil­lion eu­ros fi­nanc­ing from GIZ, a Ger­man de­vel­op­ment agency.

With an off-grid mar­ket es­ti­mated at over $9.2bil­lion, there are vast op­por­tu­ni­ties for com­pa­nies will­ing to take a risk in a mar­ket where over 75mil­lion Nige­ri­ans are with­out ac­cess to re­li­able elec­tric­ity.

The op­por­tu­ni­ties are huge. Ac­cord­ing to the World Bank’s Off-grid So­lar Mar­ket Trends Re­port for 2017, Nige­ria is the sec­ond largest mar­ket in the world for of­f­grid elec­tric­ity with 8% of global off-grid house­holds and the Nige­rian Ru­ral Elec­tri­fi­ca­tion Agency (REA) says so­lar home sys­tems can save Nige­ri­ans $4.4bn a year in en­ergy cost.

In the last three years, or­gan­i­sa­tions like the United States Africa De­vel­op­ment Foun­da­tion, ( USADF) African De­vel­op­ment Bank (AFDB), GIZ and Hein­rich Boell Foun­da­tion, have ramped fund­ing and ad­vo­cacy about the prospect of off grid to de­liver en­ergy ac­cess for mil­lions of Nige­ri­ans with­out power.

Ac­cord­ing to BusinessDay cal­cu­la­tions, close to N300bn worth of fund­ing has come into the Nige­rian off grid space last year alone, backed by tech­ni­cal and gov­er­nance sup­port.

The World Bank has pro­vided the Nige­rian gov­ern­ment, a $ 350 mil­lion loan for the de­vel­op­ment of ru­ral elec­tri­fi­ca­tion projects in the coun­try. In Oc­to­ber, Shell-seeded, All On, an­nounced part­ner­ship with the African De­vel­op­ment Bank ( AFDB); the Nordic De­vel­op­ment Fund (NDF); Global En­vi­ron­ment Fa­cil­ity (GEF); and Calvert Im­pact Cap­i­tal ( CIC) to­wards a $ 58 mil­lion first close for the Off-grid En­ergy Ac­cess Fund (OGEF).

CD Glin, the CEO and Pres­i­dent of USADF told Businessday that his or­gan- isa­tion has pro­vided about $10mil­lion dol­lars in fund­ing to dif­fer­ent ac­tiv­i­ties in Nige­ria in­clud­ing off grid en­ergy sec­tor.

In Nige­ria, All On headed by Wiebe Boer, is the only lo­cal in­vestor fo­cused solely on Nige­ria’s off grid en­ergy sec­tor. All On has ac­tively cham­pi­oned lo­cal in­vest­ment through grants, seed fund­ing and en­ergy chal­lenges where the most in­no­va­tive ideas re­ceive fund­ing.

In July it gave four early stage en­ergy com­pa­nies $40,000 in fund­ing for in­no­va­tive re­new­able en­ergy so­lu­tions rang­ing from a gen­er­a­tor pow­ered by wa­ter to an air con­di­tioner that does not re­quire elec­tric­ity.

Last month, All On and USADF an­nounced win­ners of an­other round of en­ergy chal­lenge, award­ing $100,000 grant, half in the form of low in­ter­est loan be­tween 7 and 10 per­cent over five years and half as grant to sup­port 10 dif­fer­ent com­pa­nies pro­vid­ing en­ergy so­lu­tions for pro­duc­tive use in agro pro­cess­ing to a so­lar power as­sem­bling plant.

“All On is work­ing hard to en­cour­age other lo­cal in­vestors as well as lo­cal com­mer­cial banks to in­vest in the sec­tor,” Boer, com­pany CEO told Businessday.

He fur­ther said, “How­ever, as it is a nascent sec­tor with mostly un­proven busi­nesses, off grid en­ergy com­pa­nies are be­yond the risk of ap­petite of most lo­cal in­vestors,

We are con­fi­dent though that as All On and other in­vestors de­risk off grid busi­ness and help them scale, we will see sub­stan­tial lo­cal in­vest­ment pour­ing in,” Boer said.

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