Giant Strides Made in Accelerating Off-Grid Energy, but Barriers Remain
When the Scaling Off-Grid Energy (S.O.G.E.) project was launched in Nigeria in late 2017, its goal was to increase access to electricity and reduce the number of unelectrified people in Nigeria. This is in tandem with the goal of the S.O.G.E. Grand Challenge for Development which is funded by the Global Development Lab of the United States Agency for International Development (USAID) and Power Africa: to provide 20 million households in Sub-Saharan Africa with access to modern, clean and affordable electricity through distributed solutions.
As the largest off-grid market in sub-Saharan Africa with 74 million people not having access to electricity as well as only 25% of the 106 million connected to the grid enjoying up to 4 hours of power daily, it was evident that the success of this project in Nigeria was pivotal to the achievement of this goal.
As co-implementers of this project in Nigeria, FHI360 and Power for All worked with governments at national and sub-national levels on decentralized renewable energy (DRE) solutions to increase electrification rates regionally and at state level in order to meet the Federal Government’s policy targets of achieving a 75% electrification rate by 2020 c.
We also adopted a three-pronged approach in our strategy:
- To train policymakers at state and regional levels on how DRE solutions can accelerate electrification rates within their domains and how they can attract investment into DRE in their states and regions;
- To establish a multi-stakeholder taskforce across the industry to confront the biggest barriers to growth and work at dismantling them; and
- To test a market intelligence platform that will empower the private sector, policymakers, researchers and journalists and provide access to the most accurate information on DRE in Nigeria and globally.
What the SOGE Project Achieved
The training workshops for state and regional policymakers, tagged DRE101/X-Learning workshops were held in eight states across five regions of the country and were attended by about 400 policymakers from 18 state governments in total. These workshops have increased the awareness level of the policymakers regarding DRE solutions and increased their options of increased access to electricity in their domains.
The workshops have produced numerous outcomes, which include plans for states to set up regional taskforces to drive DRE in their domains, research on how some states can share power generated especially through decentralized energy, and with states pledging to adopt DRE policies and plans. Other outcomes also included collaborating with neighboring states to set up industrial hubs for the assembly of DRE components and numerous exploratory discussions with developers on DRE investments and projects in their domains.
The taskforce which is called the D.R.E. Taskforce was drawn from the private sector, government, donor agencies, civil society organizations, trade associations, and investors. It tackled the most pressing challenges facing the sector, across five focal areas: (1) zero duties and tariffs for the sector, (2) collaborative data sharing, (3) consumer awareness, (4) end-user payments and (5) support for standardization of equipment and components.
The taskforce has scored tremendous successes, such as the sustained engagement with government authorities over the imposition of a 10% import duty on solar components. This new and sudden duty translates to an increased cost of DRE solutions and consequently makes the government’s projections and targets on energy access harder to meet. . The taskforce met several times with representatives of the Federal Ministry of Finance and the Nigerian Customs Service on the new duties to discuss how to go about resolving the challenge. Since that meeting, there has been sustained engagement with government officials on removing the tariffs or granting a sector-wide waiver on paying import duties for solar panels and components.
The taskforce had also identified the challenge of simplified payments that will enable the target market to pay for DRE solutions as a barrier to growth. It recognized that a solution to this barrier was the activation of digital finance solutions such as mobile money to enable end-users pay for services.
The taskforce collaborated with the United States Agency for International Development (USAID) on an analysis of the Digital Finance Solutions landscape, including how to enable a simplified and working system, and how the DRE sector will benefit from it. This analysis formed the basis of engagement between the taskforce and the Financial Inclusion Secretariat of the Central Bank of Nigeria which seeks to deepen financial inclusion in Nigeria.
These engagements were part of the efforts that culminated in the Central Bank creating regulations that will allow for the establishment of payme