Private investment for decentralised power
The Federal Government of Nigeria’s Energizing Economies Initiative (EEI) aimed to increase access to energy through private development of off-grid electricity solutions in economic clusters, such as markets, shopping centres, and industrial complexes. The EEI has identified up to 340 clusters, and forecasted a market opportunity of USD955 million per annum. Rensource Energy is the Lagos-based start-up running the Sabon Gari Energy project, which is a scheme developed in line with the EEI.
- Nigeria has Africa’s largest population, however only 55% of the population have access to electricity. Rolling blackouts are common.
- Health, safety, and environmental risks from ad hoc power generation are significant. A fire caused by petrol generators destroyed USD24 million worth of goods at Sabon Gari Markets (northern Nigeria).
- Rensource Energy established a micro-utility network as part of the Sabon Gari Energy Project, which will provide electrification of the market under a power-as-a-service model (PaaS), through installation of solar panels on residential homes and SME premises.
- NEoT Offgrid Africa invested in the Sabon Gari Energy Project.
- Under the PaaS model, Sabon Gari Energy will provide power, service infrastructure (installation and service calls), maintenance, and financing – consumers do not need to own any expensive solar infrastructure, and are only billed for the amount of wattage that is used.
- NeOT Offgrid Africa: Paris-based platform managed by NeOT Capital, focused on distributed renewable energy projects. NeOT is backed by French infrastructure developer Meridiam and utility Electricite de France.
- Rensource Energy: Lagos-based distributed energy services company and manager of Sabon Gari Energy Project.
- Rural Electrification Agency: Saudi Government Department responsible for overseeing the EEI.
Results and impact
- Elimination of capex costs allows low-income households and businesses to more easily access electricity grid and only pay for what they use.
- Electrification of 13,600 shops at Sabon Gari Markets through decentralised solar led to more reliable power, reduced emissions, and improved health and safety conditions for merchants and customers.
- The broader EEI initiative has helped more than 340,000 small- and medium-sized enterprises (SMEs) and 18 million Nigerians access reliable, clean electricity off the main grid.
Key lessons learnt
- Private sector involvement accelerates delivery of decentralised projects by providing the capital required and taking advantage of reduced central government involvement. In this case, there were no permits or licenses required for project advancements, and the government only sought to facilitate (not own) the project.
- Private sector involvement can reduce capital burden on governments by wholly financing electricity projects, particularly in countries where there is low access to the grid and high ad hoc power generation.