Studying the Viability and Providing Recommendations to Support Distributed Solar PV in Urban Environments in Nigeria Post Workshop 1 - Report 16 JUNE 2021 NIGERIA THE WORLD BANK IBRD • IDA │WORLD BANK GROUP Content summary 1 Workshop context 2 List of workshop attendees 3 Workshop presentation 4 Summary of feedback from the discussion 5 Next steps 1 Objective of workshop Workshop participants Identify potential solutions to challenges that inhibit the • Federal Government penetration of Distributed • Regulators Photovoltaics in Lagos • Distribution Companies • Companies in PV \value chain Workshop date • Financiers • Associations • Residential representatives 26th May 2021 • C&I representatives • Donors 2 Content summary 1 Workshop context 2 List of workshop attendees 3 Workshop presentation 4 Summary of feedback from the discussion 5 Next steps 3 Detailed list of workshop participants DPV Value Chain Players Enabling Agencies Government Distribution Companies Association 1. EKEDC 1. Renewable Association of Nigeria 2. Development Bank of Nigeria Presidency – Michael Uvere – Segun Adaju – Joseph Adeniyi 1. Power Sector Working Group 2. Ikeja Electric – Lande Abudu 3. Nigeria Power Sector Program – Yusuf Ali – Nneka Nwosu – Lanre Lawson Lagos State Government Commercial banks 4. FCDO 1. Lagos State Ministry of Companies in PV value chain 1. FCMB – Gail Warrander Energy and Mineral 1. Daystar Power – George Ogbonnaya Resources – Christian Wessels – Paul Adebo Others – HC Olalere Odusote 2. Rubitec Solar 2. Sterling Bank 1. All-On – Janet Olubisi Alabi-Eye – Bolade Soremekun – Ayodeji Mayaki – Dr. Weibe Boer – Ujunwa Ojemeni – Aiyegbusi Samuel – Sele Igbenedion – Adeola Adebisi – Oluwapelumi Gold Microfinance banks – Osei Anao – Mukhtaar T. Tijani 3. Engie Energy Access 1. LAPO Microfinance Bank – Adaobi Oniwinde – Kemi Adeniji-Adams – Samuel Babalola – Owamagbe Okpeku – Aishat Alimi – Ogunkoya Mariam 4. Greenlight Planet – Ayokunle Omoniyi Temitope – Eniola Olutimilehin Donors 2. Deloitte 5. CrossBoundary Energy 1. World Bank – Miracle Ogunbowale – Simisola Abere – Ashish Khanna 3. Michelle and Anthony Consulting – Anshul Rana Limited – Arsh Sharma – Victor Olufemi Ajulo – Oladiran Adesua 4. Energy Training Centre – Lindsay Caldwell Umalla – Kenneth Nweke 4 Content summary 1 Workshop context 2 List of workshop attendees 3 Workshop presentation 4 Summary of feedback from the discussion 5 Next steps 5 Studying the Viability and Providing Recommendations to Support Distributed Solar PV in Urban Environments in Nigeria Brainstorming Workshop 26 MAY 2021 Objective Identify potential solutions to challenges that inhibit the penetration of Distributed Photovoltaics (DPV) in Lagos 7 Welcome 13:00 – 13:10 Context and case for DPV in Lagos 13:10 – 13:20 Initial recommendations to accelerate 13:20 – 13:40 Agenda DPV in Lagos Breakouts: Brainstorm and refine 13:40 – 14:50 recommendations Next steps and closing remarks 14:50 – 15:00 8 • Please share your details (name, org., email) in the chat window for tracking and follow-up Ground rules/ • Active contribution and participation in discussion is Instructions expected • Breakout session: Click on popup screen that will appear asking you to join your breakout room • You may send questions/comments anonymously to Sudhanshu Gupta directly in the chat window 9 Workshop participants Federal Government Regulators Distribution Companies • Rural Electrification • NERC • Eko Electricity Distribution Agency • CBN Company • Power Sector Working Group • NEMSA • Ikeja Electric Organizers Companies in PV \value chain Financiers Associations • Lagos State Ministry of • Daystar • Commercial banks • Renewable Energy • SolarCentric Technologies – Sterling Bank Association of Nigeria Energy and Mineral • Prado Power – FCMB • Manufacturers Association Resources • Rubitec Solar • Microfinance banks of Nigeria (MAN) • Cross Boundary – LAPO Microfinance (Honorable • Engie Bank Commissioner - • Lumos – Grooming Centre Donors/Others • PAS Solar (Bboxx) • Others Olalere Odusote) • Auxano Solar – All-On Energy • AfDB • Green Light Planet • UNIDO • World Bank (Ashish • FCDO • USAID Khanna) Residential representatives C&I representatives • Power Africa Team • AfD • Magodo Residents • Friesland-Campina • GIZ • BCG/Nextier Power Association • Union bank • EEAS (Tolu Oyekan) • JICA 10 Welcome 13:00 – 13:10 Context and case for DPV in Lagos 13:10 – 13:20 Initial recommendations to accelerate 13:20 – 13:40 Agenda DPV in Lagos Breakouts: Brainstorm and refine 13:40 – 14:50 recommendations