Jobs or just lights? Nigeria toils to power up its solar promise

Rice farmer Danjuma Okuwa knows what he needs to do to boost his profits: use a machine to remove the husk from his grain and then sell it direct to buyers at the local market, instead of supplying his unmilled harvest to a global agribusiness nearby.

A 50-kilowatt solar minigrid system, installed in his rural community of Rukubi in Nigeria's central Nasarawa state a year ago, now makes that possible at an affordable cost.

Most rice in the town - a two-hour drive from the state capital Lafia on a pot-holed dirt road - is processed with machines run on dirty generators that fill the air with smoke, ear-splitting noise and climate change-fuelling pollution.

Today, diesel and petrol generators - which plug a gap caused by limited connections to the national electricity grid and frequent power outages - belch out about a third of emissions from the country's power sector, according to the Nigeria Energy Transition Plan.

But when Okuwa flicks a switch on his gleaming solar-powered electric de-husker, housed in a shed at his family compound, it hums quietly into action, separating the beige skin from the whitish rice, which can now fetch him a higher price, but with less expense to the environment or human health.

"It's a good business," said the ambitious young farmer, who cultivates five hectares (12.4 acres) of paddy rice with his brother and employs village youth to bring in the harvest.

"The problem is financial and (other) support; we do face challenges," he said, pointing to the difficulty of finding capital to invest in expansion and a lack of local skills.

He is paying for his new milling machine in instalments under an appliance financing scheme run by the solar firm.

This year, Okuwa's farm has also faced destructive flooding from the River Benue after unusually heavy rain in the region, which the government has blamed on climate change.

Rukubi's minigrid was the first of 12 set up so far in Nasarawa state by Husk Power Systems, a clean energy company that started in India, connecting thousands of Nigerian homes and businesses to electricity for the first time.

Husk plans to build at least 500 solar minigrids across Nigeria by 2026, serving more than 2 million people and putting 25,000 diesel generators out of action.

Tackling pollution from generators is a key pillar of the West African nation's Energy Transition Plan (ETP), which maps out measures to cut its planet-heating greenhouse gas emissions to net zero by 2060.

Despite its abundant fossil fuel reserves, more than 40% of Nigerians - about 90 million people - still have no access to electric power, one of the key reasons as many as four in 10 live below the national poverty line.

The ETP, launched in August, aims to ensure electricity provision to all Nigerians by 2030, in line with a globally agreed goal on energy access, while lifting 100 million people out of poverty and driving economic growth.

Nigeria - one of Africa's top oil-and-gas producing nations - has also committed to phase down its reliance on fossil fuels.

But gas will play "a critical role as a transition fuel" and its use will be ramped up for power generation and cleaner cooking until 2030, the plan says.

Nigeria's ETP targets a complete phase-out of diesel and petrol generators - widely used by households, business and industry - by 2050.

Both on- and off-grid solar power, supplemented with hydrogen, are seen as key replacements.

According to Husk Power, when it installs solar minigrids in a community about half of generators are taken offline within the first year, cutting customers' monthly energy costs by at least 30%. 

With fossil fuel prices soaring around the globe - especially since the Russian invasion of Ukraine in February - pain from high diesel prices is helping solar companies like Husk make the business case for using cheaper, renewable power.

Many small business owners in Nasarawa's rural communities said their monthly solar costs are now a quarter to a half cheaper than what they had previously paid for diesel.

John Dauda Buhari, a 25-year-old student who runs a mobile phone-charging shop in Igbabo village, pointed at the boxed-up generator he no longer uses in the corner of his cramped kiosk.

"It left a foul smell on my clothes and I had to take it for repairs once a week," he said. "This (solar power) makes things very easy in our business."

Since hooking up to the minigrid late last year, his daily power cost to charge his customers' 100-plus phones, neatly lined up on shelves, has fallen from 1,000 naira ($2.30), using generator fuel, to about 400 naira.

Buhari, who is training to become a psychologist, said he now makes a profit of about 30,000 naira per semester, which covers about half of his college fees.

Like others in Igbabo, the young man, who lost an arm in a night-time attack on his home by armed intruders, hopes that a planned expansion of its minigrid will bring better security in a region where communal tensions have flared in recent years.

Ibrahim A. Abdullahi, chief executive of the Nasarawa Investment and Development Agency, said a key aim of putting solar minigrids in rural communities was to propel the growth of small businesses like Buhari's and attract new investment.

"Once there is access to power, the possibilities, the level of ambition... increases and you will see a lot of complementary businesses coming up by young people," he said.

A survey led by energy access campaign Power for All, which tracked employment in off-grid renewables in India and four African countries, said Nigeria has seen "massive growth" in solar-related job creation since 2017, including a quick bounce-back after the COVID-19 pandemic.

Nearly 50,000 Nigerians are directly employed in small-scale solar - compared with about 65,000 in oil and gas - and with fast-rising demand for products such as solar home systems, renewable energy jobs are projected to top 76,000 by 2023.

