• Wednesday, June 19, 2024
businessday logo

BusinessDay

Renewable energy options for Nigerians following tariff hike

Renewable energy options for Nigerians following tariff hike

The electricity deficit in Nigeria devastatingly affects the country’s economy and the well-being of its people. According to the World Bank, Nigeria has the most significant electricity access deficit globally, with 45 percent of the population, or about 90 million people, cut off from the national electricity grid. World Bank data further shows that there are also significant gaps in electricity access between urban centres (84 percent) and rural areas (26 percent).

The recent Nigerian Electricity Regulatory Commission tariff increments affecting households and businesses aggravated the energy access deficit. NERC introduced electricity bands on April 3 and raised the tariff for those in Band A from N68/KWh to N225/kWh until May 6, when it was reduced by 8.1 percent. Meanwhile, Band A customers should optimally receive 20–24 hours of electricity daily. Subscribers in Band B should enjoy 16 to 20 hours of power supply, while those in Band C should receive 12 to 16 hours daily.

These tariff hikes have convinced many Nigerians that now is the time to shift to alternative energy. Renewable energy from solar and hydropower is a beacon of hope, offering a concrete solution to the high energy costs and environmental pollution caused by fossil fuels.

Solar Energy: A Bright Solution

Harnessing the abundant sunlight to potentially revolutionise energy accessibility, with an average of 6.25 hours of sunshine daily across the country, solar panels can help homes and businesses break free from the constraints of the national grid by adopting Solar Home Systems (SHS), reducing electricity expenses, and insulating against price fluctuations.

An estimated 6.2 million people (6 percent of the non-electrified population) in Nigeria are best served by SHS solutions due to their distance from grid infrastructure and low housing density, according to the SEforALL and AfDB market assessments published in 2018. SHS can be considered across two categories based on the different customer groups addressed. These are trim/entry-level, which provides basic power requirements to households (e.g., lighting), and large SHS, which provides more significant power outputs for domestic use (e.g., TVs, fans, and kitchen appliances for an increasing middle-class market).

Looking at the whole SHS landscape, the Rural Electrification Agency (REA) has spearheaded various funded projects in line with this. Some key players in Nigeria’s solar market involved in the SHS business include Lumos Nigeria, Arnergy Solar Limited, Greenlight Planet, Solar Energy Nigeria, Rubitec Solar, Blue Camel Energy, Solynta Energy, Havenhill Energy, Auxano Solar, and Solar Force Nigeria Limited.

Hydroelectricity: tapping into rivers and streams

Hydropower has substantially contributed to Nigeria’s grid for several decades, accounting for 20 percent of the total grid supply today. While large-scale hydropower is well established, there is significant untapped potential in small hydropower across Nigeria. Many river systems, providing 70 microdams, 126 minidams, and 86 small sites, supply a technically exploitable capacity of 3.5 GW, but only 1.7 percent (0.06 GW) of these resources are currently being tapped. For instance, a small hydropower system with an operating capacity of 400 kW is owned by Taraba State and managed by the Mambilla Beverages Company, factory, and local communities around the Mambilla Plateau. The United Nations Industrial Development Organisation (UNIDO) supported the project to supply clean electricity and renewable energy to the vicinal communities, including Kakara, Kusuku, Galadima, Nguroje, and Furmi.

Such efforts could be replicated with flowing water and the required machinery in other areas. They will be well-suited for providing neighbourhoods not served by earlier grid infrastructure with the desired energy solutions. The main categories of hydropower plants include small hydro, mini-hydro, micro-hydro, and pico hydro.

Incorporation of solar energy and hydroelectricity into real estate development

Clean Technology Hub surveyed to review the perceptions of real estate developers and residents on the feasibility of incorporating renewables (solar and hydro) into residential infrastructure. All survey respondents acknowledged the importance of integrating renewable energy into real estate projects, although most currently do not utilise any renewable energy sources in their homes. The popularity of solar energy is highlighted by the unanimous agreement among respondents that solar energy is the most cost-effective option for real estate development. One compelling reason for this is the decreasing cost of solar technology and its long-term cost savings compared to traditional renewable energy sources such as hydropower.

Regarding incorporation into real estate development, 71.4 percent of estate developers consider solar energy the most suitable for real estate development. In comparison, 28.6 percent expressed mixed consideration, suggesting a preference for a combination of renewable energy sources.

The survey further provides insights into various aspects of implementing renewable energy schemes, focusing on timelines, costs, comparisons with current options, and suggestions for improvement. Respondents’ estimates for setting up renewable energy schemes varied from less than a month to up to two years, a variation that may be due to differences in knowledge of the technology, perceptions of administrative processes, or technical complexity. Implementation cost estimates ranged from 200,000 NGN to 10 million NGN, likely affected by the project’s scale, technology, and infrastructure requirements.

For household scenarios:

Powering a 3-bedroom home with multiple appliances (two air conditioners, a freezer, two television sets, two decoder sets, a standing fridge, and eight lighting points) will cost between N8 and N10 million, ensuring stability for five hours at noon and five hours at night with the battery powering the system when the sunlight is no longer available.

A 2-bedroom setup could range from N6 to N8 million with appliances (an air conditioner, a fridge, a TV, a decoder set, a microwave, and six lighting points) ensuring stability for five hours at noon and five hours at night, with the battery powering the system when the sunlight is no longer available.

A one-bedroom option costs around N5 to N6 million and includes appliances (one television set, one decoder set, and two standing fans). It guarantees 10 hours of power, just like the two- and three-bedroom homes.

It is worth noting that many Nigerians may not be able to afford N5 to N10 million to install solar power systems. There are cheaper options. A solar power system with a one-year warranty costs N2 to N3 million and can power the same load for 10 hours. Also, a solar power system that costs N200,000 to N1 million with a warranty for less than a year can power the same load for five hours or less. Likewise, there are subscription options.

Call to Action:

Solar energy has become the most valued resource as it has proven cost-effective and continuously supplies power. People can minimise conventional grid electricity, which is costly due to high tariffs. Similarly, the survey shows solid agreement that renewable energy needs to be part of real estate development, emphasising its effectiveness in dealing with electricity challenges in Nigeria.

The transition to renewable energy in the country will surely be possible when the government and businesses work together. To spur renewable energy development, policymakers and stakeholders must address the upfront costs of solar installations and promote the benefits of renewable energy to the public. The government can also address the issue using incentives such as tax breaks and subsidies for renewable energy to make them available to the public.

Despite the unresolved challenges, the survey results reveal a keen desire for green technologies in Nigeria. Adopting renewable energy will enable Nigeria to start from the basics, i.e., addressing electricity tariffs and inconsistent power supply, to a more sustainable and resilient energy future.

Ifeoma Malo is the founder and CEO, and Victor Fagorite, PhD, Lead Researcher at Clean Technology Hub, Abuja