In my previous post, I suggested that if we broaden our definition of impact investing in Nigeria’s energy space, we can ensure middle-income Nigerians suffering from the absence of United Nations #SDG7 are not excluded from its promise. We’ll explore some ideas in this article and the next on how we can achieve this. Let’s get started.
Idea 1 – Accelerate access to Climate Funds for Distributed Energy Companies: We need well priced, local currency climate funding with longer terms (5 years +) to make it into the hands of Distributed Energy Companies which can help transition their network of customers to cleaner energy solutions. Most middle-income consumers and SMEs want clean tech solutions. Many just need help financing the transition. I came across this funding support from Climate Finance Advisory Limited executed via Development Bank of Nigeria, Central Bank, and the Bank of Industry. I have not confirmed interest rates, but we need to see more of these at competitive terms. Nigeria’s Bank of Industry also has a solar funding program with favorable local currency interest rates. Sterling Bank has been one of those commercial banks making an aggressive push with their HEART program. I am sure there are more out there. However, the requirements to access the funds can be onerous for Distributed Energy Companies, the interest rates are often prohibitive (20% plus), and thus the intended use of the funding may never be fulfilled. We should digitalize the climate funding process at these banks and institutions, ensure the performance of these intended climate funds is digitally tracked and visible. Local banks and institutions should continue innovating their climate lending products to accelerate the clean energy transition for forgotten middle-income populations. In addition to the low cost, local currency loans, we can also adapt first loss capital, grants, and other forms of impact oriented capital to support the clean energy transition for middle-income Nigerians and their small businesses. My argument is that when we exclude such Nigerians from the narrative, despite the obvious impact opportunity, we cannot achieve #SDG7. The innovation required in the financial engineering space to truly achieve a fully inclusive SDG7 for Nigeria is immense. But it is achievable. There are many talented people working in the climate finance axis. We only need to free them up to think more inclusively about what SDG7 impact looks like. What are your ideas on how to improve access to climate funds for middle income populations in Nigeria?
Old generators are the worst and should be retired once they fail emissions and other performance tests
Idea 2 – The Digitalized Generator Registry: Many middle-income consumers may choose generators over Solar Storage systems due to their need for air conditioning and other lifestyle energy needs not always be supported by Solar Storage systems for the same duration of time (this is totally dependent on the needs of the end user). Turns out the diesel generator is one of the best technologies to support more intense and variable energy needs. What about the environment you ask? Well, new diesel generators produce less pollution than those old, overhauled, inefficient ones producing that nasty black carbon. If a consumer ‘must’ use a generator, it should pass emissions tests so it contributes less to global warming and so citizens can breathe cleaner air resulting in less air quality related deaths.
Old generators are the worst and should be retired once they fail emissions and other performance tests. Armies of generator performance testers should be commissioned to go door to door logging old generators and testing them (I admit this might be wishful thinking). New ones should never make it out of the sales office without first being registered in a digitalized database. Generator owners should be made to digitally track and report their emissions, noise levels, and other pollutants. When we achieve this, Producing Consumers (Prosumers) will think differently about the fully internalized cost of operating their generators. Every generator owner today externalizes these costs, but when internalized, we can change the volume of people opting to use generators in such an inefficient manner. Generators should be clustered to serve communities and not individual needs. Individual generators are typically oversized and are often only used at 30 to 50% of their capacity. If we acknowledge that Distributed Energy Systems are the backbone of Nigeria’s power grid, then we can start ensuring generators are more efficiently utilized, and their emissions monitored and sanctioned. We can also better target these generators to hybridize them with solar to reduce their emissions. There is a lot of transparency and climate impact work to be done in this arena. For example, as mentioned, we should work with state governments to create generator ownership registries ensuring all generators are digitalized and their emissions tracked. Register a car, register a generator, track emissions. What is the difference? This better positions states to target clusters that generate the most emissions with incentives to transition to cleaner sources including community power solutions. If we care about the impact we are having on one another, this should be an easy option to consider. As they say, what you do not know, can hurt you.
In the next article, we’ll look at the need for a long-term investment mindset in sustainability entreprenuers, the Carbon Exchange, sustainability education, and GIS driven emissions maps. We’ll wrap this up in the article after the next which will explore energy efficiency, investment and production tax credits, and net metering, but hopefully the conversation will go on beyond that…