For the first time ever my neighbors and I experienced 24/7 power supply for the whole of 2022.
ICYDK, some estates in this country have experience 24/7 power for years now.
Anyways, how did we achieve this?
ICYDK, some estates in this country have experience 24/7 power for years now.
Anyways, how did we achieve this?
It started in 2021 when we were approached by an independent power operator to takeover our internal power supply. This includes grid supply from Eko Disco.
After initial discussions, we signed a contract with the company giving them control of our entire power. The deal included us paying for meters and also purchasing 2,500KWh of power. Tariff at the start was N95/KWh
Tariff determination was based on blend 60% grid supply and 40% from generator. Meaning we expect Eko Disco to give us light at least 60% of the time. Thus the higher the supply availability from Eko the lower the tariff and vice n versa.
Capex also plays a role in the tariff build up though much less volatile. They bought a 60kv generator and another 100kv as back up. Capex also plays a role in the tariff build up though much less volatile.
To get the tariff low, we had to also get other mini estates in the neighborhood on the deal. We were just six units. So we had to convince others to join. It wasn’t easy because they had to sell their existing generators. We also sold ours (a 25kva at the time).
The contract also required a tariff review once every quarter depending on the dynamics of local grid supply availability and diesel cost.
The deal also required that we bought new meters as the existing grid meters wasn’t optimized for a blended tariff
The deal also required that we bought new meters as the existing grid meters wasn’t optimized for a blended tariff
And so we started towards the end of 2021.
By the first month some of us averaged 1,600KWh per month in consumption. At the rate of about N106/KWh including VAT that was like N163k a month from roughly N50k monthly. It wasn’t funny but we had peace of mind. Or so we thought 🌚
By the first month some of us averaged 1,600KWh per month in consumption. At the rate of about N106/KWh including VAT that was like N163k a month from roughly N50k monthly. It wasn’t funny but we had peace of mind. Or so we thought 🌚
By the next month we all started reducing consumption. Some of us had power police in our houses.
For me, the challenge was how to get my consumption below 1,000 KWh threshold. Some of us invested in inverters against the wishes of the operator who felt we didn’t need it.
For me, the challenge was how to get my consumption below 1,000 KWh threshold. Some of us invested in inverters against the wishes of the operator who felt we didn’t need it.
I got a 5kv inverter & moved all my equipment to it except for the ACs, water heaters, ironing and cookers. After 2 months my power demand dropped to 1,200 KWh. Still freaking high. My kids couldn’t understand what my drama was all about. “Why pay for what you can’t enjoy Dad”?
Some of my neighbors got their down to below 1k units.
Apparently, to go below 1k units you’d have to use less of ACs. ACs are major luxury when your tariffs are high. In my house we stopped turning on ACs till midnight.
I even moved one inverter AC to the inverters.
Apparently, to go below 1k units you’d have to use less of ACs. ACs are major luxury when your tariffs are high. In my house we stopped turning on ACs till midnight.
I even moved one inverter AC to the inverters.
At some point it became a completion for who could get their power usage down. I always lost and started suspecting foul play despite being metered. 😅
Money makes you paranoid if it’s draining
Money makes you paranoid if it’s draining
Another major contributory factor to power usage was number of people in your household. More kids, visitors, relatives who live with you means more power
In addition, the bigger the house the higher the cost. Electricity usage has a way of installing social discipline
In addition, the bigger the house the higher the cost. Electricity usage has a way of installing social discipline
Makes me wonder if this is why those living in the west hardly entertain long stay visitors. Perhaps why they hardly have more than two kids.
Anyways, things were about to get worse around April 2022.
Anyways, things were about to get worse around April 2022.
Diesel prices had gone from N180 to like N250 per liter. Power from discos also dropped to around 40% much lower than the 60% that the tariff was benchmarked against.
We received our first notification for tariff increase.
We received our first notification for tariff increase.
They informed us it had to go up to N150 per unit. It wasn’t funny at all but we all understood they had a plausible reason to hike it.
That wasn’t going to be the last hike in a matter of months.
That wasn’t going to be the last hike in a matter of months.
For us, it meant adjusting our consumption and as expected it dropped for a lot of us. That of course meant the gen could be on for hours & no one used it because you dare not turn on your AC during the day.
I suddenly found love in fans.
I suddenly found love in fans.
Solar inverters also had to play a role.
Oh btw, Solar inverters is an interesting equipment.
It works well during the day but the juice that powers it drops in the night.
To keep it going you use the power supply to charge it.
Oh btw, Solar inverters is an interesting equipment.
It works well during the day but the juice that powers it drops in the night.
To keep it going you use the power supply to charge it.
Your tariff could rise depending on how long you charge it.
For example, if you charge a 5kv inverter like I do for 6 hours it consumes approximately 24kWh. Do that for 30 days and it’s 720kwh.
Easy to understand why the operator warned us against it.
For example, if you charge a 5kv inverter like I do for 6 hours it consumes approximately 24kWh. Do that for 30 days and it’s 720kwh.
Easy to understand why the operator warned us against it.
Once some of figured that’s what contributed to heavy consumption we reduced or outrightly stopped charging it. We just switched to direct in the night. Despite doing this, things were still about to get worse for us.
