With gas supply, distribution and transmission challenges affecting on-grid power sector, indications have emerged that 13 states’ access to electricity is still below 40 per cent.
Report obtained by correspondent from the Rural Electrification Agency, REA, showed that small-scale generators (10-15 GW) account for almost 50 per cent of the population that have limited or no access to the grid.
Consequently, they spend about $14 billion annually on inefficient and expensive generation ($0.40/kWh or N140/kWh or more), that also pollutes the environment.
But there appears to be hope as REA has intensified efforts towards massive construction of off-grid, especially solar, targeted at reducing the percentage of Nigerians without access to electricity.
REA’s report indicated that access to electricity differs from one state to another, from close to universal access in Lagos to about 11 per cent in Taraba.
It stated that 13 states, including Borno, Adamawa, Bauchi, Bayelsa, Jigawa, Kebbi, Kwara, Kogi and Taraba access level stood at below 40 per cent.
Specifically, a feasibility study conducted in Lagos, Kano and Abia states, made available to Vanguard, showed that business owners spend between ₦10 million to ₦250 million monthly on power.
– Economic impact –
The President of Manufacturers Association of Nigeria, MAN, Mr. Frank Jacobs told Vanguard that: “It is possible to gauge the loss suffered by manufacturers arising from the paucity of electricity supply and the high cost of alternative energy source. Capacity utilisation in the sector has barely been above 50 per cent.
“Another way of measuring the loss to manufacturers as a result of the challenges of electricity supply is by looking at the huge cost of alternative energy which was estimated at ₦129.95 billion in 2016.”
The Senior Technical Design Manager, REA, Uche Honnah, said: “Addressing these needs while capturing the near-term opportunity in Nigeria will amplify the investments there and ensure that more challenging countries can benefit as well.”
A recent PricewaterhouseCoopers (PwC), report also showed that, “the sub-Sahara African region has now overtaken Asia as having the largest number of people lacking access to electricity.
“The countries with the largest populations currently without electricity are India, Nigeria, Ethiopia, Côte d’Ivoire, Democratic Republic of Congo and Bangladesh.”
– Challenges –
According to Honnah: “On the other hand, DISCOs have conflicting figures from what the Nigerian Electricity Regulatory Commission, NERC, has. Also, years of violent conflict and forced displacement have affected millions of people in North-eastern Nigeria, as insecurity in the region makes planning and execution of capital projects difficult.
“Cost of grid extension is far greater than revenue achievable especially for small communities. This serves as one of the major driving forces for the deployment of mini-grids and Solar Homes Solution, SHS.”
– Mini grid regulation –
NERC stated that the Mini Grid Regulation is specifically designed to accelerate electrification in areas without any existing distribution grid (unserved areas) and areas with an existing but poorly electrified or non-functional distribution grid, especially but not limited to rural areas.
It stated: “The regulation shall promote the engagement of the private sector, communities, non-governmental organisations and other stakeholders in achieving nationwide electrification, and it seeks to minimise major risks associated with mini grid investments such as: Sudden tariff changes, as tariffs would have been agreed in advance by the relevant parties; and stranded mini grid operator investments due to the connection of the main grid to mini grid in circumstances where the main grid has been extended to cover the mini grid area. In such cases, a fair compensation mechanism would be applied for mini-grid operators that choose to exit.
“Isolated mini-grids up to 100kw of distributed power require registration, while isolated mini-grids larger than 100kw of distributed power and up to 1mw of generation capacity require permit.”
“Interconnected mini-grids larger than 100kw of distributed power and up to 1mw of generation capacity, the connected community the Mini Grid Developer and the distribution licensee have to sign a tripartite contract which becomes binding for all parties upon approval by the commission, permit is required, while, all mini-grids larger than 1MW must apply for a full licence.”
– Off-grid to create ₦3.2 trillion market –
The Founder and Chief Executive Officer, Energy Mix Hub, Mona Garrick said with a population of 180 million people, solar is slowly infiltrating every part of the society.
He said: “It is awakening entrepreneurial instincts, giving life to innovative payment models and promising to restore some hope in the Nigerian government’s ultimate goal of providing electricity to citizens who are used to frequent blackouts or no power at all.
“Presently, we have utility-scale solar plants, rooftop solar, mobile electricity systems as well as mini-grid solar systems all making an impact within the sector in one way or another.
“Furthermore, collaboration between the Nigerian Rural Electrification Agency (REA), the World Bank and the Rocky Mountain Institute (RMI), recently found out that developing off-grid alternatives to complement the nation’s grid could create a $9.2billion/year (N3.2trillion) market opportunity for mini-grids and solar home systems investors that will save $4.4billion/year (N1.5trillion) for Nigerian homes and businesses.
“However, common barriers to off-grid market growth include investors viewing the Nigerian market as being too risky in operational and financial terms, leading to poor access to project financing.”
“Clarifying the issues around in the sector and providing solutions through this particular workshop from financial, operational, legal and regulatory perspectives will allow for better appreciation of the opportunities involved.”