United States Involvement in Tesla’s $5bln Gigafactory: Any lesson for Nigeria?

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    Nigeria, known as a World’s most populous black country and Africa’s largest economy with a commodity revenue driven economy which is crude oil is suffering from infrastructural collapse of its power sector in decades, Naija247news finds

    The history of electricity development in Nigeria can be traced back to the end of the 19th Century, when the first generating power plant was installed in Marina, Lagos, in 1898, fifteen years after its introduction in England. Its total capacity was 60kW.

    Nigeria is endowed with large oil, gas, hydro and solar resource, and it already has the potential to generate 12,522 megawatts (MW) of electric power from existing plants, but most days is only able to generate around 4,000 MW, which is insufficient.

    There are currently two main types of power plants operating in Nigeria: (1) hydro-electric and (2) thermal or fossil fuel power plants. With a total installed capacity of 8457.6MW (81 percent of total) in early 2014, thermal power plants (gas-fired plants) dominates the Nigerian power supply mix.

    Nigeria power uses a electric voltage of 220-240Volts. So most of your appliances from places like the United States, with just 110 Volts, would be damaged if you do not utilize a step down adaptor or a foreign travel voltage adaptor / converter.

    Presently, primary source of energy for the production of electricity in Nigeria for the past 45 years remains as coal, oil, water and gas. Therefore, the types of power plants functioning in Nigeria are the hydro-electric and the thermal/fossil fuel power plants.

    According to records Nigeria has spent N2.74 trillion in it’s power sector over the last 16 years (1999 to 2015).Hundreds of homes, small and big businesses spend billions of dollars to power their economic activities with little or no profits or assistance from the government present and in the past.

    Records states that Nigerians Spent N17.5 Trillion On Power Generators In 5 Years which equals approximately to N3.5 trillion in a year.

    Citing the findings of the Committee on Public Inquiry on Metering in the Nigerian electricity supply industry, set up by the National Electricity Regulatory Commission, The Punch says 23.73 million Nigerian households out of the 28.9 million (over 82%, representing more than a half of Nigeria’s population) are lacking access to the national electricity grid. Additionally, about N2 trillion is spent by small and medium scale enterprises, banks, other corporate entities and traders across the country who have no other option but to rely on generators.

    The ever-worsening power supply has led many Nigerian factories to close down, effectively increasing the rates of unemployment. Other manufacturers have chosen to relocate to neighbouring countries to reduce expenditure on fuel for generators. Not only the high cost of procuring energy and a 95% raise in the industrial tariff for electricity are affecting Nigerian manufacturers, but also the unavailability of the product. It is believed, The Punch reports, that, with the exception of Lagos state that has reduced the government’s energy costs through its four independent power plants, other state governments (774 local government areas) have back-up generators to rely on when grid power fails.

    About 550 ministries, departments and agencies are also believed to have supplementary generators. To fuel them, the federal government allocated N815 million for the purchase of fuel and lubricants for cars and generators in the presidency, office of the secretary to the government of the federation and parastatals under them. The 2015 budget also includes N12, 734,332 that will be used for the vice-president’s plants and generators.

    Other agencies under the presidency were also not left out of the provision for fuel and lubricants. Nigerians are forced to rely on generators because of an unstable and weak power supply that ranges from just 2,000 to 3,500 megawatts. This is one of the lowest electricity consumption indicators on a per capita basis in the world when compared with the average per capita electricity usage in Libya (4,270kWh), India (616kWh), China (2,944kWh), South Africa (4,803kWh), Singapore (8,307kWh) and the United States (13,394kWh).

    United States Involvement in the Gigafactory: Any lesson for Nigeria?

    Tesla Gigafactory was widely reported in the news especially since July 2014 when Panasonic announced to partner with Tesla in the construction of the $5billion (USD) factory that is reportedly the world’s largest solar-powered factory and also the world’s largest battery manufacturing plant.

    Admittedly, it appears to be quite an odd topic to talk about Nigeria in a discourse on a United States based Tesla Motors Inc. There are obviously lessons we can draw from this as we shall see later.

    Perhaps the commonest thing about the United States and Nigeria is their need for renewable energy. Of course, the United States is a developed country and Nigeria and Africa by extension is way behind them in the utilization of the several ways Renewable energy can contribute to the nation’s economy and increase the average standard of living of the people.

    But Nigeria as an African economic power must learn to catch up fast with what is already working in other countries.

    For example, let’s look at the Government’s involvement in the establishment of the Tesla Gigafactory, although Tesla Motors Inc. is a privately owned company.

    As I wrote earlier on, the Tesla Gigafactory is cited in the state of Nevada. In 2014, Bloomberg Business News reported that The Nevada State Government has agreed to offer a whopping $1.3 billion in tax incentives to build the world’s largest lithium-ion battery plant in their state. In addition, Bloomberg wrote:

    “Tesla would pay no sales taxes for 20 years and no property or business taxes for 10 years. It also would receive $195 million of tax credits over 20 years.”

