Tag Archive for: Solar

Andrew Stegmann
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Sola Lawson: Gas/Solar Diversification Needed in Nigeria to Escape Power Shortages

Nigeria’s chronic power shortages have been a defining feature of the country’s path to sustainable economic development.

As an oil-producing net importer of petroleum products, this makes the lack of investment in Nigeria’s own domestic energy infrastructure even more stark – a trend which must be reversed.

Currently, peak power supply is a quarter of the total 20,000MW demand in the country. With electricity generation per head 25% below sub-Saharan African averages, the country spends $12bn annually on diesel to power generators. This cost comes with additional health and environmental hazards, highlighting the importance of developing a sustainable, reliable energy mix.

Economic productivity is severely impacted because of inconsistent power supply. Its resulting cost to the economy is estimated at $29bn annually. In the context of an anticipated COVID-19-induced recession forecast to be the worst in four decades, there is an urgent need to act.

The gas sector offers a more environmentally friendly alternative than oil. Policy implementation in the shape of the Nigerian Gas Transportation Network Code (NGTNC) illustrates a potential future of an equitable and competitive gas market. Better infrastructure and broader access to gas across the country can have a considerable impact.

Most importantly, these steps open the door to increased investment. Where private sector participation had previously been muted, there is currently an uptick in activity. A healthy proportion of this has been directed to development of midstream assets, and with the influence of the NGTNC the sector’s potential will increase.

New Investments

African Infrastructure Investment Managers (AIIM) sees value in this, as reflected in our recent activity through our pan-African AIIF3 fund. By acquiring stakes in Savannah Uquo Gas and Accugas, [Nigeria is] invested in an integrated gas midstream business.

Accugas has 260km of pipeline network and a gas processing facility, critical to realizing ambitions of being Nigeria’s gas supplier of choice. Accugas is currently responsible for supplying gas to around 10% of the country’s power generating capacity. Assisting this process are shifts in policy which are helping direct gas production towards domestic demand.

Given that most of Nigeria’s power demand today is fulfilled through diesel based self-generation, significant opportunity also lies in solutions which help the switch from high-carbon, high-cost generating capacity to low-carbon, low-cost alternatives.

[Nigeria has] also invested in Starsight Power, a rooftop solar company which has become one of the leading commercial and industrial solar power providers in Africa. It has a portfolio of over 35MW of generation assets installed in Nigeria and Ghana. This model encapsulates Nigeria’s future energy and economic ambitions, harnessing the vast potential of our solar resources, while reducing reliance on the nation’s primary commodity.

Increasing utilisation of lower carbon emitting fuels and energy sources speaks to a future which considers sustainable growth and the lives of generations to come. A warmer climate and less predictable rainfall are having deleterious effects on many communities, especially those whose livelihoods rely on rain-fed agriculture. Climate change is driving displacement across these communities, impacting millions and compounding issues food security issues.

Solar Power

Achieving inclusive and sustainable growth will mean fully embracing alternative, cleaner energy sources. In a country where 43% of people are living off-grid, options like solar mini-grids bypass the need for installation of transmission infrastructure, bringing down costs and delivering power at affordable rates. Technology developments also mean such options are widely deployable and rapidly scalable.

Despite modest uptake, there is growing momentum towards commitment to a more sustainable future. In August, the government released eight tenders for solar power projects, which will be followed by a US$200m mini-grid development initiative from the African Development Bank. The World Bank has also pledged its support for the second phase of Africa’s largest off-grid hybrid solar project, the Energizing Education Programme.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann
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Opinion: African Grid Operators That Don’t Open Up to Solar Risk Being Left Behind

African grid operators that don’t put solar power onto their systems risk being bypassed as prices for solar production and storage continue to fall, John van Zuylen, CEO of the Africa Solar Industry Association, tells The Africa Report.
 
There are already many places where solar energy is the cheapest option says Van Zuylen, who is based in Kigali. That means the prospect of “a significant uptake of solar in the African energy mix, grid-connected but probably mostly off-grid. By rejecting solar, the national utilities may create themselves a new problem: losing their reliable customers.” Less than 1% of the world’s solar capacity is in Africa.
 
According to the Institut Montaigne in Paris, sub-Saharan Africa is the world’s only region where demographic growth since 2000 has been faster than the speed at which populations are being given access to electricity.
  • Only around 10 solar power plants of more than 5MW have been connected to the grid in the whole of sub-Saharan Africa, excluding South Africa, the Institut says.
  • Africa has been largely absent from the global solar power plant deployment, which constitutes a “collective failure”, the Institut argues.
  • It’s only going to get worse if nothing is done: in 2040, almost 95% of the world’s population without access to electricity will be in sub-Saharan Africa, the Institut says.
Many African national grids are in poor condition and cannot absorb more than 20-30MW in a single location, limiting opportunities, Van Zuylen says.
  • For grids that don’t have these technical constraints, questions about risk-sharing, government guarantees and bankable off-take agreements have significantly limited the number of projects coming to fruition, he adds.
  • Meanwhile, solar home systems and mini-grids still require heavy subsidies to provide electricity at affordable prices for rural populations, which are often the ones with the lowest available income.

Urban subsidies

National grids are best placed to do something about it. According to a global outlook for solar power to 2024 published by SolarPower Europe in June, African utilities with access to an urban customer base may be able to finance connections for poorer rural households by subsidising them with revenue collected in cities.
  • Projects situated near these urban centres are more bankable due to economies of scale, the possibility of future capacity expansions and a lower risk of under-utilisation, SolarPower Europe says.
Some countries are becoming supportive of solar. Van Zuylen points to the example of Senegal, which this month removed VAT on all solar products, including water pumping systems.
  • The decision is part of a strategy that seeks to achieve universal access to electricity in Senegal by 2025.
  • Institut Montaigne says that of the 10 plants connected to sub-Saharan grids, four are in Senegal.
The best thing to do for grid operators is to “guide and accompany a smooth integration of solar in their grids,” Van Zuylen says. “If they do not do so, it could very well be that more and more customers will gradually disconnect from the grid completely as solar plus storage is not only reliable but also increasingly cost-competitive.”

The Bottom Line

Foot-dragging national grids risk being left behind as falling prices for solar and storage equipment have the potential to be a game-changer.

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].