J.1.5 Nigeria Energy Transition Partnership Private Sector Meeting Stakeholder Report (1).pdf

Private Sector Roundtable Report Nigeria’s Energy Transition Plan -

The Report www.energytransition.gov.ng

17th February, 2023.

Supported by:

Table of Contents

Executive Summary Background Framework For Private Sector Engagement The Private Sector Roundtable Summary of Speakers’ Key Points

Lanre Shasore Dr. Muntaqa Umar-Sadiq Tariye Gbadegesin Victor Haruna Adamu Mr. Ahmad Salihijo Hakeem Shagaya Mr. Chinua Azubike

The Discourse Meeting Outcomes Action Points Appendix

Appendix 1 Event Photographs

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energytransition.gov.ng

Nigeria’s Energy Transition Plan - Private Sector Roundtable Report

Executive Summary

The Nigerian Government designed the Energy Transition Plan (ETP) to tackle the dual crises of energy poverty and climate change; and outline a pathway to achieve net-zero status by 2060, while also providing energy for development, industrialization, and economic growth. To deliver net-zero target by 2060, Nigeria requires ~$410 billion above business-as-usual spending (between 2021 - 2060); $150 billion net spend on generation capacity, $135 billion on transmission and distribution infrastructure, $79 billion on cooking, $21 billion on industry, $12 billion on transport and $12 billion on oil and gas decarbonisation. Nigeria’s Energy Transition Office has identified an initial $23 billion investment opportunity across a portfolio of projects, out of which ~$17 billion is estimated as funding required through the private sector, across generation, transmission and distribution, metering, gas commercialization, clean cooking, e-mobility, and healthcare. See appendix A.

Nigeria needs to unlock an enormous amount of financing from various sources of capital, both domestic and foreign, to fund its just energy transition. The scale and ambition of the ETP underscores the important role of the private sector in bridging financing gaps, and mainstreaming private sector led climate-friendly and

To consolidate efforts towards energy transition, a private sector-focused roundtable was convened in Lagos on Friday, February 17th, 2023.

innovative financing solutions for Nigeria’s transition to net zero. A successful transition will require commercial investment capital, blended structures in the form of public- private partnerships and concessional capital and development funding from a combination of philanthropists and multilateral development financiers.

To help consolidate efforts towards the financing of the ETP, a private sector-focused roundtable was convened in Lagos on Friday, February 17th, 2023 to support the preparation of aligned pipeline projects to financial close and provide private sector stewardship towards project implementation.

The round table aimed to discuss investment opportunities for private sector participation in the ETP, and outline a framework for addressing project specific constraints to unlock a financing path forward for the five verticals of the ETP including in power, oil and gas, cooking, industry and transportation sectors.

Convened by the Nigeria Energy Transition Office (ETO), supported the by Sustainable Energy for ALL (SEforALL) and Global Energy Alliance for People and Planet (GEAPP), the meeting brought together over 70 stakeholders, sponsors and operators from the private sector across the energy, finance and legal sectors, to engage around the pipeline projects of the ETP and share insights, perspectives and experiences on the challenges and opportunities presented by the energy transition. In addition, several senior government officials and heads of departments and agencies participated. Speakers and attendees included Ahmed Salihijo, Managing Director & CEO of the Rural Electrification Agency, Chinua Azubike, CEO of Infracredit, Victor Adamu, representing the Special Adviser to the President on Infrastructure, Hakeem Shagaya of Sun Africa, Nana Maidugu, Head of ESG at Nigerian Sovereign Investment Authority, Sola Carrena of Helios Investment Partners, Tunde Gbajumo (Chief of Party, Power Africa), Banjo Alimi, Ayo Falola and Seyi Okunnuga of Sterling Bank (Renewable Energy), Dr. Uzo Egbuche of Climate Finance Accelerator, Muhammad Wakil of GEAPP, Barbara Izilein, Head of Solar Power Naija, Ayo Ademilu, President of the Renewable Energy Association of Nigeria, Joshua Adedeji of Innovate UK-KTN and Yemisi Awonuga, Partner at Templars Law, among other key stakeholders

The private sector roundtable involved contextual discussions around the case for private sector investment in the ETP, rapid (problem solving) diagnostic sessions of selected ETP pipeline projects (including 14 IPPs Projects, Gas flare commercialization, Sun Africa (NDPHC) Solar Projects, Solar Power Naija Project amongst others) and ideating around project based themes, that if addressed, will facilitate project preparation and financial close. The sessions were facilitated based on a bottom up reverse enquiry approach, with a view to address transaction bottlenecks and influence policy reforms that stimulate private sector investments across the priority sectors of the ETP.

