A Review of the Nigerian Energy Industry

Quest for renewable energy heightens in 2015

17 January 2015, Lagos – The quest for renewable energy development across the world has continued to be at the front burner, with speculations that many more countries including Nigeria would improve significantly in the next three years.

wind. Renewable-energyAlready, total corporate funding into the solar sector encompassing venture capital/private equity (VC), debt and public market financing increased by 175 percent in 2014 with $26.5 billion, compared to $9.6 billion in 2013, according to a report from Mercom Capital Group.

The report stated that global investments more than doubled to $1.3 billion in 85 deals in 2014, compared to $612 million in 98 deals in 2013.

The Energy Commission of Nigeria (ECN) had also recently stated that Nigeria needed to exploit renewable energies such as gas, coal, hydro, solar, wind, biomass and nuclear sources to generate 13 per cent of the required energy in short term, 23 per cent in medium term and 36 per cent in long term bases.

Chief Executive Officer of Mercom, Raj Prabhu, said: “The big story coming out of 2014 was the revival of capital markets – solar companies were able to access funding through multiple avenues like VC, public markets, IPOs and debt in record numbers, while the quest for lower cost of capital continued with Yieldcos and securitization deals,”

He added that: “The solar sector has come a long way from being perceived as a speculative high risk investment to attracting investors based on low risk attractive dividend yields.”

The Mercom report stressed that solar downstream companies saw the largest amount of venture capital funding in 2014 with $1.1 billion in 44 deals, accounting for 85 per cent of venture funding.

“Investments in PV technology companies reached $75 million in 12 deals and Balance of Systems (BoS) companies were close behind with $73 million in seven deals. Concentrated Solar Power (CSP) companies came in at $59 million in three deals, followed by thin film companies with $52 million in nine deals.

“Large-scale solar project acquisitions totaled $3.2 billion in 2014, compared to $1.7 billion in 2013. Transaction activity was up 46 percent year-over-year, with 163 deals in 2014. A total of 6.4 GW of large-scale solar projects were acquired in 2014. Good solar projects with solid returns continue to be in heavy demand and are being acquired at a record pace,”it stated.

Nigeria’s renewable energy policy 2013 admitted that the nation’s renewable energy resources base is enormous which include: solar, wind, hydro, hydrogen and other renewable energy sources (geothermal, tidal and ocean waves, among others).

The policy also stated that renewable energy should be optimally exploited to cater for the growing national demands in the next 20 years.

“In twenty years, Nigeria’s population is expected to double and aggregate energy demand will triple. Conventional energy sources alone will not meet the challenges of an increasing population at affordable costs and in a flexible manner. To meet the rapidly growing demand for energy, and the challenges posed by climate change there has to be a conscious effort to increasingly include renewable energy into the nation’s energy mix.

“Renewable energy has the potential to create jobs, improve livelihoods and open up the market in rural areas. Increasing demand for rural water supply, lighting, health services and the needs of micro enterprises are already driving the market for PVs. This trend will continue to drive small hydro and wind power plants if the supporting legislative and regulatory structures are put in place.

“For Nigeria, to achieve its goals of sustainable socio-economic development, the need for renewable energy cannot be overemphasized,” it stated.


– The Guardian

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