Next steps and closing remarks 14:50 – 15:00 11 Analysis focused on identifying the business case for DPV in Lagos and identifying the risks to be mitigated Business Market potential Supply chain ecosystem Technical assessment case • Potential market size • Maturity of supply chain • Infrastructure readiness (e.g., DISCO capacity, 2-way • Use case viability • Competitive landscape metering, Panel Utilisation • Ability and willingness to pay • Business models Factor, etc.) Financial Commercial Operational Enabling environment Risk • Availability and • Demand aggregation • Importation • Quality standards factors accessibility of funds • Acquisition costs • Collections • Fiscal policy barriers • Local FI involvement • Consumer awareness • Skills availability • Stability and implementation 12 Observed that most of population of Lagos (est. 95%+) are close to grid infrastructure; gaps primarily in low-population areas of Epe and Badagry Electricity Sub Stations Industrial Power sub-stations and Commercial Open spaces distribution infrastructure Farmlands Residential concentrated in mainland Lagos Power infrastructure deficit in peripheral regions Source: BCG Gamma Geospatial Analysis, Transmission Company of Nigeria Distribution Map 13 Demand: We estimate that unconstrained electricity demand in Lagos State is currently ~40-50TWh (~5-6GW) of electricity annually Electricity use per capita, kWh 7,500 Trend line fitted for $2,000- $30,000 as relevant range Lagos est. 2020 6,500 for the range of incomes in demand: Lagos State and structural • 1,610 kWh 6,000 per capita Estimates Nigeria Lagos similarities in demand 5,500 • 45TWh patterns across these 5,000 countries (5GW) total Population 209 25 - 30 4,500 size 4,000 Nigeria estimated (million) 3,500 demand: Fitted 3,000 • 890kWh per regression Total GDP $1130 $250 capita 2,500 • 185TWh (21GW) line Y = 0.18X US$, PPP billion billion 2,000 total + 68 1,500 2 R = 0.82 1,000 GDP per $5,400 $9,400 500 capita, 0 US$, PPP 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 GDP per capita, US$, PPP Fitted line Estimated for Lagos in 2020 Estimated for Nigeria in 2020 Note: Electricity use per capita reflect unconstrained electricity demand forecast for the given GDP per capita US$, PPP Source: Lagos Bureau of Statistics; World Bank; Consultants; Consultant Analysis 14 Although most of the population of Lagos are close to grid infrastructure, electricity supply from the grid is insufficient to meet demand Estimated gap between unconstrained demand and grid supply in Lagos state - 2020 TWh 40 to 50 Significant share being met today by private generation (e.g., through generators) 37 83% 8 17% Grid supply Demand gap Total demand GW1 0.9 4 to 5 5 to 6 1. Gigawatt equivalent of electricity service assuming 100% capacity factor Source: Lagos State Ministry of Energy & Mineral Resources; Lagos Bureau of Statistics; Presidential Power Initiative; NERC; EKEDC Performance Improvement Plan; IKEDC Performance Improvement Plan; Power Africa Nigeria Power Sector Program; Consultant Analysis 15 Geospatial estimates (ESMAP) suggest DPV with potential to supply 10 – 15TWh of power needs Approach for geospatial DPV generation potential by building type in Lagos (TWh/yr) assessment 10 to 15 1• Estimate total rooftop area from satellite imagery 72% 10 2• Classify rooftops based on Google Map labels 16% 2 2 3• Estimate generation 13% potential of rooftop DPV potential Residential Commercial Industrial based on roof tilt and Type of building local irradiation levels Capacity ~11.6 ~8.4 ~1.8 ~1.4 (GW) 1. Initial estimate by World Bank ESMAP study across 11 LGAs (=9TWh) was scaled up to include the other 9 LGAs in Lagos, based on land area Source: World Bank ESMAP Lagos Rooftop Geospatial Study; Consultant Analysis 16 Given potential, case exist to include DPV within power mix in Lagos Illustration showing DPV potential based on 2020 electricity demand (TWh) 40 to 50 -40% 8 36 14 22 Range of ~10–15 TWh Total Demand Grid Supply Demand - Grid DPV Potential Remaining Gap Supply Gap Source: Lagos State Ministry of Energy & Mineral Resources; Lagos Bureau of Statistics; Presidential Power Initiative; NERC; EKEDC Performance Improvement Plan; IKEDC Performance Improvement Plan; Power Africa Nigeria Power Sector Program; World Bank ESMAP Lagos Rooftop Geospatial Study; Consultant Analysis 17 Several challenges would need to be mitigated to realize the DPV potential A B C D Financing Commercial Operational Enabling environment • Quantity: Insufficient • Lack of centralized • Insufficient