Objectives of the Energy Transition Private Sector Round Table

Engagement Approach

Several themes emerged as constraints to unlocking private funding. Some of the themes were surprising, and linked to specific pools of international capital, while others were not, and linked to domestic institutional investors and strategic partners. Many cross-cutting issues also emerged, many of which are complex to resolve and will require public and private sector collaboration. The discussions highlighted eight project based constraints that cut across the five verticals (sectoral focus) of the ETP, and prevent stakeholders from fully engaging with and investing in the energy transition projects. These bottlenecks include;

• Limited scale in the ETP investable pipeline as well as the visibility of that pipeline. There is a lack of (bankable) pipeline and project development support, including for bridging the disconnect between the actual projects and the available capital. Several participants reported that they had not been presented with any ETP projects for serious consideration despite an abundance of rhetoric on energy finance and infrastructure in general.

• Suboptimal demonstration cases and projects required to deliver proof of concepts and build the viability case to potentially attract the buy-in from institutional funders.

• Insufficient financial innovation, as the local market has been slow to adopt new instruments that can crowd in funding for the ETP projects. Furthermore, there is relatively little evidence to suggest that practitioners are proactively thinking about designing new and innovative instruments and mechanisms that could accelerate the mobilisation of private sector funding for the ETP.

• Ambiguity around the JETP investment case and financing model. Participants reported a limited understanding of what a JETP was, the scale of funding required and the role that various stakeholders in the market should play. Participants recognized that unless there is consensus on what needs to be financed and how this can be done, the just energy transition in Nigeria will remain an unachievable ambition.

• Skills shortages related to knowledge transfer and upskilling capacity required for the power, oil and gas and buildings (cooking) sectors. Many of the blockages highlighted by participants refer to a lack of specialist skills and expertise in the local market to drive the capacity required for building a pipeline of low-carbon projects in the ETP’s five sectors.

For example, the ETP envisages a significant ramp up of solar capacity at 5.3 GW each year till 2060, and the associated economic trade-offs such as the long term job loss in the oil sector.

• Governance/leadership vacuum to drive sustained private sector ETP engagement and enhance trust between stakeholders. Specifically, the public sector has a suboptimal track record of developing viable funding opportunities and projects that can be taken to the private sector with appropriate instruments. Private sector stewardship is required to

Project Based Themes and Challenges support the preparation of priority ETP projects and accelerate the financing of the ETP.

• Poor-quality data and ESG climate reporting standards. Participants shared that data demands of ESG are a key factor that could deter investment by the private sector into the ETP. Collecting, collating and packaging ESG data is resource intensive and requires technical expertise to ensure that the data is of good quality.

• Undeveloped market for renewable energy (RE) component assembly and manufacturing for renewable energy installations (solar PV, batteries and other related inputs).

• Demonstration projects for the ETP verticals. Participants expressed an interest in identifying aligned priority projects to use as case studies or demonstration projects that signal the viability of energy transition business models, and curate learnings that may inform broader policy action. Participants committed to getting their teeth stuck into actual priority pipeline deals to test internal structures and processes as well as offer solutions, project preparation support and enable discussions with end investors. More broadly, there is an opportunity for development funders, including philanthropists and multilateral development agencies, to support the development of projects that are close to being investment ready to get to a point of bankability. Alternatively, projects that are deemed excessively risky for commercial funders can be de-risked by development funders.

• Innovative financing mechanisms. To unlock large-scale financing from the local pension funds industry in Nigeria, mobilizing domestic credit or equity to the private sector through innovative financing instruments will be required. There is a need for packaging transition financing instruments in a way that is accessible for institutional investors. This is applicable for both domestic and offshore investors. Moreover, other sustainable finance instruments (including transition bonds, carbon credits and sustainability linked loans) may have to be considered on a much larger scale to enable the funding of the just element of the transition. Although there has been a shift in Nigeria from a dependency on sovereign guarantees for projects, to more private sector-led financing, other forms of risk mitigation such as revenue ring fencing, blended finance structures and stabilisation funds will continue to be important to the success of ET transactions.

Recommendations

Against the back drop of the highlighted bottlenecks, during the practical co-creation session, facilitated by Mrs Tariye Gbadegesin, (MD, ARM-Harith Infrastructure Fund), four ETP projects were discussed: 14 IPPs projects, Gas Flare Commercialization Project, Sun Africa (NDPHC) Solar Projects and Solar Power Naija Project. Please see appendix A. A number of action plans emerged from the deliberation, summarized below:

• Developing the investment case for Just Energy Transition Partnership (JETP) financing.

A more concerted effort to engage with international capital allocators, through the JETP (or other alternatives) is essential. To attract funding at scale, Nigeria may need to offer liquid investments to capital allocators that yield competitive, risk-adjusted returns over the medium to long term. Advocacy related to scaling up financing for the ETP must be done successfully in the local market to demonstrate to offshore investors that there is buy-in from local investors (which encourages a sense of derisking and information sharing). It is also critical to ensure that the case for investing in the just transition as well as how such investment will support the pathway to net zero are clearly articulated. The local private sector needs to ramp up efforts to demonstrate to offshore investors how their capital can be utilised to achieve long-term sustainable outcomes.

