The foreign exchange crisis is said to be driving up the prices of solar equipment as households and businesses look for alternative power sources on the back of soaring diesel prices.
With mounting forex challenges and rising inflation, BusinessDay findings show some solar companies are capitalising on recent developments to increase the prices of solar systems, consequently passing on the impact of the mounting pressure of the naira to consumers.
“We have been forced to adjust to the market to remain in business. Our suppliers/partners have all marked up the cost of their solar panels,” Ubah Benson, CEO of Solatrify, said.
Another business owner dealing in solar, Uvie Ugono, CEO of Solynta, highlighted the company’s approach to mitigating the effects of the tariffs.
“The overall impact on our business has been limited because panels are only one part of our overall cost of sales. We’ve been able to find savings in other parts of our supply chain to compensate for the increased prices,” Ugono said.
A market survey by BusinessDay showed a solar panel with a power wall inverter and a controller now cost N725,000, up from N700,000 in early July.
Further findings showed Rubitec Nigeria has also increased the price of 200W 24V monocrystalline solar panels, used mainly by households, from N40,000 to N52,000.
“With the depreciation of the naira against the dollar, it is unfortunate that prices of solar components will have to go up. Local manufacturing capacity is almost non-existent as we rely majorly on imports,” Collins Obi, an energy specialist with a Lagos-based multinational, said.
He said energy access across the country is at an unbearable point and “it will be suicidal for foreign exchange issues to continue to threaten the viability and affordability of energy access projects.”
The Naira, which depreciated to as low as N710/$1 last week, has pared some of its losses this week.
“With continuous naira devaluation, developers and mini-grid operators may not be able to service debt obligations and deliver projected returns to investors,” Obi added.
Daramfon Bassey, manager at Clean Tech Hub, said the cost of importing solar components has increased with constant market volatility and increase in the exchange rate.
“The cost of importing solar components has increased because private solar companies have to transfer the costs to end-users, making it unaffordable,” Bassey said.
Nigeria, Africa’s largest economy with a population of more than 200 million people, has installed electricity capacity of 12,500 megawatts (MW) but the national grid only provides 4,000MW at peak, leaving businesses and citizens heavily reliant on diesel- and petrol-powered generators.
The price of diesel, not subsidised like petrol, has nearly tripled to N800 a litre. Most of that increase came in the wake of Russia’s invasion of Ukraine.
The Energy Commission of Nigeria says the country spends $22 billion annually to fuel generators.
Solar power adoption is estimated at below 2 percent and some businesses perceive it as unsuitable for large-scale use, industry executives said.
A study earlier this year by Boston Consulting Group and All-On, a Shell-funded firm, said Nigeria’s installed photovoltaic solar panel per capita amounted to 1 watt, compared to an average 8 watts in similar emerging markets like South Africa.
“The current FX challenge is a big concern for the acceptability of renewable energy; More than 90 percent of solar components are imported,” said Anthony Akpasoh, energy expert and founder/COO of Tonipash Energy.