How to solve the power supply problem in Nigeria

Story By
David Adeleke

For many Nigerians born after 1981, uninterrupted power supply is an alien concept – the stuff of dreams. For most of 2016, Nigeria has oscillated between 2,900 and approximately 4,300 megawatts, a fraction of the capacity needed to power a nation of more than 180 million people. In fact, electrical power generation fell to 1,580.60 megawatts, and eventually, zero megawatts–total blackout. Yet, in their nigh-supernatural resilience Nigerians continue to find ways to cope with the inefficiency of the nation’s power sector.

“We never get light since two months now,” Mr Tare Gbefa, a computer salesman and repairman living in Egeda, tells me. First, he complains about the increase in transport fare. Normally, he would pay 150 to get from Egbeda to Ikeja Inside, but that day, the transport fare increased by 50 naira. After complaining, he went on a rant about his inability to pay his electricity bills and how “NEPA” sent “their people” to disconnect his power supply. He complained that the recession has become an excuse for anyone to increase the prices of their goods and services, and this including the power distribution company. For the better part of two months, he and his wife and daughter have been living without electrical power supply. “Na only sometimes wey we dey buy fuel put for gen,” he says. “And even at that one sef, because say fuel don cost, I no fit dey buy am too many times. Maybe just once or twice in a week, we go buy 1,000 naira fuel.”

He goes on to talk about his shop in Computer Village. “Na that one dey swallow my money pass,” he says. I ask him if the power supply in Computer Village was any better. He says “Yes,” but that the power supply is not as good as he wants it to be, so he spends more money fueling his generator in Computer Village than he does the one at home, because, according to him, “Na there my money dey come from, so I suppose face that one well well.”

Mr Gbefa’s plight resonates with many Nigerians. The recession has resulted in the increase in price of several commodities and they are feeling the pangs from every angle. A bag of garri that cost 8,000 naira before now costs 12,000 naira; 25 litres of vegetable oil in the market used to be 6,500 naira, it’s now 13,000 naira; and one litre of kerosene that was 750 naira is now 2,125 naira.

As commodity prices increase, many businesses have also increased the cost of their goods and services to make a profit. Many like Mr Gbefa’s now pay more for electricity than they used to. A few months ago, he would pay 3,500 for what would be a month’s worth of power supply, now he pays 5,000 naira. And what’s worse? The power supply is no good, so he’s better off not paying at all. 5,000 naira is a big deal to him.

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Ernest Akale is the founder/CEO of Electric City Energy, a startup operating since 2008 based in Abuja that deals in solar and renewable energy and the sale of inverters and batteries.

When asked if the recession has had any reasonable impact on the way people perceive alternative sources of energy like inverters, batteries and solar panels, his response is an affirmative yes. According to him, because of the falling value of the naira, even if the price of batteries and inverters in dollars hasn’t changed much, what shouldn’t be too expensive becomes just that when converted into naira. For example, a 1.5 KVA inverter with two batteries would cost 45,000-50,000 naira last year, now it costs 97,000-105,000 naira because of the increased exchange rate. Yet despite the increased price, more people are buying inverters because they are frustrated by the mainstream power supply.

Nigeria is dependent on hydro, coal, petroleum, and natural gas for the national supply of electricity. However, overreliance on petroleum has been Nigeria’s bane, which is why since 2013 the government has attempted to expand the fossil fuel burning sector in order to solve the energy crisis. The ready availability of oil has also blinded the government to other eco-friendly and more reliable options such as solar energy and biomass power sources, which are already thriving in certain parts of the world.

Solar energy and biomass power sources are better options that are already thriving in certain parts of the world.

