Nigeria’s solar potentialAugust 16, 2021
Uche Iheakanwa, vice-president and CEO of Solarwox Renewable Energy, talks to The Energy Year about the path ahead as Nigeria embraces solar home systems and the company’s approach to addressing hurdles in achieving uptake. Solarwox provides solar home systems for off-grid households and businesses.
Has the pandemic triggered a greater need to diversify Nigeria’s energy mix?
Covid-19 left the world shell-shocked. It obviously had a greater impact on Nigeria simply because we are a country that is overdependent on fossil fuels. It got to a point where people were willing to give away oil for free. This was the prelude to a new reality faced by the entire world, and Nigeria really began to face its dependence on oil. More than 80% of our government revenue comes from crude, which has made us a highly vulnerable nation.
There is no doubt that there needs to be an alternative. Of course, people have now begun to look at other sources, including solar. These will soon become an essential part of the country’s energy mix. Until now, we had not paid much attention to solar energy but it could really be a game-changer for the economy. If this pandemic has done one thing, it is accelerate the energy transition and shed light on solar as a viable alternative.
What mistakes has Nigeria made while aiming to hit its sustainability benchmarks?
We have had wonderful policies on paper but, in practice, little has been done. The government should be willing to drive some of the policies that are in place. For example, it has pledged to reduce its CO2 emissions by 20% by 2030. The government has to start acting now if we want to reach those goals.
Various targets have been missed over the years. By 2020, we were supposed to have been generating 5,000 MW from renewables. We are still a very long way from that. The truth is that we have not invested where we needed to, and we have not managed to produce a business platform to make the renewables sector thrive. There is an urgent need for local capacity building, and here Nigeria has to start training its people as technicians and engineers in renewables.
In addition to this, there was a time when the government gave tax holidays for solar-related imports such as photovoltaics and solar panels. These were exempt from taxes and duties. The intention was to create the platform and encourage people to import these types of products. However, the reality is that there are plenty of difficulties importing and one ends up paying more than initially stipulated.
Still, the government is making important efforts through the REA [Rural Electrification Agency], which is determined to push the solar sector by capitalising on the opportunities it offers.
What potential does the solar sector have in Nigeria?
The solar sector in Nigeria has an estimated potential of 500,000 MW in generating capacity, which means a huge potential for addressing the gap in the country’s power supply.
To draw a comparison, if we look at South Africa, a country with around 58 million inhabitants, their current generation capacity is 59,000 MW. This is roughly 1,000 MW per million inhabitants, yet still they are unable to electrify the whole country, leaving areas and communities powerless. By contrast, Nigeria is a country with a population of over 200 million and we generate 12,500 MW, of which only 3,000-5,000 MW reaches the end user. This comparison says a lot about the state of our power sector today.
If we were to focus on the north and middle belt of the country, we have vast stretches of land that could be used to generate energy. If we could use 5% of that land to install solar panels, we would be able to generate anywhere between 47,000 MW and 50,000 MW. This would spur a vibrant economy in Nigeria.
Not only that, this could also attract investment into the country. There is a huge solar market here just waiting to be tapped. However, in order to [attract] international investment and capital, the right incentives and regulatory framework need to be in place. Businesses and factories still rely on generators due to the constant power cuts. There is an urgent need for power, and solar may well be the solution.
What solutions does Solarwox bring to the market?
Solarwox is a leading indigenous renewable energy company that provides a new generation of solar home systems for off-grid households and businesses. We are focused on commercial and industrial spaces as these need power. A hybrid type of system is what commercial clients need – a combination of solar energy with its corresponding solar lithium-ion storage batteries, as well as gas engines. These solutions will take the client off the grid, making them self-sufficient.
Along these lines, we offer end-to-end services which include the pertinent studies for installation, the installation per se and maintenance. We also target industrial spaces that require solar systems for their plants and industries as it’s more reliable than the grid due to constant power cuts. Other services we offer are solar solutions for small utilities such as solar street lights, as well as solar water pumps and heaters. Our aim is clear: to deliver scalable, cost-effective renewable energy to customers and governments.
What role can advocacy play in advancing Nigeria’s solar sector?
Solar energy is still a new area for a lot of people in Nigeria, and this is why they don’t buy into it. The average Nigerian needs to be convinced that solar actually works and lasts, which means there is plenty of advocacy to be done.
However, some of the solar panels coming into the country are inferior products and don’t last long, which diminishes solar’s reputation. The solution to this is to set up quality metrics and standards, but most importantly to start growing our own capacity by manufacturing locally. This could be done in partnership with foreign firms that have the know-how. Thus, our intention is to establish a manufacturing facility where we could produce photovoltaic cells, among other things.
Moreover, the lifecycle of solar panels should be between 15 and 20 years. Clients get 40% of their solar panel investment back in the first year and total payback in five to seven years. After that, electricity is free for the rest of the lifetime of the panel. These are some of the advantages people must understand. We import our panels from abroad via a company called Canadian Solar, while our batteries come from SMA and soon from Tesvolt in Germany.
What are the main hurdles preventing residential clients from getting solar home systems?
The main restraint in accessing residential solar systems is capital. It is difficult for clients to pay the whole cost upfront. If you want to get a solar system installed, for a 30-kW unit on a residence, the cost might add up to USD 35,000 upfront, which is difficult for many to pay. The same goes for small utilities such as water heating solar systems; the price of a unit of 300 litres can cost USD 1,000 or more.
A first step in addressing this hurdle is making sure the individual has a long-term vision and understands the long-term benefits. Although one pays a substantial amount of money at the beginning, in the long run it ends up being very economical.
A second step is seeking the pertinent financial arrangements so that clients can pay upfront. We are now working on the development of a solution where banks could help credit-worthy individuals have the system installed and then they would owe the bank. Then the bank would ultimately pay us.
How important is maintenance for the functioning of solar panels?
It is crucial. The panels are placed on roofs, which means that sometimes they are shadowed by trees. These not only create shading but their leaves end up blocking the cells that absorb the light. These panels have to be cleaned to ensure their effectiveness. This also goes for rodents destroying cables or birds making nests which end up hampering the performance of your solar panels. PV installations have to be tested every five years or so, and they will need cleaning or maintaining. We offer a system health check that includes precisely this.
How willing is Solarwox to engage in partnerships?
We are currently looking for partners to join us in the local manufacturing of photovoltaics and possibly manufacturing of our own lithium-ion batteries. We are also open to making alliances with foreign investors and/or companies that are interested in coming to Nigeria. We are willing to form alliances with partners to build local capacity but also to be the agents of already well-established companies that manufacture their own products. There is plenty of solar potential in Nigeria; we just have to start tapping into it.