Solar companies are rushing to fill energy gap in Nigeria, with its high level of unreliability costing the local economy$29 billion every year, said the International Monetary Fund (IMF).
A report by Reuters said despite being Africa’s most populous country, Nigeria only has 12 gigawatts of installed grid capacity, with just one-in-four Nigerians connected to the national power grid.
In contrast, South Africa has 50 gigawatts. Nigeria’s unreliable electricity already costs its economy $29 billion a year, according to the IMF.
According to it, many families spend $50 a month or more on diesel fuel for generators – costing an estimated $14 billion a year.
The report observed that the failure of Nigeria’s electricity, coupled with the continued improvements in the reliability and price of solar power, has created a gap for new green power operators.
One of these companies is Rensource Energy, which raised $20 million in an equity financing round in December 2019.
The round was co-led by existing investors CRE Venture Capital and the Omidyar Network, with participation from Inspired Evolution, Proparco, EDPR, I&P, Sin Capital, and Yuzura Honda.
The funds are earmarked for expanding the company’s footprint of micro utilities across the country as well as to invest in new technology infrastructure.
Rensource’s funding round follows that of Nigerian power startup Arnergy Solar, which raised $9m for expansion in June of 2019.
Since its launch, Arnergy has delivered over 2MW of installed capacity and over 5MWh of storage capacity to business and residential clients across Nigeria.
This comes as private equity companies worldwide start to shift lending priorities to green energy.
Chinese investors are also entering the market. “Major projects involving Chinese contractors include: a 200MW solar farm that will be built by Sinohydro Group in Bui, Ghana; the 100MW Gwanda Solar Power Plant in Zimbabwe by CHINT Electrics; and the Benban solar farm in Egypt, the world’s largest solar park, which is expected to be fully operational by August 2019.”
Prior to 2005, the generation and transmission of electricity to the homes of Nigerians was the sole responsibility of the Nigerian Federal Government. Today, Nigeria provides its energy through the four main sources: coal, hydro, oil and natural gas. According to the IMF, Nigeria currently generates 13,000MW of electricity, but can only transmit below 4,000MW/hour.