A few weeks later, the wrote to use insisting they had to change tariff again. Basically breaching the 3 months clause. 🤦🏽♂️🤦🏽♂️
You see, in deals contracts are just there to guide everyone. When push comes to shove common sense has to prevail. It’s when common sense fails that everyone goes to court.
They informed us diesel prices were volatile and product was scarce to come by. And so tariff when to around N250/KWh. Information reaching us also confirmed most estates around Lekki with a similar arrangement observed tariff increases.
Oh and the Discos also increased their tariffs exacerbating issues.
By now, everyone’s hair strands were up. We decided to look into the tariff components and how it is determined. Something we never did before. Again, costs has a way of instilling financial discipline and vigilance. It also brings on accountability for all parties.
We scrutinized the year off build up and noticed a lot of items in there were modeled to have us bear the consequences of whatever inefficiencies the operator incurred.
For example, if they refused to hedge diesel prices, we pay the price. We also noticed a term called consumption ratio where the less power we consume the more we pay.
For example, a 100kva generator that’s loaded at say 25% capacity because everyone is reducing consumption will still burn as much diesel as when it’s loaded 80%.
It was a huge penalty for being power efficient and we weren’t having none of it. In response, they told us we had to bring on more mini estates to the plan. We retorted that it wasn’t our responsibility.
Anyways, while this was going on, tariff went up to a crazy N350/KWh. Diesel prices was also around N800 per liter and so they told us tariff has to go up. Power from the grid was also very poor dropping to like 4 hours a day.
By this time it was breaking point. We were essentially spending all our earnings on power. You see, comfort has a price and a limit. Some of us were ready to terminate the arrangement.
But the others who operated Air BnBs were more cautious. They needed the power and their business model could cover the cost.
Another interesting aspect of a fast changing Lagos residential property markets. Most Air BnB operators hardly pay tax so cost can be very low.
Another interesting aspect of a fast changing Lagos residential property markets. Most Air BnB operators hardly pay tax so cost can be very low.
Some played smart by locking in cost months ahead. That meant buying three months worth power units at current prices. Whilst that brought savings in a volatile environment it meant doling out N600k at a go. Not easy at all!!
Negotiating stepped up and we all demanded collective accountability. We even considered scaling down the size of the generator. Some asked that we ditch 24/7 power as it was no longer affordable based on the current model.
Amidst all this, sector regulator NERC launched the partial activation that forced everyone in the sector to confirm to power generation and distribution.
Grid Power increased sharply in August, September and tariff dropped to around N200/KWh.
Grid Power increased sharply in August, September and tariff dropped to around N200/KWh.
It was a huge relief for most of us. Imagine paying N400k a month for 24/7 power. There is no amount of comfort that’s worth it tbh. You still had to content with rising cost of food, school fees etc.
It’s been like that since then except for a small increase in early December. A recent hike in tariff by Discos might affect us again but we are yet to get notification.
What a bitter sweet experience it has been but one lesson is clear. 24/7 power for is not cheap especially using the modular approach.
But it’s probably the quickest way of improving power supply in the country.
Renewables like Solar are great but quite expensive.
But it’s probably the quickest way of improving power supply in the country.
Renewables like Solar are great but quite expensive.
Grid power is till the most reliable, efficient and clean source of power but the current market design does not create enough incentive for it to work. And it’s unreliable to power industries
It will cost hundreds of billions of naira to get grid power to reliability levels but that won’t happen with the current market design.
One other thing you quickly realize is that Nigeria needs more heavy industrial users to get cost of power generation down.
One other thing you quickly realize is that Nigeria needs more heavy industrial users to get cost of power generation down.
A service economy like ours isn’t just suitable for cheap power. It’s a fact!!
Anyways, while the sector continues to flounder, independent power producers like the ones we use are exploring cheaper options.
They will only get better in time with scale. All they need is a concerted partnership with Discos to leverage on their distribution lines and infrastructure and things might just be different.
I hope my experience helps others looking to go off grid or hop onto a similar service as ours learn from our experience.
End
End
Something I forgot to add in this thread was energy theft. At some point, when the tariff became unbearable, the supplier brought our attention to suspected energy theft.
They claimed one of the residents bypassed their meters and went ahead to slam them a N1million penalty. The accused resident immediately denied the claims forcing a counter accusation.
We conducted our own investigation and determined the meter was actually by passed. But there was no proof that the resident did it. They finally agreed on a back billing spread over some months to claw back the losses.
Most DisCos face similar losses emanating from energy theft. Losses cost discos around N29 billion based on monthly average billing efficiency of 77% (they billed N295b). This is based on 2021 Q1 data. Discos racked up total losses of 47.8% out of which 23.4% is commercial.
So the higher the tariff the higher the risk to energy theft despite mass metering. I envisage Nigeria will have to develop its own meter specifications capable of discouraging energy theft. The current ones we have now can’t stop it.
Maybe techies can look into these areas. A N30b a month problem is a unique opportunity to leverage technology fix with local competencies.
Also important to mention other ancillary service providers operating in this space. There are startups that now provide applications that aid vending, dashboards and energy management tools. We currently don’t have that in our offering but I do know some estates have it.
👍🏾👍🏾
👍🏾👍🏾
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