• Nigeria awaits 1,531MW plants
• Fear over cartel as oil majors may control $50b market
Nigeria needs to brace up for about a 150 per cent rise in the cost of solar installations, the slowdown in the energy transition and an increase in electricity challenges as the Federal Government finalises plans to ban the importation of solar panels.
This could worsen the already high energy poverty and increase the cost of doing business as an increasing number of small businesses switch to renewables to reduce the cost of energy consumption.
With planned solar panel assembly plants of about 1,531 megawatts in Lagos, Enugu, Nasarawa, and other locations, Oando, Shell-backed Auxano, LPV Technologies, and National Agency for Science and Engineering Infrastructure (NASENI) are on track to take control of the market, raising fears of the possible emergence of a cartel.
Stakeholders have warned the government to drop the importation control plan, especially at a time when it is unable to provide electricity through the national grid. They insisted that the hope that state governments and individuals would leverage off-grid solutions would remain elusive.
Currently, a 100W 12V polycrystalline solar panel, containing 36 cells, is imported into Nigeria for approximately N22,000 but sold by some local manufacturers such as the National Agency for Science and Engineering Infrastructure (NASENI) for N28, 000 leaving a gap of N6,000, Managing Director, Deemich Renewable Energy Nigeria limited, Gbenga Olapade, said.
Previously, the foreign exchange and inflation crises had moved the cost of deploying solar by over 50 per cent when compared with the cost in early 2023.
Olapade said homes and businesses that were installing 1kva of solar for about N500,000 now have to part with about N1.2 million, even as an average home needs about 5kva, which is about N6 million, while small to medium-sized businesses require an average of 10kva, at a total initial investment cost of about N12 million.
Olapade noted that the cost of premium motor spirit and diesel, as well as the rising cost of electricity, has created more patronage for solar organisations, but that the planned ban on panel imports would reverse such renewable energy expansion.
The Rural Electrification Agency (REA), which controls over 90 per cent of solar funds in Nigeria, said more than N200 billion has already been spent on solar importation.
This implies that the N200 billion spent on solar imports in recent years would have cost a staggering N254.54 billion if procured locally.
From a mere 11MW in 2015, Nigeria’s solar deployment grew to 102MW by the end of 2022, 143MW in 2023 and 144MW in 2024, according to the International Renewable Energy Agency (IRENA).
The bulk of the solar panels in Nigeria are imported from China, which remains dominant not only in solar production but also across the broader renewable energy value chain, keeping import costs lower compared to local assembly.
Currently, Nigeria’s installed solar PV assembly capacity stands at about 131MW, with around 1,400MW planned capacity, bringing the future capacity to approximately 1,531MW, significantly higher than the current cumulative installed solar capacity of 385.7MW across the country.
Oando Clean Energy is developing a 1,200MW solar assembly plant in partnership with the REA. The company’s President, Ademola Ogunbanjo, disclosed that the first 600MW line is expected to kick off next year.
Nigeria is channelling part of a $950 million Distributed Access through Renewable Energy Scale-up (DARES) loan from the World Bank and Japan International Cooperation Agency into this project.
Ogunbanjo warned that if import trends continue, up to 90 per cent of the estimated $50 billion African countries are expected to spend on PV infrastructure over the next decade could flow to China.
Other players include LPV Technologies, which has opened a 100MW solar assembly plant in Lagos.
Its Executive Director, Yinka Adelodun, maintained that a zero-import policy is the right strategy to bolster local production, citing global supply chain disruptions as a risk Nigeria must guard against.
Auxano Solar has also invested over $500 million into a 110MW facility in Lagos, backed by All On, an investment company founded by Shell.
Meanwhile, a N60 billion solar photovoltaic (PV) module assembly plant is under development in Enugu state and the NASENI is constructing a $325.8 million solar cell production plant with a 21MW capacity in Nasarawa state.
Also, RIPLEnergy Company Limited, the renewable energy subsidiary of the Nigeria Sovereign Investment Authority (NSIA) and PASH Global Management Limited have signed a joint venture to develop a 2.6MW ground-mounted solar PV plant with a 6MWh battery storage system, also in Nasarawa state.
Chief Executive of Green Growth Africa, Dr Adedoyin Adeleke, criticised the proposed ban, questioning the government’s logic.
“Nigeria has several reasonable doubts. Aso Rock wants to spend N10 billion on solar energy systems, yet they plan to ban the import of components. What is the total local production capacity for solar energy components in the country?” Adeleke asked.
He warned that while Nigeria must strive for self-reliance, poorly crafted policies could backfire, noting that solar system demand surged because of the national grid’s persistent failure.
He cautioned that the early adoption of solar energy in Nigeria was marred by poor-quality products, leading to consumer mistrust.
Adeleke said: “Now that consumers have access to globally competitive brands, banning imports could reintroduce quality concerns.”
Adeleke urged the government to first strengthen local capacity, attract international manufacturers to set up plants in Nigeria and build a competitive local market rather than resorting to a “military-style” ban.
Former President of the Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, similarly criticised the move.
“One wonders why the government is getting it wrong. What is the current capacity of local producers? Are the raw materials even available locally at the right quality? How significant is solar panel importation in Nigeria’s total import bill?” he asked.
Ajibola described the proposed ban as a distraction from more pressing issues in the power sector, stating that “leadership of the sector should let Nigerians breathe, as the suffocating impact of the controversial electricity tariff banding remains unresolved.”
President of the Nigerian Economic Society (NES), Professor Adeola Adenikinju, also voiced concern.
“In my view, it is too early to ban the importation of solar products into Nigeria. We are grappling with high living costs, inflation, high energy prices, and poor electricity supply. Businesses and households are barely surviving. Imposing a ban now could worsen the situation,” Adenikinju said.
He emphasised the need for a comprehensive, phased plan with credible data, public education, and support mechanisms before contemplating a ban.
Executive Director of PowerUp Nigeria, Adetayo Adegbemle, said the ban could backfire, citing past examples.
“We have seen how banning food imports only led to higher prices and inflation without achieving self-sufficiency. The same mistake could be repeated with solar products,” he said.
Adegbemle called on policymakers to prioritise boosting manufacturing capacity, improving quality, and encouraging exports, rather than creating an environment ripe for smuggling and market distortion.
The Minister of Science and Technology, Uche Nnaji, had said the Federal Government is willing to support local manufacturing of solar panels while restricting imports.
The Managing Director of the REA, Abba Aliyu, also hinted at a possible ban, insisting that domestication remained the right way to go.
Renewable Energy Association of Nigeria (REAN) acknowledged that government intentions would create security and employment, but warned that creating an enabling environment for businesses to thrive must come before any restrictive measures that could stifle progress and inadvertently hurt the very industry the government seeks to empower.(Guardian)