• Capacity building and market development: Participants highlighted that Nigeria will need to develop highly specialised skills across various ET industry areas to create the capabilities needed to achieve the energy transition goals over the next four decades. To understand exactly what skills are needed in which areas, the government needs to do a skills gap analysis and develop a strategy on how this gap will be closed. This is an area where development funders can provide technical assistance. To get to the end-goal of achieving net zero, Nigeria will need to have a number of fundamental building blocks in place including capacitated human resource, green manufacturing (and assembly) market development as well as ESG integration amongst others.

• Private sector governance framework to guide the ETP resource mobilization and complement the government’s Energy Transition Implementation Working Group. Public and private sector participants agreed to work together through private sector working groups, organised around thematic areas, to advance project preparation and innovative financing mechanisms that could help mobilize private finance at scale. Participants acknowledged that in developing solutions to project constraints, some hurdles will be easier to overcome than others, yet with collaborative efforts between private and public sector actors, as well as partnerships between capital providers along the entire spectrum of capital – from philanthropic funders right through to commercial investors – progress can be made to ultimately mobilise funding at scale.

Figure 1: Conceptual framework for unlocking financing at scale for Nigeria’s ETP, drawing from the Financing South Africa’s Just Energy Transition Framework.

The round table achieved its objectives of:

i. Creating a better understanding of the investment opportunities in the ETP and building the foundation for a deliberate, systematic project based collaboration between the government and the private sector;

ii. Building consensus on concrete actionable themes and projects for the government and private sector to collaborate on to improve market enabling policies and enhance access to capital to ETP projects; and

iii. Securing over 50 public and private stakeholders committed to participating in a Private Sector Working Group of net-zero-committed institutions that will help guide the ETP resource mobilization process.

Next Steps

The set of recommendations and actions will be anchored around the ET private sector working group with a focus on working together, through pragmatic thematic labs, to advance project preparation and innovative financing mechanisms that could help mobilize private finance at scale. Three core sub groups will be established to drive the recommended actions and assist in the financing of specific projects. The sub groups will focus on (i) demonstration projects for the ETP verticals; (ii) innovative financing mechanisms to unlock large-scale financing, (including developing the investment case for Just Energy Transition Partnership (JETP) financing), and (iii) Capacity building and market shaping activities, including for building localized manufacturing and industrial capabilities related to renewable energy. Private sector participants will be invited to volunteer their time and expertise to support various working groups. Terms of References (TORs) and rules of engagement will be developed to frame the activities of the sub-groups.

A dedicated secretariat, managed by the Energy Transition Office, will coordinate and support the activities of the working groups; and work with partners to provide technical and operational assistance, in meeting the objectives of the working groups. The next private sector round table will take place in April 2023 and focus on undertaking a deep dive on one of the pipeline projects.

Subsequent consultations will go beyond offering solutions to bottlenecks and focus on facilitating the financing and implementation of viable ETP projects.

Background

Nigeria is a high-impact country for achieving the UN Sustainable Development Goal 7 (SDG7) which calls for universal access to clean and affordable energy. Based on the latest data available, 92 million Nigerians lack access to electricity while 175 million lack access to clean cooking solutions.

Concurrently, the reality and grave impacts of climate change are already manifest in the form of floods, pollution, erosion, desertification, and the associated socio-economic consequences. This consequently led to Nigeria becoming the first African country to develop a detailed Energy Transition Plan (ETP) in 2021. In partnership with the UK Energy Transition Council, Sustainable Energy for All (SEforALL) and McKinsey, the Nigerian Government designed the Energy Transition Plan to tackle the dual crises of energy poverty and climate change and deliver SDG7 by 2030 and net-zero by 2060, while also providing energy for development, industrialization, and economic growth.

Since its unveiling, the ETP has been approved by Nigeria’s Federal Executive Council (FEC) and adopted as national policy. An Energy Transition Implementation Working Group (ETWG) chaired by His Excellency Vice President Yemi Osinbajo (SAN) and comprising of several key ministers including the Ministers for Environment, Power, Finance, Works & Housing, Petroleum Resources, and Foreign Affairs has also been established to drive the implementation of the plan. SEforALL and the Global Energy Alliance for People and Planet (GEAPP) support the working group through a dedicated secretariat, the Energy Transition Office (ETO).

Since the conception of the Energy Transition Office in March 2022, the ETO has engaged in strategic activities and delivered significant outcomes like fundraising support & investment facilitation across selected priority projects, stakeholder management and coordination. Consequently, it became clear that a significant opportunity exists in the coming months to mobilize a considerable financial and technical support package for the implementation of Nigeria’s ETP.

