Ending Nigeria's fuel subsidy pushes a shift to solar. Without a climate plan, progress is at risk

Nigeria's removal of a subsidy that helped reduce the price of gasoline has increased costs for people already struggling with high inflation

As soon as Bridget Mosanya went to get a book from her bag to study, it started to rain. The power immediately went out, as it virtually always does in Nigeria, even if it is barely drizzling.

“NEPA has taken light,” the 17-year-old said in her now-dark room. She was referring to the National Electric Power Authority, a long-defunct public utility whose abbreviation is still the commonly used name for the intermittent power supply from Nigeria’s fragile electric grid.

Her father, Tunde Mosanya, turned on the family’s small solar system, lighting up the living room, master bedroom and his daughter's room. It was enough for Bridget to finishing studying that night.

But a street away, on the east side of Nigeria’s capital of Abuja, 13-year-old Bamkinaan Panshak would have to wait to do his homework until the power was restored or make do with his parent’s half-charged cellphone flashlight.

His family used to start up their gasoline-powered backup generator during blackouts because they do not have a solar system. But since new President Bola Tinubu removed a subsidy that helped reduce the price of gas, they can't afford the cost of fuel.

"It is just beyond means for now," said Bamkinaan's father, Guleng Panshak, who is a teacher.

The end of the long-running fuel subsidy last month has increased interest in solar, operators say, which could accelerate progress toward mitigating climate change in Africa's largest economy. But experts say the government needs a clear plan to make the most of this new opportunity to advance Nigeria’s climate goals, which include eliminating fossil fuel-run generators widely used to keep the lights on in homes and businesses.

Reducing fuel costs was a popular but environmentally and economically costly system.

The state petroleum company, NNPC, says Nigeria spent 4.39 trillion naira ($9.7 billion) on the subsidy last year, leaving the government struggling to finance infrastructure projects, including rail systems that could help reduce emissions from vehicles.

Gas-powered generators also contribute significantly to emissions, having proliferated under the subsidy in a country where only half the population of more than 200 million have access to grid electricity. Those who do often endure blackouts.

Solar adoption, on the other hand, has largely been hampered by relatively high upfront costs, with only 1.25% of Nigerian households installing those systems, according to a 2022 study conducted by Boston Consulting Group and All On.

If 30% of Nigerian households turned to solar by 2030, 5 million metric tons of carbon dioxide would be avoided, reducing emissions from households by 30%, the study added.

The new president has acknowledged that removing the fuel subsidy “will impose an additional burden on the masses of our people,” who have seen gasoline prices triple while struggling with high inflation and unemployment.

It is a pain point that could lead to longer-term climate benefits.

“We are already getting a lot of customer inquiries and requests for solar,” said Segun Adaju, president of the Renewable Energy Association of Nigeria. “Many potential customers are already ordering their solar systems.”

“Also, this is a great opportunity to cut emissions by reducing the use of fossil fuels and shifting to solar and electric vehicles,” Adaju said.

Bridget’s father, Mosanya, now wants to avoid gasoline altogether and use solar to power all their appliances — including refrigerators, air conditioners and televisions — when there is a power outage.

Installing an expanded 4-kilowatt solar system, according to Lagos-based energy engineer Kunle Adesiyan, would meet Mosanya’s needs and would cost “conservatively” 3 million naira ($6,452).

That cost is too expensive for most families and small businesses.

Any potential environmental benefits of eliminating the fuel subsidy would be lost without a comprehensive plan to make renewable energy more accessible and affordable, energy economist Tobi Oluwatola said.

He proposed incentives such as tax credits and low-interest financing for people who use solar and businesses that provide solar installations.

“Nigeria also needs to implement its net metering policy to allow solar owners to sell excess power to the grid during the day and reduce their net electricity bills. This would reduce the need for battery storage,” said Oluwatola, CEO of TAO Energy in Abuja.

The cost is holding back Ifeanyi Ogbonna.

He owns a pharmacy in Abuja and would prefer to use solar energy but said installing the system would be costly given that his business needs a refrigerator and air conditioner. That means he will stick with his gas-powered generator.

“Although the price (of gasoline) has risen, I can still struggle to meet the expenses on a regular basis because they are smaller in comparison to spending so much — more than a million naira all at once — to get the solar capacity I require,” Ogbonna said.

Incentives like waivers on customs duties for imported solar equipment also would help expand access to off-grid solar energy for homes and businesses, said Adaju of the Renewable Energy Association.

Those charges apply except when raw materials are imported to make solar systems and generate value in Nigeria, said Abdullahi Maiwada, a spokesperson for the Nigeria Customs Service.

He said the government’s fiscal policy would have to be reviewed to stop or reduce the charges on imported solar equipment.

Tinubu’s campaign did not prioritize climate change, and he has not detailed his plan to address the issue since assuming power. A spokesperson for the president did not immediately respond to a request for comment.

Nigeria is Africa’s second-largest carbon emitter — following South Africa — and is considerably affected by climate change fallout such as sea level rise and flooding, which threaten livelihoods, food security and increased conflict.

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