Nigeria needs $23bn to fix power sector — REA boss

Nigeria's electricity sector faces a deepening challenge as demand is projected to rise unprecedentedly, driven by population growth, artificial intelligence, digitalization, and the electrification of various sectors. Abba Aliyu, the Managing Director of the Rural Electrification Agency (REA), issued this warning during the signing of a collaboration agreement between the REA and Alpha Morgan Bank.

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Currently, this era is being termed as the era of electricity. Electricity is going to drive almost every single thing that we are going to do. Electricity will drive transportation, electricity will drive agriculture, electricity will drive health, education and everything we do.

The agreement commits up to N50 billion in financing for renewable energy developers. This facility aims to address the significant financing gap in Nigeria's electricity sector, particularly in rural and underserved areas where millions lack reliable power. Eligible developers in REA programs can access revolving loans of up to N10 billion each, subject to the bank's approval. Alpha Morgan Bank will provide up to 70 percent of the counterpart funding for these projects.

However, Aliyu emphasized that the N50 billion facility is only a small part of the solution. He disclosed that Nigeria needs approximately $23 billion in additional investment to enhance electricity access and supply reliability. Aliyu highlighted that electricity is becoming the cornerstone of future development, driving transportation, agriculture, health, and education.

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So, when you look at the future, three factors are going to be the main drivers of increasing electricity demand. Population growth is one. Beyond that, there are the two other factors: electrification of everything, digitisation, AI and data centres. And this is profound.

He further explained that the growing deployment of AI and data centers will place additional pressure on existing electricity systems. Reliable and affordable power is increasingly becoming a strategic economic advantage. The global shift towards electrification, coupled with declining costs in solar generation and battery storage, is accelerating investment in renewable energy, which remains the fastest-growing source of electricity generation.

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One of the things that keeps making renewable energy continue to grow and remain the fastest-growing source of electricity generation is that the cost of using solar to generate electricity has kept going down.