Can Solar Power Solve Nigeria's Energy Crisis?

Justin Norman: In the heart of Africa's largest economy, energy is both a challenge and an opportunity.

Bim Adisa: The African grid is inefficient.

Justin Norman: Nigeria's 200 million people drive one of the continent's most dynamic markets. But a struggling power grid leaves millions in the dark.

Chidalu Onyenso: To know Nigeria is to know blackouts. Not a brownout, but incessant blackouts.

News Montage: The grids are not really satisfied in Nigeria.

Rotimi Thomas: Generators by themselves are really energy dense technology. The problem is just, like, air pollution perspective. There's a noise aspect of it, and then there's now a compounding effect of an economic problem.

News Montage: Between April 2022 and today, price of petrol in Nigeria has skyrocketed by a staggering 418.5 percent.

Justin Norman: Families spend billions on generators, soaring costs stifle businesses, and rural areas are left behind. Yet against these odds, a brighter future is emerging. Nigerians are innovating their way forward, redefining energy access, and working to transform the energy landscape across the country. But how did this crisis begin? What's holding back the grid? And most importantly, how are Nigerians lighting the way to a more sustainable future? 

African founders are solving local problems with global implications. But to fight climate change and grow the continent, we need a blueprint. This is the Greenprint. 

Justin Norman: In the bustling streets of Lagos, this small shop offers a simple yet essential service, charging devices for customers. It's one of many enterprising businesses stepping up to tackle a persistent challenge of unreliable power. From this charging station to the neighborhood barbershop and even the roadside mechanic, they all run on generators.

News Montage: They are noisy, smokey. But they are also the essential live wire. From 8 AM to past 6 PM, run constantly on generator just to get power supply to do their business. It gives you an idea of how terrible at the electricity situation here.

Justin Norman: The reliance on supplemental and decentralized energy stems from the grid's unreliability, a challenge Bim Adisa, the CEO of Beacon Power Services, is determined to overcome.

Bim Adisa: So Beacon Power Services provides data and software for the African grid. Why is that a problem? Historically, because the grid has been so messy and so inefficient, everyone's avoided it, but you can't get past it. So we think the solution or the answer is to fix the grid. The African grid is inefficient.

In Nigeria, 50% of the electricity produced into the grid is unaccounted for. Across Africa, it's about a third. The problem is the power companies have no visibility. They know what comes in at the top end. They know what they're able to see at the back end. But in between, it's a black box. There's no visibility.

Justin Norman: The grid system has three main parts. First is generation, where electricity is produced. Next is transmission, which carries and transports electricity over long distances. Finally, there is distribution, the stage where electricity reaches and powers our devices and appliances. Along the way, transformers are used to step up and down the voltage for efficient transmission and safe delivery.

Bim Adisa: I'll give a quick example to illustrate. I'm sitting here in my office in Lagos. The power goes out. It's a common occurrence, so I don't flinch. But I don't know that the transformer that's a hundred meters upstream from my office is just blown up because it was overloaded.

The utility doesn't know that I'm out of power. After a week, I think, okay, well, this is unusual. We sort of complain to the utility. They then go, we didn't know. Then it takes them another 3 days to send someone out, and then it takes them another week to find out exactly where the problem is. That contributes to inefficiency because in that time power is produced, it's not getting to me. They're not getting paid for it. It's going somewhere. Nobody's happy. Nobody wins. And that's the problem precisely Beacon is solving.

Justin Norman: Beacon Power Services is tackling grid challenges head-on by mapping its infrastructure.

Bim Adisa: We map every customer, every building, every asset, every pole, every transformer, and we create a grid topology. And we digitally tag all these so you have the geolocation. We're now building incorporating AI and using drones to basically create a digital map of customers and the grid.

Justin Norman: This approach has already covered half of Lagos, enabling faster problem resolution and cutting grid losses by 20 to 30%. Without accountability in energy systems, sustainable utilities face barriers to investment.

Bim Adisa: There is a capacity problem because they are unable to invest in keeping their infrastructure up to date, let alone grow the infrastructure to serve their customers because they're not profitable. What we do is by providing this visibility, we help utilities reduce their inefficiency and increase revenue. And when we do that, they're better able to reinvest. When they're better able to reinvest, the customers get better service. So we think it's a vicious cycle, and again, our goal is breaking that vicious cycle.

Justin Norman: As African cities gain a clearer understanding of their grids, they can begin to reduce reliance on supplemental energy like diesel generators. Yet the demand for power remains urgent.

Bim Adisa: In 1990, the population of Lagos was about 6 million. Now it's grown in the space of about 30 years threefold. The infrastructure just hasn't caught up.

Justin Norman: But now, change is on the horizon.

Rotimi Thomas: The fastest way to electrify the retail consumer are these fast-moving decentralized solutions. We're using generators, but we should be using solar at scale. But how to deploy that at scale and scale up in the country is a big opportunity.

Justin Norman: That's Rotimi Thomas, the cofounder and CEO of SunFi.

Rotimi Thomas: Generators today, whether it's petrol or diesel, if you look at the cost a few years ago, people were paying a subsidized rate or even just a year ago. And today, that cost has taken off 300, 400%.

Justin Norman: In 2023, Nigeria's federal government ended a 50-year fuel subsidy.

President Tinubu: The fuel subsidy is gone.

Justin Norman: Causing petrol prices to quadruple almost overnight.

