By Wale Akinola

Renaissance Impex Energy Solutions Incorporated (RIES), an American ‘mission-driven’ start-up renewable energy developer/aggregator, last Tuesday, signed an agreement with Ogun State government to install, when fully scaled, 3MW of solar photo-voltaic (PV) energy in each of the 16 model secondary schools in the state (48MW+4.8MW Storage), aggregated total equivalent to providing electricity to over 10,365 average Nigerian homes), to mitigate Nigeria’s continued power generation, transmission and distribution challenges.

In this interview, Olatunde Ogundeko, Co-Founder/Chief Principal Officer (CPO) of RIES, and his British counterpart, James Gough, Chief Technical Officer (CTO), speak on the project and the long-term prospects for stable power supply in Ogun and Nigeria.

Ogundeko (right) and Gough, during the occasion to sign the agreement, last week

How do you assess the power situation in Nigeria and the capacity of solar energy to resolve the issues?

Nigeria sits on the equator, meaning that you get over twice of sun irradiation more than what Germany, for instance, up north gets. So, if Germany can use solar massively, then Nigeria can do a lot better. Nigeria also is a signatory to COP21 and COP22, global climate change accords to limit global warming. The goal is to increase energy generation from renewable sources. The FGN’s target is to increase renewable energy sources into the energy mix and DISCOs to procure 50% of their energy from renewable sources.

There is energy crisis in Nigeria; scarce diesel, scarce petrol; and power generation and distribution are poor. Solar solution means you already have the irradiation to generate electricity; and the FGN is putting regulations in place to make it work. They just put in place the “Eligible Customer” rule which deregulates DISCOs to make entities like us provide solar energy even above 2MW and supply customers. So, the potential is there.

The challenge is for the FGN to back the new dispensation with resources. The Power Purchase Agreement (PPA), the model we are using for Ogun State, can be replicated for businesses and other institutions. We can generate power (off-grid – microgrid) for SMEs, for instance, and they sign PPAs that enable them pay monthly over 20 years or whatever shorter terms is affordable for them. We are making “going solar – easy and affordable.”

You spoke about the rule allowing entities like you to generate renewable energy even over two megawatts. How huge is that?

It is huge – it is the opening entities like us have been seeking – it is deregulation in a way. Look, to start, we are doing 1.2MW of solar PV, and 1.2MW of BESS for the four initial schools, for 24/7 electricity. That is a grand total of about 1,752,000kWh energy per year. For example an average home in Britain or the US consumes about 15 -25kWh a day.

If one extrapolates the same for Nigeria household, then 1.752MWh can power about 268 homes daily. With the 16 schools totalling 48MW, it can provide electricity to about 10,365 average Nigerian homes daily as reference. So, the excess energy from each school would be sold directly to sub off-takers, as the regulation will permit. However, we hope to partner with Ibadan Disco, with the Ogun State as the main off-taker, to deploy the excess energy. That is the essence of the rule.

What is the Ogun project all about?

It is integrated 48MW PV and 4.8MW BESS project for 16 schools. We are starting with four school sites (Ago Iwoye, Ewekoro, Ikenne and Sagamu) – with 300kW PV and 300kW BESS each – as Phase 1 of the project. When completed in March, according to the timeline, the Phase 2 is to extend the project to the remaining 12 schools (300kW PV with 300kW BESS per school). Phases 3 and 4 will be to scale them to 3MW PV per school.

The total project cost is about US$56 million. Furthermore, when we scale up the project to 3MW as is planned per school, the excess energy will be sold to surrounding businesses and homes and this has the potential to spur economic activities. It is a great business model. One must commend the foresight of the Ogun Government and the Governor’s Consultant on Energy, Mr. T.A Fagbemi, for the fantastic idea, for coming out with this model. Ogun is scaling and aggregating solar incrementally (another first) – incremental is the key word.

Let us talk about finance. How do you raise funds for the project?

Given the timeline to deliver Phase 1 by March, we are talking to the Bank of Industry on the

possibility of financing the initial phase of the project. Then there is the international financing option – lots of possibilities. For instance, we have an institution in the UK that is interested in financing projects in Africa.

We are also targeting Pension Funds, particularly pension funds for Ogun State business employees, OGSG employees and Pension Funds operating in or out of Ogun State – we see tremendous opportunities for the Funds to invest in quality OGSG-backed renewable energy projects such as this. For Phases 2,3 and 4 of the project, we will be engaging USAID/Power Africa, OPIC, AFDB and other consortia – our ultimate goal is to be a Power Africa Partner. So, we welcome financiers of all type and investor partners.

How do you recoup your investment?

Through the PPA arrangement – the stream of “guaranteed revenue” projected from the sale of energy to be generated. What is unique about our PPA structure is that you don’t have to put money down as the client; all you need is to have the capacity to service the agreement. In this instance, we have agreed with Ogun State government on how much per kilowatt they will buy the power generated per hour; that becomes our source of recouping our investment and we can service our debt whether from overseas or from the Bank of Industry or Pension Fund(s), for that matter.

How does the society benefit from the project especially in the area of job creation in this era when we are talking about local content? What are the prospects?

Excellent prospects, James is excited to be in Nigeria because he can’t believe that we have these gargantuan solar resources that are shockingly underutilized. He doesn’t see enough solar on theroofs. He bemoans this every day – the unlimited job creation possibilities, how many people you can put to work, from the electricians to the carpenters not to talk of graduates, who studied marketing or electrical engineering that can be trained to become part of the solar energy revolution.

We are a benefit corporation similar to what is called CSR here; and some of us the promoters are also from Ogun and we are Nigerian-Americans. So, we are interested in creating jobs for the teeming population. Our plan is to use solar designers/installers around locations where we operate. We will also create about 17,000 clean tech jobs/entrepreneurs over a period of time. We will bring a US solar training and certification entity to Nigeria to train our people as professionals of international standards in this area of business.

Your project in Ogun limits you to 16 schools. What are your future plans?

We want to target businesses; SMEs, manufacturers, institutions, especially in Ogun State, which is an industrial hub, and we hope to create partnership with private businesses. Our goal in the medium term is to generate a minimum of 100MW annually, which is about US$100million per year, and scale up from there. We also have residential products targeting housing estates, cooperatives, etc.; the more the people in the group subscribing, the lower the cost.

How do you respond to the claim that solar energy is not affordable, particularly for the average Nigerians?

That is, to an extent, true if you consider the upfront cost and not the cost per kilowatt; in fact, the cost per kilowatt is lower because people pay several times more to generate their own power. If we can find a way around it through a financial engineering; for instance, an industrial business doesn’t need upfront capital.

If we know it is a thriving business and can service the PPA, we are good to go and it can have power 24/7 and spend less than what it spends now. For the average Nigerians, the FGN can provide an entity like BoI, with additional funds to enable it scale solar more to the residential and non-residential consumers as well.

Then there are other intermediaries or consortia such as a Shell affiliated intermediary (All-on) trying to finance scaling solar – we are talking to them to see how we can partner. We are working something out for estates, cooperatives in which they do not have to put down money upfront and they can have power round the clock and pay less while making the environment better. Again, we are open for business to scale solar+storage as it has never been scaled before in Nigeria – best-in-class while making “going solar easy and affordable.”