Tier 5: Public

POWER AFRICA
NIGERIA POWER SECTOR PROGRAM
PRODUCTIVE USE COLD STORAGE SYSTEMSIN NIGERIAMarch 2022
Deloitte Consulting LLP prepared this publication for review by the United States Agency for International
Development (USAID). It was prepared under Task Order No. 01: The Nigeria Power Sector Reform Program (the“Task Order”) of the Power Africa Indefinite Delivery, Indefinite Quantity (“IDIQ”) Contract No. 720-674-18-D00003 implemented by Deloitte Consulting LLP. The contents of this publication are the sole responsibility of
Deloitte Consulting LLP and do not necessarily reflect the views of USAID or the United States Government.

POWER AFRICA
NIGERIA POWER SECTOR PROGRAM
PRODUCTIVE USE COLD STORAGE
SYSTEMS IN NIGERIAIDIQ Contract No. 720-674-18-D-00003 Power Africa Expansion
Task Order No. 720-674-18-F-00003 Power Africa Nigeria Power Sector Program (PA-NPSP)USAID | Southern Africa
Contracting Officer’s Representative: Narlene Egu
Submitted: 23 September 2021
Comments Received: 14 February 2022
Resubmitted: 23 March 2022
Approved: 25 March 2022
Cover Photo Credit: PA-NPSP/Tochukwu Mbachu

TABLE OF CONTENTSEXECUTIVE SUMMARY

1

INTRODUCTION

3

Methodology

3

Report Structure

4

THE NEED FOR COLD STORAGE SYSTEMS

5

Improved Income

5

Food Scarcity and Export Potential

5

Proliferation of Markets and Supermarkets

7

Deployment of Energy Access Business Models

8

COLD STORAGE MARKET POTENTIAL IN NIGERIA9COLD STORAGE SYSTEMS

12

Cold Rooms

12

Industrial Blast Freezer

13

Milk Chiller

14

Solar Refrigerator

16

Refrigerated Trailer

17

Solar Ice Maker

17

Obstacles To Cold Storage Access In Nigeria
OFF-GRID SOLAR COLD STORAGE DEPLOYMENT

18
20

Business Models for SPCSS Deployment

22

Payment Options for Accessing SPCSS

24

Sustainability of SPCSS Deployment
FINANCING OPTIONS AND PARTNERSHIPS

26
30

Debt Financing

30

Grant Financing

32

Equity Financing
BUSINESS CASE SCENARIO ANALYSIS

33
35

Variables

35

Outputs

36

Cold Storage Scenarios

36

Scenario Analysis Results

38

CONCLUSIONS AND RECOMMENDATIONS41

APPENDICES

42

Appendix A: Summary of Cold Storage Projects by Country

42

Appendix B: Debt and Grant Financing Schemes

45

Appendix C: Business Case Analysis Assumptions

48

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIAiLIST OF TABLES
Table 1: Food Commodity Import and Export Value (2019).................................................................................. 6
Table 2: Cold Storage Market Potential ..................................................................................................................... 11
Table 3: Promethean Power Systems’ Milk Chiller Components ........................................................................ 15
Table 4: Cold Storage Systems and Storing Capacity ............................................................................................. 18
Table 5: Advantages and Disadvantages of Non-commercial Entity Model....................................................... 22
Table 6: Advantages and Disadvantages of Commercial Partner Model ............................................................ 22
Table 7: Advantages and Disadvantages of Developer-owned Model ................................................................ 23
Table 8: Advantages and Disadvantages of Shared Community-owned Model ................................................ 23
Table 9: Advantages and Disadvantages of SPCSS Provider-owned Model....................................................... 24
Table 10: Advantages and Disadvantages of SPCSS Payment Options ............................................................... 26
Table 11: Cold Storage Business Case Scenarios .................................................................................................... 37
Table 12: Business Case Scenario Analysis Results ................................................................................................. 38
Table 13: Solar-diesel Hybrid Scenarios ..................................................................................................................... 39
Table 14: Impact of Variation in Revenue on IRR .................................................................................................... 39
Table 15: Impact of Increased Grant on Average DSCR, Sensitivity Analysis .................................................. 40
Table 16: Deployment Models Most Relevant to Business Case Scenarios ...................................................... 40
Table 17: Scenario Analysis Capital Cost Assumptions ......................................................................................... 48
Table 18: Scenario Analysis Operating Cost Assumptions.................................................................................... 49
Table 19: Scenario Analysis Cashflow Input Assumptions ..................................................................................... 50
Table 20: Business Case Scenario Revenue Calculations ....................................................................................... 51

LIST OF FIGURES
Figure 1: Potential Emissions Reductions from Switching to Solar Cold Storage .............................................. 9
Figure 2: ColdHubs Modular Walk-in Cold Room.................................................................................................. 13
Figure 3: Standard Blast Freezer Diagram ................................................................................................................ 14
Figure 4: Solar Refrigerator Diagram ......................................................................................................................... 16
Figure 5: Potential Demand for SPCSS, by State, Commodity ............................................................................. 20
Figure 6: SPCSS Debt Financing Structure................................................................................................................. 31
Figure 7: SPCSS Grant Financing Structure ............................................................................................................... 32
Figure 8: SPCSS Equity Financing Structure ............................................................................................................. 34

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIAii

ACRONYMS
AcronymDefinition

ABP

Anchor Borrowers’ Program

ACGS

Agricultural Credit Guarantee Scheme

ACSS

Agricultural Credit Support Scheme

ADB

Asian Development Bank

AFD

French Development Agency

AfDB

African Development BankAGSMEIS

Agric-Business/Small and Medium Enterprise Investment Scheme

B

BreadthBAU

Business As Usual

BOA

Bank of Agriculture

BOI

Bank of Industry

BRAC

Bangladesh Rural Advancement Committee

C&I

Commercial and Industrial

CACS

Commercial Agriculture Credit Scheme

CBN

Central Bank of Nigeria

CFC

Chlorofluorocarbon

tCO2eTons of carbon dioxide equivalent

COVID-19

Coronavirus Disease

CSS

Cold Storage System

DBN

Development Bank of Nigeria

DFI

Development Finance Institution

DSCR

Debt-Service Coverage Ratio

EnDev
FAO

Energizing Development
Food and Agricultural Organization of the United Nations

FCDO

Foreign, Commonwealth and Development Office

FFVFresh Fruits and Vegetables

GAIN

Global Alliance for Improved Nutrition

GHI

Global Hunger Index

GIZ

Deutsche Gesellschaft für Internationale Zusammenarbeit (German Society for International
Cooperation)

GOGLA

Global Off-Grid Lighting Association

GWP

Global Warming Potential

H

HeightHCFC

Hydrochlorofluorocarbon

HFC

Hydrofluorocarbon

HCFCs

Hydrochlorofluorocarbons

HFO

Hydrofluoroolefin

IAAS

Ice-as-a-service

IFS

International Food Standards

IRRInternal Rate of Return

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

iii

L

Lengthl

LitersLAPO

Lift Above Poverty Organization

MGPP

Mini-Grid Partnership

MSMEs

Micro and Small and Medium-sized Enterprises

NEP

Nigerian Electrification Project

NEXIM

Nigerian Export-Import BankNPVNet Present ValueODSs

Ozone Depleting Substances

P-AADS

Private Sector-Led Accelerated Agriculture Development Scheme

PA-NPSPPower Africa Nigeria Power Sector Program

PAYS

Pay as you store

PFI

Private Finance Institutions

PHL
PLAN

Post-Harvest Losses
Postharvest loss alliance for nutrition

PUF

Polyurethane Foam

RBF

Result based financing

REA

Rural Electrification Agency

REEP

Renewable Energy and Energy Efficiency Partnership

REF

Rural Electrification Fund

RMI

Rocky Mountain Institute

ROI

Return on investment

SAM

Severe Acute Malnutrition

SAS

Stand Alone Solar

SHS

Solar Home Systems

SMEDAN

Small and Medium Enterprises Development Agency of Nigeria

SPCC

Solar Powered Cold Storage System

TAGE

TransAfrica Gas and Electric

TES

Thermal Energy Storage

TSS

Thermal Storage System

UNICEF

United Nations International Children’s Emergency FundUS

United States

USADF

United States African Development Foundation

USAID

United States Agency for International Development

US$

US Dollar

US$FC

United States International Development Finance Corporation

UV

Ultraviolet light

VCA

Value Chain Analysis

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

iv

EXECUTIVE SUMMARY
Nigeria’s agriculture sector loses an estimated NGN 110 trillion (US$268 billion) to post-harvest losses(PHL) annually, due to inadequate cold storage, agro-processing, and transportation infrastructure
available to farmers, fishermen, and retailers. 1 The impact of inadequate cold storage is mostly observedfor highly perishable food commodities such as dairy, fish, fruits, and vegetables. Solar-powered cold
storage systems (SPCSS) provide a reliable and cost-effective cold storage option for agricultural
stakeholders, by leveraging clean and sustainable solar energy. PA-NPSP conducted a scenario analysis toanalyze the costs and benefits for financing for SPCSS. Some of the key insights drawn from this exercise
include:••••Depending on the business model, powering option and cold storage system, the economic
viability of SPCSS investment varies.
Under the debt financing structure, SPCSS investment is more profitable than diesel powered cold
systems.
SPCSS users can save up to 10% of powering costs if cold storage equipment is powered by asolar-diesel hybrid system rather than a diesel generator.
Grants and equity are particularly necessary to decrease the loan amounts borrowed to cover
the capital cost for solar-powered cold room investments.