In communities where Husk deploys its minigrids, it uses local labour to clear land, erect fences around the site, and dig trenches to anchor the solar panel arrays, with the whole installation process taking about a month.

Once up and running, each grid supports eight full-time jobs for villagers: two security guards, two technicians - who clean the panels and maintain the power equipment - two power sales agents and two energy-efficient appliance salespeople.

Candidates for the positions are selected by village power committees, which have about 15 members including women and young people and are tasked with solving any issues that arise, as well as planning future expansion of their minigrid.

Kabiru Abubakar Idasho, a Husk sales agent in Igbabo who also runs a phone-charging business, has a biology degree and eventually wants to become a university lecturer.

But he has delayed starting his master's course to take advantage of the chance to earn money at home and save.

"This is a good choice for now," said the young graduate, smartly dressed in a purple Nigerian tunic. "Before there wasn't any other job."

Husk has made about 300 connections in the settlement of 5,000-7,000 people since its minigrid came online last December, about a third of them local businesses, Idasho said.

But there is a way to go before everyone has access to green power, and it reaches its full economic potential.

Igbabo's chief, Alhaji Adamu Osabonya, a father of 10 whose solar connection runs lights and a television in his home, listed the benefits the minigrid has brought to residents, from safer streets at night to electricity for the clinic.

But while he now sleeps better undisturbed by the din of generators, he is seeking a bigger economic boost as rice farmers and traders take advantage of the new source of power.

"I need my community to develop," he said, adding he hopes reliable electricity will attract people from nearby urban hubs where the supply from the national grid is intermittent.

Rural schools, health centres, mosques and other public institutions usually get free connections to the minigrids and are then charged for the power they use.

Households and businesses pay both a connection fee and a tariff - approved by regulators - according to the amount they consume.

A basic monthly package capable of running lights and charging phones costs 2,000-2,500 naira ($4.60-$5.70).

But what developers - and the government - particularly want to see is more "productive use" of clean electricity, where it is used for manufacturing, processing or to provide a service.

"What people do with the power is where our main focus really is," said Olu Aruike, Husk's country director, at the firm's office in Abuja, lit by rooftop solar panels during one of the capital's regular power cuts.

In Rukubi, for example, tech entrepreneur Shehu Agye, in his late 20s, runs a computer school with his minigrid connection, teaching villagers basic skills, including navigating the internet.

Another young businessman, Aliyu Mohammed Oyi, 28, employs nearly 25 people at his car wash and drinking-water purification operation, where solar electricity pumps up water from a well in the yard and powers his packaging machinery.

One major problem Husk and other solar companies are grappling with in Nigeria is an abundance of power-hungry old electric appliances, from televisions to refrigerators.

In Igbabo, Victoria Olije runs a small grocery shop selling drinks and food, but the bulky chest fridge lining one wall is idle because it is too expensive to run, she said.

A solar-powered bulb lights her windowless shop but she wants to get a modern television and refrigerator to cool drinks and provide entertainment to attract more customers and keep her 7-year-old twins happy.

To help clients like Olije afford new energy-saving appliances, some minigrid companies set up demonstrations to show how effectively they run on solar power, and then offer payment plans for their purchase.

"We keep on... talking to them, showing them and teaching them," said Kanayor Emeagwai, who leads appliance sales and customer engagement for Husk.

The company also gives simple energy-saving tips - like not leaving outside security lights on in broad daylight, which many people do to show neighbours and customers they have power, or turning off televisions and freezers when not in use.

In Rukubi, one of those who has listened is nurse Juliana Ezegwoya Peter's, who showed off a brand-new refrigerator she bought to use for vaccines and drinks in her clinic. She recently boosted her solar-power tariff to run it.

Anita Otubu, who heads the Nigeria Electrification Project (NEP) funded by the World Bank and the African Development Bank, said "productive use" of solar power is taking time to establish, even as simpler systems for household needs flourish.

An NEP goal to subsidise 300,000 standalone solar home systems was met ahead of time, as international companies like Greenlight Planet and d.light pressed on despite the pandemic, enabling about 800,000 such systems to be installed since 2020.

The NEP has backed 67 minigrids to date, with local and foreign developers receiving $600 per customer connection as an incentive. The pace of deployment is picking up and the number of grids is expected to double in the coming year, Otubu said.

"Nigeria is certainly on the right path in terms of trying to achieve (full) energy access and trying to do so in view of its climate-related obligations," she added.

But $20 million earmarked under the NEP to fund "productive use" equipment has so far hardly been tapped, partly due to the time-consuming challenge of lining up business customers ready to pay for power, noted Otubu, who will lead a separate finance facility run by Sustainable Energy for All to drive uptake.

Another stumbling block cited by many minigrid developers, which must import equipment and pay back overseas investors, is the difficulty of converting naira revenues into dollars.

