Solar: Affordable Power in Nigeria and Africa: The True Cost of Power-Part 2
Levelized cost of electricity (LCOE) is the cost to build and operate a power generation facility, divided by the total power output over the lifetime of the facility. It is the used to compare the cost and returns between different power generation sources.
The LCOE for off-grid solar PV systems are $0.20/kWh compared to diesel and gasoline generators at $0.40-$0.71/kWh. This makes off-grid solar PV systems cost comparable. Despite their lower upfront cost fossil-fuelled (diesel and petrol) generator, operation costs are subject to the availability and cost of fuel. Whereas the fuel for solar PV is free and abundant. The LCOE for combined cycle natural gas is lowest at $0.5-$0.7/kWh but requires significant supply and distribution infrastructure.
In 1954, when Bell Labs built its first solar photovoltaic panel, it cost $1,000 per watt of power it produced. By 2008, solar modules cost $3.49 per watt, and by 2018, price per watt has crashed to below $0.40. The reasons for this sharp is increased R&D spending, and economies of scale.
The bane of renewable energy was once battery storage technology. The cost of industrial batteries was $1,000 per KWh in 2008. In 2015 the cost has fallen to $268. In 2016, Tesla said that the cost of battery production at its Gigafactory was less than $190/kWh. This is driven by demand for electric vehicles.
Nigeria has a unique advantage for solar energy as it receives about 6 hours of sunshine per day on average.
According to a report by the European Union, Nigeria can theoretically achieve 42,700 MW of solar power from just five percent of suitable land in the Central and Northern regions of the country.
This is greater than Nigeria’s current effective electricity demand at 31,200MW.
Problem Statement
1. There are 60m diesel generators in Nigeria, which cost about $12-$14bn/year. These are expensive to run ($0.71/kWh or N256/kWh), noisy and dirty
2. About 100m rural households spend more than $6/month (N2,100/month) on kerosene or battery powered torches, making a compelling case for solar home systems
Up Next in this series is The Power Value Chain, Reform and Problems
Thank you for reading,
Nero
