IBADAN, Nigeria (AP) — Dim and stuffy classrooms come alive every morning as children pour in. Sunbeams stream through wooden windows, the only source of light. Students stare at their books and occasionally at the blackboard as teachers try to keep their attention.
It is a reality for many schoolchildren across Nigeria, where many buildings do not have access to the national electricity grid. At the Excellent Moral School in Olodo Okin, Ibadan, “the entire community is not connected, including the school,” says school founder Muyideen Raji. It has serious consequences for students, he said, who cannot learn to use computers or the Internet and cannot study at night.
About half of Nigeria’s more than 200 million residents are connected to a national electricity grid that cannot provide enough daily electricity for most of those connected. Many poor rural communities like Olodo Okin are completely out of the picture.
In a country with abundant sunshine, many are looking to solar to help fill the gaps, but getting risk-averse investors to fund large solar projects that would provide Nigeria with enough reliable energy is a tough ask. It means millions of people in the country are finding ways to live with little to no electricity.
Lots of sun, little money
Studies have shown that Nigeria can generate far more electricity than it needs from solar energy thanks to its powerful sunshine. But 14 large-scale solar projects in the north and centre of the country that could generate 1,125 megawatts of electricity have been stalled since contracts were signed in 2016.
Those trying to develop solar projects in the country blame the interest rates on the loans, which can be as high as 15 percent, two to three times higher than in advanced economies and China, the International Energy Agency.
That means it is more expensive for solar companies to operate in Nigeria or other developing countries than in rich countries. Africa has only a fifth of Germany’s solar energy capacity, and that is fair 2% of global clean energy investment goes to the continent.
“The same project has been set up in Nigeria and Denmark; the Danish project is getting financing at an interest rate of 2 to 3 percent,” said Najim Animashaun, CEO of Nova Power, one of the stalled solar projects. Meanwhile, he is struggling to get loans, even with interest rates of 10 percent or higher, “even though my solar project can produce two and a half times more power” than a Danish project.
Nigeria also does not have so-called cost-reflective tariffs, which means that the price consumers pay for electricity does not cover the costs of producing and distributing it. This means that distribution companies cannot fully pay producers and the sector is dependent on government intervention to stay afloat, deterring lenders from investing in the solar industry.
Currently, power producers say they owe up to 3.7 trillion naira ($2.7 billion) to the government, making it difficult to meet obligations to their lenders and contractors.
One option would be to obtain guarantees from the World Bank that would put investors at ease and make them more willing to put money into solar projects – but the government is wary of anything that would force them to pay large sums even if the electricity from the projects does not reach consumers because of inadequate transmission and distribution infrastructure.
But without guarantees from the World Bank, “no one will develop a project or finance it with government subsidies because it can dry up,” said Edu Okeke, CEO of Azura Power, which has a stake in the now-stalled 100-megawatt Nova solar project in Nigeria’s northern Katsina state.
Emergency solutions
With a capacity of less than 8,000 megawatts and an average supply of less than 4,000 megawatts (less than half of what Singapore supplies to just 5.6 million people), power outages are a daily occurrence in Nigeria.
Communities like the Excellent Moral School in Ibadan, which do not have access to electricity, are often surrounded by more fortunate ones who are connected to the grid but experience frequent outages and have to use private generators running on petrol and diesel.
With the long-term petroleum subsidies have now been abolishedMany households, schools, hospitals and businesses struggle with the cost of fuel for their backup generators.
“We have stopped using diesel generator as an alternative due to cost,” said Abdulhakeem Adedoja, principal of Lorat Nursery and Primary School in Ibadan. He added that although the school is in an Ibadan area connected to the electricity grid, they could be without power supply for two weeks.
The problem is not only the lack of electricity for computer-assisted learning, proper lighting and fans to make classrooms less stuffy for students and teachers, but also that students cannot complete their school assignments at home, Adedoja said.
Small businesses that use more energy, such as restaurants, are closing their stores or pursuing alternative energy generation, which incurs high costs that affect their ability to expand.
Ebunola Akinwale, owner of Nature’s Treat Cafe in Ibadan, says she pays 2.5 million naira ($1,700) monthly for power from emergency generators in her four branches.
“If nothing changes, I’ll probably have to close one or two locations,” she said, although she plans to switch to solar power, which she says will help reduce “pollution from diesel (generators).” . She is in talks with her bank for a low-cost loan package specifically designed for young female entrepreneurs to finance the solar alternative.
However, not every business and household has access to such access or can afford the initial capital for a private solar system. Headmasters Raji and Adedoja said they find the cost prohibitive.
Finding a way forward
The stalled solar energy projects are not going ahead because the finances are insufficient. But even for other sources of electricity generation, Nigeria has struggled to attract much-needed private financing.
The Minister of Energy, Adebayo Adelabu, said in May that to tackle the financial crisis in the electricity sector, prices must reflect the real cost of providing services because a bankrupt “government cannot afford to pay 3 trillion Naira ($2.4 billion) in subsidies. “
The government also believes that it would boost investment in the sector if Nigerians paid fully for the electricity they consume.
There have been some push back towards that, while the unions continued strike in early June, partly in protest against electricity rate increases.
But businesspeople like Akinwale understand the government’s position because regularly supplied electricity from the grid, even without subsidy, is “still cheaper and cleaner” than diesel for generators, she said.
If finances for grid-scale solar projects don’t add up, the government should offer incentives such as tax credits and payment plans to encourage private solar adoption, Akinwale said. “Sunlight is plentiful,” she said.
Former regulator Sam Amadi doubts whether consumers in Nigeria – where the minimum wage is 30,000 naira ($20) a month – “can pay for the energy they consume today without subsidies.” He also wants policies that make it more affordable to have small-scale solar projects spread across communities, businesses and homes.
Until then, the frequent power outages will have consequences, he said.
“I have a story of someone who died in the hospital because the electricity went out during surgery,” he said. “Every day we see the real effects of the lack of electricity.”
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