BusinessDay

Nigeria dithers as battery storage investment soars

Systems that capture energy and store it for later use, either to supply power to an off-grid application or to complement a peak demand, are the emerging energy sector investment frontier, but Nigeria is staking a claim.

Investment dollars are shifting from large-scale utilities for battery-based energy storage systems since Tesla provided a proof of concept for the commercialisation of electric cars and advanced battery technology.

Nigeria’s battery manufacturing market is ennobled by imports from China and India. Its biggest battery manufacturing plant, Union Autoparts Mfg. Co. Limited, in Nnewi, Anambra State, lies desolate. Batteries used in power back-up systems are mostly imported or assembled in Nigeria.

Local recyclers extracting lead ingots from discarded lead-acid batteries from vehicles pose a threat to the environment, as their processes are poorly monitored and regulated.

Batteries used in Nigeria are mostly for automotive and inverters adopted as an alternative backup to electric power. In recent times, the market has seen advancements in batteries such as polymers of lithium or a combination of lithium with other chemicals to improve durability.

There is also a growing demand for batteries smartphone and laptop batteries and electronic devices. Some companies are also venturing into the electric vehicle battery industry.

Analysts at Data Bridge Market Research say the Nigeria battery market is growing with a compound annual growth rate (CAGR) of 6.3 percent in the forecast period of 2020 to 2027 and is expected to reach $119.65 million by 2027 mostly through increasing adoption at the household level.

“Electric vehicles have huge opportunities and potential and are seen to be flourishing in the coming decade, creating new opportunities for Nigeria’s battery market,” the researchers say.

However, the use case for large-scale battery storage is glaringly obvious in Nigeria. From food preservation to local clinics, and rural electrification and small businesses, power storage systems should factor significantly in government’s policy plans.

For example, a recent study by the Boston Consulting Group, commissioned by Shell-seeded off-grid energy investment firm, All On, found that Nigeria loses about 80 million tons of food annually along the value chain including production, wholesale, retail, and consumption equivalent to 9 percent of its GDP, due to lack of cold storage facilities.

Globally, battery storage is attracting massive financing. Overall investment in battery storage increased by almost 40 percent in 2020, to $5.5 billion, said Paris-based International Energy Association (IEA). Other market forecasts say it could grow between $12 billion and $16 billion by 2025.

Read also: Global oil, gas investment projected to grow by $26bn in 2022

In the IEA’s Net-Zero by 2050 Scenario, forecasts that total installed battery capacity would need to expand by 35-fold between 2020 and 2030 to 585GW. It imagines that over 120GW of battery storage capacity is added in 2030, up from 5GW in 2020, implying an average annual growth rate of 38 percent.

All over the world, governments, businesses, and nonprofits are drawing up strategies to grab a piece of what is shaping to become a juicy pie and Africa, especially Nigeria, where over 80 million people without access to electricity should not be caught napping.

The largest markets for stationary energy storage in 2030 are projected to be in North America (41.1GWh), China (32.6GWh), and Europe (31.2GWh). Excluding China, Japan (2.3GWh) and South Korea (1.2GWh) comprise a large part of the rest of the Asian market, notes a report by the United States Department of Energy on Energy Storage Grand Challenge.

Experts say increasing demand for continuous power and energy storage systems in critical infrastructures, adoption of grid energy storage solutions, grid modernisation efforts, and increasing usage of lithium-ion battery-based energy storage systems due to its excellent features are among the factors driving the market for battery energy storage systems.

Already, major oil companies are training their focus on energy storage systems. Shell, last year, published its transition to Net-Zero emissions, which relies heavily on investments in clean energy and energy storage technologies.

TotalEnergies has launched the largest battery-based energy storage facility in France, which has a power capacity of 61mw and a total storage capacity of 61-megawatt hours (MWh).

“With the success of this project, TotalEnergies intends to deploy its storage solutions in countries where the company is actively developing renewable energies,” said Vincent Stoquart, senior vice president, renewables, at TotalEnergies.

The US strategy report identifies seven energy storage technologies to focus upon including Lithium-ion batteries, Lead-acid batteries, and pumped storage hydropower.

Others are Compressed-air energy storage (CAES), Redox flow batteries (RFBs), Hydrogen (H2), and Building thermal energy storage (TES) – Ice.

Lead-acid batteries are prevalent in Nigeria used in cars, home inverter solutions, and most renewable energy projects including home system solutions. The adoption of Lithium-ion batteries is only just gaining ground but it is still expensive even if it delivers superior value.

Other storage systems are not in existence and industry professionals are pushing to kickstart hydrogen adoption in Nigeria.

“Hydrogen holds real potential for Nigeria’s economy and it’s time we begin to harness it,” says Godwin Aigbokhan, head, Competence Centre Energy and Environment at the German Industry and Commerce in Nigeria.

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