Before the removal of petrol subsidies, Nigerians were used to fuelling their power-generating sets on a daily basis, but that has changed as many are beginning to abandon their generators to solar power; BENJAMIN UMUTEME writes.
For several decades now, Nigeria continues to battle with the perennial challenge of power supply. From the Electricity Corporation of Nigeria (ECN) to Nigeria Electricity Power Authority (NEPA), and the Power Holding Company of Nigeria (PHCN), one thing was common, their inability to feed Nigerians with enough electricity.
Even when Nigerians falsely hoped that the privatization of the power sector in 2013 would finally liberate them from the captivity of ‘perennial darkness’, it has yet to be as the demons of darkness continue to torment citizens to have resigned themselves to fate.
Nothing seems to have changed to improve electricity supply with analysts saying the privatization of the power sector changed nothing.
However, with increasing advocacy for alternative energy sources away from fossil fuel use, it has become imperative for the country to embrace clean energy which solar-powered electricity provides.
Access to electricity is not peculiar to Nigeria alone, in Africa, energy access is a top priority, where 600 million people live without electricity and roughly 1 billion people lack access to clean cooking.
Clean energy financing
Sadly, foreign direct investment (FDI) flows to the continent in clean energy fell by 3 per cent to $53 billion in 2023, according to the latest World Investment Report released by the UN Trade and Development (UNCTAD) on 20 June 2024.
According to the report, during the year, the estimated value of international project finance deals in African nations declined by 50 per cent to $64 billion. This follows a 20 per cent drop in 2022.
The UN agency further stated that FDI inflows to West Africa dipped by 1 per cent, with mixed results across countries.
Also, the International Energy Agency in its World Energy Investment 2024 report projects that global spending on clean energy technologies and infrastructure is on track to hit $2 trillion in 2024 even as higher financing costs hinder new projects, notably in emerging and developing economies.
Despite pressures on financing, global investment in clean energy is set to reach almost double the amount going to fossil fuels in 2024, helped by improving supply chains and lower costs for clean technologies, according to the report.
In spite of the enthusiasm, financing of clean energy projects is burdened by significant debt repayments.
According to the IEA, financing for clean energy projects is scarce as the need for concessional support becomes increasingly evident. But with geopolitical tension and crises hitting almost every part of the globe, getting the concessional support is growing thin.
“Financing needs for energy access initiatives fall well short of the annual $25 billion that is required to achieve the 2030 objectives of full access to modern energy. Progress in this area will require concessional finance providers to mobilise grants for the most vulnerable households and support the creation of bankable projects. The provision of other de-risking capital will also be critical to allow the private sector to take a more active role,” the report notes.
IEA’s executive director, Fatih Birol, notes that in spite of record investment in clean energies globally, Africa still lagged behind. According to him, more still needs to be done to change the narrative in the continent.
“Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy. For every dollar going to fossil fuels today, almost two dollars are invested in clean energy.
The rise in clean energy spending is underpinned by strong economics, by continued cost reductions and by considerations of energy security, but there is a strong element of industrial policy, too, as major economies compete for advantage in new clean energy supply chains.
More must be done to ensure that investment reaches the places where it is needed most, in particular the developing economies where access to affordable, sustainable and secure energy is severely lacking today.”
$2bn investment
Meanwhile, in Nigeria, the government has not relented as it continues to not only seek support in its quest to make electricity accessible to Nigerians; it has also invested a substantial amount in clean energy.
According to the government, the country has attracted over $2 billion in investment in renewable energy over the last ten years.
“Over the past decade, Nigeria has attracted over $2 billion in investment in the renewable energy sector and this has become a fast-growing sector in the economy. Our commitment is to continue this trajectory and attract more private sector involvement in the renewable energy space that includes manufacturing locally produced solar panels and batteries.
“By encouraging local production of equipment, we can reduce the cost of implementation thereby lowering the threshold for electrification,” President Bola Tinubu said.
