ANALYSIS: Nigeria looks to solar for quick-fire renewables boost

Nigeria’s federal government has embarked on an ambitious 1GW utility-scale solar initiative, as the West African country looks to increase its power supplies from renewable sources and reduce its reliance on oil and gas production.

To meet rapidly growing electricity demand it is estimated $37bn will need to be invested in the country’s production and supply infrastructure over the next two decades, says Kayode Omosebi, an energy and industrial analyst with United Capital.

The government, faced with frequent disruption of gas supplies to its power stations by militant groups, has recently outlined plans to create an enabling environment for investors wanting to generate electricity from renewable sources, particularly solar.

Nigeria’s power sector is relatively small. The country is estimated to generate from 3.45GW of capacity for less than 50% of its 174 million population. By comparison South Africa generates around 44.18GW of electricity for 85% of its 53 million people.

The country, which is struggling with a deep economic crisis and regular blackouts, has recently liberalised its electricity market after decades of under investment, introducing new feed-in tariffs for solar PV plants.

Nigeria’s minister of power, works and housing Babatunde Fashola has promised to improve electricity supply through developing solar projects, a process also designed to decentralise the system.

The government-owned Nigerian Bulk Electricity Trading (NBET) has signed utility-scale power-purchase agreements (PPAs) with 12 solar developers which will build projects totalling 975MW over the next few years.

It is estimated that the 12 developers will invest a total of up to $2.5bn in building solar projects in eight Nigerian states – the federal capital territory Abuja; Enugu; Nasarawa; Kaduna; Katsina; Sokoto; Bauchi and Plateau.

Fashola says the development of solar projects is part of its larger plan to fast-track the diversification of Nigeria’s electricity generation mix, designed to give the country a higher level of security in its energy supplies.

Nigeria currently generates up to 80% of its electricity from gas-fired power plants situated in the south, with around 14% coming from hydro power facilities in the north of the country.

Developer Pan Africa Solar, partnered by Canadian private equity firm JCM Capital, signed the first solar PPA with NBET earlier this month for a 75MW array in the northwest state of Katsina. The project will sell power for $0.115/kWh.

Among the other PPA winners are Nigeria Solar Capital Partners, which plans to build a 135MW PV plant in Bauchi state, and Afri Nigeria, which is looking to develop a 50MW project in Nasarawa state.

NBET chief executive officer Waziri Bintube says the target is to deliver all the projects within the next 12 to 18 months. He claims attracting 12 foreign developers is a mark of confidence in the Nigerian economy.

The government, through the Nigerian Electricity Regulatory Commission, has worked out plans to ensure a continuous reduction in tariffs for solar-generated electricity.

It expects the kick-off tariff of $0.115/kWh will continue to fall as more solar projects are commissioned.

Over time it believes the cost of solar will be cheaper than the electricity produced from the country’s gas-fired plants.