Nigeria’s determination to generate an additional 500MW from solar PV by next year and create a base for increasing the capacity to 4,000MW by 2025, appear to be on course after the recent signing of a major renewable energy development deal with a global clean energy development joint venture.
The agreement between the government of Nigeria and SkyPower FAS Energy, a joint venture between SkyPower Global and FAS Energy in May, for the development of 3000MW of utility-scale solar PV projects in the West Africa nation in the next five years, has boosted the country’s efforts to generate 18% of its electricity from renewable sources by 2030.
The $5 billion solar PV investment by SkyPower FAS Energy, to be developed in phases, is part of Nigeria’s strategy of pursuing an integrated renewable energy development programme that would enable it meet an anticipated annual electricity demand of between 6390MW and 10,800MW by 2020 up from the 3760MW.
The 3000MW solar PV will be developed in Nigeria’s Delta State and other states, yet to be identified and would entail what the company describes as “a multi-phase development and build schedule that will result in production of clean, sustainable, cost-effective energy to support the growing energy needs of Nigeria.” The company said details about the projects' sites, financial close and signing of the power purchase agreement will be confirmed later.
“SkyPower FAS Energy is committed to work closely with both governments for the planning, financing and construction of 3000 MW of utility-scale solar PV energy projects for the Nigerian power grid which are expected to reach commercial operation in phases starting in 2015,” said Canadian Kerry Adler, President and Chief Executive Officer of SkyPower Global.
“Global partnerships such as these are key to bringing together extensive expertise from around the world."
SkyPower FAS Energy said the US$5 billion funding would be raised through a combination of bank debt, development bank financing, and equity partners. “Over the life of the projects, it is estimated that more than 30,000 jobs will be created in Nigeria," said Stephen Bordes, Chief Financial Officer of SkyPower Global.
SkyPower, says it has more than 25,000MW of renewable energy projects at various stages of development from greenfield to construction and has also secured contracts worth more than $4 billion of energy sales to utilities globally.
Analysts have previously said if Nigeria devotes 1% of its land for solar PV modules, an estimated 1850 x103 GWh of solar electricity would be generated per year...
The company is expected to take advantage of Nigeria’s conducive solar radiation levels and on-going energy sector reforms, which has been in the works since 2001 to woo independent power producers and private sector investors to take advantage of new policies in investing in the energy sector.
Nigeria's Ministry of Power says the country’s solar radiation is said to be “fairly well distributed with average solar radiation of about 19.8 MJ/m2/day and average sunshine hours of 6hrs/ day.” Analysts have previously said if Nigeria devotes 1% of its land for solar PV modules, an estimated 1850 x103 GWh of solar electricity would be generated per year, which is more than 100 times the current grid electricity consumption level in Nigeria.
Another incentive SkyPower FAS Energy is likely to take advantage of is Nigeria's commitment to have 10% target for renewable energy mix for all new connections by 2020 set by the National Electric Power Policy of 2001, which Nigeria is using as a base for developing its alternative energy sources.
Nigeria’s Electricity Regulatory Commission has also published Feed-In-Tariffs for most renewable energy in June 2012 “providing investors cost recovery and guaranteed return on investment.”
The reforms also include the establishment of the Nigerian Bulk Electricity Trading Plc, which the government says is “as a credible and creditworthy off-taker of power including renewables.”
The off-taker, which is supported by World Bank Partial Risk Guarantee, will sign power purchase agreements (PPAs) with independent power producers with the backing of credit letters from the government.
Nigeria’s Energy Commission (ECN), through its Energy Research Centre has developed different solar technologies which could be exploited for commercial energy production such as solar PV application, solar water heaters, solar dryers, solar chicken brooders, water distillers and solar thermal refrigerators.
The commission says some local government agencies and ventures are already investing in solar PV street lighting and water pumping. However, ECN says the government and independent power producers would have to grapple with some challenges in developing the country’s solar PV potential such as the high initial investment costs, lack of access to capital, reluctance by commercial financiers like banks to fund renewable energy projects, delay of government subsidies on renewable energy technologies and challenges in mobilising human resource with technical know-how in production of the renewable energy equipment and components locally.
Written by Shem Oirere, a freelance writer specializing in solar energy.