MONEY MEETS MEGAWATTS: EVALUATION OF FINANCING OPTIONS IN NIGERIA AND IMPLICATIONS FOR RENEWABLE ENERGY CAPACITY DEVELOPMENT

Background: This study examines how Nigeria's energy financing options influence the growth of renewable energy capacity, with the overarching aim of evaluating the impact of these financing options on the country's renewable energy development. By analysing various variables and their interrelationships, the study enhances understanding of the drivers of energy capacity expansion, renewable energy projects, and economic growth in Nigeria. Three research objectives were outlined and tested: 1. To appraise the effect of contemporary energy diversification and financing strategies on the advancement of renewable energy initiatives in Nigeria. 2. To investigate how changes in sources of renewable energy funding affect energy capacity growth, and their implications for Nigeria’s economic growth prospects. 3. To provide an empirical justification for evaluating the energy financing mix in relation to Nigeria’s pursuit of economic growth and development. Literature: The extensive literature review offers a comprehensive overview of prior research and clearly identifies key gaps that this study addresses. An overview of the historical development of Nigeria's renewable energy sector is discussed to contextualise the challenges and opportunities in the field, providing a strong foundation for the research. The review suggests that access to reliable, affordable, and sustainable energy financing positively influences renewable energy capacity development. Notable sources of energy finance in Nigeria include internal and external financing, as well as debt financing. Other viable financing options identified include bank loans and credit, bond and lease financing, equity financing, crowdfunding, community financing, peer-to-peer funding, and publicprivate partnerships. This research addresses significant gaps in existing knowledge by exploring the under-researched topic of financing options in the renewable energy sector. A key contribution of the thesis is its emphasis on a diversified energy mix and the potential long-term benefits for renewable energy initiatives. The findings contribute to the literature and offer new directions for future research. Methodology: The study employed a robust econometric approach—the Autoregressive Distributed Lag (ARDL) model—to analyse the dynamic relationship between energy financing strategies, renewable energy capacity, and economic growth over time. Quantitative secondary data were sourced from the International Renewable Energy Agency (IRENA), the World Bank, the Energy Data database, the Central Bank of Nigeria, and other relevant institutions. Quarterly data from 2011 to 2020 were utilised. Results: The findings indicate that energy diversification has a positive effect on renewable energy initiatives, although the impact is modest (0.01%) due to Nigeria's relatively low level of energy diversification. Financing strategies do not exhibit a significant long-term effect on renewable energy initiatives. However, renewable energy financing contributes to energy capacity development by 0.029% in the long term. In addition, GDP was found to significantly enhance energy capacity development. Conversely, the energy financing mix does not have a statistically significant effect on economic growth. Findings and Contributions: This thesis significantly enhances the understanding of how energy financing options influence the development of Nigeria’s renewable energy capacity. It provides empirical evidence, practical insights, policy implications, and valuable contributions to the existing body of literature. The findings have practical relevance for policymakers and stakeholders within the energy sector. This research addresses a critical gap in the literature by focusing on energy financing and its effects on renewable energy development. Diversification of energy sources was shown to have longterm benefits for renewable energy projects, suggesting that a more varied energy portfolio, particularly one incorporating renewables, encourages greater investment in the sector. Recommendations: The study recommends diversifying energy sources with a stronger emphasis on renewables, promoting public-private partnerships in energy investments, and streamlining the energy financing process to reduce bureaucratic obstacles.

Name dc:type.qualificationname

PhD

Level dc:type.qualificationlevel

Doctoral

Grantor dc:publisher.institution

De Montfort University

Year dc:date.issued

2024

Author dc:creator

• Oyinlola, Adewale

Licence

• https://dora.dmu.ac.uk/bitstreams/4c5d398c-1f6b-4988-8d09-c0059e94fd54/download