26 February 2017, Sweetcrude, Lagos — What can solar power really do for Nigeria? Answering this question provides ample insights for solar firms, policy makers and advocacy groups. There is an emerging functional nexus between solar power (as a unique source of power) and Nigeria’s peculiar developmental challenges. Stakeholders need to understand this growing interrelationship. While solar companies and other clean energy advocacy groups are lost in the debate of why the solar transition must now happen, some rather insufficient and narrow action has been seen. Solar Power has an extremely interesting dynamics in Nigeria that it could sit at the centre of a very critical nexus in the economic and development challenges of Nigeria.
Why does Nigeria have a national program for polio eradication; a national program for malaria control and a national program for HIV prevention/management, without a viable national program for solar power deployment/energy poverty eradication?
Even where it’s obvious that such a viable national energy program provides the organic tools and channels for success in other areas.
Here are some of the scenarios in the developmental economics of solar power, showing the contextual relationships and some of the possible actions Nigeria should have long taken using solar power’s potential;
Solar Power and Job Creation
If the solar panels and components that could be used in powering 1 million or more households are sourced locally; its impact on job creation will be enormous. This is possible given that Nigeria already has a very viable but neglected small solar panel manufacturing facility (NASENI Solar Power in Karshi, Abuja) whose capacity can be expanded to optimise local production. In addition, a Greenfield solar manufacturing program – with tailored incentives – can also bring in investors and add more manufacturing capacity. It’s will be viable since $50m worth of solar PV modules has been imported from China since January 2015 and this is growing. Notably, solar power along its entire value chain is a massive employer of labour. According to the US Department of Energy, in 2016 Solar Power created 373,807 jobs more than Oil, Gas and Coal combined (187,117). Both local manufacturing and installation in (at least) one million households will spur an enormous labour demand that will significantly lower unemployment and kick the comatose economy mildly. If an additional 1 million (at least) Nigerian SMEs deploy hybrid solar systems (Grid/solar PV or Diesel/Solar PV); fuel consumption savings of about 6 percent of national daily consumption is also possible with direct monetary gains for businesses that lower the overall cost of doing business. Furthermore, as these two classes of power consumers are completely and partially taken off the grid, significant grid capacity will be freed up, providing more supply to critical infrastructures, industrial/manufacturing activities and simultaneously creating more jobs.
Solar power, petrol imports and foreign exchange
If solar power (rooftop solar) is successfully deployed in 1m Nigerian households in urban and semi-urban centres (and this can be very easily done in 6 months) Nigeria’s petroleum product import pressure will be quickly eased along with the now dire foreign exchange concerns. The total fuel consumption savings from captive power generation could reach 5 million litres daily, based on the prevalence of captive petrol generators owned by 60m Nigerians according to the Energy Commission. That’s about 12.5 percent of the current national daily fuel consumption (40m litres/day). Given the 20 – 25 years lifespan of solar panels, if one compares this to the 4-6 year life span of most generator then these gains are typically for the long haul. Many households would have purchased 5 – 6 generators in the lifespan of a single solar panel. Consequently, the foreign exchange pressure arising from massive generator importation will be minimised.
Solar Power and the Viability of DISCOs
If most (or all) National Assets in Nigeria are taken off the grid (All 26 Airports, all national stadia, Federal hospital, Federal Universities and the likes of it) and tied to a solar mini grid (or solar hybrid) which is easily achievable, their sorry power access condition is permanently improved and expensive downtimes are eliminated. These assets currently under the mercy of poor grid supplies and expensive diesel generators are also some of the traditional causes of the illiquidity of Power Distribution Companies in Nigeria (DISCOs) since they are reportedly the heaviest debtors. Their grid departure also frees up more grid capacity for alternative use and also spurs the massive solar linked jobs already mentioned.
Also, if Nigeria’s 11 DISCO’s who are already in a last mile contact with several power consumers in Nigeria could develop a solar portfolio (and what are they waiting for, spending millions of dollars in infrastructure upgrade, where they are already in direct contact with an existing power consumer base for off-grid solutions). This new solar portfolio will either replace or complement grid inadequacies (both scenarios are profitable for the DISCOs). The illiquidity crises for the DISCO’s would be quickly ameliorated and the bailout debate could be put to an end if the profitable rooftop solar services are provided by the same Disco’s through a PAYGO model.
Solar Power and New FDI Streams
If Nigeria kick starts the solar power auction which several global players are waiting for and which has already taken place in some African countries, an additional 2GW or more on a grid can be anticipated in the next 24 to 36 months. Auctions provide some of the surest pathways for foreign investment as has been seen in Zambia, South Africa and India. As these funds arrive they will not essentially stop in the solar sector but could also help catalyse more economic activities in related sectors such as construction, insurance and financial services.
Solar Power, Rural-Urban divide and migration
Accelerating rural electrification through rapid solar power deployment (mini-grids and off grids) can help curb worrisome rural-urban migration and the international migrations that feeds from it. Developing the space around PAYGO model (working either through mobile money or other telecoms offerings), in turn, brings financial services to the over 70 million unbanked population in Nigeria. Delivering the financial inclusion that has so long eluded Nigeria’s Base of the Pyramid (BoP)
If these and other endless scenarios are possible and easily achievable, Why is Nigeria still experiencing high levels of energy poverty and is at risk of energy-induced recession? Why are Nigeria’s industries closing due to power access challenges and when will a more comprehensive solar power promotion program come alive in Nigeria?
*Chijioke Mama is the CEO and Lead Research Analyst at EnergyData. +2347061013333| [email protected]