    The question remains: “Why would a State Government spend so much resource just to get a private investor to cite a factory in her state?”

    The answer isn’t quite farfetched. The Tesla Gigafactory was estimated to employ about 6,500 people and Nevada state Governor, Brian Sandoval estimated that Nevada would enjoy $100 billion in economic benefit over two decades from the construction of this factory –Quite a huge benefit on the short and long-run to the government, isn’t it?

    Now bringing this down to our country Nigeria, you will quite appreciate the fact that we need more jobs in Nigeria than the United States by far, our government also critically needs more sources of revenue than the United states.

    Naija247news recently reported that Nigeria’s unemployment rate stood at 23.1 percent of the work force in the third quarter, up from 18.1 percent a year earlier, the head of the statistics office Yemi Kale said on his official Twitter feed on Wednesday.

    The economy is a major theme of debate in the lead-up to elections in 2019. President Muhammadu Buhari came to power in 2015 campaigning to fix the economy, but his term has been marred by the country’s first recession in a quarter of a century and a sluggish recovery since 2017.

    “As of Q3 2018, the calculated unemployment rate was 23.1 percent, the underemployment rate was 20.1 percent, and the combined unemployment and underemployment rate was 43.3 percent,” the National Bureau of Statistics (NBS) said in its report published.

    “Accordingly 44.3 per cent of Nigerians in the labour force (not entire population) aged 15 to 24 were either unemployed or underemployed; while another 25.9 per cent aged 25 to 34 were either unemployed or under employed in Q1 2015.”

    Such high unemployment figures as above simply mean that the Nigeria government must strive to ensure that private sector involvement is very much encouraged. Nigeria must borrow a leaf from the United States and the Nevada state government to ensure that the private sector that ultimately generates more employment opportunities for the people and additional revenue to the government are well protected and nurtured from infancy until they can solidly stand.

    The PSC Solar case study:

    We can cite a good number of examples of the positive effects of the private sector participation in the economy of Nigeria, but our own case will suffice for the purpose of this article.

    In the PSC Solar Ikeja office alone, we generate almost 20KWh of electricity and we are completely off grid or not dependent on the nation’s power which already isn’t enough for the entire population. In our Ikeja office alone, we produce excess electricity, some of this we channel to street lights outside of our office that we solely installed and maintain. The Lagos State Government at least should support us and other private sector companies that are tirelessly building up the economy of the nation.

    Assuming the Lagos government encourages 1 million more businesses in Lagos State to generate their own power using renewable energy means, assuming each of these businesses generates 10KW of electricity on the average per head, that is an additional 10MW of electricity added (not taken from) the Lagos State allocated power!

    Note that we didn’t mention the fact that PSC Solar has trained over 200 Engineers and currently employ hundreds more Nigerians! We only chose to talk about our contribution to the energy sector of the economy. This analysis applies to all other privately owned companies in Nigeria who without government’s adequate support still struggle to stay in business by their own initiatives and sweat.
    Ways Nigerian Government can help the private sector:

    In conclusion, I shall enumerate below the ways the government can help and encourage the private sector, bearing in mind the Nevada State’s contribution to the successful completion of the world’s largest Lithium-ion battery plant in the United States that would later generate 6,500 jobs and a $100 billion economic benefits to the government in two decades.

    Here are ways the Government can help:

    Tax Incentives
    Favourable Interest rates
    Favourable trade policies such as the lowering/increase in import quota and favourable tariffs
    Contracting with Private companies on the execution of Government projects
    Funding basic Private sector Research & Development

    About Tesla Gigafactory
    Tesla Gigafactory has been widely reported in the news especially since July 2014 when Panasonic announced to partner with Tesla in the construction of the $5billion (USD) factory that is reportedly the world’s largest solar-powered factory and also the world’s largest battery manufacturing plant.

    What is the Tesla Gigafactory?

    The 1,000 acre land Tesla Gigafactory is an initiative of Tesla Motors Inc. where Tesla batteries will be manufactured at a much-reduced cost thereby reducing the production of Tesla Electric vehicle battery and the Tesla Powerwall as high as by 30%. It is projected that by the year 2020, the Tesla Gigafactory would produce 50 GWh/yr of battery packs as well as 35 gigawatt-hours per year of cells!

    Architecture of the Gigafactory

    Perhaps, the most remarkable thing about the Tesla Gigafactory is its architecture. Before the Nevada site was chosen, Tesla Motors Inc. considered citing the Gigafactory’s site in a number of places including California, New Mexico, Arizona, Texas as well as Nevada where there is an abundant supply of sunlight.

    The 5 million-square-foot (465,000-square-meter), diamond-shaped Lithium-ion battery factory is built with renewable energy in mind especially solar and wind power. The building will generate all the electricity it needs. Take a look at the Tesla Gigafactory below and notice especially how the roof is covered by Photovoltaic panels!

    Tesla Gigaffactory Did you notice the windmills too? Photo: Teslamotors.comTesla Gigafactory Did you notice the windmills too? Photo: Teslamotors.com

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    Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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