#9Questions: Renewable Energy

#9Questions with Ify Malo, Campaign Manager, Power For All Nigeria

More than 1.3 billion people lack access to modern electricity services. 2.8 million people spend several hours every day grinding grains, building fires, fetching water and collecting fuel for their cooking and heating stoves. 4.3 million premature deaths occur each year as a result of household air pollution caused by burning solids the traditional way (UNDP). In the midst of these, renewable energy has been widely accepted as the most sustainable and harmless source of energy possible. Fortunately, Africa is endowed with an abundance of these renewable sources.

Ify Malo who leads the Power for All campaign in Nigeria shares expert insight and advice on how Africa can maximize this immense renewable energy potential in ensuring that all Africans have access to clean and modern energy by 2030.

Q1. With your experience, how do you assess the use of renewable energy in Africa? Are renewables economically competitive, particularly for the least developed African countries on the continent?

According to Bloomberg New Energy Finance, global energy markets are undergoing profound transformation as solar power emerges as the cheapest form of electricity, at roughly half the price of coal. Emerging markets are leading the way in renewable energy investment, having invested more than wealthier OECD member states for the first time in 2015. South Africa has emerged as one of the world’s time clean energy investment destinations, with Ethiopia, Ghana, Senegal, Uganda, Kenya and Tanzania all following suit. Clean energy investment across sub-Saharan Africa doubled from 2014 to 2015.

A second profound transformation is occurring with the rise of distributed energy solutions, from basic solar lights, to large mini-grids which are delivering grid-equivalent, 24/7 AC power, without needing to be connected to the main electricity grid. According to the World Bank / IFC Lighting Africa programme, over 10 million households now have access to distributed renewable energy in Africa. Solar lights which cost as little as $8 are replacing kerosene lamps, and saving families $70 a year while lasting for 3-5 years. Solar home systems, which are paid for over time at less than the monthly cost of diesel, are replacing generators across communities in Africa. Next-generation clean technology is saving both customers and governments’ money; nonetheless, $27 billion a year is still wasted on kerosene, diesel, candles and batteries, whilst half of African governments continue to spend an average of 1.4% of GDP subsidizing fuel (UNEP).

Q2. What unique strength, expertise and resource has Power for All bought into the renewable energy sector that can help increase access to and utilization of renewable energy in Africa?

Power for All is a campaign, founded by a group of leading companies and civil society organisations, to promote distributed renewable energy as the key to achieving universal energy access.  The campaign is active in Nigeria, Sierra Leone and Zimbabwe, as well as at the global level with over 125 partners from 22 countries. We work with government, the private sector, investors and civil society to create an enabling environment for distributed renewable energy market growth.

In Sierra Leone for example, we have supported the government with the design of a ‘green lane’ VAT/tariff exemption for quality-verified solar products, making solar products 15% cheaper for consumers on average. In Zimbabwe, we are working closely with the Rural Electrification Agency on design of a new ‘Green Fund’ to encourage private sector investment in mini-grids, and here in Nigeria we have supported the establishment of the Renewable Energy Association of Nigeria – a new industry body, with around 100 members to strengthen industry voice and representation in decision-making processes. We are also working with faith groups, women’s groups and market associations to build awareness, to build demand for distributed renewable energy products and more importantly to demand for quality renewable products, and engage microfinance organizations, investors and the government to unlock access to finance.

We bring deep knowledge of the policies and programmes that have enabled distributed renewable energy markets to emerge in East Africa. Our aim is to help establish long term partnerships between government and private sector, to enable distributed renewable energy companies make a major contribution to the achievement of universal energy access and national development.

Q3. In your opinion, what does access and utilization of renewable energy mean for the African Continent?

It simply means that access is achieved through the adoption of distributed renewable energy which in turn leads to significant household savings. As a result of supporting the household solar market, Kenyan families are saving around $900 million, whilst Ghana is saving around $400 million a year. It also means more efficient use of national resources through lower kerosene and diesel subsidy bills for the government. Inefficient fuels are almost always imported; and so distributed renewable energy technologies reduce spending on imports, improve the balance of payments, and reduce demand for scarce foreign exchange. For grid power, the adoption of renewable energy means cost-savings too, which in turn leads to the reduction of unaffordable tariff subsidies.

Distributed renewable energy also means job creation and economic growth. According to one report, 15,000 jobs have been created in the sector in West Africa so far, with the potential for 500,000 new jobs to be further created (UNEP report). As savings from inefficient fuel get reinvested in the domestic economy, and as business productivity is boosted through access to affordable, reliable power – distributed renewable energy could deliver a badly-needed boost to economic growth, especially amongst poorer communities in more remote, rural areas.

Sustainable energy is also essential to achievement of the Sustainable Development Goals. In 2014, UN Secretary General Ban Ki-Moon, who himself grew up studying by kerosene lamp in Korea, called sustainable energy the ‘golden thread that connects economic growth, increased social equity and an environment that allows the world to thrive. Low-carbon growth can foster decent jobs, empower women, promote equality, provide access to sustainable energy, make cities more sustainable and enhance the health of both people and the planet’.

Q4. With the current move of the world from fuels to renewables, do you think renewable energy options can meet the continent’s demands?

Yes, absolutely. With the price of renewables continuing to fall while fossil fuels become increasingly scarce, renewable energy will eventually win out significantly on price alone in future. Large-scale renewable projects like the 580 MW Ouarzazate Solar Power Station in Morocco or the 310 MW Lake Turkana Wind Project in Kenya show that renewable energy can meet industrial and commercial needs, as well as community and residential demand.

Q5. What’s the challenge with solar and wind power; why has it proven so difficult to scale?