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Framework for Private Sector Engagement

The scale and ambition of the Energy Transition Plan underscores the important role of the private sector (financial institutions) in bridging financing gaps, and mainstreaming private sector led climate-friendly and innovative financing solutions for Nigeria’s transition to net zero. As the Nigeria financial market matures, private sector led innovative financing mechanisms, such as blended finance instruments and local currency financing, are gaining ground. However, current private capital inflows remain far below the amounts required to reach the country’s net zero targets. Accelerating progress on mobilizing access to finance and scaling up domestic private capital for eligible transition projects (that generate returns) is an important enabler for achieving the country’s clean energy transition.

To consolidate efforts towards energy transition, a private sector-focused roundtable was convened in Lagos on Friday, February 17th, 2023.

Just Energy Transition Partnerships (JETP) Globally, the Just Energy Transition Partnerships (JETP) are becoming an increasingly important funding and partnership model for energy transitions. The JETP funding is in the form of grants, low interest loans, and investment provided to both the public and private sector. In the past two years, $45.2 billion has been committed for the clean energy transitions, with the biggest financial packages going to South Africa, Indonesia, and Vietnam. Most recently, Vietnam and the Group of Seven (G7) nations jointly announced a $15.5 billion JETP aimed at kick-starting the implementation of Vietnam’s clean energy transition. Notably, there has been an increase in the share of private finance in JETPs, as half of the committed funding in Vietnam and Indonesia is expected to come from the private sector, compared to under 20 percent in South Africa.

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The Private Sector Roundtable – February 17th, 2023

As Nigeria implements its Energy Transition Plan and advances on its plan to join the JETP, there is a compelling opportunity for the private sector to further align with the public sector, identify sources of (domestic and international capital) private capital and support the ETP’s implementation, including through the preparation of aligned pipeline projects and bring them to financial close.

To complement the work of the government’s Energy Transition Working Group (ETWG), the Energy Transition Office initiated a meeting with the Private Sector through a Roundtable discussion. Through a series of robust discussions and deliberation, the round table engagements seek to;

• Secure strong private sector partnership in support of the financing and implementation of the ETP;

• Identify approaches and market enablers that could help crowd in private finance at scale for the ETP;

• Define a framework for the Private Sector Working Group of net-zero-committed financial institutions that will help guide the ETP resource mobilization process.

The first of these roundtable engagements held on the 17th of February, 2023.

Summary of Speakers’ Key Points

The Energy transition plan has to main objectives: It sets out a pathway to achieve de-carbonization by 2060, recognizing that we are one of the countries that bears the harshest impact of climate change in the world. 2. It helps us improve energy access which is imperative because Nigeria has one of the highest number of people without access to power, about 92 million, and one of the highest number of people in the world without access to clean cooking, 175 million.

A first scope of the projects, that would help Nigeria achieve energy access and de-carbonization, has been done to ascertain its complexity and costing, and that these projects will be introduced in the course of the roundtable to ascertain creative ways to finance them.

The Energy Transition plan was developed by an incubation team from the Office of the Vice President, and metamorphosed into the Energy Transition Working Group (ETWG) chaired by the Vice President of Nigeria and comprising of relevant line ministers like the Minister of Petroleum, Power, Environment, Foreign Minister and relevant agencies; NNPC, Rural Electrification Agency etc. The President has inaugurated the National Climate Change Council (NCCC) which is as a result of the passage of the Climate Change Act; that gives statutory backing to all the work that has been done so far on energy transition, institutionalizing Nigeria’s climate initiative. The climate act will address issues around navigating the carbon market, raising finance for mitigation and adaptation projects and supporting the Energy Transition plan going forward.

Setting the Pace & History of the Energy Transition Plan - Lanre Shasore

The Energy Transition Plan lays out a comprehensive roadmap for Nigeria’s energy transition, and emphasizes the need for private sector engagement in the form of co-creation and alignment to raise the requisite funds required to achieve the Nigeria’s net zero goal by 2060.

With the announcement of this ambitious ETP, there is a need to align it around some major projects that both public and private sector can implement. There has been a continued request for feedback from the private sector about the objectives of the Energy Transition Plan but there has not been a platform for engagement and dialogue with the private sector like this.

The Private Sector Working Group to be created will serve as a counterpart and a counterweight to the NCCC and the ETWG, to help the identification and refinement of a solid project pipeline for the ETP across priority sectors and drive the resolution of bottlenecks around project financing and delivery. Hence, the need for more round table discussions over time, with the objectives of:

• Forming partnership(s) between key private sector players and government organisations such as the Energy Transition Working Group (ETWG) and the National Council on Climate Change (NCCC).

• Together, driving the resolution of bottlenecks in the implementation of the Energy Transition Plan in view of achieving the net 2060 goals creating a project pipeline as a foundation for the rollout of more over time.

