June 22, 2024

Nigeria’s unreliable grid spurs solar system adoption


EnergyDay Editorial

The decadence of the national electricity grid system, largely powered by gas turbines and the knee-jerk response by the government to rapidly transform electricity delivery services, have taken a direction that could accelerate early adoption of Offgrid solar electricity across the country.

Nigeria’s power generation capacity, which consists of gas-fired and hydro-powered stations, is about 13,000 Megawatts, but the electricity transmitted remains less than 5000MW for a population of about 200 million.

The sector has been struggling to meet the electricity needs of Nigerians (both residential consumers and commercial private businesses) nearly a decade after the government handed control of the firms to private investors.

Available data from the industry shows that the adoption of Offgrid solar electricity across the country, is spurred by the deployment of renewable energy technologies (RETs) and innovative approach to solar installations.

This, according to available data, was largely driven by the rapidly declining cost of solar photovoltaic (PV), climate action and energy security.

EnergyDay views this development as a positive step but note with regret, the circumstances surrounding the poor performance of the nation’s integrated grid system and its influence in pressuring consumers to seek Off-grid solutions.

Data obtained from the International Energy Association’s recommended PV market, that cost of electricity from PV system in the country ranges from 0.387 – 0.475 $/kWh, whereas it is 0.947 US$/kWh and 0.559 US$/kWh for the diesel generator and glass-covered kerosene lamp, respectively.

This may still be seen as quite high compared with on-grid of between 0.057 and 0.093 $/kWh, but stakeholders claimed the solar system is sustainable and reliable, compared with inefficient on-grid power.

Otunba Akinbo Akin-Olugbade, MD Kawai Technologies Ltd, Chairman Power Sector Group, Lagos Chamber of Commerce and Industry, in a recent chat with EnergyDay, said that out of the total energy consumed by Nigerian industries, only 4% is supplied from grid-connected electricity, while about 96% is self-produced.

Data obtained from major players in the off-grid solar industry shows that about 10 percent out of 96% of power self-produced by Nigerian industries are derived from the solar installations, and the figure has continued to grow due to flexible financing facilities and instruments from international development funds, including IMF and World Bank.

The pay-as-you-go (PAYG) technology by off-grid solar companies has also revolutionized energy delivery for residential and commercial firms. This is why the number of people switching from on-grid to offgrid systems are growing around business clusters, hospitals, banks, higher institutions and residential estates in all major cities across Nigeria.

McKinsey and Company’s recent findings show that solar battery-pack prices are down to about (less than) $250 per kilowatt-hour in 2020, compared with almost $1,000 per kilowatt-hour in 2010.

EnergyDay gathered that a combination of solar panels with power wall inverter and controllers can cost as much as N725,000 depending on the numbers of batteries.

It was however estimated that 10 kVA solar systems can be installed in a residential apartment with an average of N5 Million to run home appliances including air conditioners and water pumps.

Evidently, from this data, top corporate business institutions in the country are currently adopting solar-based electricity as the primary source of power for business operations. Thousands of petrol stations across the country are switching from on-grid to solar systems.

This trend is boldly stated by the Nigerian Breweries (NB) Plc, with the 663.6 kiloWatts peak (KWp) in Ibadan, Oyo State, in collaboration with Cross Boundary Energy, a leading solar solution firm in Africa. This was about the country’s first solar installation of that magnitude.

This NB Ibadan project was developed through 1,680 solar panels installed on the factory’s roof, at the cost of over N300 million.

The Actis UK, 609kwp solar hybrid power plant at Jabi Lake Mall, Abuja, Nigeria, was also installed by CrossBoundary Energy. This particular project was the first rooftop solar- powered electricity for a Nigerian mall.

Actis, a United Kingdom – based firm, managing the 106 Micro, Small and Medium-scale Enterprises (MSMEs) in the country disclosed that in almost two years of switching over to large scale solar plant, its bills have dropped by 30 per cent at the Jabi Lake Mall in Abuja.

CrossBoundary Energy, the solar company behind all these projects, is a green energy provider with a cutting- edge innovation to solarise breweries and other industrial manufacturers in Africa.

On May 20, 2021, following the take-off of the Nigerian Breweries Plc, solar Plant in Ibadan, Big Cola Nigeria, one of the leading beverage brands in Nigeria, in collaboration with Starsight Energy commissioned a 950kW solar system in its plant in Sagamu, Ogun State.

