Nigerian installers feel heat of soaring solar costs
Some of Nigeria’s solar installers may be forced to redraft quotes as a key selling point that made solar energy the fastest-growing power source in Nigeria, which was rapidly decreasing costs has hit a speed bump.
Data from PVInsights, an real-time price update of all solar components showed the price of solar panels has risen 18 percent since the start of the year after falling by 90percent over the previous decade.
For instance the price of polysilicon, a high-purity form of silicon that is a fundamental ingredient in solar photovoltaic (PV) manufacturing have jumped from only $6.19/kg up to as high as $25.88/kg with further estimates speculating it could travel further upwards over the next year and a half.
For solar manufacturers, it doesn’t just mean higher prices for end products; it means potential project delays especially at a time several governments are finally throwing their weight behind it in an effort to slow climate change.
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“Developers and governments are going to have to stop expecting solar to get much cheaper quickly,” clean energy research group BloombergNEF said.
Jasper Graf von Hardenberg, CEO of Lagos-based Daystar Power told PV magazine he has had to go back to clients who have not signed off his company’s quotes to renegotiate the price for solar electricity.
“For us, there have been two drivers of price increases: equipment costs and freight,” he said.
With panels representing only part of total solar project costs, that 18percent PV module price rise has translated into a 5percent rise in project costs for Daystar. The installer will absorb the costs on contract offers it has signed with customers, said the CEO but, since December, unsigned quotes have had to be renegotiated.
Von Hardenberg, whose company installs solar for commercial and industrial clients in Nigeria, Ghana, Senegal and Togo, said the price hikes have been occurring since last summer.
He explained, “wildly fluctuating local currencies and rates of inflation, plus costly finance add up to ensure unpredictable costs are par for the course in Africa.”
Things are improving at least on the latter point, he said, adding,“three years ago, if you tried to get a loan from a Nigerian bank for solar, they would say ‘Solar? I can’t use that as collateral.’ Now they are much more open to the idea.”
The rising cost of polysilicon may increase the risks of many ongoing solar projects scattered around the country most especially the ‘Solar Power Naija’ project, a programme focussing on 5 million solar connections for off-grid communities as part of the Economic Sustainability Plan (ESP) in response to the COVID-19 pandemic.