Bridging Nigeria’s electricity deficit through mini-grids

By Dr Ayodele Oni

Research has shown that there is a strong correlation between economic growth and availability of affordable electricity. The less available reasonably priced public power, the poorer the country or the higher the percentage of the extremely poor.

Whilst the last administration in Nigeria laid a good foundation for much of what we see now in the electric sector, the current administration is taking things notches higher, particularly regarding off-grid and mini-grid solutions with more policies geared towards encouraging renewables.

Research recently commissioned by Shell Petroleum Development Company (popularly just referred to as Shell), suggests that several millions of people across Nigeria still do not have access to affordable electric power.

With Nigeria having a population of approximately 200 million people, over 120 million are either not connected to the electricity grid or receive less than four hours of power supply from the national grid each day.

Constructing a national grid that extends to the entire power grid remains a national aspiration that might take decades to achieve. With the foregoing facts and the fact that grid extension to certain communities may not be viable, it appears off-grid opportunities are enormous.

Despite the widening gulf between infrastructure required for electric power generation through the national grid and demand for electricity, the demand for electric power has continued to grow substantially.

The inability to meet the power needs of many businesses has meant that Nigeria’s neighbours, especially Ghana (which has a much better electric power supply situation), have gained more corporate citizens with some former Nigeria-based businesses relocating there.

A lot is spent per person per kilowatt-hour on generating their own electricity for their energy needs. In fact, market research suggests that people who live in rural Nigeria pay approximately N250/kWh for small generating sets, which use premium motor spirit (in particular).

Considering the cost of self-generation is quite high and almost six/seven times the actual tariff of grid-generated electric power, current policymakers in Nigeria with the support of private sector appear to now see more critically the importance of distributed generation.

The huge population in Nigeria and modest purchasing power could make it even more attractive to build or develop mini-grids, especially since a reasonable business case can easily be shown in terms of having people see that they cut at least half of their current N250/kWh bill.

There is really a large market for the underdeveloped mini-grid market to service.

• Oni is an international and commercial energy lawyer and partner at Lagos-based Bloomfield Law Practice