Solar energy solutions are creating new jobs, improving standards of living for many people and bringing about a cleaner, healthier environment. In this interview, Chuks Umezulora, co-founder and chief operating officer of Auxano Solar Nigeria Limited tells the story of how he got involved and takes the reader through the hurdles the sector faces to its many opportunities too. He spoke to Stephen Onyekwelu. Excerpts:
A quick check of Auxano Solar’s portfolio as presented on your website shows 80 percent of your big projects revolve around government-owned facilities. What explains this?
This may not be correct as many of those projects that were done in government-owned facilities were mostly intervention projects financed by other partners, not the government.
It was only the 240 kilowatts (kW) at Voice of Nigeria (VON), Lugbe that was purely a government project and we handled it as a sub-contractor. We do not handle government projects directly due to the bureaucracies involved.
How did you get into solar energy entrepreneurship? Tell us something about the personal factors that led to this.
Sometime around 2007, I stumbled into a solar training class when I went to pick up a building plan for a friend and that sparked off the initial interest. Also, my passion for solving technical problems helped fan my passion for solar business.
So I started out working with Sky Resources Nig. Ltd as a member of their installation team; after 2-3years of working with them, I then decided to start on my own. I rented my first office in Alaba International market where I was working as a consultant and an installer. From there we started building gradually till we got to where we are today.
One other factor was that I wanted a business I could start without much capital after I lost my initial seed capital in building materials business. So solar system installation business provided a perfect platform for me.
What is Auxano Solar about?
Auxano Solar is a renewable energy company that specialises in solar system designs and installation. We set up the first privately owned solar panel assembling factory in Nigeria, situated in Lagos.
We are a group of young people with big dreams and vision; we believe that Nigeria will only be built by Nigerians and we are determined to contribute our quota by making a mark in the solar sector, in Nigeria and beyond.
Show us in numbers the multiplier effects of solar energy for job creation, improvement in the standard of living, social and environmental transformations?
Not many people may understand the tremendous impact solar energy is having on our economy and quality of life. Its impact is multi-faceted.
For job creation, I can point to my personal experience. Many young people were able to start a career in solar sector with nothing but time, technical knowledge and passion.
For every 1kW Solar system installed at least 10 – 20 persons are directly impacted while even a larger number are indirectly impacted. For instance, you have those who worked at the factory to assemble or manufacture those solar components. You have the whole sellers and dealers who sold the items. You have solar technicians, engineers, electricians, architects who handled the design, installation and commissioning and for larger projects, bankers are involved in the project development.
Then you have the household who was the beneficiary of the solar system installed. If the solution is a Solar Mini-Grid, then you have those who are involved in revenue collection.
For the improved standard of living; with installed solar systems families and businesses have more savings that would have been spent on energy or buying fuel for their generators.
They spend less time going to buy the fuel or maintaining the generators. Families that use solar systems will be happier as they will have a less noisy environment. Noise has a way of making people angry. People staying in rural areas, for many of them a solar mini-grid provided the first opportunity for them to ever witness electricity. With electricity usually come other business opportunities and also an increase in their quality of life.
The more solar systems that are installed the cleaner our air is as we have less polluting generators and less depletion of the ozone layer. Those in rural areas don’t have to depend on kerosene lanterns anymore.
You would have encountered some challenges because you import the components for the assemblage of solar panels, photovoltaic systems and inverters, tell us about some of these and suggestions to resolve them?
Yes, everyone who does business in Nigeria knows that many challenges are being faced at our ports. Many of us have read how easy it is clearing from the ports of our West African neighbours compared to our port. It takes longer time and costs higher to clear from Nigerian ports.
Some of the problems being faced at our Ports include congestion; many times this leads to waiting time as much as 2-3weeks before you can take your consignment and in a number of occasions you are made to pay demurrage for the waiting time for something that is no fault of yours.
Ambiguous government policies and frequent changes also come at some costs. There is also a serious gap among the different government agencies where they say different things and have little or no synergy. This opens room for exploitation of the port users and arbitrary fees charged. For example, the import duties being charged for solar components are not clear as customs have a different classification on their official website but say something different on the field.
For me, part of what should be done is to open up other ports outside Lagos which is happening already but costs of clearing from those ports are still quite high.
Government needs to come out and have a clear policy on import duties being charged on renewable energy companies and if they want to grant duty waiver for companies manufacturing locally they should make it easy for these companies to access such window because many times what you read in the newspaper and your experience, when you visit their offices, are worlds apart.
