Renewable investment to end Nigeria’s largest energy deficit position
Nigeria’s energy crisis has become an endemic disaster. From high energy cost to its scarcity. Everyday, Nigerians battle with energy challenges. Government’s approach to address the nation’s energy problem has not yielded results despite gulping huge yearly budgetary allocations.
Transmission, distribution and generation sub-sectors have refused to grow. For Nigeria’s power sector, it has been a circus of retrogression.
However, the newest wave in pursuit of achieving net-zero carbon emissions by 2050 through a shift away from fossil fuel and other dirty fuels to renewables and other cleaner and environmentally friendly energy sources is a beacon of hope.
In Nigeria’s over 201 million population, over 84 million are still lacking access to electricity from the national grid and many homes and businesses have resorted to using petrol or diesel generators as alternative.
Nigeria’s ailing power sector characterised by constant grid collapses, epileptic electricity supply and the too low generation, transmission and distribution capacities of the country has further provided a brighter business opportunity for the players in the renewable energy sector.
In this editorial, Nigerian NewsDirect advances that renewable energy such as solar solutions can deliver larger capacities and meet more complex energy needs, powering devices from 500w (including many small household appliances like laptops, small fridges and televisions) to 10kW which powers most heavy duty household items such as air conditioners.
With the launch of Sterling solar panel wrapped headquarters in Marina Lagos recently, the suitability of solar solutions for industrial use has increased.
The country’s renewable energy masterplan pioneered by Rural Electricification Agency (REA), Nigerian Electricity Regulatory Commission (NERC) should be a starting point.
Also, solar energy can power commercial structures and ventures, community and the entire country with heavy investment in mini-grids in the long-term. Although innovations, falling prices, and increasingly unattractive electricity alternatives have driven the adoption of solar in Nigeria, the country still has a long way to go. Per capita, solar capacity remains at 1Wp (watts peak)—the maximum power that can be generated from a solar panel. In Ghana and Kenya, per capita capacity is at 3Wp and 2Wp respectively.
Despite the emergence of many payment models, price remains the most significant inhibitor in the growth of the market, a symptom of other prevailing market issues.
These problems can be examined by the costs tacked on at each point of the solar supply energy chain.
They include manufacturing and assembly of the products outside the country with the associated costs of importing them into the country under a high tariff regime, informal taxes and levies the importers have to pay to clear their goods, logistics and transportation challenges which make distribution to rural areas difficult and expensive, thereby making the solar solutions even more expensive and unaffordable to many Nigerians in the long-run.
In addition, energy production is a capital-intensive venture that requires investment in equipment, manufacturing, distribution and financing depending on the business model, adding that this makes the ability to access sufficient and adequate funding a make-or-break factor for providers of solar solutions in Nigeria.
With financial institutions providing funding for providers of solar solutions in the country and the Federal Government’s development of financial institutions specialised debt providers, strategic corporates, crowd-funding, the challenge of funding solar energy project will be addressed.
By and large, Nigeria’s solar energy sector is promising and its future is very bright, especially as recent events have made Nigerians to see the unsustainability of relying on fossil fuel powered generators. However, there are important issues that are constraining the growth of the sector in Nigeria. These issues can contribute to making the end-solutions expensive and inaccessible to the majority of Nigerians.
There is a need for significant investment and intervention by stakeholders in a bid to take advantage of the $10 billion market opportunity that solar energy offers and the likely potential of building more resilient economy for the Nigerian state like its counterparts in other developed countries.
The needed interventions are the provision of appropriate funding for the business models and target market by financial institutions and investors, policy support by the Federal government to create the enabling environment as well as robust consumer education to encourage users to make informed decisions.