availability of • Insufficient enforcement availability of low-cost demand aggregation to skilled human resources – Quality standards financing create scale (to reduce and data resulting in presence of • Process: Difficulty in acquisition cost) for viable • Complex importation low-quality products in accessing and delays in use cases, and ownership process driving costs up the market to drive adoption disbursement of • Payment collection – Fiscal policies (e.g., concessional funds • Limited consumer inefficiencies duty and tax • Participation: Limited awareness on benefits/ exemptions) potential of solar products • Underdeveloped involvement of local FIs due segments of value chain to data availability & market (e.g., manufacturing, end of understanding issues life) Stakeholders needed for resolution Commercial Banks, LASG, Associations, DisCos, DFIs, Associations, LASG, DFIs, LASG, REAN, SON, DFIs LASG, Developers Financial Institutions1, DFIs Customs, Developers 1. Includes commercial banks, Micro-finance Banks, FinTechs; Source: Stakeholder consultations, Consultant Analysis 18 Any quick questions? 19 Welcome 13:00 – 13:10 Context and case for DPV in Lagos 13:10 – 13:20 Initial recommendations to accelerate 13:20 – 13:40 Agenda DPV in Lagos Breakouts: Brainstorm and refine 13:40 – 14:50 recommendations Next steps and closing remarks 14:50 – 15:00 20 Preliminary & Indicative CC Cross Cutting recommendation: Create new entity focused on accelerating growth of DPV Theme Recommendation Rationale Stakeholder(s) Ownership, CC Create new entity (or strengthen existing entity) focused on • Supply chain is currently fragmented and • Lagos State demand accelerating growth of DPV in Lagos through the development so is demand and financing, therefore a Government aggregation, of ecosystem for the most viable use cases (starting with C&I programmatic approach is required to • DFIs payment risk and public sector customers), supported by policy and financial ensure success of business models and mitigation risk guarantees. Specifically, the entity will be focused on: customer participation • Private sector companies • Creating awareness and uptake for solar in various • No ownership around driving growth of customer segments, creating retail outlet (for SHS) • DisCos DPV in Lagos at scale • Aggregating demand for solar products from viable use • Financial case segments in Lagos • Similar model implemented in similar Institutions/ countries like Bangladesh, India etc. Investors • Connecting PV developers with financiers and customers • Discos don't seem to have a conflict as • Associations • Providing a single point of contact for end to end (REAN, MAN implementation of solar systems (i.e. Connecting customers either these customers are not served or their excess production can be feed-in to etc.) with qualified developers/installers) grid • Vocational • Mitigating payment risk by signing of tripartite agreements Institutions /PPA with (1) Entity (to give payment guarantee to • This will strengthen "Make in Nigeria" and provide opportunity to small and medium • PV Developers developer), (2) developer (for capex and opex) and (3) customer (provide rooftop and production) scale businesses Source: Stakeholder Consultations, Consultant Analysis 21 Preliminary & Indicative A1-6 Financing: Starting list of recommendations (I/II) Theme Recommendation Rationale Stakeholder(s) Availability A1 Facilitate the development of Distributed Solar PV • $1.5B financing shortfall • DFIs and focused equity funds to enable development of DPV • Insufficient availability of patient • Lagos State accessibility focused ventures capital Govt. • Expensive local currency debt (>20% interest rate) • Only 29% of investment in DPV is from private capital ($65M) A2 Create a Green Fund (e.g., from levies on carbon • Make funds available to cover a • Lagos State intensive activities, direct budget allocation) which can certain percentage of $1.5B funding Govt. be used to support DPV enabling activities. (e.g. capex gap (e.g., De-risk solar projects, • FIRS/LIRS subsidy, collateral support, etc) catalyze additional funding etc.) – Collateral of up to 150% of borrowed amount A3 Createa one stop shop to support PV developers in • <$2m of $350m available funding • REAN navigating issues around accessing current funds disbursed as grants in ~2 years; • Lagos State • Developers complain about Govt challenges in meeting requirements Source: Stakeholder Consultations; ACETAF; Consultant Analysis 22 Preliminary & Indicative A1-6 Financing: Starting