The worth of lithium-ion batteries soared to a document excessive in 2022, resulting in increased costs in power-hungry markets like Nigeria.
Operators say it will be simpler for customers and enhance investor confidence if the federal government considers decreasing or eliminating the 20 p.c responsibility on batteries.
Battery responsibility isn’t the one price going through photo voltaic operators. From zero p.c responsibility in 2018, the Nigerian Customs Service has imposed a 5 p.c responsibility and 5 p.c Worth Added Tax (VAT) on photo voltaic panels coming into the nation.
The 20 p.c responsibility is the very best and most impactful, giving significance to batteries in a sustainable photo voltaic power market. Usually, photo voltaic methods don’t require batteries. It’s because photo voltaic panels generate power that an inverter can convert into AC energy that can be utilized in a house to fulfill or enhance its power consumption. Nevertheless, the addition of batteries gives storage for the surplus power produced by the photo voltaic panels.
Putting in a photo voltaic system with out panels signifies that when evening comes, the home will lose electrical energy. Additionally, when the climate is dangerous – because it typically is throughout the lengthy wet season – the photo voltaic panels can battle to supply electrical energy. A photo voltaic battery setup may also help energy the house by way of emergencies.
Nevertheless, batteries are thought of the most costly part of a photo voltaic power system. After years of regular decline, the worth of batteries is beginning to rise. Demand for lithium ore, a mineral used to supply batteries to energy electrical autos, smartphones, laptops, and all types of devices is reportedly on the rise because the push for a greener future that enhance. BloombergNEF, which has been monitoring the battery market since 2010, says that 2022 would be the first time the worth has elevated yearly. After a decade of deflation, the volume-weighted common worth of lithium-ion battery packs throughout all industries will rise to $151 per kilowatt-hour in 2022, a 7 p.c enhance from 2021. BloombergNEF predicts an increase additionally the worth in 2023.
Nigeria, whose energy technology at present hovers round 4,000 megawatts (MW) to 4,500MW, is looking for to make use of renewable power sources to extend electrical energy provide.
In line with an operator who pleaded anonymity, 5.4kWh lithium-ion battery that may energy fundamental home equipment prices between N2 million-N2.2 million. The addition of import tariffs together with different clearing prices is prone to push the price of touchdown to N2.6 million-N2.7 million. There are different prices corresponding to demurrage (principally on account of port congestion and/or the lack of customs officers to examine arriving items on time, and so forth.), and transportation prices to warehouse areas / meeting which has elevated by about 300-350 p.c in latest instances.
The preliminary price of importing batteries is in {dollars}, which is an issue for importers due to the dearth of international alternate that Nigeria faces.
Rotimi Babs, CEO of Bainsbridge Power Restricted, cuts the price of photo voltaic tools. “If you happen to take the decrease band ($=N750), that’s N2,025,000 per battery. If you happen to add 27.5 p.c for customs and VAT, it involves N2,581,000, excluding supply prices. The identical battery will likely be offered in Nigeria for N3 million, N3.2 million, and even N3.5 million.
The excessive price of batteries impacts the amount imported by retailers within the nation and the dimensions of the Nigerian market. Nigeria is taken into account one of many lowest customers of photo voltaic power on the planet, regardless of having the bottom entry to electrical energy on the planet with about 92 million folks in a foreign country’s 200 million inhabitants with out entry to electrical energy, in keeping with Power Progress Report 2022 launched in Monitoring SDG 7.
“Affordability is the problem. A lead-acid equal of 48v 200A (9.6kWh) is about N1 million. Whereas the lithium battery for a similar power storage from a Nigerian distributor is between N1.5 million and N3.5 million, relying on the model you’re looking at. No vendor needs to tie up $$$ for a very long time,” Babs mentioned.
The nation’s power operators in 2017 protested the imposition of a 20 p.c responsibility on batteries, saying it will have an effect on customers and derail the federal authorities’s plans to offer electrical energy for all Nigerians.
Additionally learn: Photo voltaic funding might earn Nigeria double-digit income – Report
In 2020, the federal authorities launched ‘Photo voltaic Energy Naija’, a 5 million photo voltaic connection program in off-grid communities. About 500,000 Nigerian households, representing 1.25 p.c of the entire households, now use photo voltaic power, a research performed by the Boston Consulting Group and Shell-funded affect funding firm, All-On, exhibits.
Some consultants say that the tariffs don’t encourage buyers, particularly giant distributors, to enter the nation. Many nations are encouraging battery producers to construct crops with taxes and import tax rebates, amongst different incentives, as they push for a greener future, they mentioned.
“I’ve interacted with sellers of uncooked cells in China, particularly the favored Prismatic cells, our volumes should not sufficient to warrant organising a warehouse in Nigeria like they do within the US. What we’ve is tier 2 and three suppliers like Felicity and the likes,” a photo voltaic guide who recognized himself as Othell Yarwyck informed BusinessDay.
BusinessDay gathered that the enterprise setting has additionally created an excuse for some gamers to shift their consideration to high-net-worth people who can afford no matter price ticket they’re given, leaving the smaller gamers behind. in between. It is the smaller gamers that All-On does to offer funding however it’s not sufficient.
Babs sees a necessity for operators to band collectively and maybe sponsor payments or attempt to suggest coverage modifications to the authorities.
Different operators suggest encouraging native firms with the capability to construct and discover Nigeria’s mineral assets for the development of batteries. The nation has deposits of lithium ore present in states like Kogi, Kwara, Ekiti, and Cross River. Different crucial minerals corresponding to tantalite, tin, and nickel, which can be utilized within the course of, are present in Jos, Nasarawa, Kogi, and different states.
In August 2022, the federal authorities gave a sign that it was able to encourage the native manufacturing of batteries in Nigeria when it rejected a suggestion from Tesla to purchase noticed lithium from the nation. The federal government says it can not enable international firms to mine the nation’s mineral assets, and ship them with out including native worth.
Nevertheless, this can require entry to giant funds. In line with an operator who doesn’t need to be recognized, there’s a want for deliberate and deliberate monetary preparations by way of improvement banks because the Financial institution of Trade did in 2015, throughout the renewable power sector.
“State and federal renewable power credit score must be given to residential properties and companies that undertake renewable power merchandise. This may be tied to the carbon commerce market with IoT monitoring applied sciences,” mentioned the operator. “Technical faculties, polytechnics, and particular faculties should develop the following technical enterprise abilities for the sector.”
