The Global Energy Alliance for People and Planet (GEAPP), a global climate initiative backed by the Rockefeller Foundation and the Bezos Earth Fund, is piloting an innovative solar mini-grid project in Nigeria.

This initiative is designed to address the country’s persistent power challenges, which have long hindered productivity and economic development. By establishing interconnected solar mini-grids, GEAPP aims to provide a reliable and sustainable energy solution, especially in areas that have suffered from inadequate electricity supply.

Launched in 2021 in collaboration with the Ikea Foundation, the Global Energy Alliance for People and Planet has made significant strides in advancing clean energy solutions. The first interconnected mini-grid was completed in December, with two more currently under construction and funding secured for a fourth.

These mini-grids, operated by private developers, are intended to supplement the inconsistent electricity from the national grid, ensuring that businesses and households have continuous access to power. Such initiatives are crucial in a country where frequent grid failures disrupt daily life and economic activities.

To enhance the cost-effectiveness and scalability of its projects, GEAPP has introduced the Demand Aggregation for Renewable Technology (DART) program. This initiative consolidates the requirements of multiple developers, allowing for the bulk procurement of solar equipment, thereby reducing overall costs.

Furthermore, the DART program administers a $25 million financing facility that enables developers to secure funding in foreign currency for importing equipment, with repayment made in Nigeria’s local currency, the naira, once the mini-grids begin generating revenue. This approach helps developers navigate Nigeria’s foreign exchange challenges and facilitates the growth of the renewable energy sector.

Fauzia Okediji, a utility innovation manager at GEAPP, highlighted the importance of the initiative during a segment on Bloomberg TV’s Wall Street Week, saying, “You have those kind of underserved communities that do require reliable power to power their homes and their businesses.”

The goal is to address the gaps in electricity access across Nigeria, especially for the approximately 86 million people who still lack access to electricity altogether.

Muhammad Wakil, GEAPP’s country delivery lead, emphasized the project’s significance during an interview at the Ogun State project site.

“We need hundreds or thousands of this kind of projects across Nigeria to end energy poverty. We have shown it’s a viable business model,” he said.

Wakil’s statement aligns with the growing campaign for widespread adoption of mini-grid solutions to address Nigeria’s chronic energy issues.

Nigeria’s Power Woes

Nigeria’s power sector is notorious for its inefficiency and inability to meet the needs of its population. With an estimated population of around 230 million, Nigeria’s electricity grid delivers only about 4,800 megawatts of power—roughly one-sixth of South Africa’s capacity, despite South Africa’s population being just a quarter of Nigeria’s. This disparity highlights the severity of Nigeria’s energy deficit.

The situation is further compounded by frequent grid collapses and widespread outages, which disrupt economic activities and make life challenging for millions of Nigerians. In just the past week, the national grid collapsed three times, bringing the total number of shutdowns this year to nine. These systemic failures underline the urgent need for alternative energy solutions.

For decades, Nigeria has struggled with inadequate power infrastructure, insufficient generation capacity, and technical challenges, including obsolete equipment and poor maintenance. Efforts to improve power supply have often been hampered by policy inconsistencies, lack of investment, and corruption.

The reliance on centralized power generation, which is heavily dependent on gas-fired plants, has made the grid vulnerable to disruptions from fuel shortages and technical failures. The ongoing issues with the national grid have made a strong case for decentralized energy solutions such as solar mini-grids, which can operate independently and provide reliable power to underserved areas.

Solar Energy Potential in Nigeria

Although deeply mired in energy challenges, Nigeria is endowed with abundant solar energy resources, offering a potential solution to its electricity woes. The country receives an average of six hours of sunlight per day, making it suitable for both concentrated solar power and photovoltaic generation. Estimates suggest that Nigeria has the capacity to generate approximately 427,000 megawatts (MW) from solar energy alone, a figure that dwarfs the current output of the national grid.

Energy experts believe that the country can significantly expand its energy mix, reduce its dependence on fossil fuels, and improve access to electricity, by harnessing this vast potential.

The development of solar energy in Nigeria has garnered increased attention in recent years, especially as the cost of solar technology has decreased and awareness of climate change has grown. The government’s efforts to promote renewable energy include policies such as the Renewable Energy Master Plan and the National Renewable Energy and Energy Efficiency Policy, which set ambitious targets for expanding the share of renewables in Nigeria’s energy mix.

However, progress has been slow due to challenges such as financing, regulatory hurdles, and the high initial costs of solar installations.

GEAPP’s solar mini-grid initiative represents a practical approach to overcoming some of these challenges by providing decentralized power solutions that can be scaled up. Mini-grids offer a flexible and modular solution, capable of delivering electricity to remote and off-grid communities where extending the national grid is not economically viable. The involvement of private developers also brings much-needed investment and expertise, which can accelerate the deployment of solar energy across the country.

Broader Electrification Efforts by The Government

In addition to GEAPP’s initiatives, the Nigerian government and international partners are pursuing other projects to improve access to electricity, particularly in rural areas. The Rural Electrification Agency (REA) has been instrumental in driving off-grid and mini-grid projects across Nigeria. Earlier this month, the REA’s Director-General announced a new rural electrification project funded by the World Bank, which is set to launch next month with a budget of $750 million. This initiative aims to bring electricity to 17.5 million Nigerians through a combination of grid extension, mini-grids, and stand-alone solar systems.

