Banks Ready to Fund Renewables, But Proposals Fall Short
At the recent Lagos Energy Summit 2025, Abba Aliyu, Managing Director of the Rural Electrification Agency (REA), highlighted the increasing willingness of Nigerian banks to finance renewable energy initiatives. However, he noted that many private-sector players struggle to present bankable proposals.
"I can confidently say that banks are ready to fund renewable energy projects,"Aliyu stated. "However, most applications fail to meet basic financial standards—business plans often don’t align with financial statements, reducing approval chances."
He urged entrepreneurs to refine their proposals, emphasizing due diligence and alignment with lenders' criteria. "The funding is available, but businesses must step up their planning to access it," he added.
Nigeria’s Energy Crisis: A $26.2 Billion Annual Loss
Dr. Lateef Akanji, a Chartered Petroleum Engineer and Senior Lecturer at the University of Aberdeen, painted a stark picture of Nigeria’s energy challenges. Despite abundant resources—including solar, hydro, and fossil fuels—only 33% of Nigerians have reliable electricity access, leading to an estimated $26.2 billion yearly economic loss.
"Nigeria remains energy-poor despite its potential," Dr. Akanji said. "We must bridge the skills gap through training, adopt green financing mechanisms like bonds, and prioritize upfront investments in critical projects."
He commended Lagos State for leading clean energy adoption through progressive policies and public-private collaborations, calling for similar approaches nationwide.
Regulatory Push for Accountability in Energy Sector
Engr. (Dr.) Oluwaseun Fadare, Commissioner for Engineering and Standards at the Lagos State Electricity Regulatory Commission, stressed the need for stricter enforcement to ensure infrastructure sustainability.
"Regulation must include penalties for non-compliance, incentives for excellence, and technology-driven monitoring," he explained. "We also need an independent regulatory body and emergency maintenance funds to uphold standards."
REA’s $500 Million Renewable Infrastructure Plan
In a major development, the Rural Electrification Agency (REA) secured approval to establish a Renewable Asset Management Company to oversee nearly $500 million worth of solar and hybrid systems deployed across Nigerian universities.
Additionally, President Bola Tinubu has approved ₦100 billion for REA’s National Public Sector Solarisation Project, which aims to cut governance costs by transitioning public institutions to solar power.
"This initiative will not only reduce energy expenses but also set a precedent for sustainable energy use in government operations," Aliyu revealed.
The Path Forward
With banks increasingly backing renewables, stronger project proposals, and enhanced regulatory measures, Nigeria’s energy sector appears poised for growth. However, stakeholders agree that success hinges on:
- Improved financing readiness from private developers.
- Policy consistency and enforcement to ensure infrastructure longevity.
- Green investment mechanisms to attract capital.
As Nigeria strives to overcome energy poverty, the collaboration between financiers, regulators, and innovators will be critical in powering a sustainable future.
Key Takeaways:
- Banks are open to renewable energy financing but demand better-structured proposals.
- Nigeria loses $26.2 billion yearly due to power shortages; renewables offer a solution.
- REA to manage $500M in renewable assets, with ₦100B approved for public sector solar projects.
- Stronger regulations and skills development needed to sustain sector growth.
The Lagos Energy Summit 2025 has set the stage for actionable strategies—now, execution will determine Nigeria’s energy future.