In Nigeria’s changing electricity landscape, the combination of environmental concerns and the challenges arising from the country’s poor economic situation `is affecting how we meet our electricity needs.
Access to electricity stands as the cornerstone of a nation’s development. In navigating Nigeria’s multifaceted energy needs, considering the energy trilemma—reliability, affordability, and environmental sustainability—is paramount. How we address these needs profoundly impacts the country’s economic growth and environmental well-being. Analysing energy resources like diesel generators, gas generators, solar hybrid systems, and grid electricity unveils critical insights into their reliability, affordability, and environmental impact.
Reliability is the foundation of electricity generation. Diesel generators, boasting a 100 per cent availability rate and available in different capacities, emerge as a reliable source. Diesel fuel is accessible at every kilometre, making it suitable for medium-sized businesses. Gas generators, despite their reliability, face fuel availability challenges due to pipeline vandalism, limited network coverage, and scheduled maintenance, which limit their fuel accessibility to about 80 per cent. These issues disproportionately impact small and medium-sized businesses, affecting their accessibility. Solar hybrid systems, which integrate solar PV into existing energy mixes, offer accessibility, predictability, and integration possibilities in locations with clear skies. In contrast, the grid, with an average availability of only 37 per cent, presents limited accessibility, reaching just 40 per cent of the population.
The steep rise in electricity generation costs using diesel generators, currently standing at 38 US cents per kWh, has seen a dramatic 300 per cent increase within a year and poses a significant threat to businesses. In contrast, solar exhibits a competitive Levelised Cost of Energy of 8 US cents/kWh, making it an affordable option, especially when integrated into hybrid systems. A minimum of 40 per cent share of energy demand will save between 25 per cent and 65 per cent of any existing energy mix. Grid electricity, though reasonably affordable, may face cost increases when subsidies are removed. Gas has affordable LCOE, after Solar PV integration.
Environmental sustainability paves the cleaner path. Solar stands out with a mere 0.05kg/kWh greenhouse gas emission footprint, presenting a potential between 37 per cent and 48 per cent reduction in GHG emissions when integrated into a minimum 40 per cent share of any energy mix. Diesel generators exhibit the highest emission footprint at an average of 0.72kg/kWh of electricity, followed by gas generators at 0.59kg/kWh and grid electricity at 0.54kg/kWh.
The promising trade-off is to embrace solar integration. Solar integration emerges as a promising solution, aligning with affordability and environmental friendliness. Despite availability challenges, predictive modelling and strategic system design can maximise solar yield, resulting in significant cost savings while minimising environmental impact. Gas, although affordable, generates ample carbon footprint upon combustion and lacks 100 per cent reliability and accessibility. Diesel exhibits high LCOE and a substantial carbon footprint. Grid electricity also bears a high carbon footprint, low reliability, but is affordable.
There are hurdles in solar hybrid development. The integration of solar hybrid systems encounters several hindrances, notably within the financial realm. Challenges include high-interest rates imposed by banks, constraints in technical evaluations within financial institutions, demands for specific loan tenures and collateral, exposure to risks stemming from currency devaluation and inflation, as well as intricacies associated with assessing customers’ credit records, posing difficulties in mitigating repayment defaults. These obstacles collectively impede the accessibility of finance for solar hybrid system initiatives.
Tailored climate product development by the financiers, technical collaborations among energy service companies, and partnerships stand as potential solutions. Launching pilot projects, developing standardised technical tools, and fostering partnerships with impact investors for single interest rate, and long tenure loans, could empower financial institutions to effectively finance renewable energy projects, bolstering Nigeria’s sustainable energy drive.
The wisdom of an old Yoruba adage rings true in our current situation in Nigeria about solar electricity adoption and integration: “If we don’t eat yam because of palm oil, we would eat palm oil because of yam.” In essence, as Nigeria charts its energy future, the adoption of solar energy isn’t just an environmental necessity; it’s an economic imperative. Embracing solar integration, despite challenges, promises to revolutionise energy dynamics, offering cost-effective and environmentally friendly solutions that propel our nation towards sustainable development.
Let’s join hands to overcome barriers and unleash the potential of solar energy for a sustainable and thriving Nigeria.
- Owoeye Olakunle is the Chief Executive Officer, Ecowatt Nigeria Limited