Will 24-Hour Power Supply ever Become a Reality in Nigeria?

Will 24-Hour Power Supply ever Become a Reality in Nigeria?

What if I told you that there are people living in Nigeria with a 24-Hour power supply daily? Here’s proof that 24 hours light in Nigeria is possible but expensive.

In this article, we’ll share a Twitter thread posted by @ugodre, the founder of Nairametrics on how he experienced a 24-hour power supply for the whole of 2022 living in an estate here in Lagos, Nigeria and the cost he had to pay.

According to Twitter user, Ugodre Obi Chukwu, For the first time ever my neighbours and I experienced 24/7 power supply for the whole of 2022. ICYDK (In case you didn’t know), some estates in this country have experienced 24/7 power for years. Anyways, how did we achieve this?

It started in 2021 when an independent power operator approached us to take over our internal power supply. This includes grid supply from Eko Disco.

After initial discussions, we signed a contract with the company giving them control of our entire power. The deal included us paying for meters and also purchasing 2,500KWh of power. The tariff at the start was N95/KWh.

Tariff determination was based on a blend of 60% grid supply and 40% from the generator. Meaning we expect Eko Disco to give us light at least 60% of the time. Thus the higher the supply availability from Eko the lower the tariff and vice n versa.

Capex also plays a role in the tariff build though much less volatile. They bought a 60kv generator and another 100kv as a backup.

To get the tariff low, we had to also get other mini estates in the neighbourhood on the deal. We were just six units. So we had to convince others to join. It wasn’t easy because they had to sell their existing generators. We also sold ours (a 25kva at the time).

The contract also required a tariff review once every quarter depending on the dynamics of local grid supply availability and diesel cost. The deal also required that we bought new meters as the existing grid meters weren’t optimized for a blended tariff.

And so we started towards the end of 2021. By the first month, some of us averaged 1,600KWh per month in consumption. At the rate of about N106/KWh including VAT that was like N163k a month from roughly N50k monthly. It wasn’t funny but we had peace of mind. Or so we thought.

By the next month, we all started reducing consumption. Some of us had power police in our houses. For me, the challenge was how to get my consumption below the 1,000 KWh threshold. Some of us invested in inverters against the wishes of the operator who felt we didn’t need them.

I got a 5kv inverter & moved all my equipment to it except for the ACs, water heaters, ironing and cookers. After 2 months my power demand dropped to 1,200 KWh. Still freaking high. My kids couldn’t understand what my drama was all about. “Why pay for what you can’t enjoy Dad”?

Some of my neighbours got their down to below 1k units. Apparently, to go below 1k units you’d have to use fewer Air conditioners (ACs). They are major luxuries when your tariffs are high. In my house, we stopped turning on ACs till midnight. I even moved one inverter AC to the inverters.

At some point, it became a competition for who could get their power usage down. I always lost and started suspecting foul play despite being metered. Money makes you paranoid if it’s draining.

Another major contributory factor to power usage was the number of people in your household. More kids, visitors, and relatives who live with you means more power. In addition, the bigger the house the higher the cost. Electricity usage has a way of installing social discipline.

Makes me wonder if this is why those living in the west hardly entertain long-stay visitors. Perhaps why they hardly have more than two kids. Anyways, things were about to get worse around April 2022.

Diesel prices had gone from N180 to like N250 per litre. Power from discos also dropped to around 40% much lower than the 60% that the tariff was benchmarked against. We received our first notification for a tariff increase.

They informed us it had to go up to N150 per unit. It wasn’t funny at all but we all understood they had a plausible reason to hike it. That wasn’t going to be the last hike in a matter of months.

For us, it meant adjusting our consumption and as expected it dropped for a lot of us. That of course meant the gen could be on for hours & no one used it because you dare not turn on your AC during the day. I suddenly found love in fans.

Solar inverters also had to play a role. Oh btw, Solar inverters are interesting pieces of equipment. It works well during the day but the juice that powers it drops in the night. To keep it going you use the power supply to charge it.

Your tariff could rise depending on how long you charge it. For example, if you charge a 5kv inverter as I do for 6 hours it consumes approximately 24kWh. Do that for 30 days and it’s 720kwh. Easy to understand why the operator warned us against it.

Once some of them figured that’s what contributed to heavy consumption we reduced or outrightly stopped charging it. We just switched to direct in the night. Despite doing this, things were still about to get worse for us.

A few weeks later, they wrote to us insisting they had to change the tariff again. Basically breaching the 3 months clause.

You see, in deals, contracts are just there to guide everyone. When push comes to shove common sense has to prevail. It’s when common sense fails that everyone goes to court.

They informed us diesel prices were volatile and the product was scarce to come by. And so the tariff when to around N250/KWh. Information reaching us also confirmed most estates around Lekki with a similar arrangement observed tariff increases

Oh and the Discos also increased their tariffs exacerbating issues.

By now, everyone’s hair strands were up. We decided to look into the tariff components and how it is determined. Something we never did before. Again, costs have a way of instilling financial discipline and vigilance. It also brings on accountability for all parties.

We scrutinized the year build-up and noticed a lot of items in there were modelled to have us bear the consequences of whatever inefficiencies the operator incurred.

For example, if they refused to hedge diesel prices, we pay the price. We also noticed a term called consumption ratio where the less power we consume the more we pay.