Nigeria's chronic shortage of foreign exchange reserves boosts the financial risk of projects and the cost of doing business, although the NEP is seeking a solution.

The United Nations Development Programme and the Global Environment Facility are also supporting Nigeria's solar efforts through a separate initiative, the Africa Minigrids Program (AMP).

The $45-million AMP, which will work across about 20 countries over the next four years, aims to deliver private-sector investment and shared lessons on providing modern, clean electricity in sub-Saharan Africa.

In Nigeria, AMP funding of nearly $6 million will be used to boost demand for clean energy-powered farm services such as rice and maize processing, beginning with 25 pilot solar minigrids.

The two main models for minigrid developers and other companies are to lease or sell "productive use" equipment, or to set up and operate their own processing centres and cold storage hubs, charging fees for their use.

Husk is trying out both. By the end of November, it plans to have a rice-processing and cold-storage facility - used to extend the life of harvests and fish catches - up and running next to its minigrid site in the village of Kiguna in Nasarawa.

It is expected to initially attract about 60 users, many of them women who dry and de-husk rice, said Omobolanle Atobatele, head of strategic business development.

"Because of the scepticism we see in a lot of communities with regards to how processing equipment can be powered by solar, we are now going to implement (it) by ourselves," she said.

"It's not to put anybody out of business; it is to show that solar... can work."

Sanusi Mohammed Ohiare, executive director of Nigeria's Rural Electrification Fund, said solar minigrid firms must be patient in establishing themselves and strive to understand how local people live and work.

"You need to be in it for the long haul, aside from recovering your capital or making a profit," he urged.

Husk Nigeria director Aruike said getting local people on board, both from the top down - including religious leaders - and from the bottom up, is essential for the solar business to work in rural areas.

At the start of a new project, the minigrid proposition is presented to villagers in terms of "a 25-year marriage", he said. "We have to find solutions whatever happens and deal with it together."

He and his head-office staff often receive personal calls from customers needing help or employees reporting incidents in their communities.

On a visit to Kiguna, the Husk team was besieged by youth representatives brandishing their phones and complaining that the solar-powered telecom base station located there, run by partner firm Hotspot Network, did not provide enough internet bandwidth and speed to download Husk's app.

They also clamoured for cheaper tariffs, saying their families cannot afford the fees and their power - measured by smart meters - is sometimes cut off when they use up their monthly allowance too quickly.

Husk has pledged not to raise customer prices for the first five years, banking on cost efficiencies as the business grows, despite fast-rising inflation and fossil-fuel prices.

"Most Nigerians are not used to paying for power," said Aruike, calling for a change in mindset from the perception of electricity as "a social good" provided by the government.

With commercial minigrids like Husk's, "what you're paying for is value", he added, including a guarantee of at least 22 hours of power a day and faults fixed within hours.

The next few years will be critical for solar minigrid expansion in Nigeria, experts say, with Husk and others hoping to grow rapidly if financing, security and logistical challenges can be overcome.

Today there are fewer than 200 commercially operated minigrids across the country, while estimates put the number required by 2030 at about 10,000.

Chinua Azubike, chief executive of InfraCredit, which offers credit guarantees in naira to de-risk investment in clean infrastructure, said minigrid operators must prove they can be "self-sustaining" by boosting productive use of their power.

InfraCredit is blending capital from Nigerian insurers and pension funds with climate finance from donors like Britain, which has committed £10 million ($11.3 million) to spur private investment in renewable energy in Nigeria, including minigrids.

But the amounts of money on offer so far are miniscule compared with the extra $10 billion a year Nigeria says it needs through to 2060 to implement its energy transition plan.

Federal Environment Minister Mohammed Hassan Abdullahi said Nigeria had held positive discussions this year with the United States on backing its plan - although Abuja's goal of securing an initial $10 billion by November's U.N. climate talks seems unlikely to be met.

He said African nations would push at the COP27 summit to get money to put their energy transitions "on the front-burner".

One roadblock to winning a donor-backed "just energy transition partnership" like that offered to South Africa at the COP26 climate conference last year is plans by Nigeria, Senegal and other African nations to ramp up use of fossil-fuel gas as a so-called "bridge" on the path to clean energy.

Minigrid developers are still struggling to turn a profit in emerging markets like Nigeria - though Husk expects to become one of the first to achieve that across its Asian and African operations by the end of this year, said its CEO Manoj Sinha.

He is optimistic that, after a slow start, Nigeria has the right regulatory framework in place and a pool of young talent that can drive a major shift towards renewables.

"There are a lot of factors that are now conspiring to work together to make it happen," said the clean-energy entrepreneur. "I think we are at that turning point."

($1 = 436.1100 naira)
($1 = 0.8850 pounds)

Reporter: Megan Rowling

Editor: Laurie Goering

Photographer: Afolabi Sotunde

Graphics: Tom Finn

Producer: Amber Milne