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With N7bn solar power funding, FG to energise 100,000 homes

The federal government accelerates energy access, at least N7 billion has been released for the deployment of 100,000 units of Solar Home System (SH) under…

The federal government accelerates energy access, at least N7 billion has been released for the deployment of 100,000 units of Solar Home System (SH) under the Solar Power Naija (SPN) scheme.

The SPN programme was created as part of the Economic Sustainability Plan (ESP) deployed during the COVID-19 period of 2021, to expand energy access to 25 million individuals with five million new connections through the provision of Solar Home Systems (SHS) or a mini grid.

The solar-based connections are to be in communities that are not connected to the national grid which ought to also increase local content in the off-grid solar value chain and further the local manufacturing industry while creating 250,000 new jobs in the energy sector which would reduce the unemployment rate.

The initiative is a N140 billion long-term and low-interest credit facility to private sector developers in the business of deploying SHS and mini-grids in order to rapidly scale up deployments and make energy access more affordable.

The financing scheme implemented by the Rural Electrification Agency (REA) and funded by the Central Bank of Nigeria (CBN) was in response to the complaints of solar power project developers of the lack of access to funds for renewable energy projects. Some of the developers under the Renewable Energy Association of Nigeria (REAN) had said raising debt financing has been a major stumbling block for private developers. However, according to the template of the SPN, the scheme through CBN supports companies raising the required upfront capital for investment in off-grid electrification. It also supports the financing of upstream companies in the business of manufacturing and assembly of off-grid value chain components, such as solar panels, inverters, batteries, and other balance of system components. This is to increase the local content value chain and reduce the overreliance on fully assembled solar systems in Nigeria.

100,000 SHS units gulp N7bn

According to latest update enquiries by Daily Trust on Sunday at the REA, the disbursement made so far is from the main funding source domiciled with CBN and with support from the Nigerian Sovereign Investment Authority (NSIA).

A beneficiary company, Asolar, is said to be deploying 100,000 systems with its transaction enabled through a credit enhancement mechanism provided by the Niger Delta Power Holding Company (NDPHC), a power value chain intervention agency.

According to records, about 20,000 SHS units are being deployed across all 36 states of which 4,750 fan Solar Home System (SHS) units have been assembled in Nigeria with the rest expected to be completed by March 2022. Another 15,000 local assembly kits have been shipped for further deployment while additional 60,000 units are expected to be deployed by the third quarter of 2022.

The records also indicate that the 20,000 SHS units are being deployed across 19 and the Federal Capital Territory (FCT). They include Abuja, Adamawa, Anambra, Bauchi, Benue, Borno, Cross River, Jigawa, Kaduna, and Kano. The rest are Katsina, Kogi, Kwara, Nasarawa, Niger, Oyo, Plateau, Taraba, Yobe, and Zamfara.

According to its implementation report, since its launch, the programme handlers have worked diligently with developers and other stakeholders in the off-grid sector to make the sector more viable and attractive for new investments.

More expansion prospects for SPN?

To sustain the project expansion, the report said REA and the SPN teams have been in discussions with potential investors interested in partnering or investing with off-grid developers to provide energy access to the unserved and underserved. 

“These efforts have yielded results with several new investment channels opening for the sector via NDPHC, NNPC, NSIA and InfraCredit so far with commitments for both additional funding and deployments of units which will result in increased connections for both the unserved and underserved communities in the country,” the report said.

So far, partnerships have been formed with NSIA whose board recently approved the investment of a $20 million revolving fund for the deployment of 260,000 SHS units.

The Nigerian National Petroleum Company (NNPC) Ltd which has signed a Memorandum of Understanding (MoU) supporting three SPN initiatives to connect under-served Nigerians. This transaction seeks to facilitate investments worth about N22 billion for at least 215,000 households nationwide through the provision of an estimated 30 megawatts (MW) solar power to Maiduguri in order to help solve the current electricity crisis and 125,000 SHS units.

On the part of the Infrastructure Credit Guarantee Company Limited (InfraCredit), it seeks to act as a third-party guarantor for approved developers under the SPN programme. As the implementation report noted, the guarantees provided by Infracredit will help to unlock additional capital for mini-grid companies, either through the Bank of Industry (BoI) or commercial banks.

For this year, the programme’s implementation plan noted that the SPN scheme is being tailored to focus on addressing the bottlenecks identified in the first year of the programme’s implementation, increasing the number of disbursements to approved developers and increasing the number of deployments and connections on the programme.

“REA will continue working with InfraCredit to finalize on the terms to provide guarantee and funding for mini grid developers to be considered under the SPN programme.”

The agency said it will also work with the NSIA and SHS companies to enable developers to have access to the board-approved $20 million revolving fund. It will also work with NNPC to ensure developers can access the N22 billion investments while REA will offer support to applicants on the programme to enable them to qualify and access all financing options available to them through the programme and its partnerships.

The renewable energy agency said the scheme is still open to all potential off grid developers to provide energy access to the unserved and underserved peri-urban and rural communities in Nigeria. These firms can enrol on the Nigerian Electrification Programme (NEP) platform created by REA to support developers with technical enablement as only companies registered under NEP are eligible to participate in the SPN scheme.

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