DisCos’ woes worsen as Tesla eyes Nigeria’s power sector

United States electric carmaker Tesla has introduced in Nigeria batteries that can power homes and businesses, which could worsen the pathetic situation of electricity distribution companies (DisCos) currently veering dangerously close to insolvency.

Dissatisfied customers, especially industrial consumers who provide the big cheques to DisCos, may replace the back-up function they are currently relying on grid power for with Tesla’s batteries which have proven to be more reliable.

Launched in 2015, Tesla’s batteries have the capacity to allow consumers get off a power grid or bring energy to remote areas that are not on a grid.

In Nigeria, the model the company envisages is that it will work similar to how milk is delivered. The producer brings a full bottle to your door and takes your empty bottles with him.

Two sources familiar with Tesla’s plans in Nigeria confirm that the company will initially concentrate heavily on the industrial sector, providing between 1Kilowatt hour to 1MW capacity batteries, capable of powering an industrial complex or an industrial estate, or between 10,000 to 100,000 homes.

Tesla plans to leapfrog Nigeria’s current electricity crises the way GSM cellular providers bypassed NITEL’s inability to provide landlines to consumers despite massive demand, sources familiar with the matter tell BusinessDay.

“It’s good for the sector as there is always space for new players,” Chuks Umezulora, chief operating officer of Auxano Solar, a solar panel assembling plant based in Lagos, said by phone.
Nigeria’s 11 DisCos do not share this optimism.

First, the bulk of their customers, especially small businesses, petrol stations, banks, and estates are now relying heavily on alternative energy solutions. Coupled with DisCos’ poor collection record and unsustainable tariff, losses could go through the roof.

Many are already in a sinkhole as their most current published financial statements of 2016 show, when the DisCos reported operating losses of over N196.23 billion.

This is why Alex Okoh, director general, Bureau of Public Enterprise (BPE), said in July last year that many DisCos are technically insolvent with current liabilities in excess of assets.

“They need to improve infrastructure that consumers can pay for, but technically they do not have the capacity to do so,” Okoh said.

Tesla’s introduction could take advantage of palpable outrage in a country where over 190 million people share barely 4000MW of power.

Elon Musk, chief executive of Tesla, said the batteries would have the capacity of storing solar energy and serve as a back-up system for consumers during blackouts.

“Tesla Energy is a critical step in this mission to enable zero emission power generation,” the company said in a statement.

The rechargeable lithium-ion battery unit is built using the same batteries Tesla produces for its electric vehicles, analysts said. The system is called Powerwall and Tesla will sell the 7kWh unit for $3,000 while the 10kWh unit will retail for $3,500 to installers.

The company last February said it would triple the amount of energy storage it deployed the previous year. Tesla’s energy storage and solar group had 2017 revenue of $1.12 billion, a small piece of Tesla’s total $11.7 billion in revenue last year, according to a Wood Mackenzie research.
Bolade Soremekun, CEO of Rubitec Solar, however, says Tesla batteries would be priced at a premium considering the cost of top range batteries in Nigeria. High-end European brand like Hoppecke (German) with 12amps capacity is sold for around N250,000 in Nigeria.

“Tesla brand could be higher but it will have a significant impact on the power sector,” Soremekun said.

Tesla has demonstrated the power of its batteries in South Australia, a state with over 1.6 million residents, when it completed a 100MW battery at the cost of $66 million and began supplying power to the grid. In less than six months the company has made up to $17 million.
Tesla’s energy model is broken into converting sunlight captured by photovoltaic cells into energy, storing the energy through its innovative Powerwall system, and accessing 24/7 backup power every time.

Tesla announced in December that it was opening a store in South Africa to distribute its Powerball home solutions, a sleek and bright-coloured self-powered battery pack that combines solar energy and inverter system to independently power the home day and night.

During the day, solar panels may produce more energy than the home uses. Powerwall stores that excess solar energy and makes it available on demand, even after the sun has set. Through a Tesla app on mobile phone, customers are given full visibility into the self-powered home.
According to details on the company’s website, two packs of the Powerwall including cost of installation goes for $14,500 (N5.2 million) which guarantees 30kWh/day.

Tesla had a 16-percent market share for residential solar in 2017, way down from its 33-percent share in 2015, according to Wood Mackenzie Research. This is largely due to inability to keep up with demand as acquiring batteries continues to impact on its delivery timelines.

ISAAC ANYAOGU