Like CrossBoundary, Starsight is another leading African Commercial and Industrial (“C&I”) solar power provider.

Starsight also in collaboration with one of Nigeria’s commercial banks, First City Monument Bank (FCMB), installed end-to-end power and cooling services in 110 of its branches across Nigeria.

The Nigerian bottling company(NBC plc) listed on the Nigerian Stock Exchange (NSE) also installed a 12.5 Mw solar electric facility in its factories. Other big industry players are also forcing down its dependence on the national grid by as much as 50 percent.

Until now, solar electricity was merely used as a casual backup to guarantee the availability of minimum power to avoid complete blackouts. Now, it is being viewed as the more dependable and sensible substitute for the epileptic supply from the national grid.

EnergyDay’s check showed that no fewer than 5 major commercial banks with extensive branch networks across the country have also joined FCMB, opting for full scale solar electricity to power their business operations.

At the domestic family level, several packages have been rolled out by solar electric service providers to ease common barriers that often prevent massive adoption of solar by low income households and Small Medium Enterprises. The Federal Government through the Nigerian Rural Electrification Agency (REA) has been making significant progress in providing rural electrification, with almost 150,000 connections.

Apart from flexible financing facilities, technical challenges associated with poor quality inverters and batteries are now mitigated by service providers.

These are some of the measures taken over time by producers of solar facilities to guarantee sustainability of the facilities as a sure alternative to conventional power sources.

While the entire Nigerian economy is held captive by the inefficient and poor interplay of the Transmission Company of Nigeria (TCN), electricity Generating Companies (GenCos) and the Electricity Distribution Companies (DisCos) in an unending saga of “System Collapse” , the pathway for a more credible and sustainable electricity delivery system has taken root and is progressing rapidly in the direction of off-grid renewable power supply.

Private sector players dominate solar hybrid development in the country, with financial backing from development finance institutions including the European Union, IMF, World Bank to mention but a few.

Bloomberg, in a recent report said that “Nigeria, which is seen as the largest potential market for mini-grid in West Africa, has received at least $374 million in the past ten years from international donors for mini-grid development”

This figure pales insignificantly against the more audacious budget of USD 100 Billion launched on November 2, 2021 during COP26.under the aegis of Global Energy Alliance for People and Planet (GEAPP).

It is floated with the initial sum of USD10 billion of committed capital which is meant to accelerate investment in green energy transitions and renewable energy solutions in developing and emerging economies.

This landmark initiative is geared to mobilize USD 100 billion in partnership with the Rockefeller Foundation, Ikea Foundation, and Bezos Earth Fund.

Collectively, these groups are to unlock investment capital that will reach one billion people with reliable power, create 150 million jobs and increase economic growth.

It is instructive to state that Nigeria is selected as the start-up point for Africa in a pilot scheme called “Demand Aggregation for Renewable Technology” (DART) with a financing facility of USD10 million .

The 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”. It is to create access to affordable finance, and unlock economies of scale for solar companies and achieve cost savings for end users.

Although renewable energy is the global choice endorsed by several governments across the world, there is no denying the fact that natural gas is a stronger strategic option for Nigeria as primary feedstock for electricity generation.

Sadly, the current pace of action is rather too slow and lacking in dynamism to match the new global trend.

We have noticed that despite the annual budget the parlous condition of Nigeria’s power sector has persistently remained the same.

EnergyDay investigations revealed that inefficiency, unabated corruption, and administrative bottlenecks are key factors that have forced several commercial enterprises to disconnect from the national grid system.

According to our findings, the pull towards off-grid power is gaining momentum as ordinary citizens are also bracing up to switch to renewable sources of electricity by jettisoning the public grid system.

EnergyDay therefore feel that if this trend is allowed to continue to grow without conscious efforts to revamp the country’s grid system, the investors in the power assets with a mounting debt of N819.9 billion acquisition loans, Aggregate Technical, Commercial, and Collections Loss (ATC&C) and huge infrastructural gap will be the greatest losers

In conclusion, we call on the Federal Government to remain faithful and firm to its commitment to support renewable energy in a manner that it does not displace the opportunity cost advantages of natural gas.

It is important to maximize all resources competitively and avoid a situation where National goals are completely overshadowed by private commercial interests.

Now that necessity has created a solar facility economy, EnergyDay therefore urged the government to adopt renewable energy strategy especially with solar. Nigeria needs to develop the technical capacity to produce in-country, the basic components of the solar electricity system.