With the Christmas holidays fast approaching, Mr. Celestine Inyang and his family have decided to purchase an alternative power source to fill the gaps in the 9 hour power supply they receive daily.
So the first thing Celestine did was familiarize herself with the investor market. She would soon learn that there are two types of inverter systems: the inverter backup system and the complete solar system.
He also learned that while some investors are smart and may choose solar power as their priority, others may choose utility providers as their priority.
Please note that inverters are conversion systems that convert alternating current (AC) to direct current (DC).
Anyone wanting an alternative power supply source will have to choose between either of the two types of inverter systems mentioned above. Its characteristics are detailed below.
The inverter backup system: This consists of only an inverter and batteries. Some people fix these installations without solar panels on their houses and offices.
- If a particular locality has up to 6 to 8 hours of power supply in a day, the batteries in this system are charged using the utility supply (DisCos Regional).
- Power from the utility comes via AC. When the power supply goes through the inverter, it will be converted to DC and stored in the batteries.
- When power is not available, the inverter converts DC power stored in the battery to AC for use in the home or office. PHCN charges the batteries in this case.
Meanwhile, users can have an inverter backup system that does not have solar panels. In the absence of a utility power source, it will charge the batteries and store energy in them, so when there is no power, the batteries will provide power through the inverter that converts DC to AC.
The complete solar system: In this setup, solar panels are used to charge the batteries. During the day, the panels generate the power that is stored in the batteries, so when there is no utility power (PHCN), the batteries provide backup power. It is important to understand that there are inverters that have solar panels. The complete solar system consists of solar panels, charge controllers, inverters and batteries and other safety devices such as surge protector. In this case, the solar panels charge the batteries and when there is no utility power, the batteries provide power.
Let’s talk about the costs: Costs for any of the inverter systems are subjective because cost is often dependent on capacity.
- Chigozie Enemoh, the founder of renewable energy company Swift Tranzact, told Naijaonpoint that if someone is installing a 3KVA inverter with 4 batteries, it won’t cost the same as installing a 5KVA inverter with 8 batteries.
- According to him, these materials have specific costs. The system design is mainly focused on the energy demand of the place: house or commercial building.
- For example, a flat with three freezers, a microwave, a washing machine and a fridge will not consume the same amount of energy as another flat with only a fridge, some light points and a television.
Enemoh also noted that energy demands are different from person to person. Therefore, energy audits should be conducted to determine energy demands before designing a system for a particular use. Doing this helps to get a holistic estimate of all the loads in the home or office, from the TV, lighting fixtures, and other appliances, to determine the number of watts needed for each. He said:
- “Another determinant of cost is the type of batteries. In Nigeria, there are two types of batteries: the wet cell and the dry cell. Wet cell batteries generally contain distilled water and require maintenance every four to six months. 200 amps of wet cell batteries cost between N150,000 and N165,000.
- Dry cell batteries, also known as valve regulated lead-acid (VRLA) batteries, cost N165,000 to N215,000depending on the brand.
- What system designers must calculate is how many of these batteries are needed. For example, if a user wants to use two wet cell batteries, that means the user has to budget N300,000 for batteries alone. If the user chooses to use four batteries, that’s about N600,000.”
The same applies to investors. There are several types: 2 KVA, 3 KVA, 5 KVA, 10 KVA and higher. enemoh said:
- “On average, one can buy a 3 KVA inverter from N200,000 to N250,000. 5 KVA inverters cost between N350,000 and N450,000. This will all depend on the brand, as prices differ between various brands. In addition to inverters and batteries, which are the main components, users must also purchase AC and DC cables to be used for system configuration, as well as safety devices such as circuit breakers, surge protectors, etc.
- “For a 3KVA inverter with four batteries, the user will probably spend between N1 million and N1.5 million to install it in a home or office, depending on the brand or the quality of the product. This is enough to maintain a basic Nigerian household with just a refrigerator and lighting fixtures.
- “If the user is considering setting up a full solar system, it is instructive to note that the ratio of solar panels to batteries is either 2:1 or 2.5:1. What this means is that if the user has four batteries, they must also get 8-12 solar panels to set up the system.
- “As of December 2022, a 280-watt solar panel costs between N80,000 and N85,000. The 350 watt solar panel costs between N90,000 and N98,000. All these costs depend on the brand and quality of the product.
- “The user will spend up to N2.2 million and N2.5 million to install a standard 12 solar panel, four batteries and a 3 KVA inverter.”
The implication of costs: The above costs show that the average Nigerian struggling with multiple financial constraints in a country with an inflation rate of 21.09% may not be able to afford these technologies.
However, Naijaonpoint understands that there are options for flexible payments.
Cheaper options to consider: Although these costs are high, there are ways to access these alternative energy sources through outside financiers. Renewable energy companies in Nigeria now partner with financiers to help people purchase these alternative sources through flexible payment plans.
Some companies that already do this are Sterling Bank (through its AltPower platform), Carbon and RenMoney. These companies have a project financing approach.
- The point of the partnership is that if, for example, the cost of the project is N2 million and the user has N500,000, the latter sum could be paid to the renewable energy company providing the technologies. The loan company then pays the balance of N1.5 million and then spreads the repayment of the balance over 12-24 months on a flexible user repayment plan, with an interest rate of 3% to 20%.
- In this way, the user makes payments every month until the loan of N1.5 million is paid in full to the loan company. If the user pays for 24 months, the payment will be about N100,000 per month. Sterling Bank serves salaried individuals with a domiciled account at the bank, as well as corporate organizations for this third-party project financing. Loan companies serve both individuals and businesses.
- However, for people to access project finance loans from loan companies, they must show a steady stream of income that allows them to repay the loan.
Why technologies are expensive: For one, they are imported. Industry players import these products using United States dollars (USD)
And as the Nigerian forex rate continues to rise, so do the prices.
Efforts to reduce costs: Some industry players are still looking for ways to cut costs so more Nigerians can buy investors. However, Enemoh told Naijaonpoint that the cost of manufacturing in Nigeria is still very high. This is because power supply and other challenges are significant in the Nigerian manufacturing sector, which increases the cost of production and ultimately increases the costs of finished products.
Auxano Solar used as context: Nigerian solar panel manufacturer Auxano Solar provides context to this argument. According to Enemoh, if you compare the prices of Auxano Solar’s solar panels with the prices of imported solar panels, you find that there is not a huge difference because of the amount of money that goes into local production.
Possible options for Nigerians: For Celestine Inyang, the third-party financing option through loan applications would be easier for a civil servant like him.
However, it is important to reiterate that there are millions of Nigerians who work part time and cannot access these loans because they are contractors.
More solutions are needed to make renewable energy technologies accessible to all Nigerians.
… What you need to know before buying your first solar inverter system Read more at … Naijaonpoint.