News Montage: Nigerians have expressed concern as a new pump price of petrol increased from 897 Naira to 998 Naira per liter.

Justin Norman: Yet this dramatic shift also sparked the beginning of Nigeria's energy transition.

News Montage: Solar. Going solar. Backed solar power. Everybody's going to solar. For solar energy adoption. Now maybe in a short while, we'll all go solar.

Rotimi Thomas: Five years ago, people making the switch, it was a lot harder to sell this stuff to people. But now you have people, they've decided solar is the way. So the problem within 6 months is just completely inverted. And now it's about quality of experience that I'm gonna have and what I'm willing to pay in order to access these savings. So that's the way the consumers is thinking about it today.

So SunFi is a managed marketplace for solar. We look at it as the trust pilot for solar in Nigeria that connects consumers that want to switch away from dirty petrol and diesel generators into solar, but they're really confused about what their options are, what the right price to pay is, and how do I make it accessible. And these things are very expensive to switch into. So the first things that our customers think about is, how do I pay for this either through lease-to-own payment plans or what we call solar as a service? And then how do I make sure I'm buying the right thing?

We jumped into the space, and we were primarily driven by the fact that, yes, we wanna save customers a lot of money, but this is really great for the environment. Consumers say they weren't thinking about the air pollution or the noise, but a huge byproduct of that switch for them is like, oh, there's no noise anymore.

Justin Norman: While this energy transition has positive climate impacts, it's largely driven by economic considerations. But making the switch requires a lot of education for a price-sensitive consumer.

Rotimi Thomas: Before they get a solar system, they're using a generator. It's a recurring OPEX. They say if I have it, I bring it out of my pocket. I pay for it. If I don't have it, I just hold myself and look at the sky.

And we underestimate how important that is for consumers in Africa where it's like the credit system isn't working. Whereas when you bring a solar system, when they can't afford to pay for it upfront, you say, okay. Lease-to-own it or pay for a service. But what you want is a recurring payment that's kinda fixed for a very long time, and you give them a great service. The consumer is not truly used to that.

It's almost like an obligation in their mind. And so there's a lot of education required to get them used to that recurring kinda fixed payment. And once they paid off within 12 months support, 16 months, or whatever the case may be, they own the system. And as long as you got a quality system, then that thing runs for 5 years, 10 years. Think about it.

You don't have to spend money on fuel anymore. So it's just getting the customer to that point where they get that break even and they're home free. That's that's the real challenge. These consumers are spending $30, $40 billion a year, when you think of the FX shifts that have just happened on fueling generators. If we can cut that by 50, 60 percent, I mean, what else can we do with that capital in the economies?

Justin Norman: Making the switch to solar energy not only eases the burden of rising fuel costs, but also boosts the economy and lowers carbon emissions. And with the growing demand from small and medium-sized businesses, Earthbound is here to fill that gap.

Chidalu Onyenso: For small and medium businesses in Nigeria that are plagued with high energy costs both from the grid as well as petrol and diesel generators, we make it super easy and cheap to switch to reliable, affordable solar energy.

Justin Norman: Meet Chidalu Onyenso, founder and CEO of Earthbond.

Chidalu Onyenso: In Nigeria, it's actually quite easy to start a business. There's a lot of entrepreneurial spirit here. There's a lot of small business owners, but it's incredibly hard to grow that business. Because of political stability, how they tie to both economic development, and moreover, the cost of energy just being like a baseline no. What we hear is businesses that have access to power, and it's a matter of, I don't have access to reliable power.

And then when they have access to reliable power, it's a matter of, I don't have access to affordable power. So it's this trade-off that they're constantly dealing with. I think the reality is, there are a lot of challenges that SME's face, that are, yes, tied to financing and access to credit, but underpinning it all, SMBs take on so much infrastructural costs. And when you couple that with what is happening from a climate perspective, especially in in regions like Nigeria, where we are acutely feeling a lot of these effects. We wanna be, you know, like, the one stop shop for climate resilience as a whole.

So today, we start with energy because we know that's the biggest challenge. But what happens when a business needs flood insurance? Or what happens when a business, needs some some cover for seasonality and shocks to their their supply chains and their demand. So it's thinking about these businesses that we're helping today, what are the downstream effects of both being a growing business and then now facing more and more of the challenges that will continue to grow.

Justin Norman: Medium businesses are the backbone of Africa's economic growth, yet they face immense challenges. Solving their energy needs is just the beginning. Building long-term resilience will unlock their potential to drive industrialization and lift millions out of poverty.

Bim Adisa: You read all the reports and the emphasis is on the 600 million people across Africa who have no access to electricity. And do I think in the 21st century those people should not have access? I think that they should have access. But I actually think it's missing a big point because what Africa needs is economic growth and industrialization. To move out of poverty, you've got to focus on the economic nerve centers.

You've got to focus on Lagos, Accra, Nairobi, and ensure those people have steady, reliable, uninterrupted power. They are the critical piece because they also happen to have higher spending power, which is diminished because of this expensive power, this lack of reliability. So we think that's a problem you've gotta solve.

Justin Norman: Thanks for watching this episode of The Greenprint, The Flip’s series on climate action and economic development across Africa. For more episodes like this, please hit that subscribe button. This episode was produced in partnership with Catalyst Fund, Delta40, and Africa Climate Ventures. If you want to learn more, we've added some resources and links in our description as well.