In a joint effort, Daystar Power and RMI, (founded as Rocky Mountain Institute), has presented a feasibility study business model for hybrid power systems connected to the grid in Nigeria. The study, titled “Scaling Utility-Enabled Distributed Energy Resources for Nigerian Commercial & Industrial (C&I) Customers, was funded by the U.S. Trade and Development Agency (USTDA). It highlights the benefits of this innovative model designed for 170,000 businesses and manufacturers in the region, forecasting a promising potential to generate 3.3 gigawatts (GGW) of solar power and drawing in a total of $6.5 billion in investments.
It is believed that the latest model offers great benefits for both C&I customers and electric distribution companies (DisCos). The main focus is on moving away from diesel generators towards solar systems that are supported by backup battery storage. By switching to solar systems, businesses can cut down on energy expenses, while DisCos can see a boost in Revenue from higher grid usage and gaining new customers. Victor Ezenwoko, the country head of Nigeria and Ghana for Daystar Power, expressed excitement as he revealed the results of the long-awaited feasibility study.
Nigerian businesses could save significant costs on energy.
Although Nigeria’s solar sector is beginning to flourish, it is still in its nascent stages. Research like this is crucial for expanding the market and bringing more benefits to businesses. Collaborating closely with distribution companies can help us offer more cost-effective and dependable power to Nigerian businesses by addressing challenges and uncertainties in the power supply chain. Daystar, the DisCo, and the customer reached an agreement that forms the foundation of the proposed business model.
Daystar has implemented a hybrid solar system that is fully funded to supply energy to Nigerian businesses during peak daytime hours, while the DisCos have extended the availability of grid power for the remainder of the day. In case of grid outages, backup generators and batteries serve as a contingency plan. It also proposed that by utilizing their model, Nigerian businesses could save significant costs on energy expenses, benefiting both customers and DisCos, especially during a period of high fuel prices when many rely on diesel and generators for power.
There is an urgent need for widespread adoption of clean energy.
Moreover, the study focused on creating a unique hybrid solar power system that connected to the national grid to benefit 20 C&I customers in Abuja and Lagos. This project was made possible through collaborations with Abuja Electricity Distribution Company, Eko Electricity Distribution Company, and Ikeja Electric. The research revealed that the majority of customers saved money on their energy bills, with 17 out of 20 reporting average savings of 26%. Meanwhile, the project portfolio totalled 27 MW in new solar capacity and offset an estimated 25,000 metric tons in CO2 emissions.
Under this model, profitability for DisCos significantly increased by 1,000%. The successful business model shows how developing Sustainable Energy networks and expanding decentralized energy systems can benefit everyone involved – customers, developers, and DisCos. Suleiman Babamanu, RMI’s program director in Nigeria, stated that there is an urgent need for widespread adoption of clean energy, and we believe that this project can pave the way for the expansion of decentralized energy resources (DERs) in Nigeria, enhancing reliability and reducing dependence on costly, harmful fuels.
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Most C&I customers experience frequent power outages caused by failures in the transmission and distribution networks, thereby making grid services unreliable. As a result, many customers rely on diesel generators for both primary and backup power, leading to energy expenses that are triple the cost of grid tariffs. In solution, Daystar will cover the costs of improving grid Infrastructure in advance under the tripartite agreement, offsetting the expenses by subtracting payments from DisCos. This arrangement provides DisCos with motivation to address ongoing infrastructure deficiencies, ultimately leading to a focus on supplying electricity to C&I consumers.