According to data collated from the annual and bi-annual reports of the Manufacturers Association of Nigeria (MAN), manufacturers spent about N458.12 billion in five years to self-generate power to augment the insufficient power supply from power distribution companies to power their factories.
A breakdown of the data showed that manufacturers spent N93.11 billion in 2018, N61.38 billion in 2019, N81.91 billion in 2020, N77.22 in 2021, and N144.50 billion in 2022.
Energy costs on manufacturers gulped between 35 to 40 per cent of manufacturers’ total costs.
Changing the narrative
In a bid to cut down on operating costs, many companies are embracing renewable energy. For instance, TotalEnergies has actively invested in renewable energy with over 254 of their 540 service stations now operating fully on solar energy. Also, the company established TotalEnergies GRP Ltd., a subsidiary dedicated solely to renewable energy initiatives.
In the same vein, UBA signed an agreement with Renewvia. The agreement will see the Bank partner with Incremental Energy Solutions, the American company to provide solar energy to UBA’s branches in Nigeria.
With the high costs raked up by firms across the country, it is not surprising that solar energy has become the way to go.
Many Nigerians have also embraced solar energy. Fueling this, is the need to cut costs by any means especially with the galloping price of goods and services.
For many, the benefits are long term as a substantial amount could be saved and ploughed into other ventures.
For a media practitioner, Mr. Ifeanyi Onuba, deciding to install solar energy was one of the best decisions he has taken. IN a chat with Blueprint Weekend, Mr. Onuba said he no longer has to worry himself about getting fuel for his generating set, especially in this period of fuel scarcity or getting up to go and off the gen when the distribution company decides to ‘bring light.’
“I installed my solar in 2017. At that time, I was spending about N3000 everyday to power my generating set because I usually don’t have light at night. At that time, fuel was sold at N195 per litre, and also spent money to service the gen. I used the gen for about a year and it packed up so I had to buy another one. I now made the decision to get a solar panel. I spent N1.7 million to install. From that February 2017 till tomorrow, I have not bought fuel in my house, in fact, I don’t use fuel again.
“Let me just say I was spending an average of N2,000 per day, so, in a month I was spending about N60,000 on fuel and multiplying it by 12 that is about N720,000 for fuel alone. I service my gen every month because I use it every day. Somebody will come; I will buy engine oil which is about N1, 300. So, if you calculate N1, 300 monthly for the 12 months, that’s about N20, 000. Then, the technician that services the gen, I pay him N1, 500, multiply it by 12, that is about N18, 000.
“So, if you now add N720, 000 plus N18, 000 plus N20, 000, that is roughly N800000 for a year, if you now calculate it till 2023, when subsidy was removed, that is roughly N4.8 million. During that period, I only spent N1.7 million initially, then last year, I changed my battery and I spent N360, 000. So, if you calculate N1.7 million plus N360, 000 that is about N2.1 million. In the six years, I normally replace the acid of the battery which is about N15, 000 and I do it twice which comes down to N30, 000 every year, multiply it by 6, that is about N180, 000. When you look at it, you will see that I have saved about N2.5 million. Invariably, in the short run, it is expensive, in the long run; it saves a lot of money.
“Now in my office, we also use solar. We were using N70-80,000 for diesel in a week, so in a month, we were spending about N4000, 000 on diesel. And I can tell you that till today, we have not had any cause to put on our generator.
“In the estate where I stay, almost every house has solar power. Besides the money, the psychological torture that goes the noise from the gen the stress of having to always go and off the gen when light comes back on is no longer there. And the cost of maintenance is almost zero. There is light, it is charging, and in the night, you use your battery to power your house and it lasts till the morning, except when the battery is weak. When you buy a new battery for the next four years, you won’t change it, and then on the average, I used to spend N6, 000 to recharge my prepaid meter. Something in the estate where I stay when the transformer is faulty, people don’t bother,” he told this reporter.
