Are There Any Government Incentives or Subsidies for Solar Energy in Nigeria?
For years now Nigeria and Nigerians as a whole have been faced with numerous Electricity challenges, from constant collapses of the national grid to high cost of electricity bills, these of course have different negative effects to households and Businesses who depend so much on electricity generation.
In response to these challenges that don’t seem like phasing out anytime soon, most Nigerians are now turning towards solar energy as a more reliable alternative.
However, the issue of high initial cost for solar installation is still a major concern for those who want to adopt solar systems.
In order to encourage more adoption of solar energy irrespective of the initial cost, the Nigerian government and some international organizations have decided to introduce Different incentives, grants as well as subsidies that will ensure that more and more Nigerians are able to adopt solar energy and take advantage of the constant power supply in their homes and businesses.
This article will take a quick look at some of these incentives, how the work and how you can take advantage of them. If you are considering switching to the solar system, please remember that Arenahub is here to help you, we’ll provide you with expert guidance on how you can get started.
Why Is the Nigerian Government Supporting Solar Energy?
The Nigeria government knows that they might not be able to provide adequate electricity to it’s citizens, more than 85 million Nigerians don’t have access to constant Electricity.
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So they know that investing in renewable energy will be very important as it would greatly improve the Economy of the country as well as quality of life of an average Nigerian.
In order to help more Nigerians get access to constant Electricity through solar energy z the Nigerian government decided to introduce some tax incentives, grants, low interest loans as well as import duty waivers on solar equipment.
The major aim of these initiatives is to help
a.Reduce how much Nigerians depend on generator and fuels.
b.they want to encourage more and more private Investment in renewable energy as it’s seen as the future of power generation not only in Nigeria but globally
c.They want to make solar systems to be very much available and affordable to the average Nigerian who might not be able to afford them judging by the initial cost.
We’ll take a closer look at some of the government incentives and subsidies that are available for those who want to switch to solar energy in the country.
1. Tax Incentives and Exemptions for Solar Energy in Nigeria
One of the major stumbling blocks for those who want to adopt solar system in Nigeria is the high cost of buying solar equipments, in order to address this pressing issues, the Nigerian government decided to introduce different tax incentives so as to reduce the cost of purchasing these equipments and also encourage more People to invest in solar system.
a. Tax Holidays for Renewable Energy Companies
The federal government decided to give tax Holidays to most solar energy companies so as to help reduce the already inflated operational costs.
What this simply means is that companies that are investing in solar energy in Nigeria are often given a five year tax exemption, this exemption makes it even more profitable to invest in solar projects in Nigeria.
b) Import Duty Waivers on Solar Equipment
In order to help reduce the cost of importing solar panels, inverters and other components, the government decided to remove import duties on all this products, what these means is that importers can afford to bring in this products without having to pay exorbitant fees in form of import duties, this of course helps to make then very much affordable.
c. Value-Added Tax (VAT) Exemptions
Some certain solar components are exempted from paying VAT, with this, buyers will no longer have to pay extra taxes when buying solar systems, this of course goes a long way in reducing the overall cost of purchasing one.
2. The Central Bank of Nigeria (CBN) Solar Intervention Fund
Recently, the Central Bank of Nigeria announced that they’ve launched a N140 Billion solar intervention fund, which will help homeowners and Businesses in the country to install solar in their properties.
These funds will make available low interest loans to Nigerians who want to install solar Systems. As an individual or a business owner, you can easily have access to these loans so as to buy solar panels as well as batteries and inverters.
The government made sure the repayments are very flexible, the also allowed for longer periods meaning you’ll have enough time to repay these loans.
Landlords and Landladies who want to install solar systems in their homes can apply, also small and medium sized businesses (SMEs) as well as solar companies that want to expand their operations can also apply.
3. Government Subsidies for Solar Mini-Grids
Over the years, the Nigerian government with support from Worldbank has initiated so many projects to help reduce cost of solar mini-grids especially in rural areas.
Below are some of the key Project as well as notable achievements by the government and world Bank through this process.
Some Key Projects:
a.Distributed Access through Renewable Energy Scale-up (DARES): A whopping$750 Million was initiated with the sole aim of making sure solar energy is accessible to over 17.5 million Nigerians.
b.Nigeria Electrification Project (NEP): The NEP was able to provide some substantial financial support and aid to some mini-grids developers so that they can be able to install solar power systems in areas that are off-grid.
If you happen to live in rural areas where Electricity is mostly unstable, these programs mentioned above will help to solar mini-grids to your area, and it’s always more affordable as the government has already subsidize some of the costs.
