Nigeria may be sub-Saharan Africa’s largest economy with an estimated 216 million people, but problems in the power sector have constrained the country’s growth.
Despite abundant oil, gas, hydro, and solar resources, the country still suffers from severe power shortages. This is sad, since only a meagre 4,100mw is available for distribution out of the potential 13,000mw that its existing power plants can generate.
This development is particularly problematic because Nigeria has been generating electricity in commercial quantities for over a century. However, power infrastructure development is slow, and thus supply remains grossly inadequate.
Manufacturers, SMEs and even artisans who need steady power for their activities have had to resort to expensive alternative sources because the public power is unreliable.
Last year, the Manufacturers Association of Nigeria (MAN) lamented that poor power supply strangulated manufacturing because they spent a fortune on self-generated electricity.
“Top on the list of challenges confronting the sector is the inadequate electricity supply, which has been largely responsible for the sector’s lacklustre performance for some decades now.
Electricity-related expenses of a manufacturing concern constitute about 40 per cent of the production overhead in some sub-sectors. This is not growth-friendly and is antithetical to competitiveness,” MAN’s director-general, Segun Ajayi-Kadir, had lamented.
Aside from manufacturing, the poor power supply affects many Nigerians too. The World Bank disclosed in its Doing Business 2020 report that Nigeria ranks 175 out of 266 countries globally in terms of access to electricity as a percentage of the population, with an estimated 45%, or 85 million people, without access to grid electricity. This makes Nigeria the country with the most significant energy access deficit globally.
The unreliable power in the country has become a significant problem for citizens and businesses, resulting in annual economic losses estimated at about US$26.2 billion (₦10.1 trillion), equivalent to about five per cent of the nation’s GDP.
Also contributing to the poor power supply situation in the country are the regular grid collapses caused by ageing and insufficient transmission and distribution lines that have not been upgraded because of the enormous cost involved.
The Transmission Company of Nigeria (TCN) data showed that Nigeria experienced a total of 146 national grid collapses and 74 partial collapses between 2010 and to date, regularly resulting in widespread blackouts. The national grid has also collapsed five times this year, resulting in prolonged outage hours experienced in parts of the country.
The Federal Government, which privatised large segments of the generation and distribution segments of the power sector value chain in 2005 before selling to 11 electricity distribution companies (DISCOs) and six generating companies (GENCOs) in 2013, says it is making efforts to improve power supply in the country.
However, experts in the power sector believe that the reforms aimed at expanding capacity, increasing electricity access and upgrading transmission would further be boosted if the government looked the way of off-grid power solutions to address the energy deficit.
Typically, small-scale generation and storage, off-grid solutions are usually of three types. First, is the Solar Home System (SHS), which offers up to 5kW of power via solar photovoltaic equipment and a battery, often with lighting and appliances at an individual’s home or business.
Next is the Mini grid, which is an independent electricity distribution network that provides power to multiple firms or individuals in small communities using integrated renewable or hybrid energy systems. The last is the diesel generator, which is not sustainable given its high cost.
According to experts, developing off-grid capacity is vital to sustaining economic growth and meeting market demand. Considering Nigeria’s relatively high degree of solar radiation, particularly in the northern states, the primary renewable technologies for supplying power to off-grid locations are SHS and solar-powered mini-grids.
While the mini-grids provide community-scale electricity, solar home systems offer cost-effective generation for individual households and businesses. Given Nigeria’s current and well-documented power generation and distribution problems, off-grids appear the most likely viable option to address the issues.
The Rural Electrification Agency (REA) has affirmed this. It noted that developing off-grid alternatives to complement the grid creates a $9.2B/year (N3.2trn/year) market opportunity for mini-grids and solar home systems that will save $4.4bn/year (N1.5 Tran/year) for Nigerian homes and businesses.
It further noted that getting off-grid solutions to scale and commercial viability in Nigeria will unlock an enormous market opportunity in SSA across 350 million people in countries with smaller demand and/or less-robust economies.
Only recently, two of Nigeria’s neighbours, Chad and Niger Republic, resolved to address their power challenges by integrating renewable energy into their power mix through agreements with Savannah Energy Plc, the British independent energy company focused around the delivery of Projects that Matter in Africa.
The company will help Chad develop up to 500 megawatts (mw) of renewable energy projects, supplying electricity to the Doba Oil Project and the towns of Moundou and Doba in Southern Chad, as well as the capital city, N’Djamena.
Details of the contract shows that Savannah Energy will develop a 300mw photovoltaic solar farm and battery energy storage system, the Centrale Solaire de Komé, located in Komé, Southern Chad, which would represent the largest solar plant in sub-Saharan Africa (excluding South Africa) as well as constituting the largest battery storage project in Africa. It would provide clean, reliable power generation for the Doba Oil Project and the surrounding towns of Moundou and Doba.
The project will displace the existing hydrocarbon power supply resulting in a significant reduction in Co2 emissions, and provide clean, reliable electricity on a potential 24/7 basis to the surrounding towns of Moundou and Doba. Project sanction is expected in 2023 with first power in 2025.
Read also: Experts blame ‘energy access deficit’ for Nigeria’s economic woes
Savannah Energy will also develop solar and wind projects of up to 100mw each to supply power to N’Djamena. At up to 200mw, the Centrales de’Energie Renouvelable de N’Djamena project, would more than double the existing installed generation capacity supplying the city and increase total installed grid-connected power generation in Chad by an estimated 63%. Project sanction is expected in 2023/4 with first power in 2025/6.
In March this year, Savannah Energy signed an agreement with the Niger Republic’s Ministry of Petroleum, Energy and Renewable Energies to construct and operate the country’s first wind farm.
Parc Eolien de la Tarka, with a proposed installed power generation capacity of up to 250mw, is expected to be the largest wind farm in West Africa with project sanction expected in 2023 and first power in 2025.
Given its acute energy deficit and abundance of wind and sun, Nigeria could adopt similar models by increasing investment in renewable energy. Apart from being a less expensive power generation and distribution method, it would also significantly reduce emissions from diesel and fuel generators which many Nigerians rely on for power. Luckily, Savannah Energy is also a player in Nigeria’s energy sector and, as such is within reach to help the country achieve its renewable energy goals, specifically off-grid power, to resolve the intractable power crisis.
The benefits of renewable energy and stable management are just too many to mention. For instance, a shift to mini-grids and solar will help in the development of the country’s rural areas and economies, and stem rural-urban migration as there would be cottage industries where people can work. Individuals, artisans, SMEs and manufacturers will no longer spend a significant amount of their profit on self-generated power.
At the same time, there would be general economic development. Nigeria can no longer afford to pay lip service to its power sector if the much-needed economic growth must be achieved.
Odoh, an energy consultant, writes from Lagos
