By Linus Ita (Co-ordinator, Mfaminyen Conservation Society), Monica Samec (Managing Director, Small World Carbon), and Dr. Barry Rawn (Researcher, University of Leuven)
INTRODUCTION
The remote community of Mfaminyen was one of the first places in Nigeria to receive electricity via solar PV. After over two years of operation, the World Bank considers it “a successful pilot that demonstrated that renewable energy was both feasible and affordable in rural areas” and the Cross River State Electrification Agency plans to replicate it across the state. Yet, careful analysis of the first two years of operations indicates the pilot project is not currently economically sustainable or well utilized. Under the current model, more than 98% of the solar electricity produced is not purchased. It is also now evident that other infrastructure built to engender economic activity is unlikely to easily succeed. A local committee appointed to manage the installation, supported by the Cross River State Electrification Agency, is taking several initiatives that may improve the performance of the asset it has been given. Critical evaluation of the pilot’s challenges yields valuable lessons that may help policymakers and civic leaders achieve dramatic improvements in performance of both this and future projects.
THE PROJECT
The pilot project had its beginnings in 2005 as part of the larger “National Energy Development Project”, which was funded by the World Bank and implemented by the Power Holding Company of Nigeria Project Management Unit (PHCN-PMU) and a number of consultants including Dr. J-F.K. Akinbami of Centre for Energy Research and Development, Obafemi Awolowo University, Ile-Ife, Nigeria and Zennix Consultant, Kaduna, Nigeria.
The project’s two main goals are to:
- demonstrate an economically sustainable off-grid solar electrification project and business model with the aim of replication
- establish new businesses that will use the solar electricity and benefit the local economy
One of two battery charging stations, where people recharge batteries for N100 per charge
One hundred twenty households received a system powered by a 22 kg battery that can be brought to one of two stations for recharging at a cost of N100 per charge. In addition, a separate solar-powered computer center and water pumping station, solar street lights along the main road, and a small system for the village head were also installed.
Initially, three electric systems were considered: Individual PV systems for each household, a mini-grid, or the one that was eventually chosen, which included an 80 Ah battery, a charge controller, and two DC lights. This system configuration was selected because it was estimated to cost half the price of the first two options and believed to enable easier revenue collection. Consultants also expected the revenues from the battery charging to pay back the cost of the system in approximately eight years. It was originally planned that this money could go towards electrifying other communities.
THE RESULTS
Logbooks kept by station attendants since the start of operations gave an indication of the number of batteries exchanged at each of Mfaminyen’s two charging stations, which in turn provides valuable insight into the actual performance of the installation. An estimation of the stations’ maximum charging potential is gained through information collected from public databases combined with the knowledge of solar array characteristics and location. With this, it is easy to compare the system’s energy and revenue-creating potential against what is actually occurring.
A chart of solar electricity by month shows that the capacity of the two Mfaminyen installations is being under-utilized. Depending on the season, the combined production of solar energy from the two stations amounts to charging 30 to 60 batteries per day, with an average of 46. However, inspection of the logbooks for the last two years shows an average of only one battery being charged every two days. More precisely, the records reveal that 76% of days there were no customers at all, while on 19% of days, only one or two batteries were exchanged. The busiest days, where a maximum of four batteries were distributed, accounted for less than five percent of the time. As of April 2013, the average amount of electricity sold is only 2% of what the solar PV system is capable of delivering, which means 98% of the capacity goes unused. As the installation has a limited lifetime of production available to offset its cost, the economic sustainability of the installation then deserves a closer look.
The cost of N100 per charge was chosen as being competitive with other fuel sources, assuming that the services available from electricity are comparable with those from other fuels. The resulting and potential revenues of the charging stations allow an evaluation of the economic sustainability of the installation, whose fixed cost has been estimated by the authors at approximately N10 million. If 100% of the charging capability of the stations were utilized, the resulting revenues would average approximately N4600 per day. Charted into the future, such revenue would be equal to the cost of the system in approximately six years. Taking an average of current yearly charging station revenue and projecting into the future, one finds that instead only 1.5% of the system’s cost will be repaid in six years at the current level of utilization. While the lifetime of the solar array may exceed twenty years, depending on usage and maintenance the batteries may require replacement within 4-6 years. Thus it can be observed that the current performance does not lead to an economically sustainable installation.
Revenue possible from installation in coming years with full utilization (dashed) compared against current revenues (solid).
RECOMMENDATIONS
1. Serious consideration should be given to user preferences during system design. Members of Mfaminyen community were consulted during the planning process. However, it appears that consultation does not necessarily ensure the identification, communication and incorporation of user preferences. For example, by the project’s original design, the household electricity can only be used by DC (direct current) appliances. Yet, many desired appliances such as cell phone chargers and televisions require AC (alternating current) supply. Therefore, several individuals chose to purchase inverters. Subsequently, the Cross River State Electrification Agency has expanded this alteration by supporting the installation of inverters in many other households so the electricity can be tapped by AC appliances. This should lead to an increase in battery charging and raise the system’s utilization percentage.
Transportation of the batteries from user homes to the charging stations has also affected system utilization. The batteries weigh a heavy 22 kg. To achieve maximum solar production, the charging stations are located on hilltops outside of town. This presents a problem as the batteries must be hauled significant distances, mainly by women. For future projects, it may increase the amount of charging to locate the charging or distribution centres near load demand.