list of recommendations (II/II) Theme Recommendation Rationale Stakeholder(s) Availability A4 Work with existing programmes to refine funding • Complaints about delays in • REA and application review and disbursement processes (e.g., application and disbursement • REAN accessibility NEP, Solar Power Naija etc.) to improve cycle time to processing time (e.g., >9 months for • DFIs <3 months disbursement) A5 Train PV developers to meet the requirements of • Local developers struggle to meet • REA existing programs/funds (e.g., to develop quality requirements of current programs/ • REAN applications, meeting technical standards etc.) funds (e.g., applications re-submitted • DFIs up to 4 times before approval) Local FI A6 Structure and channel donor-led Naira-denominated • Banks have limited understanding on • Commercial Involvement debt financing through commercial banks and provide how to assess solar projects risk Banks technical assistance to banks to support establishment (only 2 banks identified currently • DFIs of DPV desks, prepare/assess transactions, etc. actively involved in this space) Source: Stakeholder Consultations, Consultant Analysis 23 Preliminary & Indicative B1-3 Commercial: Starting list of recommendations Theme Recommendation Rationale Stakeholder(s) Consumer B1 Introduce policy for minimum/target amount of DPV in • Insufficient offtake guarantee creating • Lagos State awareness state's energy mix and preferential domestic uncertainty for PV developers Govt. procurement rules that prioritize local developers • DFIs B2 Deploy DPV in anchor loads like high visible public • Consumers have low confidence in, • Lagos State areas/facilities (e.g., healthcare centres, schools, public and awareness of the potential and Govt. buildings, schools, land near airport runways, stadiums, benefits of solar • PV Developers lagoons etc.) to demonstrate the potential of solar and • C&I customers create first-hand visibility on its benefits B3 Partnerwith marketing/media companies, distribution • Lagos State companies, community/religious leaders etc. to include Govt. DPV in awareness campaigns and mass • PV Developers communications • DisCos Source: Stakeholder Consultations, Consultant Analysis 24 Peliminary Preliminary & Indicative C1-5 Operational: Starting list of recommendations (I/II) Theme Recommendation Rationale Stakeholder(s) Skilled C1 Develop training curriculum and provide standardized • Limited capabilities and availability of • Lagos State resource training programs focused on key skills required across skilled human resources across value Govt. availability the value chain2 (manufacturing to decommissioning) chain which can be a limiting factor • DFIs through vocational institutions and academies (e.g., as DPV is accelerated • REAN Lagos Energy Academy) • DisCos1 Importation C2 Create a help desk to provide clarity on custom duty • Cumbersome and unclear • REAN process exemptions and support PV developers navigate importation process for solar • MAN importation process in a timely manner products resulting in high landing cost (e.g., disagreements with customs on which HS code is relevant to DPV systems due to product definition overlaps) 1. For Grid Tied PV' 2. Training can be provided to Small and medium businesses (who can participate in different segments of DPV value chain) can be initial targets for this skill building program. Source: Stakeholder Consultations, Consultant Analysis 25 Preliminary & Indicative C1-5 Operational: Starting list of recommendations (II/II) Theme Recommendation Rationale Stakeholder(s) Data C3 Create a publicly available repository of market data, • Limited data availability for • DFI availability project pipeline, executed projects, LCOE toolkit, where stakeholders in ecosystem creating • REAN and developers and investors can access reliable, up to lack of confidence in DPV projects/ • Lagos State knowledge date data on viable market/customer segments in market Govt. sharing Lagos, to aid decision making • PV Developers Collections C4 Create partnerships with existing agent networks (e.g. • Inefficiencies in collection of payment • Comm. Banks financial services agents network) to leverage existing from customers (e.g., Businesses • PV Developers agent-infrastructure for collections and minimize the need to send agents to collect • DisCos need for overhead to support collections payments from customers) C5 Create partnerships between developers, commercial banks/fintechs to develop payment platforms to minimize overheads for collection