Electricity tariffs in major estates in the Lekki area of Lagos that enjoy 24/hours power have increased prices to as high as N105/kWh Nairametics investigations reveal.
Most estates in the Lekki area of Lagos rely on a combination of grid power from Eko Distribution Company (Eko Disco) and privately generated power to deliver 24/7 power to their residents. The power is contracted via a power purchase contract with independent power suppliers.
Triggered by the new tariff order
According to our investigations, most of the major estates have either increased their tariffs or are engaging in negotiations with resident associations to increase power costs.
In Nothern Foreshore, an Estate located off the Lekki Expressway, the tariff rose from about N58/kWh to has N80.80/kWh. In a letter to residents of the association seen by Nairametrics, the Estate Management informed residents that the decision to increase their tariff was due to the increase in power supply from the grid (Eko Disco).
“Similarly, and pursuant to Section 76 of the EPSR Act 2005 the Nigerian Electricity Regulatory Commission has recently received presidential approval for the implementation of the new Service-Based Tariff (SBT) effective 1ST September 2020.
In view of this, the DISCO Eko Electricity Distribution PLC (EKDP) has directed via a letter dated 4TH September 2020 an immediate implementation of the new approved tariff for the Estate from N29/Kwh to N56.94/Kwh. An almost 100% (Approximately 28 naira) increase. This development will also have an impact on the hybrid tariff for our central power solution. Consequently, we have applied the new approved tariff to the existing hybrid tariff model and reached a new levelized energy tariff for our central power solution of =N=80.80 /KWH.”
A hybrid or blended tariff is derived from the weighted average cost of consumption from the grid and other sources of private power delivered to an estate.
Other estates surveyed by Nairametrics also reveal similar trends. In Friends Colony located around Augungi area of Lekki, tariff increased to N80/kWh while Millenium Estate in Oniru increased theirs to N105.4/kWh. Other estates on both sides of the Lekki Epe Expressway are also said to be deliberating internally as they consider a possible increase in line with the change in grid electricity cost.
A Private Power producer who preferred to remain anonymous informed Nairametrics that there was a need to review their tariffs following the recent pronouncements by the government. “We use blended power to help reduce the cost of power generation thus, a change in a key component of that power will result in a change in the amount we charge the estates. This is why we have informed them of plans to increase the tariffs,” he explained.
For Eko Disco, their tariff increased to N54.08 for non-maximum demand customers and as high as N56.94 for Maximum Demand Customers. These are for Band A customers which according to the service reflective tariff will enjoy up to 20 hours of power supply daily.
Our investigation also reveals estates that are completely off-grid have left their tariffs the same as they observe the effect of the exchange rate on their power cost.
Why this matters: The recent increase in electricity tariffs means the government is no longer subsidizing power supply for locations that enjoy 12 hours and above in power supply.
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- Thus estates with a hybrid of grid and private generation might see a change in their tariffs if they fall within the tariff bands A to C (above 12 hours of power supply).
- However, since tariff increase for those who are in locations classified as Band D & E is not increasing, the estates may not see their hybrid tariffs go up.
Africa’s electricity generation will double by 2030, fossil fuel to be dominant – Research
Fossil fuel is expected to dominate Africa’s energy mix by the end of the decade.
A new research from the University of Oxford has predicted that the total electricity generation across the African Continent will double by 2030.
The study also expects that fossil fuel will still be dominant in Africa’s energy mix by the end of the decade, accounting for two-thirds of all generated electricity across Africa, posing a potential risk to global climate change commitments.
An estimated 18% of the generation is set to come from hydro-energy projects, which have their own challenges, such as being vulnerable to an increasing number of droughts caused by climate change.
The study, which looked into Africa’s energy generation landscape, uses a state-of-the-art machine-learning technique to analyse the pipeline of more than 2,500 planned power plants and their chances of successful commission.
The study shows the share of non-hydro renewables in African electricity generation is likely to remain below 10% in 2030, although it varies by region.
What there are saying
Galina Alova, Study Lead Author and Researcher at the Oxford Smith School of Enterprise and the Environment said that:
- “Africa’s electricity demand is set to increase significantly as the continent strives to industrialise and improve the wellbeing of its people, which offers an opportunity to power this economic development through renewables.”
- “There is a prominent narrative in the energy planning community that the continent will be able to take advantage of its vast renewable energy resources and rapidly decreasing clean technology prices to leapfrog to renewables by 2030 – but our analysis shows that overall it is not currently positioned to do so.”
Philipp Trotter, Study Author and Researcher at the Smith School said:
- “The development community and African decision-makers need to act quickly if the continent wants to avoid being locked into a carbon-intense energy future. Immediate re-directions of development finance from fossil fuels to renewables are an important lever to increase experience with solar and wind energy projects across the continent in the short term, creating critical learning curve effects.”
