New $10m Aggregated Solar Equipment Procurement Financing Facility Debuts in Nigeria
Nigerian impact investment company, All On, Odyssey Energy Solutions, and the recently launched Global Alliance for People and Planet (The Alliance) have announced the launch of a global aggregated procurement program for renewable energy companies, supported by a $10 million Financing Facility, in Nigeria. The new Demand Aggregation for Renewable Technology (DART) program will ensure that affordable, high quality solar products reach the communities most in need in Nigeria, before piloting the program in four additional countries in Africa.
The DART program aims to accelerate the growth of the renewable energy sector in Nigeria and beyond by combining demand pooling and aggregated purchasing of solar equipment, access to affordable finance, and coordinated logistics processes to unlock economies of scale for solar companies and achieve cost savings for end users.
The All On-managed finance facility will provide debt funding for solar companies already approved by the Rural Electrification Agency (REA) for the Nigeria Electrification Program (NEP) to purchase lower-cost solar equipment through the DART.
“We are excited to launch the DART program in Nigeria as an important part of the Global Energy Alliance for People and Planet, which is accelerating the transition to renewable energy access for all, reducing emissions and creating jobs,” said Eric Wanless, Managing Director of Innovation for the Alliance. “Aggregating the procurement of standardized DRE products will ensure low-cost, reliable, and clean energy is empowering people and businesses in Nigeria.”
The Equipment Finance Facility for Nigeria is seeded by matching investments of $5million from All On and The Alliance respectively.
“We are particularly excited about this deal which will inject much needed capital into the renewable energy sector in Nigeria,” said All On CEO, Wiebe Boer. “This innovative partnership provides a solution to industry challenges such as high finance costs and lack of scale, by ensuring price competitiveness, supply chain optimization and unlocking local currency financing.”
Odyssey Energy Solutions will provide aggregated procurement services in five pilot countries in Africa, starting in Nigeria. They will manage the global platform to standardize equipment, process solar company orders, manage supplier relationships, and link developers with finance partners.
“We are excited about the potential for demand aggregation and centralization of procurement and logistics services to dramatically drive down the cost of key distributed renewables equipment, and accelerate project deployment,” said Emily McAteer, Odyssey CEO.
According to a 2020 Sustainable Energy for All (SEforAll) Report on the solar sector in Nigeria commissioned by All On, aggregated procurement and logistics for solar equipment can significantly lower costs and unlock bottlenecks in the supply chain.
This is what DART aims to achieve to make affordable, high quality solar products reach the most marginalized communities.
The DART mechanism is a huge win for Nigeria,” said Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All and Co-Chair of UN-Energy. “It would go a long way in achieving much-needed economies of scale by bringing together finance providers, aggregated procurement agents, and specialized logistics. This is an example of the kind of innovation and collaboration needed to close the energy access gap, enable a just and inclusive energy transition, and unlock a sustainable future for all.”
The DART Program aims to improve the overall investment case of the renewable energy sector and attract more international and local investors, particularly commercial banks as lenders to the sector.
“I am particularly impressed by this collaboration between All On, Odyssey, and the Global Energy Alliance for People and Planet, and that Nigeria has been selected as the country in which to kick start this initiative,” said the Rural Electrification Agency MD, Ahmad Salihijo. “This could be a breakthrough in bridging the finance gap that hinders the growth of small and medium sized enterprises in the nascent renewable energy sector in Nigeria.”