Business owners have expressed concern about the increasing cost of electricity, which is affecting their investments. In this article, DARE OLAWIN explores the potential of solar energy to address businesses’ power challenges
In a country like Nigeria, electricity is a luxury. Those who have it for a minimum of 20 hours are called Band A customers and they a premium for the energy they consume. The other categories of customers still enjoy government subsidies on electricity, but they may not have for days, and nobody cares about them. These are the set of customers who continue to pay for darkness unless they have prepaid meters installed.
As a business owner, there is no way you can succeed without electricity; even a small business centre by the roadside must run on electricity and this accounts for why many Nigerians have their power generators. With the current prices of petrol and diesel, business owners, and customers not on Band A spend a fortune to generate electricity.
So, whether you are on Band A or not, the cost of electricity will remain a serious headache as you wake up daily to run your business. This is why experts have advised businesses and individuals to consider going solar, a renewable source of energy.
At the recent 2024 Nigerian Oil and Gas conference in Abuja, Adelabu said, “What Nigerians spend on the self-generation of power – on fuelling and servicing their generators – is N16.5tn according to research that was carried out in 2023. Looking at this you will see that what Band A customers pay is still cheaper compared to this, despite having 24 hours uninterrupted supply.”
Adelabu’s comment came amid complaints from members of the Manufacturers Association of Nigeria that the cost of electricity was killing their businesses.
In all sincerity, it appears business owners are in a dilemma. While those in Band A areas are complaining of outrageous tariffs, their colleagues in other places are lamenting the cost of the energy they burn on a daily basis. What is the way out?
It was gathered that the energy costs for many firms surged by a large percentage in 2023, compared to what was expended in 2022. The BUA Cement factory was said to have witnessed 86.5 per cent in its energy cost, from N91bn in 2022 to N123bn in 2023. Also, Dangote Cement’s cost of energy reportedly rose to N399bn billion from N266bn in the same period, while Lafarge spent N75bn on energy instead of N62bn.
The President of the Consumer Protection Network, Kunle Olubiyo, told our correspondent that many factories, like those in plastic production, do not rely on public power supply because an outage in the process of production would spell doom for the factory. He noted that in those organisations there was 100 per cent reliance on diesel as the only source of energy.
JPMorgan Chase, a bank, recently calculated that Alphabet, Amazon’s cloud arm, Meta and Microsoft consumed 90 terawatt-hours of electricity in 2022, being over 89.9TWh than what the most populated country in Africa generated in the same year. This is about 2,500 times the average of 36 gigawatt-hours generated by Nigeria in 2022.
With a population of over 200 million people, Nigeria still grapples with an epileptic power supply, with millions of citizens still wallowing in darkness. According to the Nigerian Bureau of Statistics, there are less than 13 million electricity customers in Nigeria.
However, in a report by the International Energy Agency, Nigeria’s national power grid collapsed 46 times from 2017 to 2023.
According to the report, Nigerians endured more nationwide blackouts in 2023, especially on September 14 when the grid collapsed due to a fire on a major transmission line. About four more collapses have occurred this year.
The IEA said Nigeria had battled recurrent power failures for many years. It stated that Nigeria’s grid continued to face issues due to aged infrastructure and vandalism. Deterioration of power infrastructure, it was learnt, increased dependency on backup generators for 40 per cent of electricity consumption in Nigeria.
“Although the country has a total installed capacity of about 13 GW, average available capacity remained around 4.5 GW in 2023 due to a combination of factors such as deteriorating units, poor maintenance and liquidity constraints.
“Unreliable power supply due to limited grid infrastructure, underinvestment and ineffective regulatory frameworks have resulted in an estimated 40 per cent of all the electricity consumed in the country being produced from backup generators,” the IEA declared.
As the struggle to ramp up power generation drags on with no end in sight, the Kano Electricity Distribution Company has decided to go solar. The Kano Disco is awarded contracts for the construction of solar power grids across 41 locations across Kano, Katsina and Jigawa States. They partnered with 31 renewable companies to build solar mini-grids of 60 megawatts in the locations. This is an attestation that solar is the way to go.
