Nigeria's economy is effectively running on 20 million fuel generators. Despite the fact that since 2015 the import of small generators has been banned in Nigeria, its economy is still heavily dependent on about 20 million small gasoline generators running daily. The collective capacity of which surpasses the entire national grid's ability by eightfold. The inadequate grid capacity, outdated infrastructure, and transmission constraints have led to an average available capacity of only 5 GW in 2022, further exacerbated by unreliable electricity access.
This widespread use of small generators in Nigeria poses multifaceted challenges.
The toxic fumes released by these generators have resulted in a staggering 1,500 deaths annually. The extensive inhalation of generator smoke not only poses immediate health risks but also contributes to a 70% increased risk of lung cancer among those exposed. Additionally, two-thirds of generator users report impaired hearing, painting a grim picture of the silent toll exacted by these seemingly indispensable power sources.
In addition to the health impact, the climate impact is equally devastating, with 75 million liters of fuel consumed daily, with an aggregate emission of 40 million tons of carbon a year in Nigeria alone. Nigeria's commitment to reducing greenhouse gas emissions by 45% by 2030 is undermined by the environmental footprint of these generators.
Fuel prices tripled in 2023 and solar generators are now the preferred solution for customers
Fuel prices in Nigeria skyrocketed in July 2023 after subsidies had been removed. The price per liter has since tripled, which makes the usage of fuel generators more costly, with yearly costs estimated at around $12 billion. Meanwhile, the solar generator hasn't changed in price, which is now making the solar generator the preferred and cheapest option for electricity generation.
Solar generators are still more expensive than fuel generators on a cash basis. However, after around 2 years, it is typically repaid and customers are “in the money” and receive their electricity for free. The continuous R&D improvements of the A2EI are helping make the solar generator more affordable, in order to reach the tipping point at which every customer will prefer a solar to a fuel generator.
The A2EI has invested around $ 5m of its own funds to develop the solar generator and install the first 2.000 solar generators in Nigeria. The demand is much higher, in particular since the fuel prices surged. The question now is how to scale the solar market in Nigeria.
The “Green Genset Facility” can unleash a new asset class of around $ 20 bn
The biggest obstacle is the lack of working capital that local companies will need to purchase the solar generators before selling it to customers. To aid with this, the A2EI has developed a so-called Green Genset facility with a funding objective of $100 million. The facility will provide funding for local distributors and track repayment patterns digitally. Overall, the asset class of solar generators is estimated to be $20 bn, in Nigeria alone.
A2EI's vision is to provide an accessible solution by reducing the upfront costs of solar systems. Thomas Gottschalk, CEO: "Our goal is to bring sustainable and affordable electricity to all, combating global warming by replacing millions of fuel generators with reliable solar alternatives, not only in Nigeria."
Global demand for the solar generator is soaring
The solar generator was initially designed to address the fuel generator challenge in Nigeria, however, there has been demand from other countries like South Africa and the Democratic Republic of Congo that also heavily rely on fuel generators. In South Africa for example, the quality of the energy provision has plummeted in 2023, with increasing load shedding. Customers try to overcome the lack of energy provision by purchasing fuel generators which makes South Africa a prime market to position the solar generator as a clean and affordable alternative.
In addition to new geographical markets, new sectors such as the market for health centers have emerged as suitable candidates for the installation of solar generators. Small healthcare centers and clinics can be equipped with solar generators to cover most of their energy needs. A first contract to install 75 solar generators in Nigeria has been announced recently.
A2EI's journey unfolds with a successful pilot project replacing 2,000 fuel generators, showcasing tangible improvements in the quality of life for users and significant carbon savings of up to 30 tons of carbon per system. The organization now envisions scaling this success to eliminate millions of generators, with its Green Genset facility as the main financing pillar.
A2EI aims to provide a sustainable and cost-effective solution for improving energy infrastructure in countries like Nigeria, South Africa, the Democratic Republic of Congo, and many more. By focusing on distributing the technology as a public good, the institute hopes to create a more sustainable and efficient energy system for all.
Media Contact:
Name: Thomas Duveau
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