• Monday, May 27, 2024
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The Growing Attractiveness of Solar Power for Nigerian Businesses

The Growing Attractiveness of Solar Power for Nigerian Businesses

Every evening at 6 pm, a fleet of white Toyota coaster buses pulls up in front of two austere buildings dwarfing a back street in Victoria Island. A group of women, dressed in brightly coloured blouses and tailored pants, stream out of the gated compound.
Were it not for the small Glo sign at the gate; one would have to guess what was inside the two stark buildings. Glo, a large telecoms company, houses its data and call centres on this nondescript side street.

Giant diesel generators that power the energy-hungry data and call centres assault the senses. Two generators, housed in large blue and white containers emblazoned with big letters’ SDMO’, produce 2,000 (Kilovolts-Ampere) kVA of electricity each — enough to power 500 houses. They emit a low rumbling sound that reverberates down the street all day. The exhaust pipes, recalling early industrial revolution smokestacks, belch clouds of exhaust and fill the air with an acrid smell.

Glo has no choice but to supply its power; Nigeria doesn’t produce enough electricity.
Nigeria’s power deficit is a well-known paradox. Although Nigeria is Africa’s largest economy, rich in oil and gas, it has struggled to boost its electricity supply since independence in 1960. Nigeria’s grid has a total generation capacity of 12,522 megawatts (MW), but it only delivers 4,000–5,000 MW. Some estimates are even lower.

Despite having Sub-Saharan Africa’s largest population (200 million) and economy ($1.1 trillion GDP PPP according to the World Bank), Nigeria’s utility-scale power stations produce only about 10% of the power generation capacity of South Africa — a country with a third of the population (55 million) and a smaller economy ($0.767 trillion GDP PPP adjusted).

According to a report from PwC, Nigeria should produce around 200,000 MW (200 gigawatts – GW), given its size. (This is based on a common industry metric that an industrialized country needs 1,000 MW of electricity for every one million people.)
While Nigerian businesses had no choice but to use diesel generators to provide their electricity in the past, they are increasingly turning to an alternative: solar energy. Over the last five years, many large Nigerian corporations and factories have handed over their power supply management to third party hybrid solar energy service providers known more commonly as commercial and industrial (C&I) solar providers.

Read Also: PSC Solar (UK) move to deepen market share of alternative energy in Nigeria

Commercial and industrial (C&I) solar providers, as they are known in the solar industry, are taking off in Nigeria as the business model is uniquely tailored to meet Nigerian businesses’ energy needs. C&I solar is affordable, reliable and provides quality power.

Solar power is affordable for Commercial and Industrial (C&I) Users

Whether used as a stand-alone energy source or backup to offset the use of a diesel generator, incorporating solar energy can dramatically lower a business’ power bills. Solar power has become much cheaper over the last decades. From 1976 to 2019, solar panel prices plummeted 89% from $106 per watt to $0.38 per watt as polysilicon producers have scaled output and improved technology.

Low hardware costs have made solar the cheap alternative to diesel generators. A generator produces outrageously expensive power of up to 120 naira/kilowatt-hour (kW-hr). This amount includes all the hidden costs of a generator’s depreciation, maintenance, and personnel. Nigerian businesses can cut their diesel generator use by up to 40% when using solar with battery storage, which carries excess power for use when there is no sunshine. Solar will only become a more attractive choice as diesel prices could increase with the removal of the fuel subsidy and the hike in grid electricity tariffs.

With 99.9% uptime, solar power is reliable for C&I Users

In addition to its affordability, solar power is reliable, providing the critical 99.9% uptime that businesses need.
Uptime — a consistent and uninterrupted power supply — is sacrosanct for many industries. Factories cannot take the risk of prolonged power cuts due to the electricity requirements of their production processes. Industries like aquaculture, dairy, or pharmaceuticals, to name a few, need a constant 24/7 flow of power to operate. Otherwise, they lose viability.

Although many Nigerian companies, especially in Lagos, receive some grid power, supply is intermittent and erratic at best. As a result, businesses that receive grid power are ultimately in the same boat as off-grid companies. The national grid collapsed 206 times over nine years (from 2010 to 2019). (This is a conservative estimate since it does not include when the distribution companies switch off.)
For many heavy-duty industrial businesses, 90% uptime might as well mean 0% uptime.

Not able to count on the shaky grid, businesses that need 24/7 power have to run a backup diesel generator, eliminating any savings from grid power.
While running a diesel generator as a backup power source is cost-prohibitive, solar power is ideal for standby power sources. Continuously generating electricity, solar provides the 99.9% uptime that businesses require to avoid any catastrophic disruptions to their production.

Solar power eliminates erratic voltage issues

With solar power, Nigerian businesses can also avoid any power quality issues from the shaky grid. Erratic voltage is the other bugaboo in Nigeria’s power sector. Nigeria’s standard voltage is 230V and 50Hz, but it rarely stays that stable. Voltage surges are common. Low voltage levels inflict even more damage. While businesses can deal with 200V, they face problems as soon as voltage dips under the 180–190V threshold. In Nigeria, the voltage frequently plummets to as low as 150–170V.

The unpredictable jumps in voltage wreak havoc on production machinery, appliances, and critical components that regular power systems like inverters. It forces businesses and manufacturers alike to make another hard decision. They have to choose between cheaper grid power and the risk of ruining expensive machinery. Many businesses will not risk ruin and voluntarily disconnect from the grid.

Many large manufacturers in Agbara, Ogun State, refuse to take any chances with their machinery. Global Pharmaceutical Company (GSK) and Swiss consumer goods company (Nestle) permanently disconnected from the grid to protect their equipment.
Since solar power is generated at the business’ location, it does not rely on transmission lines, which, if not properly maintained, are often the cause of erratic voltage. In addition, by providing steady and high-quality power, solar is particularly attractive to factories with sensitive manufacturing equipment.

A Quiet Revolution is Shaking up Nigeria’s Power Sector

For decades, Nigerian business owners have had to grapple with electricity scarcity, diesel procurement, generator breakdowns, and an unreliable grid. It was simply the reality of doing business in Nigeria. But, Nigeria’s power sector — historically resistant to change — is seeing a quiet revolution.

Solar energy is expanding rapidly in Nigeria. It is affordable, reliable and provides high-quality power. C&I energy service providers have popped up to take power supply management off of Nigerian businesses’ plates. C&I solar solutions are a game-changer for Nigerian business owners who are tired of fiddling with generators. Businesses can outsource their self-generation to third parties which act like utilities. They can flip on a switch and expect to have light; that allows them to focus on running their businesses efficiently.

Africa Data Centres, a subsidiary of pan-African Liquid Intelligent Technologies, announced plans to build a 10MW Lagos facility in April. The company also elaborated on their plans to power the energy-intensive site: they intended to use solar power to reduce reliance on the grid.
Once reliant on diesel generators, Nigerian businesses are at last embracing the power of the sun. However, there is now hope for more progress.