Can Nigeria achieve its renewable energy potential?

Nigeria, a country rich in renewable energy potentials including solar, wind, vogas, and small hydro, is struggling to realize these capabilities into tangible solutions. Despite being dubbed the 'market of markets for renewable energy,' Nigeria faces numerous challenges hindering the translation of potential into reality. In a recent interview with CNBC Africa, Shagel, the president of the Renewable Energy Association of Nigeria and founder of Consistent Energy, shed light on the key hurdles obstructing the progress of renewable energy in the country. One of the primary impediments highlighted by Shagel is the unfavorable policy framework that discourages investors, financiers, and developers from entering the Nigerian market. While other African countries like Kenya, Tanzania, and Ghana offer incentives such as duty concessions and VAT waivers to stimulate the renewable energy sector, Nigeria lacks these critical incentives. Without a conducive business environment, many potential investors opt for more favorable markets, exacerbating Nigeria's energy supply-demand gap. Furthermore, foreign exchange fluctuations pose a significant challenge for renewable energy projects in Nigeria. The uncertainty surrounding currency exchange rates impacts the financial viability of ventures that rely on importing components for solar panels, batteries, and inverters. This volatility deters potential investors from committing capital to projects that face risks associated with repatriating profits. Despite the affordability of renewable energy compared to traditional generators, initial setup costs remain a barrier to widespread adoption. While renewable energy technologies offer long-term cost savings, the high upfront investments often deter consumers accustomed to the immediate affordability of generators. The lack of accessible funding options further complicates the financial landscape for renewable energy projects in Nigeria. Moreover, Nigeria's reliance on imported components for renewable energy infrastructure underscores the country's import dependence in the sector. Approximately 70% of the necessary technologies are sourced from foreign markets, signaling a need for domestic production and assembly capabilities. While there are efforts to transition towards local production, challenges such as high production costs and unreliable power supply hinder the competitiveness of Nigerian-made renewable energy products. As Nigeria navigates these challenges, the importance of addressing policy deficiencies, stabilizing currency fluctuations, and incentivizing local production cannot be understated. By fostering a conducive environment for investment, streamlining funding mechanisms, and promoting domestic manufacturing, Nigeria can unlock its vast renewable energy potential and pave the way for sustainable energy solutions that benefit both the economy and the environment. In conclusion, Shagel's insights underscore the urgency of addressing the systemic barriers hindering Nigeria's renewable energy sector. With strategic reforms and targeted interventions, Nigeria has the opportunity to emerge as a regional leader in renewable energy deployment, driving economic growth and environmental sustainability for years to come.