Given key fundamentals in place, Nigeria’s PV capacity is projected to reach between 5-8gw by 2030, a new report commissioned by All On and produced by the Boston Consulting Group (BCG) has found.
The report titled ‘Socio-economic case for deepening solar PV deployment in Nigeria’ said that the solar market growing at CAGR of 22 percent over the past 5 years, has emerged one of the fastest growing in Africa.
This growth has been supported by a combination of demand factors including inadequate and unreliable grid power supply, supportive government. policies, growing adoption of clean energy sources.
Some supply factors such as cost competitiveness of solar, increased investment into the solar energy sector, and emergence of innovative business models have given ad added boast to the growth of Nigeria’s solar market.
However this growth isn’t as ambitious as that of African peers. The report said that solar remains underpenetrated with installed PV per capita of 1W (~200MW) compared to peer average of 8W indicating significant opportunity for further growth.
The solar market in Nigeria is constrained by several factors, prominent of which is financial. Solar energy developers and consumers grapple with limited low-cost financing options. It is also difficult accessing the available funds and concessional funds often face disbursement delays, the report said.
Another challenge is lack of centralised demand aggregation to create scale for viable use cases, limited consumer awareness of benefits of solar products, constrain the commercial side of solar adoption in Nigeria.
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Operational challenges were identified including fragmented value chain; inadequate skilled human resources; complex importations process driving costs up; payment collection inefficiencies.
The report also said insufficient enforcement of quality standards resulting in an influx of low-quality products in the market poses a constraint to an enabling environment.
However, solar energy is important to Nigeria’s social economic development. The report identifies key uses in several important sectors of the economy. In the health sector, Primary Health Centers (PHCs) with solar electricity witnessed 60-70 percent improvement in antenatal care coverage (ANC) and 40-60 percent reduction in vaccine waste.
In the education sector, public boarding secondary schools with solar witnessed more than two-fold increase in student study hours, and a 30 percent increase in ICT teaching hours.
The report forecast that providing solar to around 1,200 public boarding schools will increase average student study hours from around 8hrs per week to 18 hours per week and ICT teaching hours by around 50-60 percent.
In Nigeria, farmers using solar powered cold storage witnessed up to 30 percent reduction in post-harvest loss (PHL) for perishable goods.
The report also said that about 500,000 households have adopted solar, leading to around 160,000 tons of CO2e being avoided.
“Assuming solar penetration among households in Nigeria reaches peer average of around 30 percent by 2030, about 5 million tonnes of CO2e can be avoided, reducing emissions from households by around 30 percent,” the report said.
It is also enhancing trade as MSME’s in markets with solar witnessed around 20-40 percent increase in operating hours and reduction in fire incidents from generators; resulting in revenue uplift of around 30-40 percent.
To drive further growth in Nigeria’s solar market, the report called for developing solar developer focused financing programmes and creating a one-stop shop to support developers around access to
funding issues in current programmes, refining funding processes of existing programs to improve ease access; and, channel consumer debt financing.
In order to strengthen institutions and develop capacity, the report called developing and providing standardized training programmes focused on key skills required across the value chain; improving efficiency during payment collections by creating partnerships with existing agent networks; develop payment platforms and simplify
importation process
On the customer end, it called for the launch of awareness campaign on benefits of solar and how to identify quality solar systems. It also advocated for the creation of a mechanism to
aggregate demand from various customer segments to create scale, hence reducing acquisition cost of solar products.
The report also called for the introduction of fiscal incentives to attract investment into the sector, the enforcement of quality standards and ensuring stricter monitoring of quality solar products. It called on regulators to introduce regulations to drive solar PV demand.
“Implementing these interventions could accelerate solar deployment in Nigeria significantly thereby unleashing additional socioeconomic benefits for the country,” the report said.
