Economy

High initial cost of inputs retards solar power utilisation in Nigeria

by STEPHEN ONYEKWELU & CYNTHIA IKWUETOGHU

October 31, 2018 | 9:38 am
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High initial cost of inputs retards solar power utilisation in Nigeria
Off-grid and solar home systems can improve access to electricity but Nigerians avoid solar power utilization because of the high cost of initial capital outlay required.
The cost of purchasing a solar power system varies by the capacity of each component, and also the location. A 200-watt solar panel costs between N38,000 – N95,000, while 300 watt costs between N62,000 -N200,000.
Although, the initial cost of purchase is high, benefits derived from using a solar system such as low operational cost, reduced, no electricity bills for consumers and solar panels durability of 30 years with minimal maintenance cost are factors worth considering.
“The cost is too high and I cannot afford it. It is a very good solution for the electricity challenge in Nigeria, but if only solar companies can reduce their prices,” John Okafor, a Lagos-based businessman, said. This was a similar complaint received from eight out of 10 people who would want to purchase solar panels but may not have the capacity.
However, BusinessDay’s analysis shows that with an average of N12,000 spent on fuel for a big generator monthly, about N144,000 is used yearly. This excludes other generator maintenance cost, which will include cost of changing generator oil and other service costs. At the end of one year, over N300,000 is spent on a generator. This excludes electricity bills for a year.
According to the World Bank, nearly 1.5 billion people are estimated to lack electricity supply in the world, half are in Africa. Nigeria alone is estimated to have over 90 million people living without electricity supply. This is potential market for solar home systems.
Yet, Nigeria is endowed with solar power, which is energy derived from the sun with an average sunlight of eight hours daily, and more hours in the northern parts using photovoltaic (PV) cells or solar cells in a solar panel. Yet, few homes and offices make use of solar power system while majority see it as a dream.
The components of solar power system include solar panel, power inverter, deep cycle batteries, solar charge controller, and cables, fuses and meter.
“I spend about N12,000 monthly to purchase fuel for my generator because of the light issue in my area (Egbeda, Lagos),” David Okoro, an Egbeda-based businessman, said.
Solar panels may be expensive to install and maintain, especially for the battery, as it entails a change of battery after a period of time; or a change of distilled water in the battery (for lead-acid batteries) and so it is tagged as “for the rich” as they possess the ability to purchase.
BusinessDay’s research shows that the high cost of installing a solar power is mostly due to the 10 percent duty tariff imposed on solar panels by the Nigerian Customs Service, which the government initially approved to be duty-free.
From 1999 to 2015, Nigeria spent N2.7 trillion to improve power supply in the country, Godknows Igali, former minister of Federal Ministry of Power, said in a statement.
Nigeria has an average installed capacity 12,522mw. According to a report from , Office of the Vice President sent by email to BusinessDay, the country generates an average electricity of 3,500MWh per hour, which is less than the installed capacity.
Apart from the cost, majority of Nigerians in different states are ignorant of solar power system and its benefits. There are over 200 solar companies in Nigeria with an untapped market.
“In the next 5-10 years, I believe there will be a significant increase in the deployment of decentralised renewables in Nigeria and Africa especially in the off-grid areas ravaged by energy poverty. There is a huge market with a lot of economic potentials,” Adesoji Adejolu, creative director at Ultrashot, a media production, and event streaming company, said on TweetChat under the aegis of #GridlessAfrica.
Access to finance is one of the major limitations to the rapid development of solar energy in Africa. But while traditional methods of obtaining project capital can be very limiting. Today’s world of micro-investors on platforms such as Kickstarter and Indiegogo has paved the way for new platforms like Sun Exchange.
 
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by STEPHEN ONYEKWELU & CYNTHIA IKWUETOGHU

October 31, 2018 | 9:38 am
  |     |     |   Start Conversation

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