Speech Delivered By    

By RASHEED OLAOLUWA

Managing Director/Chief Executive Officer,

BANK OF INDUSTRY

At the

PRESENTATION OF CHEQUES TO TWO OFF-GRID SOLAR HOME SYSTEM PROVIDERS

Under the

BOI/UNDP

SOLAR ENERGY PROGRAMME:

July 3, 2015

Gentlemen of the Press,

 

Distinguished Ladies and Gentlemen,

It is a well-known fact that Nigeria’s current electricity situation is unsatisfactory. Let’s rewind a few decades into the early days of electricity in Nigeria.

The Electricity Corporation of Nigeria (ECN) was established by the then colonial government in 1950. ECN was merged with the Niger Dam Authority (NDA) to form the National Electric Power Authority (NEPA) in April 1972. By virtue of the Electric Power Sector Reform Act of 2005, NEPA was renamed as the Power Holding Company of Nigeria (PHCN), which was then unbundled and privatized into six (6) GENCOs and eleven(11) DISCOs in 2013.

To cut a long story short, the total electricity supply on our national grid today is less than 4,000MW, relative to the electricity demand conservatively estimated at 40,000MW! For a leading African economy like Nigeria, with a population of 170 million people, is grossly inadequate!

Many Nigerians and Nigerian businesses, who can afford it, have resorted to electric generators at great expense. Kerosene lanterns, used largely by rural dwellers, are also dangerous, untidy and dim.

Furthermore, the recent disruption in the supply of petroleum products needed to power these generators or lanterns, has exposed the unreliability of using generators or lanterns as a long-term alternative source of electricity. Not to mention the environmental/noise pollution associated with so many generators in our neighbourhoods and in our factories.

Let’s also trace the history of electricity, globally. Benjamin Franklin (1706-1790) was the first to use the terms positive and negative charges in 1752. Thomas Edison (1847-1931) invented the light bulb in 1879. He also launched the first central power, the Pearl Street Station power plant in New York in 1882. In the early days of electricity, energy distribution systems were small, localized and manageable. All that changed with the introduction of big power plants and national electricity grids, which unfortunately, have now become rather too complex and inefficient to effectively serve the society.

The first power plant in Nigeria was installed in Lagos in 1898 by the then colonial government. By the end of the last century, it was clear that central power plants had lost their economies of scale and could no longer deliver competitively cheap and reliable electricity to more remote customers through the national grid.

From the foregoing, you can see that the national grid, as we know it today, is less than 150 years old, and was powered by the discovery and abundance of fossil fuel, such as coal, crude oil and natural gas.

Although the first industrial revolution was driven by an abundance of coal, the second industrial revolution was driven largely by abundant hydrocarbon resources. There is already an informed discourse of a third industrial revolution to be driven by digital/robotic manufacturing and renewable energy.

Last month (June 2015), the G7 leading industrial nations agreed to decarbonize the global economy by phasing out the use of fossil fuels by the end of this century, i.e. over the next 85 years.

Renewable energy sources such as hydro (16%), wind (3%) and solar (1%) are growing in relevance and commercial adoption on a global scale.

Solar energy is the most abundant energy resources on earth. The Earth receives from the Sun 885 billion MW of solar radiation at the upper atmosphere. This amount of energy is sufficient to power the entire world more than 3,000 times over.

Nigeria, nay Sub-Sahara Africa, is geographically fortunate in this regard, given our tropical location, as we are largely sandwiched between the Tropic of Cancer in the northern hemisphere and the Tropic of Capricorn in the southern hemisphere, giving us an above average level of direct solar radiation.

The world is making rapid advancements in solar technologies and installations. Photovoltaic (PV) is the most promising technology for off-grid solar home systems. The cost of these systems have been divided by almost three in the last 6 years. Rapid deployment and falling costs have each been driving the other.

Global investment in solar energy increased by 29% to $149.6billion in 2014, with China, US, Japan, India and Brazil leading in this order.

In the USA, the leading solar energy company, SolarCity, has installed over 500,000 solar home systems. Every three minutes, a new home is switched to SolarCity.

Simpa Networks, in India, and M-Kopa, in Kenya, have introduced the “pay-as-you-go” “PAYG” pre-paid technology in their offering of off-grid rural solar home systems.

Inadequate power supply undermine our economic development as a nation. Economic life remains paralyzed in many rural communities that have been left outside the grid for several years. This is one of the main factors responsible for the often talked about rural-urban migration.

Rather than wait in vain forever for the national electricity grid to reach them, there is a golden opportunity for our rural communities to be empowered with affordable off-grid solar home systems that are operated on a PAYG basis.

You will recall that PAYG technology was the magic wand employed by the telecommunication industry to drive the rapid growth in GSM subscription across Africa over the last decade and half. PAYG addresses 2 problems; firstly, the cash flow constraint for the customer, and secondly, the credit risk management issue for the service provider.

East Africa is already leading the way for Sub-Saharan Africa.         M-Kopa, a subsidiary of Kenya telecom giant, Safaricom, has installed the solar home systems to over 180,000 rural homes in Kenya, Tanzania and Uganda.

This is exactly what we seek to replicate in Nigeria with our partnership with GVE Projects Limited and Arnergy Solar Limited. These two companies were selected from eight (8) companies that responded to our RFP in 2014.

GVE Projects Limited is a winner of the Power Africa off-grid Energy Challenge, organized by the US African Development Foundation (USADF), the USAID and General Electric (GE) in 2011. In 2013, the company implemented a 6KW PV solar rural mini-grid at Egbeke, Rivers State and is currently implementing an 18 KW PV solar mini-grid at the same location.

Arnergy Solar Limited specializes in the provision of clean energy to customers in the Bottom of the Pyramid (BOP). The company has implemented stand-alone PV solar systems in communities in Lagos and Ogun States.

We are starting off with the provision of long-term financing for the installation of off-grid solar home systems in six (6) communities in a Pilot Phase, as part of our Renewable Energy Partnership with the United Nations Development Programme. These communities, with an average of 200 homes each, are located in Anambra, Delta, Gombe, Kaduna, Niger and Osun States.

Each home will have sufficient solar energy to power three (3) LED light bulbs, one electric fan, one Radio/TV set and, of course, mobile phone charging. These are the basic energy needs of the average rural family. What we are initiating is a commercially sound model for delivering power to Nigerian rural homes at affordable rates, to provide a long-term alternative to the problematic national grid.

The GENCOs and DISCOs need not worry about this initiative. There is enough pent-up demand for energy in our cities and major towns to keep them very busy over the next decade.

We want our rural communities to take control of their energy generation and to pay only for the energy they use. Our medium-term vision is to have 100,000 homes installed with solar systems in the next 5 years, through a combination of micro-grid and stand-alone solar home systems. This is essentially a programme aimed at poverty alleviation and rural economic development.

Ladies and Gentlemen, we shall keep you updated on the BOI/UNDP Solar Energy Programme from time to time, in our quest to ensure that every Nigerian has access to affordable power through, renewable energy.

At BOI, we remain committed to making a difference in the lives of Nigerians, and to making a positive impact on their economic lives.

Thank you for your kind attention.

Rasheed Olaoluwa

Managing Director/Chief Executive Officer,

Bank of Industry