The World Bank-funded project underlines a growing recognition of the need for multi-faceted approaches to electrification that go beyond simply expanding the national grid. The focus on mini-grids and off-grid solutions is seen as crucial for reaching remote communities that are unlikely to benefit from grid extension in the near future.

However, while GEAPP’s solar mini-grid initiative represents a promising step toward solving Nigeria’s energy crisis, experts believe that much remains to be done to achieve sustainable and universal access to electricity. They note that scaling up such projects to reach the millions still without power will require overcoming regulatory, financial, and logistical barriers.

For instance, creating a favorable investment climate for renewable energy developers and ensuring that policies remain consistent and supportive will be essential for attracting the necessary funding. They also note the need for greater collaboration between the public and private sectors to share risks and maximize the impact of electrification projects.

Under President Bola Tinubu’s administration, Nigeria has seen a drastic reduction in the daily consumption of Premium Motor Spirit (PMS), commonly known as petrol. As of August 20, 2024, data from the Nigerian Midstream and Downstream Product Regulatory Authority (NMDPRA) revealed that daily petrol consumption had plummeted to just 4.5 million liters.

This marks a sharp 92% drop from the 60 million liters consumed daily in May 2023, just before the president took office. The striking decline in fuel use is primarily attributed to the significant increase in petrol prices following the removal of long-standing subsidies, forcing many Nigerians to abandon their vehicles and seek more affordable transportation options.

The removal of petrol subsidies was one of Tinubu’s first major policy decisions upon assuming office on May 29, 2023. Citing the unsustainable financial burden of the subsidies, which had cost the country an estimated N12 trillion over a decade, the president argued that continued subsidy payments were untenable and had contributed to the nation’s mounting debt. In the aftermath, petrol prices surged from N195 per liter to approximately N1,300 per liter, triggering severe economic consequences for millions of Nigerians.

The drastic hike in fuel prices resulted in a cascade of economic effects, notably pushing inflation to a near three-decade high of 34.19% by June 2024, before it slightly eased to 32.7% in September. The elevated cost of living has exacerbated poverty levels, with the World Bank reporting that approximately 129 million Nigerians—56% of the population—are now living below the national poverty line. This figure represents a steep rise from the 40.1% recorded in 2018, underscoring the extent to which inflation has outpaced economic growth, leaving real GDP per capita below levels seen prior to the 2016 oil price-induced recession.

Thus, the sharp decline in petrol consumption has highlighted significant changes in consumer behavior and fuel accessibility across Nigeria.

An analysis of the NMDPRA’s Daily Truck Out Report for August 2024 revealed that out of the 36 states, only 16 received petrol allocations from the Nigerian National Petroleum Company Limited (NNPCL), leading to widespread scarcity. Niger state received the highest allocation, with 21 trucks amounting to 940,000 liters daily, while Lagos followed with 12 trucks totaling 726,001 liters. Kaduna, Oyo, and Kano were also among the states receiving relatively higher allocations. In stark contrast, states such as Gombe, Benue, Ekiti, and Kebbi received only one truck each, translating to severe shortages in many areas.

Although the changing dynamics of the removal of fuel subsidies is resulting in fuel scarcity across the country, the decline in fuel consumption has been largely attributed to unaffordable fuel costs. The economic strain resulting from the fuel price surge has led many Nigerians to abandon personal vehicles due to the prohibitive costs.

The shift in transportation habits is evident in the stories of individuals like Emmanuel, a 72-year-old retired health worker, who has had to adjust to the new reality.

“I parked it at my son’s house. I use public transport now,” Emmanuel told AFP. “It is not convenient, but it is what the economy demands.”

His experience is shared by many, as public transport becomes the more viable alternative amid skyrocketing fuel prices.

The impact on the automotive market has been equally significant, with car dealers in major cities like Lagos and Abuja observing an uptick in the sale of large, fuel-consuming vehicles. According to Maji Abubakar, a car dealer in Abuja, there has been a noticeable trend of people selling off their bigger cars and sports utility vehicles (SUVs) in favor of more fuel-efficient models.

“People are actually selling their big cars these days,” Abubakar told AFP. “The problem is that even if you put them on the market, there isn’t much demand for them.”

He further highlighted that it has been more than a year since he last sold a car with an eight-cylinder engine, attributing this shift primarily to the steep increase in petrol prices.

Although as an advantage, the increased fuel prices have had the unintended effect of potentially curbing illegal activities such as fuel smuggling–as the economic incentive for such activities diminishes with the higher domestic prices, it has also curtailed the ability of many Nigerians to afford driving, leading to low demand.

The economic fallout from the subsidy removal has raised questions about the sustainability of such policies amid widespread poverty and inflation.

A recent World Bank data underscores a worsening poverty situation, with more than half of Nigeria’s population now estimated to live in poverty. The organization’s report noted, “Since 2018, the share of Nigerians living below the national poverty line has risen sharply from 40.1% to 56.0%. This stark increase partly reflects Nigeria’s beleaguered growth record.”

The report added that “multiple shocks in a context of high economic insecurity have deepened and broadened poverty, with over 115 million Nigerians estimated to have been poor in 2023. Since 2018/19, an additional nearly 35 million people have fallen into poverty.”