Alignment, Problem Solving & Co-Creation - Dr. Muntaqa Umar-Sadiq

The earliest thinking was on the need to anchor the plan around some priority pipeline projects and use those projects as a basis to engage government, so the momentum required for impact can be demonstrated, both in terms of sectors and priority projects. This will be more powerful when from a Private Sector Working Group because it adds weight to the advocacy required for project level reforms. Developing synergies between the needs of projects, and the capabilities and appetite of the private sector, in a pragmatic way is what is required.

The Government wants a list of what is required and what it will take to get it to deal closure through a process of reverse inquiry, through problem solving and alignment.

• Ideation and co-creation are needed to engage our best thinkers to ideate around the problem. The private sector can be a thought partner that will increase dialogue through a sustainable framework.

• The weight of the private sector will help the government address bottlenecks.

The existing pipeline of projects will serve as potential case studies and use cases that can potentially be rallied around. The key bone of contention is financing, and there are a few ways to raise money using the Energy Transition Plan.

1. Pipeline projects

2. The Just Energy Transition Plan Model e.g., the international partnership between the governments of South Africa, France, Germany, the United Kingdom, and the United States of America, along with the European Union to support South Africa’s decarbonisation efforts.

3. Voluntary Carbon Market Potential using the carbon trading system to unlock finance in the form of carbon credits, and investments, while also driving job creation, energy access and efficiency. To unlock carbon markets in Nigeria, government efforts need to create a database for recording and tracking emissions.

Tariye Gbadegesin, MD ARM-Harith Infrastructure has more than 20 years’ experience in finance, principal investments and infrastructure. Tariye spoke on the role the private sector must play in project financing, the reasons for failures from her experience in the sector and recommendations. She stated that the company has made investments in embedded energy projects and established a distributed energy platform, now looking into off-grid projects for prospective investments.

There is a shift from dependency on sovereign (government) backing/guarantees for projects to more private sector-led financing. However, it has been proven that government backing (e.g., Stabilisation funds) is still very important in the success of such projects. Therefore, there is a need to balance private sector-led financing between innovation and creating a best practice that maintains semblance to what finance has looked like over the years.

She emphasised that the philosophy of pricing is essential to getting government backing e.g., ensuring that subsidy on products/solutions is not too much, especially for people who can otherwise afford them, so that profitability is maintained.

Tariye Gbadegesin on some of her experiences in developing African Infrastructure assets

Victor Haruna Adamu, represented the Special Adviser to the President on Infrastructure. He spoke about the 14 IPPs.

The frameworks for the resolution are still in place and discussion started in March 2022.

Ministries of Power and Finance hosted the discussions and engagements.

Victor Haruna Adamu on the 14 Solar IPPs

• The framework for the resolution was that the IPPs have agreed that they’ll come back to the table to rediscuss the terms of the 14 Solar IPPs.

• Some of the terms were around re-submitting to another negotiation around tariffs, discussions around guarantees and deployment of post-financial sale.

• Secured approvals to address key issues like guarantees.

• Gas stabilization fund ongoing to secure gas payment for gas IPPs on the grid.

• Solar stabilization fund.

He similarly highlighted some of the structures that are in place that would be enticing for private sector participation:

• Service-based tariffs

• Metering

• Payment discipline

• Improved revenues

Progress made so far:

1. Minister empowered to give policy directive around level of renewable energy uptake that takes 10%

2. Discos expected to take a minimum of 10% off their total energy received from the solar IPPs

3. Payment waterfall has been made accessible to the Solar IPPs to guarantee payments for the project.

4. Expecting a policy directive from the Minister, off the directive from the President, which will guide the next necessary actions.

5. Expecting directive to the TCN on how to issue the clearance and levies.

6. Expecting directive to the Discos on how to enter into bilateral contracts with the IPPs.

Mr. Ahmad Salihijo – MD, Rural Electrification Agency

Hakeem Shagaya, MD – Sun Africa

The MD, Rural Electrification Agency (REA) addressed the need for private sector participation, because government money is just never enough. He highlighted what the REA has been able to do so far:

1. Design projects that attract different types of financing: delivering projects as EPCs.

2. Demonstrate Productive use of electricity through the Energizing Agriculture Program.

3. Deliver projects through the Rural Electrification Fund and few of the projects are running sustainably.

4. Demonstrate through the Nigeria Electrification Project that subsidies can also help deliver projects.

5. Demonstrate that the REA is able to partake in equity investments and blended financing and build strong partnerships.

Hakeem Shagaya– MD/CEO of Sun Africa said his company has established about 58,000 connections in rural areas in the last 3 years.

Hakeem believes Nigeria’s Power Sector needs to think bigger. He drew example from the Angolan power model, stating that Angola has developed about 800MW of solar with battery storage and improved on their grid.

He suggested that Nigeria can leapfrog its current position if the country speaks more about methodology as opposed to financial models.

Hakeem suggested that Nigeria adopt different technologies like introducing battery storage to the grid which helps with the baseload issue.

The second approach, according to him, is to have power generated where it is consumed.

