• Wednesday, April 24, 2024
businessday logo

BusinessDay

Daystar, RMI unveil solar model to attract $6.5bn for Nigerian businesses

Daystar, RMI unveil solar model to attract $6.5bn for Nigerian businesses

Daystar Power, a renewable energy developer in Shell Group, and Rocky Mountain Institute (RMI), a global clean energy nonprofit, have unveiled a business model aimed at attracting $6.5 billion in investments for Nigerian businesses by transitioning from diesel-fired generators to utility-enabled solar systems with backup battery storage.

This model targets 170,000 corporations and industrial manufacturers in Nigeria, offering them substantial cost savings by transitioning from diesel-fired generators to utility-enabled solar systems with backup battery storage.

The business model is based on a tripartite agreement between the customer, Daystar, and electricity distribution companies (DisCo). Daystar installs and operates a fully-financed hybrid solar system for Nigerian businesses to provide power during peak hours (9 a.m. to 3 p.m.).

Meanwhile, the DisCos will extend hours of grid power to supply electricity to customers in the evening, night, and early morning hours (3 p.m. to 9 a.m.). Backup batteries and generators mitigate against any grid outages and outperform generator-only backup systems in cost savings and reliability.

“While Nigeria’s solar industry is taking off, it’s still relatively in its early days, and innovative studies like this are key to deepening the market and adding more value to the business community,” said Victor Ezenwoko, Daystar Power’s country head of Nigeria and Ghana.

He added, “We can provide even more affordable and reliable power to Nigerian businesses if we team up with distribution companies in close partnerships to solve challenges and eliminate uncertainties in the power value chain”.

In 2023, Daystar and RMI conducted Nigeria’s first-ever feasibility study to develop custom hybrid solar power systems that integrated with the national grid for 20 C&I customers in Abuja and Lagos, working in partnership with Abuja Electricity Distribution Company, Eko Electricity Distribution Company, and Ikeja Electric.

The study found that 17 of the 20 customers saved on energy costs, with an average savings of 26 percent, while the project portfolio totaled 27 MW in new solar capacity and offset an estimated 25,000 metric tons in CO2 emissions.

“Under the model, DisCos’ profitability surged up to 1,000 percent. Among the 20 customers, The Wood Factory, an Abuja-based furniture manufacturer, became the first to reach close with an agreement signed with Daystar and AEDC on January 19, 2024,” the report said.

Suleiman Babamanu, the program director at RMI said the institute is very proud to have de-risked a pipeline of projects at 20+ C&I customer sites and facilitated the contract signing of the first project in Nigeria.

“The business model exemplifies that unlocking sustainable grids and scaling distributed energy systems can go hand in hand and create win-win-win scenarios for customers, developers, and DisCos. It’s time for radical clean energy implementation, and we hope the project will lead to scaling distributed energy resources (DERs) in Nigeria to help improve reliability and reduce reliance on expensive, polluting fuels,” he said.