On the contrary, grid-scale solar and wind is scaling. As mentioned earlier, clean energy investment across sub-Saharan Africa doubled from 2014 to 2015. After a period of rapid growth of over 100% year on year in 2012 and 2013, the solar home system market has slowed but continues to grow steadily and consistently attracts record levels of investment. Kenya, Tanzania and Ethiopia are leading the way, with Uganda, Rwanda and Nigeria emerging. The GOGLA / Lighting Africa market trends report for Nigeria, for example, reported a total of over 125,000 sales for the first time in January-June 2016. The mini-grid market segment, which the IEA says needs to deliver on 40% of all new connections to achieve universal energy access by 2030, is only just beginning to emerge. We see further scale occurring when public funding earmarked for grid subsidy is reallocated to mini-grids, to leverage private capital and enable the sector to scale and reach several unconnected and neglected communities – particularly in Nigeria.

Despite the cost-savings and other benefits for consumers and government, there remain significant barriers to scale. The biggest challenge is around access to finance for companies and consumers – there is a need for patient equity and debt, as well as grants and concessional finance for early-stage companies. Government subsidies need to be redirected towards the least-cost solutions that align with consumer demand and willingness to pay. Access to foreign exchange is another challenge, since most quality products and components for the distributed renewable energy systems are still imported. Other issues relate to trust and demand for distributed renewable energy products; promotion of quality products and services in the marketplace; policy barriers relating to taxation; limited government capacity to support distributed renewable energy market growth; as well as a huge skills gap in the sector. All of these factors create risk and add to the bottom-line expenses that companies have to absorb and collectively deter more robust investments that prevents the market from growing faster.

Q6. Renewable Energy Technologies (RETs) are said to provide attractive environmental-friendly technology options for Africa’s electricity industry. What are realistic expectations for wind and solar in the near future?

Wind and Solar renewable energy technology are emerging as the fastest growing power sources in the near future. Wind and solar energy are modular and well suited for meeting decentralized rural energy demands; they can be built more quickly than hydropower, nuclear or fossil-fuel plants. Furthermore, green-power installations can be expanded piecemeal as demand increases. I expect the demand for solar and wind, but especially for solar, to soar in the next few years.

Q8. Bearing in mind that a large percentage of the continent depends on either hydroelectric and wood fuels, coal ignite, crude oil, natural gas or nuclear fuels, can these economies leap frog to renewable energy?

If you live far from the electricity grid, and use wood, kerosene, or diesel to light your home and cook, then any renewable technology – even a basic solar light that replaces a kerosene lamp – saves money and is a big step in the right direction in terms of electrification and development. People move up what we call the ‘energy ladder’ over time – once they trust the technology and have experienced the benefits of basic lighting, they’re prepared to invest more in a solar home system, and would be more likely to invest in connecting to a mini-grid. As I mentioned earlier, having access to an AC mini-grid is almost exactly like being connected to the grid, except the power is reliable, so that too is a big step in the right direction.

As for the grid itself, I think ‘leapfrogging’ is an appropriate way to think about the transition. By leap-frogging distributed renewable energy systems, we by-pass expensive solutions in favour of cheaper ones. By leapfrogging we substitute an unsustainable solution in favour of a sustainable one. Renewable energy already wins on price alone most of the time, and on current trends is only going to get cheaper, becoming a financial no-brainer for end-users and governments in future.

Q9. High initial capital costs, weak dissemination strategies, lack of skilled manpower, et al are said to be major setbacks for the sector. What are the most pressing steps to be taken?

  1. Eliminate VAT and tariffs on quality solar products – experience from Kenya and elsewhere shows companies pass on cost reductions to consumers through reduced prices. This makes lights more affordable and boosts uptake.
  2. Make FOREX available to the sector – distributed renewable energy should be considered a priority sector for national development. Foreign exchange should be made to ensure consistency of supply.
  3. Develop Access to Finance programmes, in partnership with Development Finance Institutions, national governments and policy makers and local commercial and micro-finance banks – so that companies and end-users can access the financing they need to grow.
  4. Raise Awareness of the benefits of distributed renewable energy – by building demand and helping customers make informed choices, and to invest in quality products and companies.
  5. Build a Public / Private Partnership to drive market growth – government and the private sector need to work together, meeting regularly to discuss market performance and challenges faced, if the market is to deliver on its potential to bring energy access to millions.

We hope policymakers see the potential for distributed renewable energy to make a major contribution to Nigeria’s development. Distributed renewable energy is the fastest, most cost-effective path to achieving universal energy access, and a powerful engine for the creation of jobs and economic growth.

Ify Malo brings solid credentials with building, cultivating, and driving public, private partnerships for project delivery and implementation. She is the CEO of Clean Tech Hub and the Energy Innovation Center, Abuja. She was the immediate past Senior Policy Advisor on Energy Policies, Regulations and Partnerships to the Honorable Minister of Power in Nigeria, and advised the policy direction for large scale grid connected and off-grid power. Ify held similar senior advisory portfolios with the Chairman/CEO of the Nigerian Electricity Regulatory Commission. Her prior work experience includes — special assistant to the Minister of Finance in Nigeria, a Counsel at Ashoka, Office of West Africa, and a wealth of other impressive experience in the clean energy sector. Ify’s focus lies with Global Policy; Project Design and Strategy. She has built up vast experience in Public Finance Systems; Project Management; Performance Monitoring; Deal Design, and in Mainstreaming Gender and Civil Society issues. Ify is a qualified attorney with graduate advanced degrees in Law, Business and Public Policy. She sits on several boards in Nigeria. She is a Desmond Tutu Fellow (2013) and a Dwight Eisenhower Fellow (2015).




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