On-grid Solar Electricity: Urgent Need For Strategic Reconsideration

On-grid Solar Electricity: Urgent Need For Strategic Reconsideration

Saturday, September 19, 2015 10:05 am


Solar Power

Solar Power

By Philip Chukwueke.

On June 3rd, 2015, Egypt, with a population of 88 million people and 27,000 Megawatts of installed electricity capacity, announced a contract with Siemens AG of Germany for the development of 16,400 Megawatts of renewable energy based on a combination of wind, solar power and natural gas technologies. Based on this agreement, Egypt expects to increase its electricity generation by 30% by year 2020 and by 50% at the completion of the contract.

In contrast, Nigeria with a population estimated at 176 million, is still tottering on a generation capacity of 5,900 MW of electricity. As brilliantly captured by Dayo Oketola in the Punch article of June 20th, 2015, “painfully, per capita electricity usage in the country remains at 136 kilowatt-hours. This is one of the lowest electricity consumption on a per capita basis in the world when compared with the average per capita electricity usage in Libya, which is 4,270KWH; India, 616KWH; China, 2,944KWH; South Africa, 4,803 KWH; Singapore, 8,307KWH; and the United States, 13,394KWH.”

Against this background, the Nigeria Electricity Regulatory Commission (NERC) released a document entitled Draft Feed in Tariff for Renewable Energy Sourced Electricity. As per this document, a maximum of 2,000 MW was earmarked for all renewable energy sources deployable into the Nigeria GRID by year 2020. Of this amount, only 387 MW was earmarked for solar electricity. The balance of 1,613 MW was spread across other renewable solutions such as hydro, wind and biomass. Graphically speaking, while Egypt has chosen to leap like a frog, Nigeria has chosen to crawl like a snail. THERE IS SOMETHING GRAVELY DISTURBING WITH THE PRESENT RENEWALBLE ENERGY POLICIES.

Thinking within the box, it is very easy to understand why these paltry numbers are put out by NERC. The electricity generation, transmission and distribution eco-systems in Nigeria are very weak; the distribution companies better known as DisCos, are still struggling to upgrade their networks, purchase and deploy meters and pay their energy supply bills; and some sections of the transmission grid remain unstable and have limited capacity to accept additional power generation from the GenCos; and to compound the situation, the Nigerian consumer, perennially defrauded by electricity bills that have little correlation with usage, ferociously resists any increases in electrical tariffs.

For these reasons, NERC, acting within the existing regulatory and policy frameworks, must of necessity think SMALL, and must frame the renewable energy strategy in microscopic numbers as reflected in the figures presented earlier. This policy framework is dead wrong and potentially very dangerous to Nigeria! Our energy policy framers must of necessity think outside of the box if we are ever going to realistically confront and master this country’s energy security and destiny.

Fortunately, there is at least one radically different approach to the electricity conundrum. To address near term electricity needs, Nigeria must consider a careful design and introduction of a two-tiered (time of day) tariffing mechanism that can support an aggressive deployment of solar energy in Nigeria. Why solar? Amongst renewable energy technologies, solar energy has very unique features that mandate special treatment in the energy policy framework:

Ø Solar electricity can be cost effectively harnessed anywhere in Nigeria; with sunlight everywhere, it is probably the only renewable energy solution that can be sited anywhere to address local and regional needs. Recent advances in technical performance of solar panels and cost reductions in utility scale storage technologies make this feasible.

Ø Solar electricity is generated only during the day – the period of time a significant number of electricity consumers may be willing to pay slightly more for better guarantees on electricity supply. Electricity consumption pattern in Nigeria is distributed roughly 50-50 between residential consumers and commercial/industrials, with the latter accounting for the bulk of the daytime consumption. Hence with cost of running an average sized genset at multiples the cost of comparable solar electricity, it is a no brainer that most commercial enterprises will welcome a slight increase in daytime tariffs as an alternative to running the gensets. Some banks in Lagos are already retrofitting their branches from conventional electricity supplies to solar. Under this flexible tariffing scheme, an additional 3,000MW of solar electricity can be commissioned within five years in a way that provides adequate protection to off-peak (evening and night), mostly residential consumers. This is not rocket science. One can speculate that most Nigerian homes can suffice with 12 hours per day of off-peak electricity delivered at the normal tariff. The alternative, however, is for the nation to be stuck with a 10-year gestation needed for other forms of energy to develop from concept to commissioning.

Ø Solar panels account for 60% of the cost of a typical utility scale deployment; hence, large-scale deployments envisaged under this scheme can spawn local solar panel manufacturing in Nigeria – possibly within the next 18 months. No other energy source offers such a tremendous potential for content localization. It is noteworthy that the Siemens contract in Egypt provides for the establishment of a local plant that will manufacture 600 wind turbines and rotor blade assembly units, creating 1,000 high technology jobs for Egyptian youths. And most importantly, with projected 10% annual reduction in solar panel costs over the next few years, the cost of solar energy is riding on an aggressive trajectory to achieve parity with traditional fossil fuel energy sources such as gas. Can Nigeria afford to miss this ride? Put differently, the classification of solar energy as an expensive proposition which can only be deployed at the barest minimum in the Nigeria electricity supply mix is a classic manifestation of thinking, planning, and regulating inside the box.

In summary, if the foregoing factors are carefully considered and deftly weaved into a more definitive and forward looking energy policy, Nigeria will be able to use on-grid solar electricity to meet a significant portion of near term energy needs and at the same time insulate the residential and small business consumers from excessive electricity supply bills.

Chukwueke is the chief executive of CT Cosmos, an engineering firm based in Abuja.

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