Government has to understand that excessive revenue drive at our ports leads to inflation as those costs are somehow being passed down to the end-users and in cases when it cannot be passed down; those businesses are forced to close or downsize and eventually lay off their workers. So it’s a situation government needs to evaluate carefully.
Government’s ease of doing business drive has to be very visible and its impact felt at our air ports and seaports.
How have government policies enabled or stunted the growth of the sector?
Some government agencies such as the Rural Electrification Agency (REA) have done quite well in growing the sector. The Nigerian Electricity Regulatory Commission (NERC) is also making efforts; although there is still plenty of room for improvement.
However, Nigeria Customs Service (NCS) needs to sit down with the Ministry of Finance and the Federal Inland Revenue Service (FIRS) and close the several gaps in their policies and communications; their synergy needs to be improved.
Government policies have to be clear concerning the industry and there should be a minimum number of years that every policy should be in effect as policy somersault is one major challenge we see with our government over the years.
I can say we seem to have a good policy for the sector on paper but the experience at the field is nothing to write home about.
Right now, no one can tell if import duties are being charged for solar modules as the classification on NCS website is yet to be updated after several years of effecting the change.
What are your expansion plans as a company and how do you think Nigeria could pull the required factors together and start making solar panels, inverters and PV units locally?
Our plan as a Company is to scale up the installed capacity of our assembling line at least six times by next year.
To be honest, for local manufacturing to scale quickly there has to be a clear policy and support from government to the sector because right now it’s mainly down to patriotism.
For example, if the government said it’s charging import duty on solar components to encourage local production; after you have started charging those import duties, they should use the same enthusiasm to identify the local manufacturers and give them the promised waiver.
When you tell others, you have given import waivers to these local manufacturers; many will truly consider investing in local manufacturing.
Government should not leave it to these manufacturers to sort themselves out. The government cannot even say they find it difficult to identify them as there is Manufacturers Association of Nigeria (MAN) and every manufacturer belongs to this association.
Estimate the market size and opportunities in the solar energy sub-sector of the renewable energy industry in Nigeria. Where are the investments opportunities of today and the future?
It’s tough to estimate the market size but according to research by Rural Electrification Agency (REA) Nigerians spend around $14b annually on Off-Grid Power so this is the market size for renewable in terms of opportunity.
Investment opportunities in the sector lie mostly around financing solar projects especially for productive uses and financing manufacturing of solar components.
Also as our energy costs start moving towards cost-reflective tariff, this will make solar be able to compete with the grid very soon. Also, this opens a whole new business model and opportunities especially around the commercial and industrial space.
The Interconnected Mini-Grid is also one that is fostering a lot of synergy between the solar providers and the electricity distribution companies (DISCOs) and the opportunities this provides is also endless.
One thing is certain; the future for solar energy sector in Nigeria looks very bright. The sector is also beginning to attract a lot of foreign direct investment (FDI) in recent years and this trend is sure to continue.
Tell us about three of your most impactful projects and why you think they are so.
Three of our impactful projects are:
Stallion Motors Solar Lighting Project: this was when we got the opportunity to install around 200 poles of stand-alone solar street light at the Volkswagen Assembling facility along Ojo-Badagry road some years back from Stallion Motors. It was a massive project for us then and our first major project; it looked as though they took a gamble on us but we did deliver on that project and it opened a lot of other opportunities for us.
Voice of Nigeria 240kW Solar Hybrid System: we installed a 240kW Solar Hybrid system in VON Lugbe, Abuja. It was the single biggest project we handled as at then; it was not so profitable but we learnt a lot from that experience. It did improve our jobs profile.
AllOn Office 72kW Solar Hybrid System: we installed 72kW Solar Hybrid system at AllOn office in Ikoyi, Lagos. As at then, it was our biggest installation in an office and it has been like our flagship project and has opened up several other opportunities for us.
What will be your advice to a young solar energy entrepreneur, who believes they are held back by funding?
For a young person who is aspiring to become a solar energy entrepreneur; one thing he or she has to understand is that people are not interested in funding ideas so they have to find a way to try out some of their solutions no matter how small.
I will strongly recommend they understand the technical side of the business as it’s a lot easier to sell when you understand the technical side of the business.
Lastly, start with what you have; people will always ask what have you put into the business, so you start with your savings. No one will believe in a vision that you are not passionate enough to risk your all.
They must know that the path of an entrepreneur is a lonely path filled with potholes so they must make up their mind, that they are not going to give up no matter what happens.