To encourage sustainable deployment of SPCSS in Nigeria, PA-NPSP recommends the following based ona thorough literature review and scenario analysis:●

Consideration of environmental impacts of cold storage technologies: In order tomaintain environmental sustainability, SPCSS users, as well as donors and governments funding
SPCSS, should be cognizant of the Global Warming Potential (GWP) of refrigerants associatedwith different cold storage options, comparing Hydrofluoroolefin (HFO), blendedhydrofluorocarbons (HFCs), ammonia, and CO2 with traditional hydrochlorofluorocarbons(HCFCs), and HFCs.

●

Understanding of costs, benefits, and deployment models: When assessing the best
deployment model for investing in and implementing SPCSS, users and funders should take due
consideration of pay as you store (PAYS) rates, operating costs such as fuel requirements, andescalation costs. Some models may require high PAYS rates to achieve financial viability and these
rates must be validated with customer willingness to pay before an investment decision is made.

●Awareness campaigns: Given the complex nature and high number of different cold storage
systems, it is necessary that users and customers are equipped with relevant knowledge of costs,
potential benefits, suitability, deployment models, and financing options to allow for sounddecision making.

●Targeted financing and awareness campaigns for marginalized customers:
Governments and donor funded programs can mitigate gender imbalance or imbalance impacting
other marginalized groups through strategic awareness campaigns for these populations. Such
entities can also offer specialized financing opportunities specifically for women who are 13x lesslikely to own land (critical collateral for accessing loans).

●

Further analysis of location-specific business models: There is an opportunity for the offgrid stakeholder community to further develop location specific, data-driven business models forcold storage given different states require different types of cold storage, based on the type ofcommodities produced and transported.

1 Estimate based on an estimated 20% PHL savings for milk and 40 percent PHL savings on fish, fruits, and vegetables on annual

food production rate. See Table 2.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

1Each of these is explored and supported in each section of the report. The report includes an introduction,
an overview of the need for solar powered cold storage in Nigeria and market potential, a detailed review
of solar powered cold storage systems and deployment models, a discussion of financing options, ascenario analysis exploring outcomes and sensitivities of different variables to solar powered cold storage
deployment, and a conclusion summarizing insights from the literature review and scenario analysis.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA2INTRODUCTION
Each year, Nigeria’s agriculture sector loses an estimated NGN 110 trillion (US$268 billion) to postharvest losses (PHL) due to lack of adequate storage, agro-processing, and transportation infrastructure
available to farmers, fishermen and retailers. 2 There is a high demand for both stationary and mobile cold
storage systems, from farms to markets, due to the combination of high temperatures — that accelerate
the rate of spoilage — long distances traveled, and the extended time spent in transit due to poor roadconditions). 3 These losses are especially severe in the long-haul transport of fruits and vegetables, of whichhalf of the total post-harvest losses (PHL) (up to 60%) occur during transportation. 4, 5 It is estimated that
41% of the tomatoes lost post-harvest are damaged or perish in transit.6 The significant food losses
inevitably result in a reduction in the quantity of nutritious foodstuffs available in the market.
Solar-powered cold storage systems (SPCSS) provide adequate storage means for agricultural
stakeholders by leveraging clean, sustainable solar energy. However, many stakeholders lack theknowledge and financial support required to leverage solar-powered cold storage systems.
This study by the Power Africa – Nigeria Power Sector Program (PA-NPSP) seeks to achieve the following
objectives:●●●

Provide an overview of the market for solar-powered cold storage systems
Identify the benefits, challenges, current environment, and opportunities for growthOffers recommendations for sustainable deployment for SPCSSMETHODOLOGYThis study evaluates different investment case scenarios using techno-economic analysis to discover the
economic viability of solar-powered cold storage systems and business models suitable for rural farmers,
fishermen, Micro, Small and Medium Enterprises (MSME), mini-grid developers, and entrepreneurs. This
includes a financial analysis of eight scenarios, under four distinct business models: pay-as-you-store(PAYS), ice-as-a-service (IAAS), commercial partner or shared community-owned (a debt financed
investment for community use, to be operated and maintained by the community). The analysis focuseson six cold storage systems of varying capacities for the preservation of milk, fish, meat, fresh fruits andvegetables (FFVs), and ice production.
To support this analysis, desk research included over 100 primary literature sources; documented inAppendix D. In addition, interviews were conducted to validate the study assumptions with over 10organizations in Nigeria across the off-grid energy and agriculture sectors, including private sector
companies, non-governmental organizations, donor agencies, financial institutions, and government
agencies.

2 Estimate based on an estimated 20% PHL savings for milk and 40 percent PHL savings on fish, fruits, and vegetables on annual

food production rate. See Table 2.
3 Bolarin, F. M. and Bosa, S. O. (2015). “Post-Harvest Losses: A Dilemma in Ensuring Food Security in Nigeria”. Journal of
Natural Sciences Research Volume 5, Number 7. Source: Post Harvest Losses: A Dilemma in Ensuring Food ... IISTEhttps://www.iiste.org › JNSR › article › download
4 Food and Agricultural Organization of the United Nations (FAO) Nigeria Country Office (undated). Strengthening Nigeria's
plantain value chain to curtail post-harvest losses. Source: http://www.fao.org/3/i4123e/i4123e.pdf
5 Centre for the Promotion of Imports from Developing Countries (CBI) Ministry of Foreign Affairs of The Netherlands (2021).
“Food Loss in Nigeria: Value Chain Analysis (VCA) of Tomato, Onion, Chili value chains”. Source:
https://www.rvo.nl/sites/default/files/2021/02/Report-Food-Loss-in-Nigeria.pdf
6 World Bank (2020). Nigeria: Food Smart Country Diagnostic”. Source:
https://openknowledge.worldbank.org/bitstream/handle/10986/34522/Nigeria-Food-Smart-CountryDiagnostic.pdf?sequence=1&isAllowed=y
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

3REPORT STRUCTURE
The main body of the report summarizes the study, and a series of appendices provide greater depth ofanalysis and additional data. This report is divided into the following sections:●Introduction: This section provides an overview of post-harvest losses (PHL) in Nigeria, thereport objectives, the methodological approach, and indicates the focus of the analysis.

●

The Need for Cold Storage Systems: This section discusses multiple factors that necessitate
the use of, as well as drive the demand for, cold storage technologies. It also highlights the benefitsof cold storage to farmers and agribusinesses.

●

Market Potential of Cold Storage in Nigeria: This section analyzes the market potential ofcold storage for fish, milk, and fruit and vegetable products in Nigeria. It identifies the degree towhich these perishable income-generating produce require cold storage solutions.

●

Cold Storage Systems: This section discusses the different types of cold storage technologies
used both in Nigeria and globally. It also considers the obstacles facing the adoption of cold storage
systems across Nigeria.

●

Deployment Models: This section explains the different models through which cold storage
systems can be adopted by agricultural stakeholders and identifies the advantages anddisadvantages of each model.

●

Financing Options and Potential Partnership Opportunities: This section looks at thepossible sources of financing and opportunities for partnerships available to those seeking toacquire cold storage systems.

●

Cold Storage Business Case Analysis: This section evaluates the economic viability of solarpowered cold storage systems (SPCSS) based on financial analysis of eleven scenarios, underwidespread business models, along with the methodology and assumptions used to prepare thesefinancial models.

●Recommendations: This section provides recommendations necessary to encourage thesustainable deployment of SPCSS in Nigeria, based on this study’s findings.

