Africa’s biggest economy is among the top five countries with the largest cash market of off-grid solar energy with a value of $4.6 million, according to the latest Global Off-Grid Solar Market Report.
From the report by the Global Off-Grid Lightening Association (GOGLA), the global association for the off-grid solar energy industry, Nigeria off-grid solar cash sales increased by 58.6 percent to $4.6 million in 2018, from $2.9 million in 2017, but volume of products sold reduced by 5.3 percent to 204,155 in 2018, from 215,575 in 2017.
The off-grid solar appliances such as TVs, fans, refrigeration units and water pumps were sold to people living in off- or weak-grid areas.
Also, GOGLA that builds sustainable markets, delivering quality, affordable products and services to as many households, businesses and communities as possible across the developing world said that Nigeria moved up by three places to the fourth position in 2018 from the seventh position in 2017.
The report, which analysed 46 countries, includes data for national markets where at least three manufacturers reported sales.
“The macroeconomic situation in Nigeria in the first half of 2018 seems to be more stable than it was in 2017. Inflation has remained high and in double digits, but it is on a slightly downward trend compared to the previous two years. Foreign exchange is more available to enable imports but shortages of it still remain an issue,” the report stated.
Nigeria was in recession for five consecutive quarters but returned to positive growth of 0.72 percent in the second quarter (Q2) 2017 from -0.67 percent in Q1 2016. Since the exit from recession, there has been availability and stability of foreign exchange in Nigeria.
The top countries with the largest cash market are India, Kenya, Ethiopia and Nigeria with $94.3 million, $18.0 million, $10.8 million and $4.6 million, respectively.
“The grid in Nigeria is not as strong as it should be or has not produced much power and that is why people need an alternative source of energy. Remember that there is a direct correlation between poverty and lack of energy, so the more lack of energy people have, the poorer they become,” said Ayodele Oni, an energy partner at Bloomfield Law Practice.
“Fossil oil like diesel is very expensive. But with solar, the initial cost may be expensive but subsequently you will be spending no money because the sun is your source of energy, so it is much cheaper over time, cleaner, less stressful and less risky,” he said.
Oni also said solar market is growing and more businesses and investments are going into the sector because it is a larger market.
Affordable, reliable, sustainable and modern energy access for all is part of the Sustainable Development Goals (SDGs).
The report is divided into half-year periods. For H1 2017 (between the period of January-June), Nigeria had $1.7 million and in H2, between July-December, it had $1.2 million totalling $2.9 million. For 2018, H1 and H2 had $2.7 million and $1.9 million, respectively, which sums up to a total of $4.6 million.
The off-grid products are sold in cash and the PAYGo (pay as you go) model. But from the report, both the PAYGo and cash models were used in 2018 unlike in 2017 when only cash model was used. On the PAYGo model, Nigeria slipped to the seventh position in H2 2018 having $2.4 million from the fourth position in H1 2018 with $2.6 million. The volume of products sold dropped by 35 percent to 32,439 in H2 2018 from 50,319 in H1.
The PAYGO model works the same way as recharge card, Oni said.
“You pay as you make calls, so if you use it for two hours you pay for that time. You don’t own the solar panel system, it is a rental system. When you rent, you pay for it. So most people don’t want to pay forever, they want to buy and know that they own it. And that appears cheaper in the long run,” he said.
Nigeria’s electricity system is saddled with a huge gap between the cost of generating electricity and the tariffs it receives. This gap was estimated at $2.4 billion in 2015-17 by the International Monetary Fund (IMF).
According to IMF, the gap can be closed by reducing the cost of generating and distributing electricity, and through increasing the tariff by at least 50 percent.