What you should know
- The study suggests that a decisive move towards renewable energy in Africa would require a significant shock to the current system. This includes large-scale cancellation of fossil fuel plants currently being planned.
- In addition, the study identifies ways in which planned renewable energy projects can be designed to improve their success chances – for example, smaller size, fitting ownership structure, and availability of development finance.
- Fossil fuels include coal, petroleum, natural gas, oil shales, bitumen, tar sands, and heavy oils. All contain carbon and were formed as a result of geologic processes acting on the remains of organic matter produced by photosynthesis, a process that began in the Archean Eon (4.0 billion to 2.5 billion years ago).
- These non-renewable fuels supply about 80 percent of the world’s energy. They provide electricity, heat, and transportation, while also feeding the processes that make a huge range of products, from steel to plastics.
FG insists on no petrol, electricity subsidies in 2021
The FG has insisted that its policy on the removal of subsidies on fuel and electricity in the 2021 budget remains.
The Federal Government has insisted that it will go ahead with its policy on the removal of subsidy on Premium Motor Spirit (Petrol) and electricity, with no provision made in the 2021 budget for their subsidy.
This disclosure was made by the Minister of Finance, Budget and National Planning, Zainab Ahmed, during a virtual public presentation of the Breakdown and Highlights of 2021 Appropriation Act on Tuesday in Abuja.
What the Minister for Finance is saying
While answering a question on whether there would be a return to petrol subsidy following the reduction in petrol price about a month ago, the Minister said the answer is a flat no.
- “We are not bringing back fuel subsidy. We didn’t make provision for fuel subsidy in the budget. The impact of what was done was reducing some of the cost components that were within the template. And also related to it, on matters of electricity subsidies, no provisions have been made for subsidy for fuel and no provisions have been made for subsidy for electricity.”
Also, while talking about the new Finance Act 2020, which took effect from 1 January 2021, Ahmed said the act adopts counter-cyclical fiscal policies in response to the Covid-19 pandemic by providing fiscal relief to taxpayers.
The Minister stated that the government would hold the unclaimed dividends of investors in the stock market in trust and would make the fund available when needed by an investor.
- “On the issue of unclaimed dividends and government’s accounts and projections, there would be as much as N850bn to be realized in the special trust fund of unclaimed dividends. Government is keeping the money in trust for the beneficiaries. At any time, a registrar or a bank confirms that this is the true and bonafide beneficiary of this fund, then the government will release from that trust fund to the investor who has it.”
What you should know
- It can be recalled that the Federal Government, in early 2020, announced the full deregulation of the downstream sector of the oil industry which culminated in the removal of petrol subsidy.
- The government said that following a sharp drop in revenue, it was becoming increasingly unsustainable for it to continue to subsidize the product with funds that can be used for the development of critical infrastructures in the country.
- Similarly, it also pointed out that the removal of subsidy on electricity tariff and ensuring the implementation of the right pricing for power will help attract the needed investment in that sector.
Daystar Power secures $38m funding to grow its West African’ operations
Daystar Power, provider of hybrid solar power solutions to businesses in West Africa, today announced a Series B investment of $38 million.
Daystar Power has announced a Series B investment of $38million.
The company expects to grow its operations in its key markets of Nigeria and Ghana, while deepening its presence in other regional countries such as Côte d’Ivoire, Senegal and Togo with the funds raised.
The company expects to expand its installed capacity to over 100 megawatts – enabling it to meet demand from its clients in the financial services, manufacturing, agricultural and natural resources sectors.
What you should know about the funding
- Taking into account the previous round by Verod Capital and Persistent Energy, Daystar Power has received equity investments totalling $48 million.
- The funding is led by the Investment Fund for Developing Countries (IFU), the Danish development finance institution (DFI).
- IFU is joined by new investors STOA, a French impact infrastructure fund, Proparco, the French DFI, backed by a guarantee from the European Union under the African Renewable Energy Scale-Up facility (ARE Scale-Up); and Morgan Stanley Investment Management.
What they are saying
The CEO and Co-founder of Daystar Power, Jasper Graf von Hardenberg, stated that:
- “By offering our commercial and industrial clients cheaper, reliable and cleaner power, we have seen a more than 50-fold increase in power-as-a-service revenue over the last two years. African businesses are realizing that solar power stand-alone or in tandem with a second power source is a superior energy alternative to the often-unreliable grid or too expensive, polluting diesel generators.”
Thomas Hougaard, Vice President sub-Saharan Africa, IFU said:
- “We believe that Daystar Power has the right elements – the client base, technology, engineering expertise, and executive leadership to scale off-grid solar across West Africa. Not only is Daystar Power at the forefront of a growing market, it is helping to accelerate the adoption of renewable energy in some of Africa’s fastest growing cities.”