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THE NEED FOR COLD STORAGE SYSTEMS
There are several providers of cold chain equipment and facilities currently in operation in Nigeria due tothe high level of demand for both stationary cold storage facilities, and cold storage transport and logistics.
According to a capacity mapping carried out by the Global Alliance for Improved Nutrition (GAIN)
between December 2017 and February 2018, the cold chain storage capacity of Lagos State alone was an
estimated 200,000m3. 7 However, information on the distribution of cold chain facilities and service
providers in Nigeria is limited, partly due to the refusal of businesses to disclose such information.6
Most of the cold storage services that are available are primarily for the preservation of meat and fish,with comparatively few options suitable for the storage of fresh fruits and vegetables (FFV), and milk.6
Where these options exist, they provide immediate and significant benefits for the farmers andagribusinesses utilizing them.
The preservation of food commodities is connected to the following factors which together drive thebusiness case for increasing the deployment and adoption of cold storage in Nigeria:●●●●

Improved income
Prevention of food scarcity and improving export potential
Proliferation of markets and supermarkets
Deployment of energy access business models

In Nigeria, access to constant and reliable electricity is a major challenge for target customers situatedwithin unelectrified and underserved communities. Due to unreliable grid electricity, most cold storage
systems in existence are powered by diesel generators, leading to high operating costs and environmental
pollution. Alternatively, cold storage systems can be powered by solar systems or solar-diesel hybrid
systems, which offer the double advantage of a low cost and low-emission.

IMPROVED INCOME
Cold storage systems help users preserve their farm-produce, which translates to increased incomes by
as much as 50%. 8 By extending the preservation of produce, farmers are able to negotiate better prices
for a higher quality product, leading to revenue gains and accrual of income.
For example, in a rural farming community, a small collective of 10 pastoral farmers produce 100kg of milkmonthly (excluding PHL), generating a total revenue of NGN 72,034 (US$174.83) per month. 9
Considering post-harvest losses of 20% due to inadequate cold storage, this amounts to a loss of NGN
14,407 (US$34.96) per month due to the unavailability of milk chilling options. However, with theintroduction of chilling facilities, these farmers will earn that additional NGN 14,407 (US$34.96) per
month, bringing their monthly total to NGN 86,441 (US$209.80).

FOOD SCARCITY AND EXPORT POTENTIAL
At its current population growth rate, Nigeria’s population is forecasted to double to 400 million by
2050. 10 It is therefore imperative that food production and supply rise to keep pace with demand. In
Nigeria, as much as 20 – 30% of total grain production, 30 – 50% of root and tuber, and around 30 – 50%
of FFVs are lost during the post-harvest stage, due to poor processing, marketing, distribution, and storage
7 Global Alliance for Improved Nutrition (GAIN), and The Rockefeller Foundation (2018). “Nigeria cold chain capacity mappingpostharvest loss alliance for nutrition (PLAN)”. Source: https://www.gainhealth.org/resources/reports-and-publications/nigeriacold-chain-capacity-mapping-postharvest-loss-alliance
8 BASE (2020). “Reducing Food Waste and Vaccine Spoilage through Cooling Solutions”. Source: https://energybase.org/news/reducing-food-waste-and-vaccine-degradation-through-caas/
9 Expatistan (2021). Cost of Living: Nigeria. Source: https://www.expatistan.com/price/milk/lagos
10 The Economist (2020). “Africa’s population will double by 2050”. Source: https://www.economist.com/specialreport/2020/03/26/africas-population-will-double-by-2050

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facilities. 11 To mitigate food shortage and increase the present availability of food, Nigeria has relied heavily
on imported produce to supplement local production. Table 1 includes information on the amount ofmoney spent on importing produce in the FFV, dairy, and fish market segments. The current levels of foodcommodity importing represents a significant market opportunity for reducing PHL of farm produce inNigeria.
Table 1: Food Commodity Import and Export Value (2019)
Food Commodity

Export Value (NGN) 12

Import Value (NGN) 13

Cashew

2,784,546

75,014,056

Orange2,546,340

1,152,418,733

Mango

3,277,386

111,146,893

Tomato174,958

70,690,585

Milk

192,603,515

3,135,666,923

Fish

390,166,232

33,430,101,940

Total

591,552,977

37,975,039,130

Therefore, solutions aimed at preserving the freshness of produce are all the more crucial since thereduction in food loss directly results in an increase in the amount of food available, thereby reducing theoverreliance on imports as well as the level of undernourishment in the country. 14 The pertinence of thelatter issue in Nigeria is evident in the Global Hunger Index (GHI) ranking the country 98th out of the
107 graded countries, with a score of 29.2 indicating that hunger is a serious issue. 15 The United Nations
International Children’s Emergency Fund (UNICEF) estimated that approximately 2 million children sufferfrom severe acute malnutrition (SAM), and with 32% of children below the age of five years old sufferingfrom stunted growth, Nigeria has the second highest burden of stunted children worldwide. 16 This isfurther corroborated by the 2018 Global Nutrition Report, which reports a total of 13.9 million stunted

11 Miyinyawa Yahaya (2002). Farm structures, Ibadan Press, 32-37.
12 OEC (2019). Nigeria (NGA) Exports, Imports and Trade Partners. Source:
https://oec.world/en/profile/country/nga#economic-complexity
13 TrendEconomy (2021). Nigeria – Imports and Exports. Source: https://trendeconomy.com/data/h2/Nigeria/0801
14 World Bank (2020). Nigeria: Food Smart Country Diagnostic”. Source:
https://openknowledge.worldbank.org/bitstream/handle/10986/34522/Nigeria-Food-Smart-CountryDiagnostic.pdf?sequence=1&isAllowed=y
15 Global Hunger Index (GHI) (2020). “2020 Global Hunger Index by Severity”. Source:
https://www.globalhungerindex.org/ranking.html
16 United Nations International Children’s Emergency Fund (UNICEF) Nigeria (2019). Nutrition. Source:
https://www.unicef.org/nigeria/nutrition

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children in Nigeria, and the 2020 edition reporting levels as high as 40% in Jigawa State. 1718 Investments incold chain facilities will have a significant positive impact on this situation as they have the potential toincrease food supply and drive down prices. FAO points out the positive impact on women due to theadditional opportunities made available by cold chains, especially in the fishing industry. 19
Reduced food wastage will also improve Nigeria’s trade deficit. The Federal Government of Nigeria isalready implementing policies aimed at developing its agricultural sector to make the country lessdependent on foreign countries for food. The Agriculture Promotion Policy 2016-2020 (APP) was
developed to provide solutions to the country’s challenges in meeting its domestic food demand, as well
as boosting the profitability of its export market. 20 Cold storage systems will facilitate the success of thisinitiative and will generate greater revenue inflows for the national economy through increased export
volumes.
Table 1 also illustrates the export values of certain FFVs in Nigeria, which could substantially increase witha wider implementation of cold storage systems across the country. Furthermore, the potential boost in
the availability of produce will have an appreciable impact on national GDP and the economy through arise in exports. With the annual exports generating almost US$600 million, an increase in the volume ofexports will result in a direct increase in export revenue generated. This additional financial inflow isvaluable to the Nigerian government in its attempts to improve its balance of trade. According to Statista,
the last time Nigeria made a surplus in its trade balance was in 2019 of US$7.27 billion. 21 In 2020, there
was a deficit of US$22.07 billion. 22

PROLIFERATION OF MARKETS AND SUPERMARKETS
Since the turn of the millennium, Nigeria has experienced an explosion in the creation of markets andurban supermarkets. According to the National Bureau of Statistics (NBS), the percentage of total GDP
attributed to the wholesale and retail trade sector increased steadily during the early years of the second
decade of the 2000s, accounting for 15.58% in 2011, 17.05% in 2012 and 18.44% in 2013.23 While thefallout of the 2016 recession, as well as the recent economic hardship and uncertainty, have somewhat
hampered the growth of the supermarket sector (it accounted for 16.7% of GDP in 2018), it has still
experienced a meteoric rise over the past two decades. 24 This has been largely due to the rapid
urbanization and population growth experienced in the country. Nigeria’s population has increased
steadily over the last 20 years from 122 million by 2000, to 159 million by 2010 and to over 200 million
by 2020. 25 Inevitably the demand for food has risen exponentially, which has necessitated the growth of
the food retail sector and, in turn, heightened the need for cold storage options in order to ensure foodsecurity. Furthermore, the emergence and growth of a middle class in Nigeria has fueled the proliferationof supermarkets across the country. The previous decade of relative political stability, high oil prices, rising
GDP and higher per capita income created avenues for economic growth and development in Nigeria,
17 The 2018 Global Nutrition Report. Source: https://globalnutritionreport.org/reports/global-nutrition-report-2018/burden-

