By Bankole Oloruntoba
Rocky Mountain Institute (RMI) and Infrastructure Corporation of Nigeria (InfraCorp) recently announced a partnership through a Memorandum of Understanding (MoU) to support the implementation of Nigeria’s clean energy infrastructure strategy.
The partnership, which was signed on the sidelines of the 29th Nigeria Economic Summit Group (NESG), outlined a collaboration between the two organizations to establish a Project Preparation and Development Facility (PPF) and jointly develop climate finance initiatives to mobilize competitive long-term local currency funding for the sector.
Designed to bridge Nigeria’s energy transition gap and scale the deployment of clean energy projects in the country, the partnership will also focus on building local capacity to unlock and accelerate climate finance at scale to build lasting national capacity that will ultimately maximize adaptation and mitigation outcomes.
Commenting on the partnership, Ije Ikoku Okeke, RMI Managing Director of Catalytic Climate Capital and the Global South, said its focus aligned with RMI’s Catalytic Climate Capital (C3) program, and its goal of supporting the development of 10 gigawatts of clean energy over three years in the Global South and mobilizing US$15 billion from the private sector to support the energy transition.
Lazarus Angbazo, Managing Director/Chief Executive Officer, InfraCorp, also noted that the partnership will enable his organization to work together with RMI to support the development of bankable and sustainable national infrastructure projects in the Nigerian renewable energy sector.
Angbazo added that InfraCorp and RMI will collaborate on project development finance and financial market initiatives to allow InfraCorp to provide or mobilize financial resources and infrastructure investment for stimulating economic activity and reducing poverty through clean energy solutions.
The partnership is a significant development for the clean energy sector in Nigeria. The establishment of a PPF is a critical step in addressing the investment shortfall in the Nigerian energy sector. Despite being the most populous nation in Africa and boasting a wealth of natural resources, Nigeria struggles to provide reliable electricity to its citizens. With over 92 million people lacking access to electricity and frequent power outages plaguing even those connected to the grid, Nigeria’s electricity supply challenges hinder economic growth, stifle business expansion, and impact the overall well-being of its people.
Currently, Nigeria’s primary energy sources for electricity generation are natural gas and hydropower. While the country has embarked on a journey to diversify its energy mix by incorporating renewable sources, progress has been painfully slow due to lack of strategic investments.
In 2022, the Nigerian government pledged to achieve 30 Gigawatts of renewable energy capacity by 2030, with renewable sources accounting for 30% of the nation’s energy mix. This ambitious goal, however, can only be realized with the unwavering support and strategic investments of the private sector.
The Renewable Energy Roadmap for Nigeria, meticulously crafted in collaboration with the Energy Commission of Nigeria, underscores the critical need for substantial investments in electrification, a cornerstone of achieving the nation’s renewable energy aspirations. It unequivocally demonstrates the pivotal role of renewable energy technologies in propelling Nigeria towards a sustainable energy mix and meeting its burgeoning energy demands.
This visionary plan is projected to yield remarkable benefits, including a projected 40% reduction in natural gas consumption and a staggering 65% decline in oil requirements. To fully realize this ambitious goal by 2050, the commission estimates a total budget of $1.24 trillion, translating into an annual expenditure of $36 billion.
The report further highlights the immense potential of renewable energy sources to meet Nigeria’s energy needs, with projections indicating that nearly 60% of the country’s energy demand could be met by 2050, while simultaneously achieving significant savings in natural gas and oil consumption.
Nigeria’s renewable energy vision is not merely an aspiration; it is a clarion call for private sector leadership and engagement. The private sector possesses the financial muscle, expertise, and innovation to propel Nigeria’s transition towards a sustainable and energy-secure future. By embracing this opportunity, the private sector can not only contribute to Nigeria’s environmental goals but also unlock a wealth of economic opportunities and establish itself as a driving force in shaping the nation’s energy landscape.
The time for action is now. The private sector must seize this transformative opportunity, forge bold partnerships with the government, and harness the power of renewable energy to propel Nigeria towards a prosperous and sustainable future.
Nigeria, like many developing nations, faces a significant challenge in securing adequate funding for its clean energy transition, but it can glean valuable lessons from Brazil’s approach to clean energy financing. Brazil has emerged as a global leader in renewable energy deployment, demonstrating a remarkable ability to mobilize financial resources for its clean energy projects. Like the South-American country, Nigeria should establish a robust policy framework that provides long-term stability and predictability for renewable energy investments. This entails implementing clear and transparent regulations, streamlining permitting processes, and offering attractive incentives to attract private capital.
It should emulate Brazil’s success in leveraging the power of public banks to catalyze renewable energy investments. The establishment of a dedicated Green Bank, modeled after Brazil’s BNDES, could provide low-cost financing, risk mitigation, and technical expertise to support renewable energy projects. Nigeria should also diversify its financing instruments, moving beyond traditional loans and grants to incorporate innovative blended finance mechanisms. This could include utilizing green bonds, securitizing renewable energy projects, and leveraging international climate finance initiatives.
The African Development Bank (AfDB) has sounded an urgent call for robust private sector involvement in Nigeria’s quest to achieve its ambitious climate change and green growth aspirations. In its incisive “Nigeria Country Focus Report (CFR) 2023,” the AfDB unequivocally states that mobilizing private sector climate finance is the key to unlocking Nigeria’s potential to meet its 2030 nationally determined contribution (NDC) targets.
The report paints a stark picture of the financial muscle required to propel Nigeria’s green transformation. To bridge the gap between current efforts and the nation’s NDC commitments, an annual investment of $20.5 billion is needed, primarily directed towards renewable energy, sustainable transport, and waste management initiatives.
AfDB astutely observes that the private sector holds the key to unlocking this vast pool of capital. Nigeria’s private sector boasts an unparalleled capacity to attract and channel strategic investments from a diverse array of stakeholders, including individual investors, investment funds, and credit institutions. This untapped potential, if harnessed effectively, can serve as a powerful engine for Nigeria’s green transition.
The bank highlights the limitations of the public sector’s ability to shoulder the financial burden of climate action alone. Nigeria’s public coffers are strained, making it imperative to leverage the private sector’s financial prowess to drive meaningful change.
AfDB’s message is clear: Nigeria’s green growth aspirations can only be realized with the full and enthusiastic participation of the private sector. It is time for Nigeria’s private sector to step forward, embrace the opportunities presented by the green economy, and play a pivotal role in shaping a sustainable and prosperous future for the nation.
Bankole Oloruntoba is the Chief Executive Officer at the Nigeria Climate Innovation Centre.