2. 100% system utilization should not be assumed. It would have been a more technically optimal and cheaper option to utilize centralized stations to obtain charging capacity if they had been used even half as much as an individual station. However, due to multiple factors current utilization is estimated at 2% and the resulting electricity has a high effective cost. This calls into question the monetary value of a cheaper, yet little-used system. While locating stations closer to load demand or providing individual household charging systems are more expensive options and would have been fewer in number, this may well have led to higher utilization with much more electricity being delivered.
The selection of a centralized system was expected to save roughly half of the system’s upfront costs, but analysis of every different type of configuration assumed 100% utilization. The current realized utilization of about 2% suggests it is wise to reconsider whether battery station provide the best value for the money compared to other alternatives.
3. In un-electrified areas, anticipated electricity demand should be based around locally-led investment and initiatives. In this pilot project, the majority of the budget (reported to be greater than N47 million) was spent building infrastructure for businesses identified as viable by external consultants, namely TV viewing centers, computer center, and VIP toilets. There was no actual local interest in running any of these potential businesses. Thus, only a trivial amount of revenue has been collected for any of these endeavors and many of the buildings and toilets constructed are not currently being used. A more effective alternative might be establishing a fund that matches local investment to co-finance businesses that use electricity and structures according to local (rather than consultant-suggested) demand. Such a pilot fund is currently being attempted in Mfaminyen community to invest in local businesses.
4. Improved planning and design is likely if local champions are valued and compensated for performance. Champions can provide critical information and encourage widespread support for the project. The lead author of this paper acted as community liaison for the Mfaminyen project, and made significant contributions during and after the project planning. However, it was a completely voluntary role and not assigned any value or compensation by the community or the project. Such projects should clearly link the local champions’ compensation with their effort and success of the project. Local champions are critical to fully involving the stakeholders directly and could provide key information for the design and maintenance of the project.
5. Battery charging stations need to be operated in a service-based business model rather than a traditional public utility model. The battery charging attendants provide the service of exchanging batteries and must be properly incentivized to serve their paying customers. Unlike other electrification models, which employees can, for the most part, work a set schedule, the battery exchange must be done at a time convenient for the customer. Currently, the Mfaminyen station attendants are given a set salary by the Cross River State Electrification Board, which ensures system maintenance but does not provide incentive to improve the utilization rate. Future projects should consider including a usage-based incentive to station attendants.
6. Price of electricity should be optimized for economic viability. The price of battery charging in Mfaminyen (N100) was set to undercut the price of all other alternatives. However, most homes are still using the alternatives (kerosene and generator) rather than electricity from the batteries. Successfully incorporating these recommendations should make solar electricity be viewed as more valuable than the alternative, thus a price that would result in a more economically sustainable model can be charged. In the case of Mfaminyen, a change in price would be a challenge due to both current expectations and the sub-optimal system design. However, it may be possible to do in conjunction with an upgrade (such as the installation of inverters to provide other electricity services). Furthermore, a clear market assessment of the customers’ willingness to pay and/or clear subsidization scheme is recommended for future programmes.
CONCLUSION
Solar PV is becoming cost-competitive with private generators in many parts of Nigeria. Yet, if solar is to be a major provider of energy services to Nigeria’s off-grid market, it is critical to incorporate lessons learned from pilot projects into future programme planning. There is a greater potential for delivering competitive, valuable solar energy in rural areas if factors such as system utilization, economic incentive, and local business interest are taken into account. With this in mind, the local committee has already elected to pursue several interventions in Mfaminyen to improve the utilization of their asset for its remaining lifetime.
If its design serves local preferences, solar electricity infrastructure offers the potential for new services and economic benefits in many communities.
i. Mfaminyen estimated coordinates: 5.609494N,8.820992E
ii. Assumed 27% overall system losses and used PVGIS analysis tool
iii. Logbooks kept by station attendants indicate the number of batteries exchanged at each of at the two battery charging stations in Mfaminyen since the inception of the project of two years ago. The records indicate the customer name, the unique identification number of the batteries that were collected and or distributed, and the date of the transaction.
Linis Ita is the Coordinator of Mfaminyen Conservation Society and acted as the community liaison for the planning process in this Mfaminyen PV electrification. He also serves as a board member of Cross River National Park’s Local Advisory Committee and as Supervisor of Budget and Planning, Due Process and International Donor Support in Etung LGA. He earned a Bachelor’s of Education in Community Development at University of Calabar.
Monica Samec is Managing Director of Small World Carbon. She has been working in Nigeria for over seven years in areas including solar, clean cookstoves, carbon credits, climate change, clean energy financing and investment risk. She graduated with distinction from Utrecht University's International Master’s Programme in Science and Business with a specialization in Energy Science.
Dr. Barry Rawn is a researcher at the University of Leuven in Belgium in the area of electricity transmission system operation and planning, with graduate degrees in electrical engineering from the University of Toronto in Canada. He employs his background in renewable energy systems for applied research, educational training and consultancy. He also serves as a reviewer for several scientific journals in power and renewable energy.
Many thanks to the reviewers, especially those associated with the original project, whose contributions served to improve this assessment.