malnutrition/
18 The 2020 Global Nutrition Report. Source: https://globalnutritionreport.org/reports/2020-global-nutrition-report/inequalitiesglobal-burden-malnutrition/
19 Food and Agriculture Organization of the United Nations, “Food Loss and Waste in Fish Value Chains.” Source:
http://www.fao.org/flw-in-fish-value-chains/value-chain/processing-storage/cold-storage/equitable-social-gender-environment/en/
20 Dr Heineken Lokpobiri (2019). “Nigerian Agriculture Promotion Policy 2016 – 2020: Towards a New Paradigm for Domestic
Food Security and Foreign Exchange Earnings in Agricultural Production”. Public Policy and Administration Research 9(3), 4757.
21 Statista. Source: https://www.statista.com/statistics/383170/trade-balance-of-nigeria/
22 Ibid.
23 Business Day Newspaper (2016). Nigerian Retail Sector Report 2014/2015. Source: https://businessday.ng/wpcontent/uploads/2016/10/Nigeria-Retail-Sector-Report-2014-.pdf
24 Nigeria Food and Beverage Industry Report 2018. Source: https://www.slideshare.net/fabwestafrica/nigeria-food-andbeverage-industry-report-2018
25 The World Bank (2020). Population total, Nigeria. Source: https://data.worldbank.org/indicator/SP.POP.TOTL?locations=NG
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which has resulted in more consumers being attracted to the more modern and organized supermarkets
in comparison to traditional market settings. Additionally, the rate of rural-urban migration has increased
significantly over time, with many rural dwellers relocating to urban areas in search of better job and living
prospects. According to World Bank data, the urban population in Nigeria is currently 52% of its total
population, up from approximately 35% in the year 2000. 26 Since almost all the food grown in Nigeria is
produced in rural areas, the need for cold storage equipment and facilities to preserve perishable produce
being transported to urban areas cannot be understated.

DEPLOYMENT OF ENERGY ACCESS BUSINESS MODELS
Solar-powered mini-grids and Stand-Alone Systems (SAS) are primary renewable energy technologies
which supply power to off-grid locations. This provides the opportunity for a low-emission, cost-efficient
cold storage system, compared to diesel powered systems.
The SAS sector has witnessed significant growth evidenced through increased sales, about 324,000 SAS
units were sold in 2019, up from negligible sales five years earlier. 27
As of 2020, Nigeria has an estimated installed mini-grid capacity of 2.8MW, with 59 mini-grid project sites
serving rural consumers out of which 52 are solar powered. These are mostly residential-based mini-gridswith some developed for specific productive uses. An increasing number of developers are seeking
opportunities to supply commercial and industrial (C&I) customers or other business customers withlarge predictable loads while also using the mini-grid to provide electricity to residential customers. This
increases the utilization rate of the mini-grids, reduces risk through predictable loads, lowers the cost ofelectricity, and increases profits for the developer. 28
Cold storage systems are potential anchor loads that can be powered by mini-grids. Anchor loads arecontinuous, predictable loads (use of electricity) with potential to increase the utilization rate of minigrids, thus lowering the cost of electricity and increasing profits for the developer. There is a reduced
burden (both financial and technical) on users who can power their cold storage systems via mini-grids.
While a cold storage system acts as an “anchor load”, in some instances there may be a need for an
additional storage system that can sustain cooling when electricity cannot be supplied by the mini-grid(further discussed in this report).
Many conventional cold storage systems in Nigeria are heavily reliant on diesel generators and consume
copious amounts of diesel in the process of powering the equipment. This contributes to climate change
due to the carbon emission level of diesel fuel. 29 This impact is compounded by rising global temperatures,
which is one of the greatest threats to future food security and further increases the need for cold storage
options to preserve food. This could also result in the creation of a negative spiral in which the need forthese carbon-intensive cooling systems further exacerbates climate change, which subsequently drives up
the demand for cooling solutions even further. Solar powered cold storage provides an alternative todiesel powered equipment achieving the same result without emitting greenhouse gas emissions.

26 World Bank (2020). Urban population (% of total population) – Nigeria. Source:

https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?locations=NG

27 Stand-alone Off-grid Solar Market Research: Nigeria (2021). ACETAF, TetraTech, UK Aid. Source: https://www.ace-

taf.org/wp-content/uploads/2021/05/ACE-NIGERIA-MARKET-RESEARCH-STAND-ALONE-OFF-GRID-SOLAR-FINALREPORT.pdf
28 Mini-Grid Partnership (MGPP), BloombergNEF and Sustainable Energy for All (2020). “State of the Global Mini-grids Market
Report: Trends of renewable energy hybrid mini grids in Sub Saharan Africa, Asia and island nations. Source:
https://minigrids.org/wp-content/uploads/2020/06/Mini-grids_Market_Report-20.pdf
29 US Energy Information Agency (EIA) (2016). “How much carbon dioxide is produced when different fuels are burned?”.
Source: https://www.eia.gov/tools/faqs/faq.php?id=73&t=11
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

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Figure 1: Potential Emissions Reductions from Switching to Solar Cold Storage 30

Figure 1 represents the expected impact of introducing solar-powered multi-use agricultural cooling on
the carbon emissions arising from agricultural activities in Uganda. Continuing the Business As Usual(BAU) trend leads to a continuous rise in the emissions of carbon dioxide equivalent (tCO2e), further
exacerbating the climate emergency.

COLD STORAGE MARKET POTENTIAL IN NIGERIA
According to official estimates by the Food and Agriculture Organization of the United Nations (FAO),
global post-harvest losses (PHL) can reach up to 20% for cereals, 30% for dairy and fish, and 40% for fruitand vegetables.31 This level of waste is devastating, particularly in Africa where approximately 250 million
people (20% of the continent’s population) are undernourished. 32 In Sub-Saharan Africa, for example, anestimated US$4 billion worth of food, which could feed over 48 million people, is lost every year due topost-harvest losses. 33
Data collected from primary and secondary sources revealed that cold storage systems are available andoperational across Nigeria. However, when compared to the number of farmers and agribusinesses whoneed this technology, there is a severe gap between the demand and supply of cold storage in Nigeria.
This gap is pronounced in rural communities where the overwhelming majority of smallholder farmers
lack access to cold storage solutions.34 PHL estimates as well as the size of the agriculture industry indicate
a sizable potential to scale deployment of SPCSS, which is expected to have a significant impact for highly
perishable food commodities such as dairy, seafood, fruits, and vegetables, with inadequate cold storage.
The following discussions lay out the significance and drivers for each of these, followed by Table 2, at theend of this section providing an estimate of potential reduction in PHL for these.
Fish Storage: The fishing industry in Nigeria is in dire need of cold storage solutions due to the highperishability of fish, as well as low and sometimes sub-zero temperature storage requirements. Thirty to
30 The Renewable Energy and Energy Efficiency Partnership (REEP) (2017). “Solar Powered Multi-Use Cold Storage in Uganda:

Station Energy”. Source: https://www.reeep.org/projects/solar-powered-multi-use-cold-storage-uganda-station-energy