Source: Stakeholder Consultations, Consultant Analysis 26 Preliminary & Indicative D1-3 Enabling Environment: Starting list of recommendations Theme Recommendation Rationale Stakeholder(s) Quality D1 Enforce International Electrotechnical Commission • To reduce presence of low-quality • Lagos State standards (IEC) / Lighting Global quality standards and stricter products in the market and make it a Govt. monitoring of quality of solar products sold in the market level playing field • DFIs place by Standards Organisation of Nigeria (SON) • SON • REAN D2 Launch state wide awareness campaigns targeted at • To increase awareness on quality • Lagos State informing customers on how to identify quality solar standards and improve consumer Govt. systems (SON certified/IEC certified/Lighting Global protection • DFIs certified) • SON • REAN D3 Create a publicly accessible repository of verified DPV • Lagos State suppliers Govt. • DFIs • SON Source: Stakeholder Consultations, Consultant Analysis 27 Customers Enabling Agencies • Magodo Residents Association • Sterling Bank • Manufacturers Association of Nigeria • FCMB Breakout (MAN) • Grooming Centre DPV Supply Chain Players • All-On room 1 • LAPO Microfinance Bank • Eko Electricity Distribution Company Finance • Auxano Solar & • SolarCentric Technologies Breakout groups Enabling • Prado Power Government • Rubitec Solar • CBN environ- • Daystar • Rural Electrification Agency ment • MEMR working group 1 Donors/DFIs • NERC 70 minutes • AfDB • NEMSA • USAID/Power Africa • AfD • EEAS Objectives Customers Enabling Agencies • Identify solution gaps for • Friesland-Campina • Renewable Energy Association of unaddressed challenges Nigeria • Union Bank • Discuss what role you/other • Cross Boundary Energy Breakout stakeholders can play room 2 DPV Supply Chain Players Government • • Discuss bottlenecks to Ikeja Electricity Distribution Company • Power Sector Working Group Commer • Lumos • MEMR working group 2 implementation -cial & • PAS Solar (Bboxx) Operatio • Green Light Planet Donors/DFIs • Engie -nal • GIZ • DFID/FCDO • JICA • UNIDO 28 Any quick questions? 29 Welcome 13:00 – 13:10 Context and case for DPV in Lagos 13:10 – 13:20 Initial recommendations to accelerate 13:20 – 13:40 Agenda DPV in Lagos Breakouts: Brainstorm and refine 13:40 – 14:50 recommendations Next steps and closing remarks 14:50 – 15:00 30 Three components to develop recommendations To be discussed per recommendation ~50 mins 1 2 3 ~20 mins Discuss what role Discuss bottlenecks to Identify solution gaps you/other stakeholders implementation for unaddressed can play challenges 31 1 Breakout Room 1: Recommendations for Financing and Enabling Environment challenges Please open up the list of challenges on page 11 Proposed Recommendations • A1 Facilitate the development of Distributed Solar PV focused funds (in • CC Create new entity (or strengthen existing entity) focused on local currency) to enable development of DPV focused ventures accelerating growth of DPV in Lagos through the development of ecosystem for the most viable use cases (starting with C&I • A2 Create a Green Fund (e.g., from levies on carbon emitting and public sector customers), supported by policy and financial industries, DG set manufacturers etc as well as direct budget risk guarantees. allocation) which can be used to support DPV enabling activities • D1 Enforce International Electrotechnical Commission (IEC) / • A3 Create a one stop shop to support PV developers in navigating Lighting Global quality standards and stricter monitoring of issues around accessing current funds quality of solar products sold in the market place by Standards • A4 Work with existing programmes to refine funding application review Organisation of Nigeria (SON) and disbursement processes (e.g., NEP, Solar Power Naija etc.) to • D2 Launch state wide awareness campaigns targeted at informing improve cycle time to <3 months customers on how to identify quality solar systems (SON • A5 Train PV developers to meet the requirements of existing certified/IEC certified/Lighting Global certified) programs/funds (e.g., to develop quality applications, meeting • D3 Create a publicly accessible repository of verified DPV technical standards etc.) suppliers • A6 Develop a DPV financing playbook for commercial banks (including • B1 Introduce policy for minimum/target amount of DPV in state's guide to setup DPV desk, templates of bankable project docs. etc.) energy mix and preferential domestic procurement rules that focused on how to effectively assess risks related