Daystar Power, a part of the Shell group, and RMI (Rocky Mountain Institute), in collaboration with the U.S. Trade and Development Agency (USTDA), have released a groundbreaking feasibility study titled “Scaling Utility-Enabled Distributed Energy Resources for Nigerian Commercial & Industrial (C&I) Customers.” This study introduces an innovative business model aimed at deploying grid-connected hybrid solar power systems in Nigeria. The projections suggest that implementing this model could unlock 3.3GW of solar capacity and attract investments worth $6.5 billion.
Targeting 170,000 corporations and industrial manufacturers in Nigeria, the study offers significant cost savings by transitioning from diesel-fired generators to utility-enabled solar systems with backup battery storage. Notably, this model not only benefits C&I customers but also presents advantages for electricity distribution companies (DisCos). Businesses can reduce energy costs, while DisCos can increase revenues through enhanced grid consumption and connecting new customers.
Victor Ezenwoko, Country Head of Nigeria and Ghana for Daystar Power, expressed enthusiasm about the study’s results, emphasizing the importance of innovative solutions to deepen Nigeria’s solar market and provide affordable and reliable power to businesses.
The pilot group results from the feasibility study are promising. C&I customers saved an average of 26% on energy costs, while DisCos witnessed profitability surges of up to 1,000%.
In 2023, Daystar and RMI conducted Nigeria’s first-ever feasibility study for custom hybrid solar power systems, collaborating with electricity distribution companies such as Abuja Electricity Distribution Company (AEDC), Eko Electricity Distribution Company (EKEDC), and Ikeja Electric (IE). Among the 20 customers involved, The Wood Factory, an Abuja-based furniture manufacturer, became the first to sign an agreement with Daystar and AEDC on January 19, 2024.
Suleiman Babamanu, RMI’s Nigeria Program Director, expressed pride in de-risking a pipeline of projects and facilitating the signing of the first project agreement of its kind in Nigeria. The business model demonstrates the potential for sustainable grid development and scaling distributed energy systems, creating win-win scenarios for customers, developers, and DisCos.
The unique tripartite agreement between the customer, Daystar, and the DisCo forms the basis of the business model. Daystar installs and operates fully-financed hybrid solar systems for Nigerian businesses, providing power during daytime peak hours, while DisCos extend grid power during evening, night, and early morning hours. Backup batteries and generators ensure reliability during grid outages.
The model addresses grid infrastructure challenges faced by C&I customers, who often experience poor reliability due to blackouts. Many rely on expensive diesel-fired generators as primary and backup power sources. The rising diesel prices in Nigeria further exacerbate this issue. Daystar aims to finance upfront grid infrastructure upgrades, incentivizing DisCos to prioritize grid supply to C&I customers.
In conclusion, the feasibility study presents a transformative approach to energy provision in Nigeria, offering cost-effective and reliable alternatives to traditional energy sources while fostering collaboration between solar companies, DisCos, and the national grid.
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