31 Food and Agricultural Organization of the United Nations (FAO) (2019). “Reducing post-harvest losses”. Source:

http://www.fao.org/3/ca6344en/ca6344en.pdf
32 Food and Agricultural Organization of the United Nations (FAO) (2020). “The State of Food Security and Nutrition in theWorld 2020”. Source: http://www.fao.org/3/ca9692en/online/ca9692en.html
33 Food and Agricultural Organization of the United Nations (FAO) (2020). “Food losses increase during COVID-19, a major
hurdle to Africa’s development”. Source: http://www.fao.org/africa/news/detail-news/en/c/1310100/
34 Kibiti, B. and Strubenhoff, H. (2019). “How off-grid cold storage systems can help farmers reduce post-harvest losses”.
Brookings. Source: https://www.brookings.edu/blog/future-development/2019/10/16/how-off-grid-cold-storage-systems-canhelp-farmers-reduce-post-harvest-losses/
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fifty percent of harvested fish is lost due to inadequate cold storage. 35 Fish is integral to diets in Nigeria
with the average Nigerian consuming 13.3kg of fish per year. 36 The combination of the dominance oftraditional fish preservation practices (such as fish smoking), the dearth of cold chain infrastructure, andconsumers’ strong preference for fresh fish pose major obstacles to implementing mini-grids for the
purpose of fish refrigeration and freezing. 37 If unable to introduce these cold storage solutions, fish farmers
miss a great opportunity to increase their revenue through reducing post-harvest losses of fish and selling
their fish in markets far from the point of capture using cold transport vehicles. Interviews in PA-NPSP’s
Productive Use Stimulation in Nigeria: Value Chain & Mini-grid Feasibility Study revealed all aquaculture value
chain participants expressed their belief that refrigeration would allow them to sell more fresh fish as
opposed to smoked fish, despite their lack of experience with cold storage.34
Milk Storage: According to International Food Standards (IFS), milk is one of the most perishable protein
commodities, requiring cooling at approximately 10ºC within 3-4 hours of collection to prevent spoilage.
Conservative calculations estimate the post-harvest losses of milk at 20%, which is costly because thedegraded milk is unfit for use and often discarded except in instances where it can be used to makecheese.34 The high perishability of milk requires significant energy resources to meet cooling requirements
in Nigeria where the average cow can produce 213kg of milk in a year. Furthermore, due to the integralrole of dairy farming in the cultures and economies of certain regions of Nigeria, it is unsurprising thatsome milk chilling operations receive hundreds of liters of milk daily from pastoral farmers.34 For example,
dairy cold chain services in the Middle-Belt and Northern Nigeria, home to many livestock farmers, tend
to experience high levels of milk production. This creates an avenue to leverage the concentration of dairy
farming activities into the development of the productive use of energy through partnerships with existing
dairy off-takers who seek to expand their local milk supply chain.34
One example of milk chilling facilities yielding immediate and substantial dividends to its users is found in
the creation of the Milky Way Partnership in Kaduna State. It is a collaboration between a Danish dairy
company called Arla Foods, the Kaduna State Government, a local dairy cooperative called Milcopal, andlocal dairy farmers which was created to boost both the Nigerian dairy market as well as the livelihoodsof local dairy farmers.34 The provision of milk chilling facilities was vital to this partnership because it isthrough the preservation of locally sourced milk that Arla Foods is able to support the development of
the fast-growing Nigerian dairy industry, and because the facilities provide opportunities for local dairy
farmers to generate higher and more stable incomes from their activities.34 This partnership has been
beneficial to all parties as the dairy farmers have been provided with permanent grazing lands for theircattle by Kaduna State Government, while Arla Foods has access to a constant source of locally produced
milk. This is an example of a combination of the commercial partner model and community-owned model,
discussed later in this report under the section on the deployment models.
Fruits & Vegetable Storage: There is a large variety of fruits and vegetables grown across Nigeria, andthey are produced in enormous quantities, as shown in Table 2 . Over 10 million metric tons of FFVs areproduced annually for domestic consumption and export, with some of the main products including:mango, pepper, citrus, tomato, banana, plantain, okra, and onions. There is significant potential for theindustrial use of the by-products of FFVs but they require adequate preservation until use. For example,
high value components such as nutrients extracted from produce can be made into substances and foodadditives that aid digestion, regulate blood pressure, improve bowel movement, and can serve as colorants,
35 Adeyeye, S. A. O. (2016). “Traditional Fish Processing in Nigeria: A Critical Review”. Nutrition & Food Science, 46(3) 321335. Source: https://doi.org/10.1108/NFS-11-2015-0148
36 Food and Agricultural Organization of the United Nations (FAO) (2017). “Fishery and Aquaculture Country Profiles: The
Federal Republic of Nigeria”. Source: http://www.fao.org/fishery/facp/nga/en
37 Santana, S.; Allee, A.; Meng, Z.; Omonuwa, W.; Sherwood, J.; Balaji, M. K.; Rosi-Schumacher, K. (2020). “Agricultural
Productive Use Stimulation in Nigeria: Value Chain & Mini-Grid Feasibility Study”. Rocky Mountain Institute, Deloitte
Consulting LLP. Prepared for the U.S. Agency for International Development Power Africa Nigeria Power Sector Program.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

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antioxidants, and flavorings. 38,39 Capitalizing on these additional benefits of fruits and vegetables would
significantly contribute towards an acceleration in the rate of advancement of the Nigerian processing
industries. However, despite the wide variety of produce and the abundance of opportunity, there is asevere lack of large-scale fruit and vegetable industries in the country. 40 Furthermore, due to the highperishability of these food items, a significant percentage is lost due to inefficient handling and storage.
Therefore, it will be highly advantageous to both the Nigerian economy and society if greater effort isinvested into the growth and development of fruit and vegetable industries to take advantage of theabundance of available produce, thereby greatly reducing PHL.
The potential annual savings on PHL for fish, milk, and some FFVs based on the estimates shown in Table 2
is approximately NGN 110 trillion (US$268 billion), which emphasizes the need for accessible and effective
storage facilities and underlines the market potential for new or existing entrants into the cold storage
market.
Table 2: Cold Storage Market Potential
Market Segment

Annual Production(metric ton)Price per metric ton(NGN)

Potential Annual
Savings (NGN M)

Cashew

960,000

525,000

201,600

Orange4,160,000

25,00041,600

Tomato3,816,009

370,660

565,776

Milk

523,599,000 41

720,344 42

113,151,419

Fish

1,100,000

1,000,000

330,000

Total

534,581,704--

110,776,845*Based on an estimated 20% PHL savings for milk and 40% PHL savings on fish, fruits, and vegetables.

38 Gowe, C. (2015). “Review on Potential Use of Fruit and Vegetables By-Products as A Valuable Source of Natural Food
Additives”. Food Science and Quality Management, 45, 47-61.
39 Ahmad, F. and Khan, S. T. (2019). Potential Industrial Use of Compounds from By-Products of Fruits and Vegetables. In A.
Malik, Z. Erginkaya, and H. Erten (Eds.), Health and Safety Aspects of Food Processing Technologies.
40 Alagba, R.; Ofor, M. O.; Okoli, N.; Ibeawuchi, I. I.; and Obiefuna, J. C. (2015). “Fruit and Vegetable Crop Production in
Nigeria: The Gains, Challenges and The Way Forward”. Journal of Biology, Agriculture and Healthcare 5(2), 194-208
Source:https://www.researchgate.net/publication/332876077_Fruit_and_Vegetable_Crop_Production_in_Nigeria_The_Gains_
Challenges_and_The_Way_Forward/link/602661f792851c4ed567214b/download
41 Knoema (2019). Nigeria - Production of milk. Source: https://knoema.com/atlas/Nigeria/topics/Agriculture/Live-StockProduction-Production-Quantity/Production-of-milk
42 Expatistan (2021). Cost of Living: Nigeria. Source: https://www.expatistan.com/price/milk/lagos

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COLD STORAGE SYSTEMSThe preservation methods of refrigeration and freezing are vital parts of the food chain and vary by foodproduct. Chilling temperatures vary between 0°C to 8°C whereas freezing temperatures are below -18°C.
Examples of cold storage systems used around the world include cold rooms, industrial blast freezers,
milk chillers, refrigerators, mobile refrigerated trailers, and ice makers. The different options are designed
to cater to the context-specific needs of customers, which vary depending on the products being stored,
the intended duration of storage, and the existing energy situation of the target customers locations.
These systems can be powered by diesel, solar energy systems or solar-diesel hybrid systems either
through dedicated stand-alone power generation or power from mini-grids serving a larger community inthat area. There is a high operational cost and capital cost associated with powering cold storage solutions
using diesel generators and solar systems, respectively. This section provides a description of each of thetypes of systems with examples of their deployment. Table 4 at the end of this section presents theapplicability of each of them to the various value chains and typical capacities. A business case scenario
analysis, in a later section of this report, evaluates which powering options are most suitable, economically.
Benefits of cold storage systems adopted in several countries have been observed to preserve incomegenerating farm-produce, increase revenue, and create jobs. Appendix A summarizes additional
information on cold storage services employed by farmers and agribusinesses in different parts of theworld. Included are cold storage facilities in Nigeria, Ghana, India, and Rwanda. Products range fromstationary cold rooms used to store FFVs to milk chillers and other solutions designed to meetpreservation and cold storage needs.

COLD ROOMS
Cold rooms are stationary temperature-controlled rooms used to store fresh fruits and vegetables tosignificantly extend freshness and quality. The capacity varies depending on the size of the storage unit.
There are smaller, more compact units targeted at smallholder farmers in rural areas, and there are muchbigger units utilized by large agribusinesses and food processors. The temperature of cold rooms can varydepending on the specific storage requirement of the farm-produce.
An example of a cold room provider is ColdHubs, which provides plug-and-play modular, solar-powered
walk-in cold rooms for 24/7 off-grid storage and preservation of perishable foods that can extend the shelf
life of FFVs from 2 days to 21 days. 43 The cold rooms deployed by ColdHubs possess the following
features:●

Operate at a maintained temperature of 5°C.

●

Stainless steel floors made with 0.8 – 1mm aluminum to prevent slippage and rust●

Energy efficient mono-block refrigeration unit with the environmentally friendly R290 propane
refrigerant connected to a set of inverters and batteries that supply energy●

Batteries charged by solar panels, which generate about 5.7 kWh of energy.

