Why investors should invest in renewable energy to drive Nigeria’s manufacturing sector

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Charles Nwaoguji 08032715118 defeminternational@yahoo.com

It’s no longer news that the cost of production is very high in Nigeria as manufacturers spend so much on power to produce their products. At the end, the cost is shifted to the consumers, who in turn drops it and goes for the cheaper ones which are imported into the country in place of locally produced products.

When the cost of energy is factored into production cost, it becomes very high for anyone to bear. This is the reason why every manufacturer must begin to look inward by investing in renewable energy in 2019, so as to reduce cost of production.

The manufacturing process generally uses a substantial amount of electricity, which makes a manufacturer an excellent candidate for solar energy. In addition, manufacturers typically operate in large buildings with a lot of available roof space for a solar system. Solar energy will save a manufacturer thousands of naira over time on electricity costs and provides a hedge against energy price increases which will make him more competitive.

But as global energy demand continues to rise, driven by emerging economies nations, total worldwide energy usage is expected to grow by nearly 40 percent over the next 20 years. That will require a staggering amount of coal, oil and gas.

But it’s not just fossil fuels that will get the nod. The demand for renewable energy sources is exploding, and according to new study, we haven’t seen anything yet in terms of spending on solar, wind and other green energy projects. For investors, that spending could lead to some serious portfolio green as well.

How can an environment be sustainable, healthy and the people living in it be healthier? One sure way is when countries or governments begin to harness natural resources like renewable energy as an alternative means of energy generation to cushion the effects of pollution and climate change – a global challenge that is affecting the environment and health of man.

Renewable energy is energy gained from natural resources such as sunlight, wind, rain, tides, waves and geothermal heat, which cannot be exhausted but replenished.

According to experts, it could also replace conventional fuels in four distinct areas like electricity generation, air and water heating/cooling, motor fuel and rural (off-grid) energy services. Renewable energy technologies range from solar power, wind power, hydroelectricity/micro hydro, biomass and biofuels for transportation.

Current projections from the International Renewable Energy Agency (IRENA) show that at least 70 percent of Africa’s 600 million people are not connected to the electricity grid. Instead, most are forced to rely on inefficient, expensive and polluting energy sources to power their homes and businesses.

Industry Sun invegration shows that in Africa, Kenya, Ethiopia and South African countries are leading in the renewable energy revolution. The advantages of renewable energy utilization cannot be overemphasized, especially to a developing country like Nigeria, where population growth is high with an increase in industrial activities, which results into environmental pollution and economic difficulties from more consumption.

Other industries that can benefit from solar energy apart from manufacturing

Agricultural

Agricultural operations, such as poultry and dairy farms, also use a lot of electricity and typically have lots of sunny, available roof space. For example, a chicken farm requires electricity to run fans and must maintain a consistent temperature throughout the year. A roof mounted solar system allows the business to switch from electricity generated by the utility company, to clean electricity generated on site.

Commercial

A commercial business, such as an office building or department store, will see a similar return on investment as a manufacturer or farmer. If you have available roof space and would like to take control of your electricity costs, you are a perfect candidate for solar energy.

How it works

Nigerian manufacturers has the potential to exploit its abundant solar energy resources considering its geographic location around the equatorial sun-belt – receiving abundant sunshine all-year-round, ranging from 6.70kwh/m2/day in Borno State to roughly 4.06kwh/m2/d to 5.86kwh/m2/d in locations such as Calabar in Cross Rivers State.

In states like Katsina, Zamfara and Sokoto, the abundant natural winds can be trapped into windmills to generate energy.

Nigeria is endowed with an annual daily sunshine that is averagely 6.25 hours, which is ranging between about 3.5 hours at the coastal areas of the northern boundary of the nation, and also has an annual average daily solar radiation of about 3.5 KWm2/day in the coastal area, which is in the southern part, and 7.0 KWm2/ day at the northern boundary.

Nigeria receives about 4909.212 kWh of energy from the sun, which is equivalent to about 1.082 million tonnes of oil; this is about 4000 times the current crude oil production per day, and also put at about 13 thousand times of daily natural gas production based on energy unit.

It is estimated that when 1 percent of Nigeria’s land area is covered with a solar technology of 5% efficiency, about 333,480MW of electricity may be produced at about 26 percent capacity factor. This electricity generation capacity will be more than enough for the country, up to year 2050, that will conveniently support 11 percent -13 preent economic growth rates, as envisioned by “Vision 20:2020.”

This level of solar radiation across the country can support huge deployment of solar and wind power infrastructures designed to primarily feed into the regional power distribution entities, which would add up to the national grid, offering a much more affordable, practical and healthy solution that could boost the economic and enhance healthy environment.

Most renewable energy comes either directly or indirectly from the sun. Sunlight – or solar energy – can be used directly for heating and lighting homes and other buildings, for generating electricity, and for hot water heating, solar cooling, and a variety of commercial and industrial uses as well as be valuable for rural usage where supplying electricity from utility line could be expensive.

The sun’s heat also drives the winds, whose energy is captured with wind turbines. Then, the winds and the sun’s heat cause water to evaporate. When this water vapor turns into rain or snow and flows downhill into rivers or streams, its energy can be captured using hydroelectric power.

With the continuously increasing demand for electric power, the significantly high price of oil and the growing concern for the environment, many businesses are resorting to alternative sources of energy. Among the renewable energy sources, solar energy is a sustainable choice and one that can be used in various applications. Many businesses are now tapping into this alternative source of energy, hoping to benefit from its numerous advantages

Nigeria, for instance, is one of the countries that largely supply crude oil in the world, but still suffers setbacks in terms of access to electricity for their daily usage in homes and industries. A climate change expert, Our report shows that, only 40 percent of households in Nigeria are connected to national grid due to decline in power generation and energy lost.

The only renewable energy source Nigeria utilizes is hydro-power and biomass; where solar energy is minimally utilised for street lightening, mostly in the cities. The country relies also on fossil fuels, natural gas and oil, which are non-renewable – they dwindle, are expensive, and pollute the environment.

Hydroelectric power plants with installed capacity and those coming on stream cumulatively account for roughly 13,000MW, but the effectiveness of supply is less than 5000MW across the country.

Benefits of solar energy

Reducing energy costs in plant operations

Solar power systems will reduce or even eliminate your office building’s electric bill. For big and small businesses, this money savings can have a tremendous impact. Having a solar power system installed is the equivalent to prepaying for almost 40 years of energy, but at just a fraction of what you are currently paying for electricity. The cost per unit of your current energy costs is likely much higher than what you would spend for solar power. This results in further savings for your business.

Good return on investment

Government incentives and the decrease of solar equipment costs means the utilization of solar power is a sound investment and a good financial decision for public agencies and businesses. Investing in solar power generates both long-term savings and quick payback.

Low maintenance/high reliability

Solar energy systems from reputable solar providers require virtually no maintenance and operate with no noise. Given the roof structure of many commercial buildings, the access to them is easy. While individual solar cells are fragile, they are encased in a highly tempered and protective glass case, which is framed by non-corrosive aluminum. Because solar panels are exposed to the elements they are typically very sturdy and built to withstand rain, hail and other weather-related threats. In addition, the photovoltaic cells that make up the panel experience very little break down over time, similar to computer chips. Accordingly, most solar manufactures offer a full warranty over their solar panels for 20-25 years which means that once you make the move to solar, you will experience clean electricity for at least 25 years from a system that is just as functional and more reliable than standard utility electricity.

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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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