- All-On, a unique impact investor dedicated to off-grid energy, and Nextier, a multi-competency firm focused on solving complex development problems, have released an Offgrid Energy Business Report.
- The Offgrid Energy Business Report stated that Nigerian businesses waste an estimated N5 trillion yearly on inefficient power generation.
In a recently released energy business report put together by impact investor All-On and multi-complacency firm Nextier, it was stated that Nigerian businesses are estimated to spend almost $14 billion (₦5 trillion) annually on expensive and inefficient power ($0.40/kWh or ₦140/kWh or more), of poor quality, noisy, and polluting.
The report states that Nigeria has a total installed power generation capacity of 16,384MW, based on installed generation capacity and electricity generation mix. Power generation in Nigeria is mainly from hydro and gas-fired thermal power plants, with the hydro plants providing 2,062MW and the gas-fired 11,972MW.
The remainder, 2,350MW, comes from solar, wind, and other sources, such as diesel and Heavy Fuel Oil (HFO). The All-On, Nextier Report identifies the developing off-grid alternatives to complement the grid, creating a $9.2B/year (₦3.2T/year) market opportunity for mini-grids and solar home systems that will save $4.4B/year(₦1.5T/year) for Nigerian homes and businesses.
The All-On, Nextier report outlines the current value chain and potential growth trajectories for the Offgrid Energy Business industry. The key elements of the value chain trajectories analysed in the report are the value chain components and their economics.
These include players, participation requirements, challenges, contributions to power supply capacities in relation to Nigeria’s gross domestic product, investment, and job market sizes and opportunities. The report notes that efforts to boost investments in the Nigerian renewable energy and energy efficiency (RE/EE) market have been evident in various stages of the country’s electrification policies.
The All-on Nextier report noted that the Federal Government has consistently sought to improve the environment for renewable integration in the energy mix through policies and regulations to de-risk the off-grid market for optimum private sector involvement.
In addition, international development agencies, donors, investors, and impact investment organisations have invested profoundly in the off-grid market to bridge the energy access gap and promote sustainable development.
As a result, the Nigerian off-grid sector has seen significant growth in recent years. However, despite the market’s upward growth trend, market uncertainty and the unavailability of market intelligence in the sector are significant factors affecting the penetration of off-grid energy.
Furthermore, the high risk of investment for off-grid energy companies is often an offshoot of market uncertainties related to commercial viability, financing, security of investments, and technical viability of the projects.