●

Capacity for 2000 – 3000kg (2-3 metric tons) of perishable food arranged in at least 150 units of
30kg (0.03 metric tons) plastic crates●

The units can either be leased to farmers who run it and are paid a commission per crate used orpurchased by a farmer’s cooperative under a subsidized repayment plan.44

43 ColdHubs. Source: https://www.coldhubs.com
44 CNN (2015). “A radio show host may have fixed Nigeria's worst problem.” Source:

https://edition.cnn.com/2015/12/22/africa/cold-hubs/index.html

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Figure 2: ColdHubs Modular Walk-in Cold Room

Another provider is InspiraFarms, which provides cold storage options in Africa as well as in Asia, Central
America and South America. 45 The organization is focused on designing, developing, and supplying modular
and energy-efficient cold rooms and packhouses that are either on or close to farms in emerging markets.46
With the current deployment of its on-demand model in Mexico, Ethiopia, and Mozambique, more than
5,000 members of rural communities in developing countries have experienced improved livelihoods,
especially the women in underserved communities that now have jobs.42 InspiraFarms expects each unit
to potentially increase the net income of over 200 small-scale producers by over 30% due to the significant
reductions in PHL and increased quality of produce.42
One of InspiraFarms’ clients is Ausmoz Farm holdings, which is a commercial farm in Mozambique that
has invested in cold rooms to preserve the freshness of litchis (lychees) produced for export. 47 Initially,
Ausmoz invested in refrigerated containers to store the fruits before they were exported, but a surge inproduction over the past three years meant that their existing facilities were no longer sufficient to satisfy
their storage needs. This led to the produce being spoiled and wasted, which resulted in considerable
financial losses for Ausmoz. In response to this, Ausmoz invested in a modular cold room, which can store
a maximum of 20 metric tons of produce. The facility is equipped with pre-cooling capabilities throughair-forced cooling and a humidifier, which rapidly lowers the fruit’s pulp temperature topreserve optimal quality.44

INDUSTRIAL BLAST FREEZER
The industrial blast freezer is a specialized stationary freezer used to preserve food at sub-zero degrees
Celsius temperatures to prevent the growth of harmful bacteria that spoils food. Blast freezers work byblowing chilled air from blowers mounted inside the freezer that rapidly reduces the temperature of the
45 The Shell Foundation (2019). The ‘Cold Chain’ Opportunity: Reducing Postharvest Losses and Increasing Market Access for

Rural Farmers. Source: https://shellfoundation.org/feature_posts/the-cold-chain-opportunity/#_ftn1
46 InspiraFarms. Source: https://www.inspirafarms.com
47 Ausmoz Farm holdings (2021). Source: https://www.inspirafarms.com/portfolio-items/ausmoz-farm-holdings-mozambique/
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

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food. 48 These form smaller ice crystals within the food items than conventional freezing, thereby causing
less damage and thus preserving the quality longer. Blast freezing ensures that the food preserves its taste
and texture when it thaws and is primarily used by businesses in the frozen food industry to store
vegetables, fresh fish, or raw meat that must be stored at very low temperatures. This technology isespecially useful for areas of intermittent power supply as the frozen items will remain cold for hours in
the absence of further cooling. The capacity varies depending on the size of the storage unit.
Figure 3: Standard Blast Freezer Diagram 49

An example of a blast chiller supplier is De Koolar Nigeria Limited. Their units are powered by gridconnection or diesel generators or solar energy systems. They also provide units of various sizes uponrequest and deliver them across Nigeria. Another example is Eja-Ice Nigeria Limited, they offer solarpowered freezers with natural refrigerants to fish retailers through affordable lease-to-own schemes.

MILK CHILLER
Milk chillers reduce the temperature of milk and keep it at a very low temperature preventing
deterioration of milk molecules. This preserves milk and extends storage life, which allows for time totransport it to users.
An example of a milk chiller service provider is Promethean Power Systems, a company based in India. Its
systems employ thermal energy storage, which stores cold energy as opposed to electricity, under its
patented “Promethean Thermal Storage System (TSS)” to chill the stored milk. 50 The milk chilling processincludes three core components with an optional fourth component available as a complementary piece(Table 3).

48 ADK Kooling Ltd (2016). “A Brief Look at Blast Freezers and Understanding its Working Principle”. Source:
https://adk.co.uk/brief-look-blast-freezers-understanding-working-principle/
49 Alvin, L. (2017). Blast Freezer - A Hygienic and Affordable Way of Freezing Food. Medium. Source:
https://medium.com/@Refrigeration/blast-freezer-a-hygienic-and-affordable-way-of-freezing-food-aa502855e3a4
50 Promethean Power Systems. Source: https://coolectrica.com

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Table 3: Promethean Power Systems’ Milk Chiller Components 51
Milk Heat Exchanger
Flow rate: 35ºC - 4ºC (can be customized)
210 liters/hour
Holding Funnel Capacity
60 liters
Dimensions (L x B x H)
0.76 x 0.76 x 1.7 meters
Designed Ambient Temperature
40ºC
Heat surface exchange
1.2 square meters
Thermal Storage System (TSS)
Number of TSS
1
Back-Up Capacity
500 liters
Time to Recharge
4 - 5 hours
Dimensions
1.2 x 1.2 meters
Chiller Unit (for charging TSS)
Compressor Type
Copeland Scroll
Refrigerant
R-404 aPower input
3.5 kW
Average Cooling Capacity
5 kW
AC Power Supply
220 / 50 Volt/Hz
Milk Cooling Tank (Optional)
Capacity
1000 liters
Maximum capacity
1100 liters
Polyurethane foam (PUF) Insulation
50 mm
Dimensions
1.96 x 1.08 x 1.35 meters

Rural dairy farmers in India are heavily impacted by the country’s unreliable power supply as it severely
limits their access to cooling solutions. This situation is exacerbated by the reluctance of dairies to operate
in rural areas due to the high cost of installing milk chillers. 52 With no way of transporting their milk tolarge dairies, the farmers are forced to either sell to local markets and risk spoilage, or sell to middlemen
who take a cut from the proceeds.49 This is vital for the country’s dairy industry, which accounts for 22%of global milk production and makes India the largest producer of milk in the world. 53 It is also a key
contributor to the rural Indian economy as it is a significant source of employment and income.
Promethean Power Systems has sold several units to its dairy partners in India, Sri Lanka and Bangladesh,and has installed 25 units in Bangladesh for the Bangladesh Rural Advancement Committee (BRAC), whichis the world’s largest NGO. 54 To date, the company has installed 1,200 units, which has served 60,000
dairy farmers, chilled 700 million liters of milk, and saved 3 million liters of diesel.47 Furthermore, there isa 30-40% increase in the volume of milk collection when a village-level chilling center is installed because
doing so makes the collection process more streamlined.51 This undoubtedly provides immediate benefits
to individual dairy farmers as it increases their revenue generation, raises their profit margins, advances
their agribusinesses thus improving their overall living standards. Many of them are the community-owned
model.
51 Engineering for Change (2020). Promethean Power Systems. Source:
https://www.engineeringforchange.org/solutions/product/promethean-rapid-milk-chiller/
52 Forbes India (2019). “Promethean Power: A chill pill for dairy farmers”. https://www.forbesindia.com/article/innovationfactories/promethean-power-a-chill-pill-for-dairy-farmers/53087/1
53 Food and Agricultural organization of the United Nations (FAO) (2021). “Gateway to dairy production and products”.
Source: http://www.fao.org/dairy-production-products/production/en/
54 ETCIO (2017). “How Promethean Power Systems is revitalizing the dairy farming industry”. Source:
https://cio.economictimes.indiatimes.com/news/corporate-news/how-promethean-power-systems-is-revitalizing-dairy-farmingindustry/56908332

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SOLAR REFRIGERATOR
Solar refrigerators are ordinary refrigerators that are powered by the energy directly provided bysunlight. Rather than a stationary temperature-controlled room, solar refrigerators are much smaller insize and holding capacity, similar to ordinary refrigerators. Traditionally, a combination of solar panels andlead-acid batteries is used to store generated energy for periods when sunlight is unavailable, such as
during cloudy days or at night. 55 They are commonly used in areas where inhabitants are either totally
unconnected to the grid or receive little to no power supply from the grid. Temperatures can range from
0ºC to +10ºC and would be highly beneficial for livestock farmers and markets.
There is a solar refrigerator unit currently in development by TreeSeaMals Ltd intended to provide up to1600 kg (1.6 metric tons) per day of cold storage for farmers using the combined energy generation of anassembly of solar panels. 56 This technology can be highly cost intensive due to the relatively short life spanof the batteries, which necessitates frequent replacement. It can be very difficult to obtain the batteries,
which can make it unattractive as a long-term solution. 57
Figure 4: Solar Refrigerator Diagram 58

