Energy, Finance, Partnerships: Transforming Clean Business Jubril Kareem Energy Research Specialist, Ecobank Capital africaficc.ecobank.com

Transforming clean energy application: From household to grid Proposed Solar projects Source: NBET There has been a surge of interest in renewable power generation over the past 5 years NBET signed PPA with 14 companies planning to build 1,125MW of solar capacity in 2016 However, successful application has been limited to household and small scale consumption Large scale projects can help boost grid supply Mini grid can be designed around sizeable projects ©Ecobank Research 2018 | Renewable energy | Jubril Kareem, Energy Specialist | 17 April 2018 3

PPP: lowering investor’s risk through strategic financing agreements Azura Edo financing structure Source, Ecobank Research Removing unsystematic risks that discourage investors Reliable power purchase agreement that reflects cost and margins appropriately Government guarantee to aid securing capital financing ©Ecobank Research 2018 | Renewable energy | Jubril Kareem, Energy Specialist | 17 April 2018 4

Funding Source: Focus on cheap and patient capital Equity Preferable source of capital Strategic investors with long term view Unfortunately, underdeveloped capital market makes public equity difficult to raise Debt DFIs World Bank, European Union, The African Trade Insurance (ATI) and European Investment Bank (EIB) recently launched a US$1 billion facility to finance renewable projects in Africa. Green and Impact investment organizations Traditional Debt financing Nigerian government and foreign governments grant ©Ecobank Research 2018 | Renewable energy | Jubril Kareem, Energy Specialist | 17 April 2018 5

Building a self sustaining industry that supports clean energy application Recovery in Nigeria since oil price slump How did they manage this difficult transition – what next? Sources: NBET, Ecobank Research Working towards a self sustaining power industry is a major prerequisite to attracting investment to the power industry. The current model is heavily dependent on government funding for survival. The industry’s current financial dynamic makes reasonable projects unsustainable ©Ecobank Research 2018 | Renewable energy | Jubril Kareem, Energy Specialist | 17 April 2018 6

The current industry pricing variables are far from reality Electricity Cost across SSA countries US$/kWh Recovery in Nigeria since oil price slump How did they manage this difficult transition – what next? Sources:: NERC, Ecobank Research Despite increasing Gencos tariff by 58% in 2016, final consumer’s tariff still remain stagnant and poorly reflect the cost of electricity generation and distribution in the country. The current MYTO being utilized still incorporates exchange rate at NGN199/$ and assumed generation of 7,100MW, over 40% off current reality. ©Ecobank Research 2018 | Renewable energy | Jubril Kareem, Energy Specialist | 17 April 2018 7

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