For example, a 100kva generator that’s loaded at say 25% capacity because everyone is reducing consumption will still burn as much diesel as when it’s loaded at 80%.

It was a huge penalty for being power efficient and we weren’t having none of it. In response, they told us we had to bring on more mini estates to the plan. We retorted that it wasn’t our responsibility.

Anyways, while this was going on, the tariff went up to a crazy N350/KWh. Diesel prices were also around 800 naira per litre and so they told us the tariff has to go up. Power from the grid was also very poor dropping to like 4 hours a day.

By this time it was the breaking point. We were essentially spending all our earnings on power. You see, comfort has a price and a limit. Some of us were ready to terminate the arrangement.

But the others who operated Air BnBs were more cautious. They needed the power and their business model could cover the cost. Another interesting aspect of a fast-changing Lagos residential property market. Most Air BnB operators hardly pay tax so costs can be very low.

Some played smart by locking in costs months ahead. That meant buying three months’ worth of power units at current prices. Whilst that brought savings in a volatile environment it meant doling out N600k at a go. Not easy at all!!

Negotiating stepped up and we all demanded collective accountability. We even considered scaling down the size of the generator. Some asked that we ditch 24-Hour power supply as it was no longer affordable based on the current model.

Amidst all this, sector regulator NERC launched the partial activation that forced everyone in the sector to confirm power generation and distribution. Grid Power increased sharply in August, and September and the tariff dropped to around N200/KWh.

It was a huge relief for most of us. Imagine paying N400k a month for 24-Hour power supply. There is no amount of comfort that’s worth it tbh. You still had to contend with the rising cost of food, school fees etc.

It’s been like that since then except for a small increase in early December. A recent hike in tariff by Discos might affect us again but we are yet to get a notification.

What a bittersweet experience it has been but one lesson is clear. 24-Hour power supply is not cheap especially using the modular approach. But it’s probably the quickest way of improving the power supply in the country. Renewables like Solar are great but quite expensive.

Grid power is still the most reliable, efficient and clean source of power but the current market design does not create enough incentive for it to work. And it’s unreliable to power industries

It will cost hundreds of billions of naira to get grid power to reliability levels but that won’t happen with the current market design. One other thing you quickly realize is that Nigeria needs more heavy industrial users to get the cost of power generation down.

A service economy like ours isn’t just suitable for cheap power. It’s a fact!!

Anyways, while the sector continues to flounder, independent power producers like the ones we use are exploring cheaper options.

They will only get better in time with scale. All they need is a concerted partnership with Discos to leverage their distribution lines and infrastructure and things might just be different.

I hope my experience helps others looking to go off the grid or hop onto a similar service as ours learn from our experience. End

He continued with his tweet:

Something I forgot to add in this thread was energy theft. At some point, when the tariff became unbearable, the supplier brought our attention to suspected energy theft.

They claimed one of the residents bypassed their meters and went ahead to slam them N1 million penalty. The accused resident immediately denied the claims forcing a counter-accusation.

We conducted our own investigation and determined the meter was actually bypassed. But there was no proof that the resident did it. They finally agreed on a back billing spread over some months to claw back the losses.

Most DisCos face similar losses emanating from energy theft. Losses cost discos around N29 billion based on monthly average billing efficiency of 77% (they billed N295b). This is based on 2021 Q1 data. Discos racked up total losses of 47.8% out of which 23.4% is commercial.

So the higher the tariff the higher the risk of energy theft despite mass metering. I envisage Nigeria will have to develop its own meter specifications capable of discouraging energy theft. The current ones we have now can’t stop it.

Maybe techies can look into these areas. A 30 billion naira a month problem is a unique opportunity to leverage technology fix with local competencies.

Also important to mention other ancillary service providers operating in this space. There are startups that now provide applications that aid vending, dashboards and energy management tools. We currently don’t have that in our offering but I do know some estates have it.

One of his followers @Dagreatfemi replied under the thread about how he was able to achieve a 24-Hour power supply without a generator or solar system since November 2021.

Thanks for your trend Mr Ugodre. As a middle-class salary earner not staying in an estate, I’ve been able to achieve 24 hours of light since November 2021 except for a total of 6-10 days when there was a national grid collapse. I achieve this without a generator or solar system.

33KVA transformer areas are better than 11KVA areas in terms of power supply. It’s a cheat code I don’t know why it’s like that. My inverter consumes about 4 units when it’s totally down and can serve me and my family for 2 days even with our fridge on.

I live around the Ketu/Ogudu axis which has 33KVA and a guaranteed minimum light of 18 hours daily. I have a 2.5 inverter with 2 batteries that provide electricity anytime there’s no light. My monthly usage at the rate of 49.1 naira per unit is around 300 KWh which costs about 15k. He concluded.

Nigeria’s power sector is notoriously dysfunctional at every level, despite being Africa’s largest oil producer. We are in 2023 and still, citizens have been deprived of something so basic as a 24-hour power supply. Due to the inefficient power supply in the country, Nigerians use generators to power their homes, offices, and shops, which has resulted in massive noise pollution. We are hopeful Nigeria tackles this fundamental problem and switch to renewable energy for a 24-Hour Power Supply which can dramatically reduce our carbon footprint.

How many hours of electricity do you enjoy in your area? Will 24-Hour Power Supply Ever Become a Reality in Nigeria?

Don’t forget to share this article with your friends.