Culled—Proshare

January 9, 2020

By FBNQuest Research                                                                                

Power shortages as well as the absence of electrification in most rural areas have contributed to the slowdown of the much-needed industrial take-off Nigeria requires. For businesses, particularly SMEs, the cost of energy generation via generator sets depletes profit margins. Industry sources suggest that businesses suffer an average monthly power outage of 239 hours (equivalent to about two weeks). Furthermore, self-generation places pressure on household pockets. A shift to renewables is an efficient way to boost power supply, particularly in rural communities.                                                                                                                  

According to a survey carried out by a reputable indigenous polling agency, households with access to on-grid electricity had an average power supply of only 9.2 hours a day in the first half of 2019.

Grid expansion is difficult in rural areas due to non-commercial viability as well as high technical losses. This creates significant opportunities for off-grid alternatives to penetrate the rural economy, thereby improving agricultural output from farms as well as general rural electrification.

Solar can provide relatively affordable energy for rural communities across Nigeria. It complements rapid development of small scale industries and reduces the rural-urban drift.

Through the Rural Electrification Agency (REA), the FGN commissioned a solar hybrid mini grid power plant in Rokota Community of Niger State in December 2019. Rokota is a farming community. Its major economic activities include shea butter production and oil palm farming.

Biofuels are still hugely untapped in Nigeria. For biodiesel, the conversion of oil waste (such as recycled restaurant greases) should drive down the cost of self-generation via fuel dependent generators. Yet we note the opposing view that the feedstock required from agricultural output is not the way forward for countries struggling to meet their domestic food demand.

This month, the African Development Bank (AfDB) announced that it had secured a US$20m investment in the Metier Sustainable Capital International Fund II. Nigeria, alongside other sub-Saharan African countries, will be beneficiaries. The funding is expected to facilitate production of an additional 178.5 megawatts of renewable power for commercial and residential use.

Renewable energy technologies (especially those that can be locally manufactured) require subsidies at initial stages. Although Nigeria has an energy policy which emphasises renewable energy development, an implementation strategy is needed to facilitate meaningful growth of renewables in the country’s energy mix.

Effective harnessing of renewable energy technologies to supplement energy produced from fossil fuel resources would raise the reliability of electricity supply, reduce energy insecurity, enhance availability of energy for socioeconomic activities and improve the standard of living of Nigerians.