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Deploying 4,000-plus Solar Storage Minigrids in Nigeria: A One-Billion Dollar Revenue Opportunity

Millions of people in Sub-Saharan Africa lack access to affordable, reliable electricity services yet reside in utility distribution providers' service territories, according to multilateral development agency studies. The Rocky Mountain Institute and Energy Market and Regulatory Consultants (EMRC) say they have come up with a strategic approach that could benefit them. It's centered on deployment of solar-storage-based minigrids.

“Undergrid minigrids are an attractive opportunity for all stakeholders. We believe that piloting this electricity solution in the near term will enable future replication that supports the sector’s financial health and drives local community development,” said RMI Senior Associate Sachi Graber, a co-author of Under the Grid: Improving the Economics and Reliability of Rural Electricity Service with Undergrid Minigrids

It's estimated that some 40 million Nigerians are underserved by the main power grid. RMI and EMRC assert that nearly 35 percent of them could be served by deployment of more than 4,000 commercially viable "undergrid" minigrids. Nationwide, the report authors estimate that the revenue associated with carrying out these projects totals approximately N400 billion ($1 billion) annually, holding out prospects for minigrid developers to earn annual profits of some N75 billion ($200 billion).

Across-the-board benefits

Residential electricity consumers who currently rely on a mix of grid and on-site, diesel-fired power generation would save an average N54 ($0.15) per kWh, according to RMI-EMRC's analysis. Moreover, money-losing utilities stand to reduce financial losses associated with serving remote, rural communities by at least 60 percent. Nationwide, switching from existing electricity sources to minigrids could yield annual savings of N60 billion ($170 million), along with providing more reliable, resilient electricity that's much less harmful to human and environmental health and quality, the study authors conclude.

When it comes to grid reliability Nigeria ranks third lowest in the Sub-Saharan Africa region, the study authors highlight. No less than 9 of 10 grid connections are considered unreliable, and outages and both longer and more frequent in rural areas. On average, Nigerian grid customers receive just two hours per day of reliable grid power.

Nigeria's current government has demonstrated a willingness and commitment to change matters for the better, however, RMI and EMRC point out. “EMRC believes this report serves as a call for investors to explore the minigrid potentials in Nigeria using the undergrid model. It also presents a viable alternative which is beneficial to the investors, the electricity distribution companies and the electricity consumers,” said EMRC analyst Oladiran Adesua.

Nigeria's government is on-board

Nigeria’s Rural Electrification Agency, for instance, has carried out a nationwide, geospatial energy-resources mapping project. The agency is adding to the prospective value of that by conducting community surveys that add to the breadth and depth of the data available. “They are using that really well to scale the mini-grid market,” Odyssey Energy Solutions' co-founder and CEO Emily McAteer said in an interview.

“They’re one of the most data-focused agencies out there, and they’re doing really great things with that…It’s really interesting to see the work they’re doing with geospatial mapping, for instance, to determine which technologies make the most sense where. I think we’ll see this getting better and better,” McAteer said.

More than 100 organizations are using Odyssey Energy Solution’s cloud-based mini-grid project development software-as-a-service (SaaS). Members range from leading multilateral development and national government agencies to leading project developers, including ambitious, entrepreneurial start-ups; equipment manufacturers, suppliers and systems integrators.

RMI and EMRC aren't alone in their belief that solar-storage minigrids offer a cost-effective, environmentally and fast-track solution for rural electrification. The International Energy Agency (IEA) has concluded that mini-grids are the lowest-cost option when it comes to providing modern energy access to the more than 300 million people across the region who lack it.

Andrew Burger's picture

Thank Andrew for the Post!

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Doug Houseman's picture
Doug Houseman on December 11, 2018

The article says:

"projects totals approximately N400 billion ($1 billion) annually, holding out prospects for minigrid developers to earn annual profits of some N75 billion ($200 billion)."

The numbers don't match up. 400 billion Nigerian Naira is $1.1 billion USD

But 75 Billion is 200 million USD, not 200 billion. 

We learned in rural china that if you want local people to pay for power, you have to have a local leader who has a vested interest in people paying for their usage. 

While the project may be technically appealling, Financially it may not be. Careful balance of both aspects will provide a long term answer for Nigeria. 

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