Although the gospel that solar energy is a better option than fuel generators has been preached for a long time in Nigeria, people only started taking it seriously en masse in the early 2010s. In the 2000s, many Nigerians saw solar panels as a luxury, opting to stick with the familiar, i.e. generators. One reason for this was the initial cost of purchase. Getting a 1.5 KVA (I better pass my neighbour) generator sold for less than 28,000 naira. In comparison, a full installation of a solar grid of the same capacity required 500,000 naira. On the surface, it would be almost unthinkable for anyone with low purchasing power to go for anything other than the generator. However, when you consider the amount of money that goes into maintaining the generator–the amount that goes into buying fuel and occasional repairs–and contrast that with purchasing quality solar panels that require minimal maintenance, the latter is the better option in the long run. But only a handful of Nigerians can afford to wait for this ‘long run’.

To ease the burden for people who want to adopt solar energy but don’t have the financial power to purchase solar equipment outright, Solynta, a solar energy company in Lagos, Nigeria, offers customers a pay-as-you-go option. Customers pay an initial 21,000 for connection and an ongoing monthly fee of 9,000 naira for the mini 500 MW system. Its more-expensive light starter system commands a 52,500 naira connection fee and subsequent monthly payments of 16,000 naira. But even this is still beyond the reach of the average Nigerian, with 155.56 million of them living on less than $5 a day and 99.07 million living on less than $1.25 a day.

According to Uvie Ugono, Founder/CEO of Solynta Energy, the key to driving down the cost of solar energy in Nigeria is investment. With increased cash investment, more companies can get creative with their pricing models, creating access to solar energy and further driving down the costs of operations. Without investor cash and financial innovation, the solar power business cannot go far in Nigeria.

When I asked Ugono if the government has a role to play in this, he said he doesn’t see the government’s role being any more than creating an enabling business environment, making it easier for foreign investors to invest in Nigerian companies. The main way the government can do that is by improving the supply of dollars locally, as the current dollar crunch is hampering the flow of investors into the sector. Ugono said he strongly believes that the shift from generators to solar is going to be driven exclusively by private companies such as Solynta, with little involvement from the government.

“We have all the tools we need to drive this process, except the level of capital needed to support the business model, which is highly capital intensive,” he said.

We have all the tools we need to drive this process, except the level of capital needed to support the business model, which is highly capital intensive.

After coal and oil, biomass, biological plant and animal matter that can be used to generate energy, is the third largest energy resource in the world. The most readily available type of biomass in Nigeria is municipal solid waste. As of 2013, Lagos alone had an average of 0.63kg of municipal solid waste per capita per day. If that were converted into electrical energy, it would amount to 442MW.

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There are two keys to solving Nigeria’s electricity problems: government policies and the growth of the private sector. The Nigerian government has already shown, through its handling of bodies like National Electric Power Authority (NEPA) and the Nigerian Telecommunications (NITEL) that being a business entity is not its forte. It will better serve the people by sticking to creating policies that allow private organisations to do business and thrive. But even that has proved a problem for the Nigerian government. Several times, it has meddled in the affairs of the private sector, either trying to stifle growth through policies or by refusing to allow market forces shape the way business is done. But if Nigeria will see any growth in the power sector, the government must be ready to step back, create business friendly policies that will allow the flow of investment–both foreign and domestic–creating more room for innovation in the power sector.

The private sector cannot grow if the government’s policies and activities are designed to stunt its growth. By creating policies that allow interested investors to pour cash into building solar farms and affordable solar power equipment and allowing more people experiment with biomass power, there will certainly be an exponential growth in the amount of electricity Nigeria generates.

For all the talk of progress and the need for more technological innovation in Nigeria, none of that will matter much if we do not sort out this menacing and long-standing electrical power problem. Businesses–both big and small–will continue to groan from the pains of spending large portions of their hard-earned revenue on petrol and diesel while paying electricity bills for what they can’t confidently call power supply. And the government has a big role to play here. It has shown a million times how its policies can make or break businesses. Nigerians need their government now more than ever to create policies that are particularly aimed at encouraging the growth of alternative eco-friendly power sources. By so doing, it will be killing two birds with one stone. It will create space for more innovations in the power sector while allowing businesses worry about more important things such as improving their operations and making life better for people like Mr Gbefa.