With this second approach, he emphasized, most major cities will have enough power to give light during the productive time of the day and power from the dam and gas plants can go to the cities at night.

Mr. Chinua Azubike – MD, InfraCredit Chinua Azubike introduced InfraCredit as a specialized guarantee institution backed by the SWF and international VFI’s and private investors with a vison to provide long-term local currency financing for infrastructure in Nigeria.

He highlighted that there are opportunities here in Nigeria, for example, mentioning that there are a sizable number of domestic resources that can be mobilized. Today, we have pension funds that sits at about $35billion Naira-equivalent growing at about 10-15% per annum and 35% of that fund can be mobilized as domestic credit to private sector, but we have to bridge the gap between perception of risk and what is real, and typically that’s where credit guarantees come to play.”

Guarantees are meant to enable, not to create a moral hazard problem. He commended the critical role of the Rural Electrification Agency in the ecosystem while mentioning that there is both a decentralized and centralized solution to the problem. His stand was that Rural Electrification and modular distribution of energy is one way of providing solutions, as well as centralized solutions. One of the real challenges we have is interest rates and cost of capital. There is capital but at what rate Chinua Azubike stated that it would be great to co-ordinate an organized private sector and commended the Energy Transition Office for the selfless work they have done so a far. He was emphatic about the need to avoid the experiences where a new set of stakeholders begin to discuss work done as if it’s new, which has become the usual when a new administration comes to the table.

He further stated that we are committed as an institution to the crafting of a framework to set the path on the private sector side and nominated himself as part of the private sector working group. The plan of the working group in his words, is to create a more bottoms up approach, being pragmatic with solutions while taking a lab approach to problems. Foundational work and frameworks have been done and it is up to us to create the continuity needed.

This was the practical technical session led by Tariye Gbadegesin.

The Discourse

This session contained back and forth iterations from participants thus creating practical recommendations that would lead to viable solutions. The challenge of the ambitious Energy Transition Plan isn’t the availability of capital, but the disconnect between the actual projects and the available capital. The objective of the session was to show stakeholders that the Energy Transition Office and the plan envisions certain verticals; that there are clear overarching schemes that have to be addressed across all verticals, and to hear from stakeholders in the meeting other areas within those verticals that they are particular about and what their constraints or challenges could be.

Yemisi Awonuga (Partner, Energy and Natural Resources, Templars Law)

Yemisi spoke about her concern especially in the cooking sector. She posed some critical questions such as:

1. If funds were to be deployed into the cooking sector, how will the funds be utilised?

2. How will the funds be recouped?

3. Who will the funds go to across the value chain?

4. How can interested stakeholders key into the value chain?

5. Who are the key players in terms of realizing funding?

She also looked at questions around the existing regulatory framework and policies: are there laws that compel or mandate stakeholders across the verticals to ensure that some things are done at the end of the year? Can the CCUS from the oil and gas sector be compelled? Are there any laws that mandate that out of the exploration activities of companies in the oil & gas sector, their field development plans should be included in order to ensure climate change compliance?

She concluded her comment by reiterating a few points:

• The need for the visions and laws in the Climate Change Act to be well policed.

• The importance of realizing that not everyone, including the ones in the sophisticated class, understand the value chain.

• The importance of understanding who the funds are deployed to and who are the major players utilizing the funds

Tunde Aromati (Climate Finance and Investment Accelerator)

On the issue of participation and trust between the Energy Transition team and stakeholders, Mr.

Tunde Aromati asked what the rules of engagements and elements for securing trust across the board would be, going forward.

Ayo Ademilua (President, Renewables Association of Nigeria)

Mr. Ayo Ademilola talked about the overall supply chain. According to him, it is not just about solar panels alone, because though there is some assembling going on now, it’s not the only area that needs a solution. He suggested that other areas like glass, silicon, aluminum should also be considered or else in the next five years the country would be exporting as much billions of dollars as it is doing right now.

According to him, in the line of on-grid and off-grid for the team at Renewable Energy, they’re not just using solar panels. There’s a lot of steel, cables, and poles in terms of distribution . All these, he stated, can produce an extensive value chain. Mr. Ademilola also explained the need for capacity building. He suggested that more people should be catalysed into the energy industry, considering the number of manpower available right now and the projected number needed to implement the Energy Transition Plan. He stressed the need for the Energy Transition team to look across the value chains, galvanise more capacity building to actualise the ETP, evaluate the opportunities and start now to map out the people that will implement the project, and think of a way to measure the realizable goals and their values.

Victor Haruna Adamu

Mr. Adamu stated two points:

• Make the private sector working group collaborative and all-encompassing. According to him, the Energy Transition Working Group should pick up lessons from the successes of the Power Sector Working Group, including having every key player in the room participating in decision-making and also driving delivery of actions that have been agreed at the working group level. He encouraged that everyone in the room should be involved in the process, because if there are critical players that are not in the process, the ability to drive delivery will be difficult.