to DPV projects prioritize local developers Cross Cutting Financing Enabling Environment Commercial 32 1 Breakout Room 2: Recommendations for Commercial and Operational challenges Please open up the list of challenges on page 11 Proposed Recommendations • C1 Develop training curriculum and provide standardized training • CC Create new entity (or strengthen existing entity) focused on programs focused on key skills required across the value chain accelerating growth of DPV in Lagos through the development of (manufacturing to decommissioning) through vocational ecosystem for the most viable use cases (starting with C&I and institutions and academies public sector customers), supported by policy and financial risk guarantees. • C2 Create a help desk to provide clarity on custom duty exemptions, process streamlining and support PV developers • B1 Introduce policy for minimum/target amount of DPV in state's energy through timely importation process mix and preferential domestic procurement rules that prioritize local developers • C3 Create a publicly available repository of market data, project pipeline and executed projects where developers and • B2 Start deployment of DPV in anchor loads like high visible public investors can access reliable, up to date data on viable areas/facilities to demonstrate the potential of solar and create first- market/ customer segments in Lagos hand visibility on its benefit • C4 Create partnerships with existing agent networks and minimize • B3 Partner with marketing/media companies, distribution companies, the need for overhead to support collections community/religious leaders to include DPV in awareness campaigns and mass communications • C5 Create partnerships between developers, commercial banks/fintechs to develop payment platforms to minimize overheads for collection Cross Cutting Commercial Operational 33 Welcome 13:00 – 13:10 Context and case for DPV in Lagos 13:10 – 13:20 Initial recommendations to accelerate 13:20 – 13:40 Agenda DPV in Lagos Breakouts: Brainstorm and refine 13:40 – 14:50 recommendations Next steps and closing remarks 14:50 – 15:00 34 Integrate feedback on recommendations Detail out recommendations through Next steps continued stakeholder engagement Schedule 2nd workshop (in ~2 weeks) to conclude on path forward for Lagos state 35 Content summary 1 Workshop context 2 List of workshop attendees 3 Workshop presentation 4 Summary of feedback from the discussion 5 Next steps 36 Feedback from participants in Breakout room 1 Non-Exhaustive Process: generally good engagement • Around 5 participants actively engaged of the 20+ individuals in the room (excl. LASG, WB, BCG) – 2 Banks, 2 Developers, 1 Enabling Organization • Opportunity still to excite Honorable Commissioner about DPV potential Content: Focus was primarily on financing, which felt OK given its significance. 3 specific opportunities that resonated: • Developer financing – sufficient funding exists in the space, opportunity to: – Don't expect commercial banks to drive this, too different from their existing business model; will take too much time – Improve disbursement of existing financing – Support developers with information and training to improve chance of accessing existing financing • Consumer financing – banks are convinced that this is commercial viable and are already disbursing but need support – Opportunity for additional inflows from third party for further lending to consumers – Support with increasing consumer awareness • Policy – several opportunities for government to drive demand (e.g. LSETF, bans on specific types of gen sets, etc) 37 Feedback from participants in Breakout room 2 Non-Exhaustive Process: Generally, good turn out and engagement from participants • About 4 out the 20+ participants were actively engaged (excl. LASG, WB, BCG) – 1 Developer, 3 Enabling Organizations Content: Focus was primarily on Operational issues. Four specific opportunities resonated with participants: • Capacity building programs: This is needed as there are no standardized training programs for the sector – Oversight certification/accreditation body (e.g., NAPTIN) required to ensure quality of training is standardized across all training providers – Train-the-trainer model most likely to succeed – However, key question remains – Who will bear the costs of the training programs? • Publicly accessible data repository: Though this already exists for potential mini-grid sites across the country, opportunity exists to expand database to include other DPV solutions – REAN's participation