Why solar?
As the world shifts towards a more sustainable and environmentally conscious future, businesses are increasingly looking for ways to reduce their operational costs and carbon footprint. Here are some of the reasons why you should consider solar:
Reduced energy costs
Solar power allows businesses to generate their electricity, reducing their reliance on the grid and resulting in significant cost savings. With solar panels, companies can enjoy lower energy bills, freeing up resources for other vital aspects of their operations.
Environmental benefits
Solar energy is a clean and renewable source of power, producing no harmful emissions or pollution. By adopting solar power, businesses can significantly reduce their carbon footprint, contributing to a more sustainable future and enhancing their reputation among environmentally conscious customers.
Increased energy independence
Solar power enables businesses to generate their own energy, reducing their dependence on the grid and providing a reliable source of power. This is especially crucial for companies with critical operations that require an uninterrupted energy supply. You’re the operator of your power, you decide when you put it on and off.
Enhanced brand reputation
By adopting solar power, businesses demonstrate their commitment to sustainability and environmental responsibility. This can enhance their brand reputation, attracting customers and talent who share similar values. It Is also a way of creating jobs for the installers out there.
Low maintenance costs
Unlike your usual diesel and petrol power generators, solar panels require minimal maintenance and have a long lifespan, typically lasting for years. This means businesses can enjoy reduced maintenance costs and fewer disruptions to their operations. Though there may be a need to change the batteries after some years, the cost is nothing close to buying fuel or paying Band A tariffs.
Cost of installation
Amid the desire for solar power lies the concern of affordability. Our correspondent learned that the costs of solar panels and batteries have been on the rise. Experts have blamed it on Nigeria’s volatile foreign exchange rate. Many who desire to shift to solar power have not been able to do so because of the cost, which they consider too high.
However, solar energy companies now offer monthly payment plans to lessen the burden on interested individuals.
The Chief Executive Officer of Salpha Energy, Sandra Chuckwudozie, said businesses should be in control of their electricity and save the cost of energy.
Chuckwudozie disclosed that a small business would spend at least N6,000 on electricity on each working day. This is about N1.6m a year.
She argued that many businesses overpower their offices, paying for energy not needed.
With solar, she suggested that businesses and individuals must tailor their energy consumption to the capacity of solar to be installed. The solar energy expert also suggested imbibing energy conservation by making appliances like air conditioners, fans, and others energy-efficient.
“If you compare what you will spend on solar with what you currently spend on electricity tariff or fuel, solar is still cheaper,” she said.
For those who may not be able to pay outright for solar installation, Chuckwudozie explained that there are financing institutions that could help in spreading the payment over a particular period.
She added that the cost of solar installations ranges from N500 to N1.5m or more, depending on the capacity.
“If your solar system costs N1.6m, you can pay it off in one year. With this, you’re no longer buying diesel or petrol again and you are no more spending on tariffs. I don’t know of others, we can give you a five to eight years guarantee. Multiply the current cost of power by five years and see what you will save. You can use that money to invest and grow your business. Energy cost is around 40 per cent of the production cost. So, we need to educate people on the effects in the long run. Solar is durable,” the Salph Energy boss reiterated.
The According notes that streetlights and solar bulbs have gained popularity among Nigerians recently. Traders now use solar bulbs to light up their shops instead of spending money on fuel.
According to the International Energy Agency, solar photovoltaics is expected to grow rapidly, with an average rate of above 50 per cent per year over the next three years” in Nigeria.
In summary, solar power offers numerous benefits for businesses, from reduced energy costs and environmental benefits to increased energy independence and enhanced brand reputation. With low maintenance costs, investing in solar power is a smart decision for companies looking to future-proof their operations and contribute to a sustainable future. So, businesses and individuals should harness the power of the sun and join the growing list of businesses embracing solar energy.
As Nigeria faces issues such as energy poverty and fluctuating foreign exchange rates, it is evident that solar power could be a sustainable and eco-friendly solution to some of these challenges.
By adopting solar power, individuals and businesses can reduce their dependence on the national grid, and take steps towards energy independence.