• In building the labs and test cases, it is important to start have archetypes with sample projects that pipelines can be built around. He gave an example from the directives of the 14-Solar APP that encouraged the IPP developers to work closely with the transmission companies in building infrastructure.

Mr. Adamu added that in building pipelines and projects around energy transmission, it will be good for the developers look at it full scale, which does not end at generation but also pulls in transmission as part of their project development and having a case for cost recovery. This will make it more sustainable.

Dr Uzo Egbuche (Director, Climate Finance Investment Accelerator)

Dr Uzo emphasized the need for the plan to be sectoral but also nexus-focused. Looking from the example of the electricity providers, she explained that Nigeria should focus more on off-grid electricity (because of the distribution limitations for on-grid and high cost of grid expansion). According to Dr Uzo, Nigeria is an informal-sector economy and there are a lot of activities going on both in the rural and urban areas where there are no access to electricity. Many of the people in the rural electrification agency are providing electricity in small bundles.

But looking at it in a nexus formation, the requirement would be to know who the demand is and what supply of electricity is for that demand. In many cases, business models fail in the electricity sector because providers do not carefully look at the offtake of the electricity they are producing. So a nexus approach would be useful in terms of bringing together demand and supply.

Dr Uzo went further to consider some points from the perspective of the Climate Finance and Acceleration, looking especially at how can climate finance flow? She pointed out that there is slow movement of funds, though available. She indicated that the issues arise around the risks and reporting of the emissions related to climate finance. She asserted that people do not report the types of emissions they emit or save. According to her, “people don’t know that part of the reasons why we cannot get finance moving is that we’re not expressing our risks”.

Ibiene Okeleke – Energy Training Centre Ibiene reiterated the importance of capacity building, not just for the players but also for the policy makers at the government level. She made an observation about the Oil & Gas sector where conversations are usually detached from Power. She believes Oil & Gas entities usually have a lot of access to funding and should be in constant conversation with the Power sector.

Ada Nnoruka – Investment Director at ARM-Harith Infrastructure To add to Dr. Uzo Egbuche’s contribution, Adaobi suggested that the demand-supply nexus be fine-tuned in a way that probes the most efficient supply solution for citizens in different parts of the country, as that would form the thinking around the demand-supply nexus.

She went further to add that:

• There should be conversations around efficiency in the power verticals because there is a lot of idle capacity in the sector due to a lack of investment or other varying reasons.

• The Interplay among the verticals should be leveraged so that one project can be used to supercharge the other.

Folashade Ambrose – Strategy and Fundraising Lead, Climate Finance Ms. Folashade commented on the nuances of raising finance and the need to leverage how others have been able to raise finance in the energy sector. She suggested that the lessons learnt around risks should be amplified.

Nana Maidugu – Head ESG, Nigerian Sovereign Investment Authority Ms. Nana commented on the necessity of exploring and leveraging our natural forest to secure financing. For example, she stated, Gabon is leveraging their natural mangrove along the Congo basin and selling over 90 million tonnes of carbon, and using the proceeds to fund some infrastructural projects.Nigeria can also leverage its natural forest and development of afforestation projects which can earn the country carbon credits that could be sold to finance and develop more projects.

Meeting Outcomes

1. There isn’t a lack of projects/innovation, but a disconnect between projects, and bankability, policy, regulatory framework etc, that needs to be addressed to ensure the takeoff and success of future projects.

2. Need to take a pragmatic approach to drive continuity of projects; creating labs to discuss sector sub-themes (power, industry, transport) and overarching themes (regulatory framework, policy-making.

3. Need for better recording, data collection and reporting of emissions, etc. A good data practice is also essential in being able to determine the progress made in electrification, access, etc

4. Capacity building, especially in terms of people; skilled professionals to manufacture, operate and manage technology.

5. Need to leverage natural forests to get carbon credits which can go into funding.

For example, Gabon last year completed the certification of 90 million carbon credits under the UN programme to reduce emissions from deforestation and forest degradation (REDD).

Action Points

1. Create thematic labs that address the interests of stakeholders

2. Anchor the Energy Transition Plan around some priority pipeline projects and use those projects or verticals as a basis to engage government, so the momentum required for impact can be demonstrated, both in terms of sectors and priority projects.

3. Explore the Just Energy Transition Plan (JETP) Model

4. Harness the Voluntary Carbon Market Potential

5. Focus more on off-grid electricity because of the distribution limitations for on-grid and high cost of grid expansion.

6. Create a framework for risk and emission reporting, because it is critical to acquiring funding in the Carbon Market.

7. Recognize and breakdown the actors in the energy value chain, create regulatory frameworks and policies to compel stakeholders.

