Nigerians struggling with unreliable electricity may soon find relief, and the country could see a significant economic boost, according to a new report by Shell-funded impact investment company, All On.
The report estimates that Nigeria has the potential to generate $2 billion annually by equipping homes with solar power systems.
This promising outlook comes as Nigeria grapples with a persistent lack of access to reliable electricity. Many Nigerians rely on expensive and polluting generators to meet their basic power needs. Solar power offers a clean and sustainable alternative, and the report suggests it could be a major economic driver.
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“The revenue potential from SHS in Nigeria is estimated to be $2 billion per year,” All On said.
The report noted that the electricity demand from rural communities is low.
“Many communities where mini-grids are installed and are needed are in rural areas, located at varying distances from the main grid and often in clusters, thus making it not economically attractive for DisCos to make the needed investment to electrify these communities,” the report said.
All On noted that the interventions and investments made thus far to achieve the current level of mini-grid penetration in Nigeria by different actors are in the right direction and should be shored up.
“However, some aspects of the investment in these markets must be spent to obtain an in-depth understanding and address the identified obstacles militating against the smooth operations and sustainability of these mini-grids today,” the report said.
It noted that the recommended strategy to electrify communities will remain via Decentralized Energy Systems (DES) if there is ever going to be any hope of attaining the 7th UN sustainable development goal in Nigeria.
“Another option is via the provision of a combination of Solar Home Systems (SHS), Solar Street Lights (SSL), and specific innovative energy solutions for productive usage to be used by the community on a pay-as-you-go basis, such as solar boreholes, solar refrigerator, solar dryers,” All On report said.
71 percent of the mini-grids visited by All On were fully operational with customers connected to them and receiving electricity, while 14 percent were partially operational with customers connected to them, but with limited electricity being supplied from the mini-grid to connected customers owing to one form of a technical fault or the other.
“15% of the mini-grids were completely not supplying power to connected customers; 10% were owing to fault and 5% was as a result of power plant being brand new and yet to be commissioned,” All On said.
The report also revealed that Nigerians spend a staggering N5 trillion annually on powering generators, highlighting the country’s ongoing struggles with reliable electricity.
“Nigerian businesses are estimated to spend almost $14 billion (₦5 trillion) annually on inefficient generation that is expensive ($0.40/kWh or ₦140/kWh or more), of poor quality, noisy, and polluting,” said the report by All On and Nextier Group, a multi-competency firm.
It added, “Developing off-grid alternatives to complement the grid creates a $9.2B/year (₦3.2T/year) market opportunity for mini-grids and solar home systems that will save $4.4B/year (₦1.5T/year) for Nigerian homes and businesses.”
The report noted that Nigeria has nearly 14,000MW installed electricity generation capacity but much of that capacity is constrained due to technical challenges associated with the overall network/power system.