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| A mini solar grid installed in Edo state, Nigeria by Arnergy. Image credit: Arnergy |
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Nigeria’s electricity problems are
well-documented. Only 18% of the working connections in Africa’s largest economy enjoy reliable
electricity supply.
With the national grid largely unreliable and, in
some places, non-existent, Nigerians have been typically forced to generate
their own electricity for homes and businesses with expensively maintained gasoline-powered generators. In 2009, half of the country was estimated to own generator sets. The country’s
electricity woes go on despite government’s plans to spend up to US$13.5billion over the last 16 years.
Renewable energy has been touted as an
alternative but despite success stories from East Africa, its adoption in Nigeria has been held back by two
major barriers. “There is a perceived risk that solar power ‘does not work’ as
many have doubted the efficacy of the technology,” Femi Adeyemo, CEO of
Arnergy, a solar energy solutions company, says. “This, alongside the high
cost, has typically made it a less attractive option for most Nigerians.”
This was a lesson Adeyemo learned alongside his
co-founder Kunle Odebunmi when Arnergy kicked off operations in 2014. But the
duo have now changed approach and launched a solar energy pay-as-you-go
subscription model in Africa’s largest economy. Calling it a “solar rental
system”, Arnergy allows customers in urban centers to lease solar equipment
rather than purchase them while paying a fixed price (US$30 per month) for the
electricity generated and consumed. This solution, Adeyemo says helps “resolve
the problem of high upfront costs.” With lower acquisition costs, the founders
hoped more Nigerians will become disposed to adopting solar energy. The gamble
appears to be paying off as Adeyemo says the company’s revenue for the year is
projected to grow tenfold owing to vastly increased demand.
Arnergy’s pay-as-you-go solar power solution is
novel in Africa’s largest economy and could help it stand out in a competitive
market. With a majority of Nigerians unable to purchase solar power systems
outright owing to its high costs, solar energy providers jostle in a small
market. To increase their target market, many solar energy firms have taken to
focusing their services on powering commercial and industrial outfits with
deeper pockets.
While it has been a successful experiment in
urban centers, Arnergy’s pay-as-you-go solution has proven more expedient in
rural areas, where the electrification rate is 37% according to data from the International Energy Agency. Backed by Nigeria’s Bank of Industry,
the firm deployed solar mini-grids across three previously off-grid villages in
Nigeria, connecting and metering homes with end users paying less than $10
monthly for enough electricity to power LED light bulbs, a television and fan
as well as charge mobile phones daily. With its rural projects now powering 600
homes across those three villages, Odebunmi says the company plans to replicate
this model across the country. The company has already had state governments expressing
interest in funding the deployment of Arnergy’s solution to boost
electrification in their states.
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Two
young Nigerian innovators, Femi Adeyemo, and Kunle Odebunmi, have broken fresh
frontiers in the renewable energy sector
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While its operations in the rural areas are
backed by the Bank of Industry which has also provided US$600,000 in funding,
the firm also received a
US$146,000 grant from the Solar Nigeria Programme, a UK Department for
International Development funded initiative, in 2015. To meet customer demand
which currently outstrips their capacity and stock, the founders are looking to
raise more capital to accelerate growth. There’s just one problem: the founders
say renewable energy is not yet considered a high growth area by investors.
“Most venture capital firms in Nigeria currently prefer to invest in tech
start-ups,” Adeyemo says.
Originally
published in QUARTZ AFRICA
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