and contribution is required in bringing PV developer projects under one database – Need to update LASG energy policy to mandate PV developers be registered with the state government • Demand aggregation: Key success factor will be identifying the appropriate entity – LASG will need to facilitate scale up and selection of focus segments/areas in Lagos – Entity will need to build connections with cooperatives in Lagos state to succeed – PPP could be a potential structure for this to succeed, but with limited state ownership • Collections: Leveraging mobile money is the key for success. All other initiatives are not sustainable 38 Backup Financing: Feedback from workshop participants (I/II) # Recommendation Stakeholders Key takeaways from discussion with participants A1 Facilitate the development of • DFIs Prerequisites for success: DPV-focused equity funds to • LASG • This could work if focused on smaller scale projects (typically consumer financing) enable development of DPV- • PV For example: Consumer lending facilities by banks (e.g., Stanbic and FCMB), MFIs focused ventures Developers targeting MSMEs and residential customers • Investors • Need to ensure commercial viability can be demonstrated for residential and SMEs A6 Structure and channel donor-led customer segments to investor (Investor pitch documents need to be developed) Naira-denominated debt • Expand on-lending directly to MFIs (e.g., DFIs lending directly to MFIs) with long financing through commercial tenure banks and provide technical • Have stringent lending targets and monitoring procedures to ensure banks disburse assistance to banks to support loans establishment of DPV desks, • Ensure developers are involved in process of structuring fund to articulate their prepare/assess transactions, requirements etc. Implementation barriers: • Nigerian commercial banks are not structured to support the small companies in the DPV at this time. Risk committees of the banks has categorized DPV as high risk, which prevents consideration for lending to players in sector • Commercial banks do not disburse funds even if they have credit guarantees, they would also need to provide long term financing (e.g., >10 years) Key initiative 39 Backup Financing: Feedback from workshop participants (II/II) # Recommendation Stakeholders Key takeaways from discussion with participants A2 Create a Green Fund (e.g., from • LASG Prerequisites for success: carbon taxes, budgetary • FIRS/LIRS • Lagos State Employment Trust Fund (LSETF) could mandate that share of energy allocation) to support DPV- funding be used for DPV enabling activities (e.g. capex Implementation barriers: subsidy, collateral support, etc.) • State has insufficient resources to create fund • State can't provide risk guarantee to private entities A3 Create a one stop shop to • REAN Prerequisites for success: support PV developers in • REA • REA can create a desk in the Lagos state MEMR to provide support PV developers with navigating issues around • LASG information on existing programs, following up with programs when faced with issues accessing current funds • Lagos Energy Academy can provide training to developers on how effectively meet requirements of programs as part of their offerings A5 Train PV developers to meet the Implementation barriers: requirements of existing • Limited interest and appetite by stakeholders to put up funds for training programs/funds (e.g., to • Slow progress in improving documentation practices of developers after trainings develop quality applications, • Cost limitations for developers to provide adequate documentation (e.g., ESIA, audited meeting technical standards…) financial statements etc.) Work with existing programmes • REA Prerequisites for success: to refine funding application • REAN • Nil review and disbursement • DFIs Implementation barriers: processes (e.g., NEP, Solar • Existing programmes don't have funds to disburse (e.g., CBN) Power Naija etc.) to improve cycle time to <3 months Key initiative 40 Backup Operational: Feedback from workshop participants (I/II) # Recommendation Stakeholders Key takeaways from discussion with participants C1 Develop training curriculum and • NAPTIN Prerequisites for success: provide standardized training • REA • This is needed as there are no standardized training programs for the sector programs focused on key skills • Lagos State • Oversight certification/accreditation body (e.g., NAPTIN) that certifies training required across the value chain Govt. programs across the solar PV sector (to ensure quality