August 19, 2022

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Nigerian companies flip to photo voltaic as diesel prices chew

Scene of diesel truck explosion incident

Nigeria’s photo voltaic firms are witnessing a surge in demand for mini-grids and tools as companies in Africa’s largest oil producer search for different energy sources after the price of diesel soared regionally as a consequence of rising international oil costs.

Provide constraints might, nonetheless, hamper their skill to capitalise on the development, with some saying they’ve begun to show away prospects as a result of they’re unable to fulfill demand. Many Nigerian firms comparable to BUA, Dangote, Lafarge, and others generate greater than 1000 megawatts for their very own inside use that aren’t fed into the nationwide grid.

People, small and medium enterprises rely upon use of diesel for energy era. The pump value of diesel has lengthy been deregulated and entrepreneurs decide at what value to promote to the general public. 

Nigeria, Africa’s largest financial system with a inhabitants of greater than 200 million individuals, has official put in electrical energy capability of 12,500 megawatts however the nationwide grid solely gives 4,000 MW at peak, leaving companies and residents closely reliant on diesel-powered mills. The value of diesel, not subsidised like petrol which was promoting for N400 a litre, has practically doubled to N800 a litre ($1.93).

Most of that improve got here within the wake of Russia’s invasion of Ukraine. “There was an elevated development in demand (for photo voltaic), I believe actually pushed by the spike in diesel costs this 12 months,” Victor Ezenwoko, Daystar Energy chief business officer stated. The Vitality Fee of Nigeria says the nation spends $22 billion yearly to gas mills.

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Solar energy adoption is estimated at under 2% and a few companies understand it as unsuitable for large-scale use, business executives stated. A examine earlier this 12 months by Boston Consulting Group and All-On, a Shell-funded agency, stated Nigeria’s put in photovoltaic photo voltaic panel per capita amounted to 1 watt in comparison with a mean 8 watts in related rising markets like South Africa.

That’s altering as vitality prices eat into firm margins, forcing companies to actively think about photo voltaic, a clear type of vitality, stated CEO at Rensource Vitality, Prince Ojeabulu.

“By the tip of the 12 months, going by the development that we see to date, we should always have 12 MW of photo voltaic installations operational throughout Nigeria, or much more,” he stated.