The need for
reliable power supply has risen with the coming of COVID-19 and the need to
work remotely.
The news headlines over the past few weeks have revealed the
Nigerian power sector’s struggle to deliver power to consumers. For a country
supplying significantly less than the required base amount of 1000MW per 1
million population on its best day, being unable to supply up to its typical 4,
000MW certainly puts considerable strain on consumers dependent on the state
utility, especially households.
The
recent challenges, although not new, have been the inability of distribution
companies (DISCOs) to take power wheeled to them, thereby leading to idling
generation capacity by the Generation Companies (GENCOs) on one end and
insufficient power available to the consumers at the other. Interestingly,
according to the NERC Guidelines on implementation of Economic Merit Order
Dispatch and Other Related Matters, even without taking the power, the DISCOs
are required to pay for capacity charge to NBET- a cost that will no doubt be
passed on to consumers for power they are not taking.
Only earlier in the month, the Odukpani (NIPP), Geregu I, Afam
IV&V, Geregu II (NIPP), and Rivers IPP were affected by this load
rejection, with up to as high as 1952.5MW generation capacity unused. The
Shiroro and Jebba hydropower plants also suffered this fate. It is even more
unfortunate that this unused capacity equates to the amount of power on the
average required to power at least 2 million homes.
About
two weeks ago, the Abuja Electricity Distribution Company (AEDC) and the
Transmission Company of Nigeria (TCN) traded blames as to who was responsible
for the blackouts in Karu, FCT and Lafia in Nasarawa State. This blackout also
affected customers in Nyanya, Mararaba and Keffi, amongst others. Last week
also saw a significant drop in electricity generation to 3, 657MW, going below
the 4, 000MW mark. Around the same time, while Nigerians complained bitterly of
blackouts in various areas, the DISCOs still rejected a total of 5,452.96
megawatts of electricity in that week alone.
Significant
infrastructure issues continue to affect delivery of power supply to customers,
yet the irony is that customers are now paying what has been termed “service
reflective tariffs.” The National Secretary, Nigeria Electricity Consumer
Advocacy Network, Uket Obonga, speaking on the infrastructure issues,
quipped, “Between Abuja and Kaduna, the DISCO in Kaduna cannot take its
allocated load because the transmission infrastructure there that links Abuja
and Kaduna cannot transmit the load.”
These
fluctuations in utility power supply continue to pave the way for solar power,
particularly for households, companies and small industries. With the high cost
of petrol and diesel and the unreliability of utility power, it is becoming
cost-effective for consumers to consider renewable energy options. According
to one World Bank research, self-generation in Nigeria is extremely prevalent-
up to nearly 14GW of power.
This
significant self-generation potential creates a massive opportunity for
renewable energy developers. The need for reliable power supply has risen with
the coming of COVID-19 and the need to work remotely. Many workers, who
previously depended on workplace power supply to charge their gadgets and work,
now have to provide their own power supply- often through generators- while
having to pay outrageous bills for utility power that is barely delivered. As a
result, many households are looking to renewable energy as a viable
alternative.
In
one market survey by AP news, Sandra, Besong, a government clerk in Nasarawa
State had indicated that powering a small generator for two or three hours a
day cost her up to 7,000 naira a month, compared to 4,500 for solar, which
provided her double the time. At first, the typical conversation around solar
was that it was too expensive, but with reducing costs globally and opportunity
for local production of solar panels and other equipment, solar alternatives
are becoming very attractive – this is added to the fact that there are no
noise or air pollution concerns as with petrol and diesel generators.
The Nigerian government recently established an Economic
Sustainability Committee to deliver power to 25 million Nigerians who lack
access to the national grid. In line with that, the government recently
launched the “Energy for All” program, with the aim of providing 5 million
households with solar power over the next 12 months.
The
$369 million project will channel funds into the solar energy space and
effectively reduce costs of solar, making it even more attractive. This would
be boosted further by the inclusion of local assembly and manufacturing of
solar equipment in the country under the initiative. With this initiative, more
investors will be looking to play in the renewable energy space- also
considering the VAT exclusions for certain solar equipment under Nigeria’s fiscal
laws.
According
to one World Bank report, “With more than 80 million Nigerians living
without electricity, the opportunity for off-grid solar investment is great.” The Energy Commission of
Nigeria has highlighted too that the household sector accounts for the largest
share of energy usage in the country – about 65%. This means that with
recurring power outages, and positive moves by the government to boost the
renewable energy sector, market forces will sooner than later drive consumers –
and investors – in the direction of off-grid renewable energy.
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