55 United Nations International Children’s Emergency Fund (2014). “Battery Powered Solar Refrigerators and Freezers”.
Source: http://iaphl.org/wp-content/uploads/2018/05/Battery-Powered-Solar-Refrigerators-and-Freezers-Copy.pdf
56 Tree_Sea.mals. Source: https://www.treeseamals.org
57 World Health Organization (WHO) (2015). “Introducing Solar-Powered Vaccine Refrigerator and Freezer Systems: A Guidefor Managers in National Immunization Programs”. Source:
https://apps.who.int/iris/bitstream/handle/10665/195778/9789241509862_eng.pdf?sequence=158 Green NRG Co (undated). Solar Fridge & Freezer. Source: https://greennrgco.com/solar-fridge-freezer/

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA16

REFRIGERATED TRAILER
Refrigerated trailer also known as “reefer”
is a refrigerated container attached to asemi-truck and used to transport
perishables and other temperaturesensitive goods. Cooling a reefer can beachieved through diesel powered
generators or solar energy systems.
The major components of reefercontainers include the compressor (takes
in gaseous refrigerant for compression),the condenser (takes the output liquidfrom the compressor) and the evaporator
An Alyx Refrigerated Trailer Funded by the Rockefeller Foundation,(inside where the cool refrigerant assumes a USAID, and GAIN
gaseous state again).
The system continuously removes heat and maintains a constant low temperature within the unit topreserve the food. Reefer capacity varies, some can hold up to 50 gallons of diesel, for the diesel fueled
type, an equivalent of 4 to 5 days driving. More so, it is known for its ability to carry goods at a constanttemperature of as low as -20 degrees ºC. 59 It can be used to transport meat, fish, fruits, vegetables,
confectionaries, and other food products.
Alyx Limited in Nigeria provides solar refrigerated trailers to help farmers transport produce from theirfarms to the markets. Their units can be used for pre-cooling perishable foodstuff of up to 5000kg (5metric tons) and can be rented to farmers during harvest for pre-cooling, storage, and transport, thereby
maintaining continuous cold chain transportation for onward movement to markets. However, if thesevehicles are not fitted with a temperature monitoring system and are not operated by properly trained
workers, there is a significant risk of spoilage in transit.

SOLAR ICE MAKER
A solar ice maker can be part of a solar freezer or a stand-alone appliance, which uses photovoltaic cells
to generate electricity, which is then used to make the ice. The blocks of ice are created during daylight
hours and kept at 0ºC within the ice maker at night using battery power. Like other methods of cold
storage, ice reduces the temperature of the fish to 0ºC by direct application. Furthermore, the large
cooling capacity of ice, with a latent heat fusion of 80 kcal/kg, provides for the chilling of large quantities
of fish with much smaller quantities of ice. 60 This presents an efficient and cost-effective method ofpreserving fish, especially when used in conjunction with insulated containers that keep the ice solid for
longer. This is amplified by the fairly high availability of freshwater in Nigeria, which is the most ideal
source of ice, as opposed to ocean saltwater.
The thermal capacity of the solar ice makers allows for the use of ice as energy storage, which preserves
food for multiple days at a time in the absence of sunlight. This makes it ideal in situations where there iserratic power supply, or where energy costs are too high. Furthermore, the compact size and portabilityof these machines allows for them to be used anywhere to chill a wide variety of foodstuffs and drinks.

59 Refrigerated Truck Bodies (2021). “How does a Refrigerated Truck Work?”. Source: https://rtbodies.com.au/how-does-arefrigerated-truck-work/
60 Food and Agricultural Organization of the United Nations (FAO) (1995). “Quality and quality changes in fresh fish”. Source:
http://www.fao.org/3/v7180e/V7180E00.htm#Contents

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Table 4: Cold Storage Systems and Storing Capacity

SystemFood Suitability

Capacity (Liters)

Temperature

EnergyRequirement

Cold Room

Tubers, Fruits, andVegetables

13,28

5ºC

5.7 kWh

Cold Room 61

Milk, Tubers, Fruits,
and Vegetables

9,714 – 382,481

5ºC and below

8kWh - 120kWh

Blast Freezer58

Meat, Fish, Vegetables

150 – 1500

-18ºC and below*

10kWh - 64kWh

Conventional
Milk
Chiller, Rapid Milk
Chiller, and Rapid Milk
Chiller Premium 62

Milk

500 – 2000

4ºC

5kWh - 12.4kWh

Solar freezer 63

Meat, Fish, **Fruits,
and Vegetables

118 - 218

-18ºC and below*

20kWh - 80kWh

Standard refrigerator

Milk, Tubers, Fruits,
and Vegetables

100 - 250

Below 4ºC

1 - 2 kWh**Solar refrigerator 64

Milk, Tubers, Fruits,
and Vegetables

1,600

Below 4ºC

2.5kWh - 8.4kWh

Refrigerated Trailer 65

Milk, Tubers, Fruits,
and Vegetables

Varieswidelydepending on sizeand purpose+12ºC to -25ºC 66

5.5kWh - 80 kWh

Solar Ice maker 67

Meat, Fish

160

0ºC and below

600 Watts*Standard temperature range of freezers** Frozen fruit and vegetable

OBSTACLES TO COLD STORAGE ACCESS IN NIGERIA
Despite the clear need for cold chain products and services across Nigeria, the supply of thesetechnologies remains limited compared to the number of farmers and agribusinesses who remain without
access to cold storage. This gap is the result of myriad economic, social, geographical, infrastructure, andlogistical challenges. Obstacles to increased cold chain infrastructure in Nigeria include:
61 De Koolar Nigeria Limited Price List. Source: https://www.dekoolar.com/price-list/
62 Promethean Power Systems’ Conventional Milk Chiller. Source: https://coolectrica.com/products/conventional-milk-chiller/
63 Jumia (2020). Source: https://www.jumia.com.ng/mlp-solar-freezer/
64 Engineering for Change (2020). Tree.Sea_mals. Source: https://www.engineeringforchange.org/solutions/product/solar-

powered-communal-refrigeration/
65 eNow Rayfrigeration™ Trailer Systems (2020): “Zero-Emission All-Electric Reefers”. Source:
https://www.enowenergy.com/copy-1-intro-to-enow-rayfrigeration-trailer-systems/
66 IndiaMART. Mobile Refrigerated Van. Source: https://www.indiamart.com/proddetail/mobile-refrigerated-van17416010355.html
67 Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) (2020) Solar Ice Maker. Source:
https://energypedia.info/images/9/9b/Techsheet_A3_solar_ice_maker_V3.0.pdf
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●Lack of awareness (demand side): In some cases, in rural communities, smallholder farmers andfishermen are unaware of cold storage systems entirely and their potential to reduce post-harvest
losses and preserve food produce. In cases where farmers are aware of technologies, there is still aknowledge gap of how to purchase the appropriate cold storage facilities and access electricity
required to power them.64●

Lack of awareness on the part of banks and other lenders: Financial institutions have limited
information about solar-powered cold storage technology and the business potential (i.e. return on
investment, payback period). 68 Consequently, they are quite reluctant to lend to businesses seeking
to raise the needed capital to acquire/construct and distribute the equipment to target areas ripe with
opportunity. This has the effect of depriving communities in need of this technology not only accessto it, but also from reaping the rewards that come with it.

●

Poor access to finance: Potential cold storage customers (e.g., farmers and agribusinesses) often
lack access to credit facilities required to purchase the systems. This lack of credit is prevalent ingeneral but particularly in the case of cold storage where the absence of a business case makes banks
reluctant to extend financial products.65●

Inconsistent energy supply: Erratic power nationwide hinders the introduction, uptake, andeffectiveness of conventional cold storage technologies, especially in communities that are completely
unconnected to the grid. Many cold chain service providers must depend on diesel-powered
generators, which are commonplace across the country, to ensure that they are able to provide
round-the-clock service to their customers. The reliance on diesel leads to higher operational costs
due to the high cost of diesel in Nigeria. This reduces the bottom line of farmers and businesses alike.

