IBADAN, Nigeria — The poorly lit and stuffy classrooms come alive every morning when the children enter. The sun’s rays enter through the wooden windows, the only source of light. Students squint at their books and, intermittently, at the blackboard as teachers try to keep their attention.
It is a reality for many schoolchildren in Nigeria, where many buildings do not have access to the national electricity grid. At Olodo Okin’s Excellent Moral School in Ibadan, “the entire community is not connected, including the school,” said the school’s founder, Muyideen Raji. It seriously affects students, he said, who cannot learn to use computers or the Internet and cannot study in the afternoons.
About half of Nigeria’s more than 200 million people are connected to a national power grid that cannot provide enough daily electricity to most of those connected. Many poor rural communities like Olodo Okin are completely off the grid.
In a country with abundant sunshine, many are turning to solar energy to help fill the gaps, but getting risk-averse investors to finance major solar projects that would give Nigeria enough reliable power is an uphill struggle. It means that millions of people in the country are finding ways to live with little or no electricity.
Studies have shown that Nigeria could generate much more electricity than it needs from solar energy thanks to its powerful sunlight. But 14 grid-scale solar projects in the north and center 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 on debt, which can reach 15 percent, two or three times higher than in advanced economies and China, according to the International Energy Agency.
That means it is more expensive for solar companies to work in Nigeria or other developing nations than in rich countries. Africa only has a fifth of Germany’s solar energy capacity, and barely 2% of global investments in clean energy go to the continent.
“The same project was launched in Nigeria and Denmark; The Danish project will receive financing with an interest rate of 2 to 3 percent,” said Najim Animashaun, director of Nova Power, one of the stalled solar projects. Meanwhile, he is struggling to get loans even with interest rates of 10 percent. or more, “although my solar project can produce two and a half times more energy” than a Danish one.
Nigeria also does not set so-called cost-reflective tariffs, meaning 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 industry relies on government interventions to stay afloat, scaring away lenders from investing in the solar industry.
Currently, energy producers say the government owes them up to 3.7 trillion naira ($2.7 billion), making it difficult to meet their obligations to their lenders and contractors.
One option would be to get guarantees from the World Bank that would reassure investors and make them more willing to pour money into solar projects, but the government is wary of signing anything that would force them to pay large sums even if electricity from projects do not reach consumers due to inadequate transmission and distribution infrastructure.
But without guarantees from the World Bank “no one will develop or finance a project with a government subsidy, because it can dry up,” said Edu Okeke, managing director of Azura Power. Azura Power has a stake in the now-stalled 100-megawatt Nova solar project in Katsina state in northern Nigeria.
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 a daily occurrence in Nigeria.
Communities like 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 that run on petrol and diesel.
With the long duration Oil subsidies were eliminated.Many homes, schools, hospitals and businesses struggle with the cost of fuel for their backup generators.
“We have stopped using a diesel generator as an alternative due to costs,” said Abdulhakeem Adedoja, principal of Lorat Nursery and Primary School in Ibadan. He added that although the school is in a grid-connected area of Ibadan, they could spend two weeks without power supply.
The problem is not only the lack of electricity for computer-assisted learning, adequate lighting and fans to make classes less stuffy for students and teachers, but also that students cannot complete their schoolwork at home, Adedoja said.
For small businesses that consume more energy, such as restaurants, they close or continue generating alternative energy, incurring high costs that harm their ability to expand.
Ebunola Akinwale, owner of Nature’s Treat Cafe in Ibadan, said she pays 2.5 million naira ($1,700) monthly to power backup generators at her four branches.
“If nothing changes, I would probably have to close one or two branches,” she said, although she plans to use solar energy, which she says will help us reduce “pollution from diesel (generators).” She is in talks with her bank for a low-cost loan package especially designed for young women entrepreneurs to finance the solar alternative.
However, not all businesses and households have that access or can afford the initial capital for a private solar system. School principals Raji and Adedoja said they find the costs prohibitive.
Stalled solar projects are not happening because finances don’t add up, but even for other sources of electricity generation, Nigeria is struggling to attract desperately needed private financing.
The Minister of Energy, Adebayo Adelabu, saying in May that to address the financial crisis affecting the electricity sector, prices must reflect the true costs of the service because a “bankrupt government cannot afford to pay 3 trillion naira ($2.4 billion) in subsidies.”
The government also insists that Nigerians pay in full for the electricity they consume would encourage investments in the sector.
There have been some push back to that, as the unions advanced strike in early June in part to protest electricity rate increases.
But businessmen like Akinwale understand the government’s position because electricity supplied regularly to the grid, even without subsidy, is “still cheaper and cleaner” than diesel for generators, he said.
If the finances for grid-scale solar projects don’t add up, the government should offer incentives such as tax breaks and payment plans to encourage private adoption of solar energy, Akinwale said. “Sunlight abounds there,” she said.
Former regulatory chief Sam Amadi doubts that consumers in Nigeria (where the minimum wage is 30,000 naira ($20) a month) “can today pay for the energy consumed without subsidies.” He also wants a policy that makes it more affordable to have smaller-scale solar projects spread across communities, businesses and homes.
Until then, the frequent blackouts have consequences, he said.
“I have a story of a person who died in the hospital because the power went out during the operation,” he said. “Every day we see the effects of a lack of electricity in the real world.”
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