Few weeks back, I wrote about the German energy transition, if you missed it, you can catch up here. It basically explains the plans of the German government and people to switch to renewable sources of energy and the steps taken so far. In this post, I explain what could be Nigeria’s easiest path to renewable energy transition which is the use of Power as a Service.
What is Power as a Service?
Oftentimes, this is also written as PaaS which obviously is an abbreviation for Power as a Service. A simple example to explain this is the service electricity companies currently offer to Nigerians where power is provided to the end user and is billed for the wattage used.
Solar PaaS works on the same basis only that in this case the source of the power is the sun. Consumers do not get to own solar generating units but are only billed for the wattage of electricity used. In my experience, the average Nigerian is interested in getting a solar generating unit not only for the environmental benefits but most importantly for the assured access to power. Unfortunately the initial cost of solar units are usually over burdening and many middle class income earners and below do not consider it an affordable investment. With PaaS, there is no need to own the actual infrastructure, like the PHCN model we are used to, the consumer only has to pay to power generated.
But PaaS is beyond only paying for power generated, it is a whole service value chain.So the customer is getting energy, service infrastructure (installation and service calls), maintenance, value added technology for visualising and tracking their power usage, and they’re getting financing. Mostly importantly, the risk of having expensive panels on the room of consumers is borne by the service provider.
In my opinion, this is Nigerian’s fastest route to an alternative energy transition, while there is not concrete publicly know plan to an alternative energy transition, the lack of power is definitely a trigger to it’s citizens to explore more alternative power sources. The least the present government can do to support this subtle unconscious transition is to offer tax benefits to solar companies to ensure the cost of doing business for these companies is at the barest minimum.
PaaS can work in the following ways:
- Companies who provide this service can build solar farms in available land mass and supply this power generated to existing grid. Unfortunately, this cannot be achieved in Nigeria as independent power generation are not allowed by the law to feed the existing grid. The cost of building new grid infrastructure however will be overly expensive and might not be a feasible investment.
- Second option is to install solar panels locally per user and bill the user per unit of electricity generated on their local panels. Unlike the regular billing system where we are used to being billed by the actual power consumed, in this case, the billing will be by the actual power generated, as excess power cannot be shared with other consumers. It is essential then for consumer to evaluate their energy needs and use to subscribe to the most efficient and cost effective system.
- For those who want to own their solar infrastructure in the long run, there are also options available. Just like a mortgage system works, you can arrange for a lease to own plan where the company values the owning cost of your preferred solar unit and you spread that cost over a period of time best suitable for the customer.
In a PaaS arrangement, the consumer uses and leaves the rest of the concerns to the service provider, and for each consumer, there is a bespoke turn key solution provided.
While PaaS isn’t yet a common venture, certain companies in Nigeria are taking a bold step into this form of energy generation and consumption. ‘RENSOURCE ENERGY’ is one of them. Though set to launch, you can find them here and subscribe by email to receive more information once launched. However if you need an audit done on your home before the launch, you can contact me and I will make a referral happen. The Rensource model is one interesting one, in that customers do not pay bills per kilo watt generated by the solar panels but a customer subscribes to the service at an agreed fee. Agreement can be yearly or bi-annual based on customer needs and can be terminated at the end of the contract or terminated. Look at it like your internet subscription but for power.
Rensource offers both the option of paying lease and lease to own in Lagos and Abuja. Consumers outside of Lagos and Abuja can be met on request. In addition to this, consumers who will like an outright purchase of solar units can also be serviced by Rensource. There really is something available for everyone.