of training is standardized (manufacturing to • REAN across all training providers) decommissioning) through • Train-the-trainer model most likely to succeed vocational institutions and Implementation barriers: academies (e.g., Lagos Energy • Total cost of ownership of implementing the programs – Who exactly will bear the Academy) training costs? C2 Create a help desk to provide • FGN Prerequisites for success: clarity on custom duty • Customs • Clear outline on specific location where help desk will be situated (i.e. which MDA) exemptions and support PV • REAN • Help desk should be situated within a reputable body with strong links to developers navigate importation • MAN FGN/Customs process in a timely manner Implementation barriers: • Customs at national level, therefore clarification of duty exemptions will involve bureaucracy • As a result of the above, it will be difficult to find an MDA that has enough power to bring real impact • This may not be effective – another layer of bureaucracy Key initiative 41 Backup Operational: Feedback from workshop participants (II/II) # Recommendation Stakeholders Key takeaways from discussion with participants C3 Create a publicly available • REA Prerequisites for success: repository of market data, • REAN • Building on existing database (managed by REA) focused on potential mini-grid project pipeline, executed • Lagos State locations in Nigeria (which includes Lagos) – Need to expand database to include projects, LCOE toolkit, where Govt. other DPV solutions developers and investors can • PV • REAN's participation and contribution is required in bringing PV developer projects access reliable, up to date data Developers under one database on viable market/customer • DFI Implementation barriers: segments in Lagos, to aid • PV developers are not required to register with the LASG - Feasibility and decision making sustainability is dependent on the updated LASG energy policy • Ability of LASG, REAN etc. to acquire and provide data (consistently) to the custodians of the repository C4 Create partnerships with • Comm. Prerequisites for success: existing FI agent networks to Banks • Commercial banks seeing value in partnership leverage existing agent- • PV • Initiative must align with the major goals of the financial institutions infrastructure for collections Developers • Leveraging mobile money here is the key for success • DisCos Implementation barriers: C5 Create partnerships between • Unwillingness of commercial banks to partner with developers as they are unsure developers, commercial what they can gain from early-stage developers banks/fintechs to develop • Cost of incorporating PV payments into already existing payment platforms and payment platforms to minimize maintaining those systems overheads for collection Key initiative 42 Backup Cross cutting: Feedback from workshop participants # Recommendation Stakeholders Key takeaways from discussion with participants CC Create new entity (or strengthen • Lagos Prerequisites for success: existing entity) focused on State • LASG facilitating scale up and defining the upscale approach accelerating growth of DPV in Govt. • Selection of focus segments/areas in Lagos and definition of potential market size Lagos through the development • DFIs • Entity will need to build connections with cooperatives in Lagos state of ecosystem for the most viable • Private entity with large balance sheet to fund projects can serve as aggregator (e.g., use cases (starting with C&I and • Private Shell Nigeria) public sector customers), sector • PPP could be a potential structure for this to succeed with limited state ownership supported by policy and companies share (e.g. to 20% stake) financial risk guarantees. • Commerci al Banks Implementation barriers: • Associatio • Selecting the right body/entity that is reputable and large enough to drive initiative ns (REAN, • High number of stakeholders needed to drive initiative MAN etc.) • Uncertainties on sustainability of entity • Who will provide capital for the entity? • Vocational • State not willing to make financial commitment to entity Institution • If state-owned, inefficiencies will likely creep in • PV Developer • DisCos Key initiative 43 Content summary 1 Workshop context 2 List of workshop attendees 3 Workshop presentation 4 Summary of feedback from the discussion 5 Next steps 44 Integrate feedback on recommendations Detail out recommendations through Next steps continued stakeholder engagement Schedule 2nd workshop to conclude on path forward for Lagos state 45 Thank You