8. Analyze the manufacturing resources required to build the assets and infrastructures to scale Renewable Energy.

9. There needs to be proper iteration of the Government Capital raised and those of the private sector.

10. Include transmission into the conversation for a full-scale development by creating a dedicated brainstorm session for the transmission agenda.

11. Incorporate a demand-supply nexus approach: study the demand and then determine what supply can be made using a nexus approach.

12. Leverage on our natural forests for financing to fund infrastructure projects.

13. Address the risks and case study the success stories.

APPENDIX 1:

Details on the projects in the portfolio above have been included here:

Sector Projects Expected Impact Support Required

Generation (On-Grid) Combined Cycle generation (CCG) programme: conversion of 5 large-scale gas power plants in phase 1

• CO2 savings of at least

12.4 million tons per annum

• 3,500MW of additional power capacity

$1.4 Bn Financing for private sector

Generation (Interconnected)

Interconnected mini grids programme:

Deployment of interconnected and isolated minigrid solutions, starting with Kano Electricity Distribution Company and subsequent roll out to other distribution companies’ grid

• 88,000 jobs creation

• Increased renewable energy penetration – greening the grid

$2.3 Bn Financing for private sector

Generation (Decentralized)

5 million solar projects:

Support private distributors in deploying solar home systems and mini grids spread across geopolitical zones to electrify 5 million homes by 2023

• 5 million new household connections

• 25,000 metric tons of Carbon emissions reduced

• 200,000 SMEs powered

• 250 ,000 jobs creation

$8.1 Bn Financing for private sector ($6.2 Bn) and Government ($1.9 Bn for subsidies)

Transmission and Distribution Upgrade

Presidential Power Initiative Implementation:

• Improved central grid reliability and stability

• Unlock >11GW of power to end users

$2.3 Bn Financing for government to upgrade infrastructure

New Distribution Connections

Expansion of distribution networks to new users and implementation of distribution Performance Improvement Plans (PIPs)

• Energy access expansion

• Improved quality and reliability of electricity supply to end customers.

• Reduction in ATC&C losses

$0.5 Bn Financing for the private sector to expand distribution grid to new customers

Sector Projects Expected Impact Support Required

Metering National Mass Metering Programme (NMMP):

Bulk procurement of meters and Meter Data Management systems

• Energy access expansion.

• Increase in collection

• Reduction in electricity theft and increased market liquidity.

• Improvement in network monitoring capability and strengthening the local meter manufacturing sector in Nigeria

• Create >500,000 jobs

$0.5 Bn Financing for private sector to procure and rollout infrastructure

Gas Commercialization

Nigeria Gas Flare Commercialization Programme: Detailed programme design of up to 89 individual projects;

Programme management and implementation; and Carbon capture study and programme design

• Reduce Nigeria’s emissions by ~13 million tons of CO2 per year

• Potential annual revenues/ GDP Impact around ~ US $ 1 billion/ annum

• Over a 1.5 –2-year period, the NGFCP could generate approximately 300,000+ direct and indirect jobs

• Elimination of gas flaring

$3.5 Bn Financing for private sector

Clean Cooking Convert about 30 million homes from dirty fuels (kerosene, charcoal and diesel) to LPG for cooking, biogas with personal home biogas digesters, community biogas digesters and electric alternatives

• Create 1million jobs and impact up to 30 million homes

• Achieve 120 million tons of CO2 emission reduction annually

$1.8 Bn Financing for private sector developers ($1.4 Bn) to deploy solutions and build supporting infrastructure and Government ($0.4 Bn) for subsidies

Government Buildings

Convert about 30 million homes from dirty fuels (kerosene, charcoal and diesel) to LPG for cooking, biogas with personal home biogas digesters, community biogas digesters and electric alternatives

• Reduction in diesel generator use and carbon emissions across government facilities and improved power supply (quantification of impact to be completed)

$0.25 Bn Financing for government

Sector Projects Expected Impact Support Required

E-Mobility • Purchase of electric fleet (buses) for pilot

• Pilot rollout of electric vehicle supporting infrastructure

• Logistics costs

• Proof of concept and increased adoption of electric vehicles across commercial and residential segments

$0.1 Bn Financing for Private Sector for vehicle and charging infrastructure

Healthcare Powering 10,000 functional healthcare centers with 50MW of solar capacity

• Clean sustainable power to 10,000 primary healthcare centers in Nigeria serving at least 100 million people

• 104 GWh p.a. and 50 MWp total electricity supplied with installed solar PV capacity

$1.06 Bn Financing for private sector (0.53Bn) developers to deploy solutions, and Government (0.53Bn) for subsidies for O&M. High subsidy due to nature of project as social good

Technical assistance needs have also been identified to support the Government in designing policies and incentives that enable the sustainability of investments.

$1bnPortfolio Overview: Technical Assistance

APPENDIX 2:

EVENT PHOTOGRAPHS

Prepared, designed and released by The Comms Unit, Nigeria’s Energy Transition Office comms@energytransition.gov.ng