Exploring the Adoption of Solar Energy Projects in Nigeria

According to the latest World Bank data, 44.6 per cent (%) of Nigerians still lack access to electricity. This reason, alongside the global move towards climate action, means the country must ensure an increase in the development of clean energy projects. However, the country’s huge solar energy potential has led to energy industry stakeholders exploring the adoption of solar energy projects.

The 2022 edition of Tracking SDG 7: The Energy Progress Report shows that out of the over 200 million people in Nigeria, 92 million lack access to electricity. To close the access deficit over the years, the federal government has collaborated with development agencies and other international organisations to explore the adoption of solar energy projects in the country.

For example, the Nigerian government launched the Nigeria Electrification Project (NEP) in 2019. The project, which was funded by the World Bank ($350 million), the Africa Growing Together Fund ($50 million) and the African Development Bank ($150 million), aimed to improve electrification through solar power. So far, the project has successfully connected 3.8 million Nigerians.

Also, the event of the Corona Virus (COVID-19) pandemic brought the need for more renewable energy deployments in the country. To explore the adoption of solar energy solutions, the federal government introduced the Solar Power Naija (SPN) project as part of its COVID-19 recovery strategy. The SPN initiative is worth $619 million and aims to install solar home systems for 5 million households across the country.

Furthermore, the Central Bank of Nigeria (CBN) introduced the solar intervention fund to encourage off-grid solutions developers. The fund which aimed to cushion the pandemic’s effects, provides developers the opportunity to obtain loans of up to ₦500 million.

Through these initiatives and more, there has been a recent slow and steady increase in the adoption of solar energy projects in Nigeria. However, the scaling of these energy projects must be accompanied by supporting frameworks. For example, the Renewable Energy Master Plan (REMP) 2005 conceptualises Nigeria’s renewable energy goals and attempts to find factors that determine the achievement of these goals.

Also, there is the National Renewable Energy Efficiency Policy 2013. This policy was developed by the Federal Ministry of Power (FMoP) to enable energy efficiency and overcome challenges affecting the deployment of renewable energy in the country.

However, many challenges still exist when exploring the adoption of solar energy projects in Nigeria, one of which is access to finance. Development agencies and the government create funding initiatives such as international and local grants and partnerships to ease finance sourcing for developers. Although, there is another way the federal government can support the scaling of solar projects in the country, reducing the cost of production for developers.

Developers have to import solar panels and other renewable energy equipment that are unavailable domestically. However, the CBN’s restriction on foreign exchange at official rates for goods and services, which is cheaper for importers, does not cover solar panels. Developers are charged foreign exchange for solar equipment at the official CBN rates, increasing the cost of the products and affecting affordability.

The federal government could approve a complete tax waiver for renewable energy equipment to support the industry. This would enable growth and healthy competition in the country’s renewable energy space.

Solar energy is a dominant alternative energy source in Nigeria because of the country’s abundance of sunshine. Although adoption of the energy source is increasing, more can still be done in terms of frameworks and investment funding. With these adequately implemented, solar energy could be the key to closing the country’s electricity deficit gap and meeting its climate action goals.