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Increasing Energy Access in Nigeria: The Role of Start-Ups
Increasing Energy Access in Nigeria: The Role of Start-Ups
Chidera Okeke
By Chidera Okeke
Jul 19 2022 · 7 min read

Illuminem Voices
Sustainability · Power & Utilities · Energy Transition

At the present population rate of 180 million people, Nigeria will need about 200,000 megawatts (MW), to satisfy its electricity needs. However, due to reasons not limited to generation constraints, the operational generation capacity stands at 3718MW and has in recent times recorded a 70 per cent decline in generation capacity owing to gas supply constraints and vandalism. Consequently leading to frequent national grid collapses and nationwide blackouts.

Yet it is important not to fall into the assumption that this is the reality of every Nigerian because as bleak as this situation of things appear to be, it promises to be bleaker. With an electrification rate of 55.4 percent of the population and the dire implication of over 85million Nigerians existing without access to electricity, Nigeria has one of the largest energy deficits in the world. The World Bank put this into clearer perspective when it highlighted in its report, that one in ten people without access to electricity globally, resides in Nigeria. To further amplify this perspective, while half the Nigerian population grapple with intermittent electricity supply, the other half is in complete darkness.

With electricity being a hallmark of modern civilization and undergirding almost every activity needed for human functioning and survival, adequate energy access is a priority for most countries. It even forms part of the UN SDG goals. In that regard, energy access is usually understood in line with the trilemma of security, affordability and sustainability.

Security

Energy security entails uninterrupted access to energy which translates to an ability to access energy whenever needed. In light of a rising population and increase in economic and human activities, energy security is essential given the crucial role it plays in the development or impoverishment of a country. Applying this to the Nigerian context, the limited operational generation capacity of 3500MW for a population of over 180 million for starters sets up the bed for energy insecurity. In addition to the constraints that persist in the transmission and distribution sector, the culminating effect is the routine collapse of the national grid. As of June this year, the grid has collapsed over 17 times, plunging the nation into darkness. This instability can chiefly be attributed to the lack of diversity in the energy mix with 80 percent of the generation mix stemming from thermal gas generation sources. Irena rightly highlights that diversification of energy sources can lead to an increase in energy access.

Energy insecurity has dire economic consequences for a country like Nigeria seeking to improve its economic lot in light of the 10trillion naira economic loss it occasions annually. Also 80% of SMEs cite electricity challenges as the major obstacle to doing business in Nigeria, given that they have to spend over 5trillion naira annually to generate electricity. According to a PWC report, this self-generation burden has led to the exit of 1 out of 7 firms in the Nigerian economy.

Affordability

The uninterrupted accessibility of energy is tied to its affordability. Given the overarching effect energy has in efficiently surviving in today’s world, affordability of energy is essential in ensuring energy access for all. In Nigeria, the affordability of electricity in Nigeria has spurred on lots of debate in the context of attempts to make the tariffs reflect the actual cost of electricity without evidence of adequate electricity supply. More so owing to the epileptic power supply Nigerians are routinely subjected to, recourse is made to self-generation from petrol/diesel generators, which amounts to an annual spend of 12 trillion naira. The implication of this is the double-spending Nigerians are subjected to in that in addition to paying for traditional electricity bills, there is the additional financial burden of purchasing generators and running them.

Sustainability

Discussions around energy access in present times cannot be discussed outside the context of sustainability.We need strong and sustained reduction of carbon dioxide emissions and other greenhouse gasses emitted from the combustion of fossil fuel, if we are going to successfully combat climate change. Excluding the emissions emanating from a fossil fuel dominated power sector which accounts for 84 percent of the C02 emissions emanating from electricity generation in Africa, the self-generation culture in Nigeria bolstered by epileptic power supply is not without climate implications with an annual emission of 29 million metric tons of C02.

Energy systems undergird by fossil fuels such as coal, oil and natural gas, have been a game changer for humanity and are significantly responsible for modern civilization. However, the continued usage of fossil fuels operates to undermine the civilization it once fostered due to its negative impact on the climate. The apparent need to combat climate change has led world leaders to negotiate several agreements and protocols, with the extant one being the Paris Agreement of 2015 which has at the heart of its objective, the prevention of global average temperature from rising 2oC above pre-industrial levels with an ultimate goal of keeping it below 1.5oC. The overall aim is to achieve a global net-zero emission in the second half of the century.

Nigeria being part of the global community is also implicated in the responsibility of achieving this goal and in that regard must approach the goal of increasing energy access in Nigeria within the confines of sustainability.

The Role of Start-Ups

From the foregoing, Nigeria evidently has an energy crisis problem requiring of urgent attention. However its approaches in line with climate change commitments must take also on a sustainable arc. Increasing energy access primarily takes the outlook of diversifying the energy sources for electricity generation through the incorporation of renewables. However this can mainly be achieved on the back of technological innovations. This is because building a resilient energy system capable of achieving net-zero emissions whilst increasing energy access would require a wide range of technologies. So what role do startups play in achieving this?

Energy startups effectively, are companies that come up with innovative approaches and strategies geared towards solving and filling energy challenges and gaps. The focus of these startups are usually on energy sources such as wind, solar, biofuels and alternative energy sources in line with its enabling infrastructure. Also, while much innovation in the energy sector has been facilitated by incumbent large energy companies, regulations around several places in the world geared towards decentralization of the energy sector have allowed for startups to play a more significant role than they have historically. Nigeria is not an exception to this phenomenon as several energy startups have taken center stage in solving Nigeria’s energy crisis. Here’s a highlight of some of these startups:

Kodar Tech, is a smart home and energy startup that allows clients to monitor and control their homes and businesses in real-time from a smartphone from anywhere in the world over the internet while supplying clean green energy during blackouts.

Switch Energy, is a technology startup seeking to displace centralized power plants by 2025, and enable a cost-effective decentralized energy supply for all of Africa's 1 Billion people by 2100. To achieve this ambitious mission, they are building an integrated platform that combines real-time metering of energy use, price difference calculation between different energy sources, software that enables households and businesses to choose an electricity supplier based on their carbon footprint preferences.

Solatrify is Africa's foremost value-added solar distribution company committed to providing quality solar equipment, business support & financial mechanism for the growing network of local solar dealers, installers & project contractors in Sub-Saharan Africa.

The activities of these startups have led to the proliferation of solar energy across rural areas that are most excluded from the national grid. By increasing energy access in these areas, there is a significant reduction in the dependence on hazardous alternative forms of energy.

Furthermore, as these startups take on the role of increasing energy access in Nigeria, the government has a duty to ensure that these companies operate with all the necessary support they need. Sustaining these companies is essential to the goal of sustainably increasing energy access and promises of economic gains particularly in line with the jobs that will be created in the process. More so, this support can take numerous forms, such as the provision of adequate financing and grants, tax exemptions, favourable and coherent regulations/polices in order to attract investors, elimination of administrative bottlenecks etc.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

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Chidera Okeke
About the author

Chidera Okeke is an aspiring energy attorney deeply interested in increased energy access in Nigeria, and is currently learning about power sector regulation at the Florence School of Regulation, European University Institute.

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