Nigeria Has Ended Fossil Fuel Subsidies, Giving Solar Power A Boost – CleanTechnica

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Solar power in Nigeria is experiencing a breakthrough moment. The poster child for neo-colonialism in Africa, Nigeria is that continent’s largest producer of crude oil. Yet it has no refineries of its own, which means Nigerians pay exorbitant prices for gasoline and diesel fuel shipped in from first world countries. To offset some of the sting of high prices, the government has resorted to subsidies for more than three decades to keep prices at the pump low. Until recently, they cost the government about $522 million each month. In 2022, Nigeria spent $9.7 billion to subsidize imported gasoline.

Nigeria also suffers from  the lack of a reliable electrical grid. To cope, Nigerians often rely on portable gasoline generators to power their homes and business, Aside from the annoying roar of all those machines, the air in large cities like the capitol city of Lagos is filled with the detritus — fine particulates, nitrogen oxides, and carbon dioxide — that pours from the exhaust pipes of those generators night and day.

When Nigeria’s new president, Bola Tinubu, took office in May, the first thing he did was scrap those subsidies. “The fuel subsidy is gone,” declared in the middle of his 30-minute inauguration speech, according to Bloomberg. Gasoline and diesel prices spiked 175% overnight, disrupting the economics of a nation that depends on portable generators. Prices have risen even further since then.

An Opportunity For Solar Power

For every cloud, there is a silver lining, however. Nigeria native Femi Adeyemo has spent years trying to find a way to get rid of those annoying generators. His company, Arnergy, is now offering a portable solar generator built in China to the company’s specifications. Its previous offerings catered to higher income people and have been well received.

The company says on its website, “You want your home to have 24/7 electricity without further procrastination and your business to save money and spend less on power, petrol, and diesel. Our products and services provide that uninterrupted power supply 24/7 that will ensure a comfortable home, help your business run smoothly, and save you so much money.”

The first X Series product is the Arnergy 5000X Solar System. It is a 3 kVA complete microgrid solar solution incorporating a 5 mkVA inverter, a 5.4kWh/48v LFP lithium battery, and 2.31 kWp of solar panels. It features free solar system installation, a sleek protective casing, and a realtime online energy management platform. The full spec sheet with prices is available here.

The Arnergy 10000X offers the same benefits but with more power. It is a 10 kVA complete microgrid solar solution that incorporates a 10 kVA (two 5kVA) inverter, 10.8kWh (two 5.4kWh) 48v LFP lithium batteries, plus 9.24 kWp of monocrystalline solar panels. It also features free solar system installation, a sleek protective casing, and a real time energy management system. The full spec sheet is available here.

Both systems come with a five-year warranty. The 10000X with a 10.8 kWh battery is priced at around $11,500, which seems quite affordable when compared to the price of a Tesla Powerwall and a 9 kW solar array.

Bloomberg Revisits Solar Power Projections

Days after the government ended the fossil fuel subsidies, energy researchers at BloombergNEF revamped their projections and put the country on a path to reach 1.6 gigawatts of solar capacity within a year — about triple the previous forecast. “This could be one of the first markets where off-grid solar begins to really build grid scale volumes,” says Jenny Chase, a solar analyst at BNEF.

In Lagos, about 70% of households aren’t connected to the grid. The lucky few with connections contend with blackouts lasting more than 12 hours a day. The national grid delivers only 1,000 megawatts to a city of 25 million people. By contrast, Shanghai, with roughly the same population, supplies more than 30,000 MW at peak demand.

That’s why there are all those generators in Lagos. Researchers at Dalberg Global Development Advisors, a consultant in New York, estimated as recently as 2019 that Nigeria had a fleet of 22 million small gasoline-powered generators. In all, these low power generators emit 51 million tons of carbon dioxide equivalent annually, which is roughly equal to all the emissions produced by New York City.

A third of these generators are in Lagos, where they have a total output of around 15,000 MW of energy by some estimates, which is 15 times more than what the electrical grid supplies. “There’s a failed social contract that’s very apparent,” says Taibat Lawanson, professor of urban management and governance at the University of Lagos. “Everyone in Lagos is fending for themselves.”

Lagos has a plan to provide all its residents with reliable electricity by the end of 2036. That strategy depends on the creation of a market that will serve only the city rather than relying on the national grid. A federal law passed in June paves the way for the work to start. Even with its own electricity market, Lagos still intends to maintain an off-grid component as part of its energy mix. It also aspires to phase out fossil fuel generators, which would bring the country closer to its goal of becoming carbon neutral by 2060.

Economics Will Be Key

But the average Nigerian isn’t thinking about their carbon footprint, and energy savings may end up being the strongest argument to change behavior. “Removing subsidies will focus greater attention on efficient sources of energy because people now have to pay for it themselves,” says Eluma Obibuaku, senior vice president and head of power at the African Finance Corp. in Lagos. “Anything that’s more efficient will win.”

The country’s nascent solar industry wants to supply that efficient energy. But challenges remain, such as financing and convincing people to trust a new technology. Adeyemo says years of trying to sell solar have taught him it’s about building affordable products that suit the customer’s lifestyle rather than trying to get them to abandon what they know and are comfortable with.

There’s a lesson in there for everyone who is advocating for people to adopt electric vehicles or alter their behavior in some way to reduce their personal carbon footprint. Usually economics will carry the day in those situations. With the demise of fuel subsidies in Nigeria, the incentive to switch to personal solar power systems like the ones Arnergy sells is much more powerful than it was just six months ago.

If Nigeria in general and Lagos in particular are able to skip over the electrical grid phase and move directly to a model that allows people to control their own personal energy needs by using solar energy, that would be a win for Nigerians and the Earth.