IBADAN, Nigeria (AP) — Dimly lit and stuffy classrooms stir with life every morning as children file in. Rays of sunlight stream through wooden windows, the only source of light. Pupils squint at their books and intermittently the blackboard as teachers try to hold their attention.
It’s a reality for many schoolchildren across Nigeria, where many buildings don’t have access to the national electricity grid. In Excellent Moral School in Olodo Okin in Ibadan, “the entire community is not connected, including the school,” said school founder Muyideen Raji. It acutely affects pupils, he said, who can’t learn how to use computers or the Internet and can’t study in the evenings.
About half of Nigeria’s more than 200 million people are hooked up to a national electricity grid that can’t provide sufficient daily electricity to most of those connected. Many poor, rural communities like Olodo Okin are off the grid entirely.
In a country with abundant sunshine, many are looking to solar energy to help fill the gaps, but getting risk-averse investors to finance major solar projects that would give Nigeria enough reliable energy is an uphill struggle. It means that millions in the country are finding ways to live with little to no electricity.
Lots of sun, few funds
Studies have shown that Nigeria could generate much more electricity than it needs from solar energy thanks to its powerful sunshine. But 14 grid-scale solar projects in the northern and central parts of the country that could generate 1,125 megawatts of electricity have stalled since contracts were signed in 2016.
Those trying to develop solar projects in the country blame interest rates for borrowing which can be as high as 15 percent, two to three times higher than in advanced economies and China, according to the International Energy Agency.
That means it’s more costly for solar companies to work in Nigeria or other developing nations than in rich countries. Africa only has one-fifth the solar power capacity of Germany, and just 2% of global clean energy investments go to the continent.
“The same project put up in Nigeria and Denmark; the Danish project will get funding for 2 to 3 percent” interest rate, said Najim Animashaun, director of Nova Power, one of the stalled solar projects. Meanwhile he struggles to get loans even with interest rates of 10 percent or higher, “even though my solar project can produce two and half times more power,” than a Danish one.
Nigeria also does not set so-called cost-reflective tariffs, meaning the price consumers pay for electricity doesn’t cover the costs to produce and distribute it. This means distribution companies can’t fully pay producers and the industry relies on government interventions to stay afloat, scaring off lenders from investing in the solar industry.
Currently, power producers say they are owed up to 3.7 trillion Naira ($2.7 billion) by the government, making it difficult to meet obligations to their lenders and contractors.
One option would be getting World Bank guarantees that would put investors at ease and make them more willing to put money into solar projects. But the government is wary of signing up to anything that would force them to pay large sums even if electricity from the projects does not get to consumers because of inadequate transmission and distribution infrastructure.
Without World Bank guarantees “nobody will develop or finance a project with a government subsidy, because it can dry off,” said Edu Okeke, the managing director of Azura Power. Azura Power has a stake in the now-stalled 100 megawatt Nova solar project in Nigeria’s northern Katsina State.
Stop-gap solutions
With less than 8,000 megawatts of capacity 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 an everyday occurrence in Nigeria.
Communities like Excellent Moral School’s in Ibadan that have no access to electricity are often surrounded by more fortunate ones that are connected to the grid but experience frequent outages and have to use gasoline and diesel-run private generators.
With the long-running petroleum subsidies now removed, many households, schools, hospitals and businesses struggle with the cost of the fuel for their backup generators.
“We have stopped using a diesel generator as an alternative due to costs,” said Abdulhakeem Adedoja, the head of Lorat Nursery and Primary School in Ibadan. He added that although the school is in an Ibadan area that is connected to the grid, they could go two weeks without a power supply.
The problem is not just the lack of electricity for computer-aided learning, proper lighting, and fans to make classes less stuffy for pupils and teachers, but also that students are unable to complete their school assignments at home, Adedoja said.
For more energy-hungry small businesses like restaurants, they either close shop or continue with alternative power generation, incurring high costs that hurt their capacity for expansion.
Ebunola Akinwale, the owner of Nature’s Treat Cafe in Ibadan, said she pays 2.5 million Naira ($1,700) monthly to power backup generators in her four branches.
“If nothing changes, I probably would have to close one or two branches,” she said, though she is planning to go solar which she enthuses will help us cut “pollution from the diesel (generators).” She’s in talks with her bank for a low-cost loan package specially designed for young women entrepreneurs to finance the solar alternative.
However, not every business and household has such access or can afford the upfront capital for a private solar system. School heads Raji and Adedoja said they find the costs prohibitive.
Finding a way forward
The stalled solar projects aren’t happening as finances don’t add up, but even for other sources of electricity generation, Nigeria struggles to attract desperately needed private financing.
The power minister, Adebayo Adelabu, said in May that in order to address the financial crisis affecting the electricity sector, prices must reflect the true costs of service because a broke “government cannot afford to pay 3 trillion Naira ($2.4 billion) in subsidy.”
The government also insists that Nigerians paying fully for the electricity they consume would encourage investments in the sector.
There has been some pushback to that, as labor unions went on strike in early June in part to protest electricity tariff increases.
But businesspeople like Akinwale understand the government’s position because regularly supplied grid electricity, even without a subsidy, is “still cheaper and cleaner” than diesel for generators, she said.
If finances for grid-scale solar projects do not add up, the government should offer incentives such as tax relief and payment plans to encourage private solar adoption, Akinwale said. “Sunlight is there abundantly,” she said.
Former regulatory chief Sam Amadi doubts if consumers in Nigeria — where the minimum wage is 30,000 Naira ($20) a month — “can today pay for energy consumed without subsidy.” He also wants a policy that makes it more affordable to have smaller-scale solar projects dotted across communities, businesses and homes.
Until then, there are consequences to the frequent blackouts, he said.
“I have the story of a person who died in hospital because the electricity went out during operation,” he said. “Every day, we see the real-world effects of the lack of electricity.”
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Rephrased content:
In Ibadan, Nigeria, schoolchildren at Excellent Moral School face daily challenges due to the lack of electricity. The school and its community are not connected to the national grid, depriving students of opportunities to learn computer skills and study in the evenings. This issue reflects a broader problem in Nigeria, where many rural areas are off the grid, impacting millions of people.
Despite Nigeria’s abundant sunshine, solar energy projects face obstacles in attracting investors due to high interest rates for borrowing. This hinders progress in expanding solar energy capacity, even though the country has the potential to generate more electricity than needed from solar sources. The lack of investment in solar power means that Nigeria continues to struggle with unreliable electricity supply and frequent power outages.
The government’s failure to set cost-reflective tariffs for electricity further complicates the situation, causing power producers to be owed substantial amounts by the government. The reluctance to sign guarantees with organizations like the World Bank to support solar projects also deters investors, leaving many projects stalled and communities without reliable electricity.
In the face of these challenges, small businesses and schools resort to costly alternatives like diesel generators to meet their energy needs. The expenses incurred from using generators can be prohibitive, forcing some businesses to consider closures. Individuals like Ebunola Akinwale, owner of Nature’s Treat Cafe, are exploring solar power as a cleaner and more sustainable solution despite facing financial hurdles.
To address the electricity crisis, stakeholders suggest implementing policies to make solar energy more accessible and affordable for businesses, households, and communities. Encouraging private solar adoption through incentives like tax relief and payment plans could pave the way for a more sustainable energy future in Nigeria. However, until such measures are taken, the repercussions of inadequate electricity supply, including tragic incidents in hospitals during power outages, will continue to impact daily life in the country.
