TECHNO-ECONOMIC VIABILITY OF SOLAR PHOTOVOLTAIC SYSTEM FOR OFF-GRID ELECTRIFICATION IN YOBE STATE, NIGERIA

Uduak S. Akpan, Salisu R. Isihak, Ye-Obong N. Udoakah SPIDER Solutions Nigeria

u.akpan@spidersolutionsnigeria.com

Presented at Nigerian Solar Energy Forum and Exhibition, 6th -7th May, 2015, Reiz Continental Hotel, Abuja, Nigeria

TABLE OF CONTENT

CONCLUSION

RESULTS

BASE CASE SCENARIOS

METHODOLOGYMODEL ASSUMPTIONS/SPECIFICATIONS

BACKGROUND

ELECTRICITY ACCESS SITUATION IN NIGERIA ELECTRIFICATION OPTIONS

ELECTRICITY ACCESS SITUATION IN NIGERIA (2013) • 1.3 billion people in the world; over 600 million in Sub-Saharan Africa (SSA) do not have

access to electricity (IEA, 2014)• Electricity Access rate in Nigeria = 56% (NPC, 2014)• Majority are rural dwellers who often live far from the existing grid• Rural communities have dispersed settlement pattern, low electricity demand, and are low

income earners.

Figure 1: Electricity access rate in Nigeria by statesSource of data: NPC (2014)

Figure 2: Population density of statesSource of data: NPC (2006)

Figure 3: Coverage of the existing grid in NigeriaSource: Transmission Company of Nigeria

ELECTRIFICATION OPTIONS• Nigeria seeks to expand access

to electricity in rural areas• Electrification options: grid-

extension, off-grid (including stand alone systems)

• Electricity sector is privatized and private sector is driven by profit maximization motives.

• Given the issues listed earlier, grid extension is less likely, off-grid may be more feasible for states with low electricity access

• Which off-grid technology?

METHODOLOGY / SPECIFICATIONS

PROJECT SITE• Nguru, Yobe State.• High average annual solar irradiation (6.12 kWh/m2/day)

We use RETScreen

Average monthly solar irradiation level in some locations in Northern Nigeria (in kWh/m2/day)

Maiduguri Nguru Bauchi Damaturu Gashua GombeJanuary 5.61 5.53 5.74 5.63 5.59 5.68February 6.3 6.34 6.21 6.34 6.41 6.19March 6.7 6.77 6.4 6.72 6.83 6.45April 6.62 6.97 6.12 6.78 6.98 6.43May 6.36 6.82 5.88 6.53 6.72 6.21June 5.97 6.62 5.66 6.24 6.53 5.79July 5.43 6 5.25 5.58 6 5.28August 5.14 5.58 4.95 5.27 5.57 5September 5.57 5.86 5.43 5.68 5.78 5.36October 5.89 5.97 5.85 5.86 5.89 5.72November 5.84 5.7 6.01 5.62 5.7 5.7December 5.35 5.24 5.71 5.3 5.27 5.45Average 5.90 6.12 5.77 5.96 6.11 5.77

Electricity demand profile of community (up to year 5)

Description Base case load

Hours of use per day

Days of use per week

5 x 10W x LCD bulbs x 100 households 5000 8.00 7

1 x 160W x television x 100 households 16000 15.00 7

1 x 15W x DVD x 100 households 1500 15.00 7

1 x 400W x refrigerator x 40 households 16000 18.00 7

3 x100W x others household appliances x 50 households 15000 15.00 6

2 x 400W x refrigerator x 1 health centre 800 18.00 7

10 x 100W x appliances x 1 health centre 1000 18.00 7

10 x 100W x appliances x 1 school 1000 8.00 5

3 x 100W x appliances x 1 mosque 300 4.00 7

N/B: All items use AC current; the average daily electricity demand is 822.67kWh; the annual electricity demand is 300.28MWh; the maximum load for the system is 56.7kW; and the study assumes peak load of 72kW.

SPECIFICATIONS contd

PV module specification

• The study selects mono-Si - HIP-215NKHA5. • Rated Power (215W)• Maximum Power Voltage (42.0V)• Maximum Power Current (5.13A)• Normal Operating Condition Temperature

(460C)• Module Area (1.26m2)• Weight (16Kg)• Dimensions L x W x H (1580 x 798 x 46 mm)

etc

PV module cost

• Unit cost of the photovoltaic panel: US$3200/kW• System cost = 85% of total cost

Financial variables

• Inflation rate (9%)• 80% of the cost of the project will be financed with term

loan of 15 years at 14% interest rate.

Financial variables• Inflation rate (8.5%), Discount rate (8%)• 50% of the cost of the project will be

financed with term loan of 15 years at 11% interest rate.

• INITIAL COST Feasibility study site investigation, preliminary design, report preparation

Development permits and approvals, project management, travel and accommodation

Engineering PV system design, electrical design, tenders and contracting, construction and supervision

Renewable energy equipments

PV module(s), inverters, transportation

Balance of plant: module support structure (batteries, tracking system), electrical equipments, system installation, construction of mini-grid, transportation

Miscellaneous: training, contingencies • ANNUAL COST Operation and maintenance :

Property taxes/insurances, others, contingencies

BREAKDOWN OF COST COMPONENTS

SPECIFICATIONS contd - Configuration

RESULTSPayment for grid-electricity

• With a tariff of N22/kWh (US$0.15/kWh), the annual total electricity cost of annual electricity demand of 17.83MWh is US$2674 which is the annual cost-savings assuming the off-grid option is used.

• Assuming the electricity tariff is not reviewed, households will spend US$66,850 in 25 years on electricity bills

Off-grid electrification (base case)

• Investing in solar PV system yields a negative net present value (-US$21,195) indicating a huge financial loss

• Negative annual lifecycle savings per year (-US$1,986/yr).

• Other financial indicators : Internal rate of return on equity (3.0%); internal rate of return on asset (0. 2%); simple payback time (28.9years) ; equity payback time (21.2 years)

Cumulative cash flows graph

Year

Cum

ulat

ive

cash

flow

s ($

)

-800,000

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Cumulative Cash-flow graph

Sensitivity (Breakeven) Analysis- Electricity tariff level - Cost of solar PV system - Government grant

Financial indicators for the breakeven analysis

Base case Scenario 1 Scenario 2 Scenario 3Financial Indicators

Break-even value Tariff level = US$0.112/kWh

System capacity cost = US$1899.47/kW

Start-up grant = US$255313.36

Net present value ($) -255,313 0 0 0

Annual life-cycle savings ($/yr) -28,127 0 0 0

IRR on equity (%) 4.4 10 10 10

IRR on assets (%) 0.9 4.7 4.7 2.7

Simple payback time (years) 27.3 17.9 17.9 15.7

Equity payback time (years) 20.9 17 17 immediate

Sensitivity (Breakeven) Analysis Contd.Cumulative cash flows graph

Year

Cum

ulat

ive

cash

flow

s ($

)

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Cumulative cash-flow graph for electricity tariff level and cost of PV system

Cumulative cash flows graph

Year

Cum

ulat

ive

cash

flow

s ($

)

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Cumulative cash-flow graph for amount of start-up grant

Conclusion and recommendations• Off-grid electrification using solar PV system may

viable in Yobe State with adequate economic and financial incentives from government support such as the provision of low interest loans or financial grants as stated in the revised renewable energy masterplan

• Government should create mechanisms to support private sector investment in mini-grid based off-grid electrification programmes using PV systems in Yobe

• A legal and regulatory framework that encourages private sector participation in ensuring access to electricity in rural areas should be introduced

Thank you

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