Business sustainability and economic case for off-grid, renewable energy solutions in Nigeria
Following the widening demand/supply gap in Nigeria’s power sector, experts are of the view that decentralized energy solutions will demonstrate capacity to bolster Nigeria’s Gross Domestic Product (GDP).
Accordingly, several studies and submissions have consistently affirmed the relationship between adequate electricity supply and Nigeria’s economic growth. This is on the back of the fact that about 75 percent of businesses in Nigeria operate within the MSMEs ecosystem.
About 47 percent of Nigerians lack access to grid electricity, while those that have access face regular power cuts due to inefficient generation, transmission and distribution network, obsolete and inadequate infrastructure, and poor financing of the power sector among other factors.
The World Bank disclosed the estimated economic cost of power shortages in Nigeria is about US$28bn – equivalent to two per cent of the GDP. However, lack of access to electricity remains one of the major constraints for the manufacturing and non-oil sectors, referencing the 2020 Doing Business Report.
In a recent report, Shubham Chaudhuri, World Bank country director in Nigeria, noted that reliable power can propel economic activities by attracting private investment that can stimulate job creation, needed to lift 100 million Nigerians out of poverty.
Taking into account the demand-supply gap, off-grid and renewable energy solutions are sustainable solutions to boost the economy by helping to solve Nigeria’s dual power and climate change challenges.
The Rural Electrification Agency (REA) estimated that about 26 million Nigerians in rural communities are unable to access power from the existing national grid, despite their low energy needs of one kilowatt per hour per month.
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REA added that over 80 million people lack access to quality electricity in spite of the fact that 51 million people are connected to the national grid, while 32 million are categorized as deinved and underserved.
CrossBoundary Energy Access Nigeria (CBEA) and ENGIE Energy Access Nigeria (ENGIE) recently finalized a project finance agreement to build a $60 million portfolio of mini grids that will connect over 150,000 people – residential, commercial and productive use customers – to electricity in Nigeria over the next four years.
ENGIE Energy Access, a leading provider of solar homes systems and mini-grid solutions in Nigeria, has proved the economic transformation capability of decentralized systems at Gbangba in Gbako LGA, Niger State with its hybrid 90-kW solar mini-grid which connected the community to electricity in December 2021.
Accordingly, access to power impacted an estimated 500 customers made up of households, and micro and small enterprises in six months, with uninterrupted 24 hours daily affordable electricity within the Gbangba community of Niger State. This translates to over 2,500 lives that have now decommissioned fossil-fuel generators and are saving money on diesel and maintenance.
“With constant electricity, many of the Gbangba residents now own cold storage appliances ranging from 100 to 250 liter-capacity refrigerators and deep freezers, 15-20hp motor electric grinding and milling machines, and agri-processing products which are financed by ENGIE Energy Access . Light industrial activities such as welding and baking as well as the provision of financial services add to increased economic activities in the community because electricity is available,” Bankole Cardoso, CEO, ENGIE Energy Access.
According to Cardoso, the mini-grid has triggered the emergence of business creators and incubators which in its turn led to job creation for the Gbangba youth. He stated that with a more active population and businesses paying taxes to the government, the capacity to provide more basic social amenities is positively impacted. “The community enjoys digital access and there is a larger degree of financial inclusion through the use of financial technology solutions with pay-as-you-go”.
Similarly, MySol Nigeria, the leading Solar Homes Systems (SHS) business, is another ENGIE green energy solution that positively affects the country’s power ecosystem. The easy-to-set up kit has connected more than 60,000 Nigerian households to solar power providing reliable, stable light for their TVs, radios, fans and small appliances. “Families and businesses are cutting down costs on generators, earning additional income from the savings,” Cardoso said.
ENGIE Energy Access offers Pay-As-You-Go (PAYGO) and mini-grids solutions across Africa. And, according to Cardoso, the company develops innovative, off-grid solar solutions for homes, public services and businesses, enabling customers and distribution partners access to clean, affordable energy.
The PAYGO solar home systems are financed through affordable installations from $0.19 per day and the mini-grids foster economic development by enabling productive electrical use and triggering business opportunities for entrepreneurs in rural communities.
With over 1,700 employees, operations in nine countries across Africa (Benin, Côte d’Ivoire, Kenya, Mozambique, Nigeria, Rwanda, Tanzania, Uganda and Zambia), over 1.8 million customers and more than nine million lives impacted so far, ENGIE Energy Access said it aim to impact 20 million lives across Africa by 2025