●High energy demand: Nigeria’s hot climate, particularly in the northern regions of the country
where most agricultural activities occur, is highly conducive to the growth of bacterial organisms that
spoil food. These organisms thrive within the temperature range of 40ºF - 140ºF (4.4ºC - 60ºC). The
current average monthly temperature for Nigeria ranges from 24°C (December, January) to 30°C
(April). 69 The average monthly temperature in Nigeria is expected to rise to 30ºC between 2020 and2039 in the absence of significant climate change mitigation. This will lead to a significant increase in
the already high energy demand required to meet cooling needs. 70●

High capital costs of cold storage technologies: The high costs of transport and energy
infrastructure required to provide cold storage technologies to rural users are a deterrence to inflows
of investment because the cold storage units would have to be built from scratch in the area of
deployment. Suppliers of cold storage units usually assemble the equipment and facilities at the baseof operations before deploying the finished product to the place or community it was purchased for.
However, if this is extremely difficult to do, they would be forced to transport the individualcomponents to the location and assemble it there. This significantly increases their costs, which leads
to a reduction in the amount of profit generated from the sale.

68 Global Off-Grid Lighting Association (GOGLA) (2021). “Decentralized Solar Refrigeration: Opportunities in the Livelihood

Appliances Market in India”. Source: https://www.gogla.org/resources/decentralised-solar-refrigeration-opportunities-in-thelivelihood-appliances-market-in
69 Climate Change Knowledge Portal. “Nigeria” Source: https://climateknowledgeportal.worldbank.org/country/nigeria/climatedata-historical
70 International Institute for Applied Systems Analysis (2019). “More energy needed to cope with climate change”. Source:
https://www.sciencedaily.com/releases/2019/06/190624111437.htm
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OFF-GRID SOLAR COLD STORAGE DEPLOYMENT
Leveraging existing mini-grids to power cold storage systems across states in Nigeria will require strategic
location pairing and partnerships with SPCSS service providers across the country (Figure 6). The minigrid site is ideally located within the target customers’ catchment area and in cases where existing minigrids pairing is not economically viable due to the additional cost of extending power distribution lines tocatchment areas, standalone systems can be employed.
Figure 5: Potential Demand for SPCSS, by State, Commodity

NEP Mini-grids

Cold storage systems and storage capacity varies, depending on the food commodity to be preserved(Table 4). According to food safety guidance for power outages, refrigerators and freezers can continue
to store contents for up to 4 and 48 hours respectively if the doors stay closed. There is currently no
open-source literature documenting the approximate number of cold storage systems powered by minigrids or standalone solar systems in Nigeria.
Smallholder farmers, agribusinesses, logistic companies, and fishermen depend on cold storage systems topreserve highly perishable income-generating produce. In turn, cold storage systems suppliers and service

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providers provide cold storage equipment including cold rooms, industrial blast freezers, milk chillers,communal refrigerators, mobile refrigerated trailers, and ice makers, to these target customers.
There are different target customers who would benefit greatly from SPCSS deployment across states in
Nigeria. Cold storage systems and service providers target a range of customers including dairy farmers,
FFV farmers, fishermen, agribusinesses, and aggregators.
●

FFV Farmers: FFV farmers are usually smallholder farmers that own small plots of land, usuallyless than one hectare. They own comparatively few production-enhancing assets for farming,
relying mainly on the use of crude technologies. Due to the lack of availability of financing,smallholder farmers cultivate labor-intensive, low-value crops which limit their income and cancause them to easily slide into greater poverty.

●

Dairy Farmers: Dairy farmers usually operate on a small-scale. Free ranging dairy cattle are fed
and watered whenever the opportunity to do so arises, with limited access to improved pasturesor supplemented feed to maintain consistent nutrient intake. 71●

Fishermen: Fishermen also operate on a small-scale. Refrigeration or freezing can be used topreserve wild-caught fish, and are especially useful for the preservation of shellfish, which istypically harvested much earlier in the value chain and thus spoils earlier. Freezing allows fish tobe sold to markets farther beyond the community in which they are produced.

●

Agribusinesses: Agribusinesses own multiple, large farmlands (usually > 20 hectares) leveraging
productivity enhancing technologies such as irrigation systems, fertigation systems, and tractors
to increase productivity and output. Agribusinesses spend significant funds on production inputs
which results in issues around post-harvest losses as less investment is made in the purchase ofcold storage technologies. 72●

Aggregators: Aggregators collect food produce from multiple locations in large quantities, store,
and transport to the market for sale. They leverage cold storage solutions to reduce the risk of
spoilage during storage and transportation. The aggregators are an ideal target customer for cold
storage technologies given the large number of produce and dairy they store and transport.68
Farmer associations can act as aggregators to their members, gathering the harvested crops fromtheir members (farmers) and transporting them to the market for sale.

●

Supermarkets: Supermarkets are where perishable goods such as meat, fish and milk areretailed to the general public, who require these goods. The capacity of the cold storage system
required within supermarkets typically varies depending on the amount of perishable goods
supplied to supermarkets.

●

Logistic companies: All the target customers, in some way, need to transport their highly
perishable produce from one point to another. The supermarkets need to transport the foodfrom the farm or processing center, the aggregators need to transport the food from multiple
locations and in large quantities. To effectively transport the produced food without spoilage orloss, cold storage equipped logistics companies are necessary. Logistics companies require
refrigerated transport vehicles that will foster the efficient distribution of highly perishable
produce.

71 Food and Agricultural Organization of the United Nations (2018). “Livestock production systems spotlight: Nigeria dairy
cattle and poultry sectors”. Source: http://www.fao.org/3/CA1790EN/ca1790en.pdf
72 United States Agency for International Development (USAID) (2019). “Technology Case Study: Clean Energy Cold Storage”.
Powering Agriculture: An Energy Grand Challenge for Development.

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BUSINESS MODELS FOR SPCSS DEPLOYMENTThere are five potential business models for deploying SPCSS in Nigeria: commercial partner model,
developer-owned model, non-commercial entity model, and SPCSS provider-owned model. Each requires
a unique set of stakeholders and roles and responsibilities and has both advantages and disadvantages todeployment.
Non-commercial Entity Model. The non-commercial entity model requires the mini-grid developer
to work with an NGO or other non-commercial entity, such as the government, to set up and operate
cold storage systems to serve the needs of the target customers. Under this model, non-commercial
entities can sponsor the upfront capital expenditure, system installation, system operations, or any
combination of these. The non-commercial entity may also sponsor upfront or installation costs, but stillseek payment from target customers to pay back the investment. There are several NGOs and localorganizations operating in the rural communities across states in Nigeria and working closely with
community members on development projects. Possessing knowledge of the target communities and theirneeds, they are well placed to assist mini-grid developers in gathering reliable data for business case studies
and social inclusion strategy development. For this type of model to succeed, boundaries must be clearly
established with each actor having well-defined roles and expectations.
Table 5: Advantages and Disadvantages of Non-commercial Entity Model
Advantages

Disadvantages● Partnership with the government can increase
project legitimacy and circumvents potential
bureaucratic delays that increase the risk of project
delay.

● Increased risk of non-payment by government orunsustainable donor development programs.
● Commercial experience of the government
partner may be limited which could result in
operational challenges.

Commercial Partner Model. This model is employed when cold storage is not easily accessible on
demand within target communities where a mini-grid exists. In this model, a partnership is establishedbetween the mini-grid developer and a cold storage provider to bring cold storage systems such as a milkchiller, cold room, and ice-maker to the target community.
For this type of model to flourish, the mini-grid must be capable of generating sufficient power requiredby the cold storage system. The cold storage provider must also be willing to integrate their system into
the mini-grid and negotiate a viable tariff based on fees charged to customers for cold storage. This model
also requires either the mini-grid developer or the cold storage solution provider to assess the cold
storage needs of the community, determine willingness to pay for these services, and provide a solutionthat is aligned to both those cold storage needs and the customer price point.
Table 6: Advantages and Disadvantages of Commercial Partner Model
Advantages

Disadvantages

•

•

•

Increased energy demand for the mini-griddeveloper.
No community-led investment required.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

The mini-grid developer may have limited insight
into the cold storage activities of the customer
base, which makes accurate projections ofelectricity demand more difficult. Furthermore,this demand may evolve or increase with thepresence of a cold storage system.

22

•
•

The mini-grid developer may require equipment
specialist expertise which may incur additional
expenses.
If the commercial partner meets the coolingneeds of the entire community, local small-scale
cold storage businesses may be priced out of themarketplace due to an inability to compete,
particularly if travel costs are involved and higher
for other local small-scale cold storage
businesses.

Developer-owned Model. In a developer-owned model, the mini-grid developer is also the provider ofthe cold storage system. Both the mini-grid utility and the cold storage system are owned and operated
by the same party. This model is used to drive the productive use of energy by the mini-grid developer ina target community with cold storage needs.
Table 7: Advantages and Disadvantages of Developer-owned Model
Advantages

Disadvantages

•

•

•
•

Increased energy demand for the mini-griddeveloper.
No community-led investment required.
An additional stream of revenue for the mini-griddeveloper while also giving the mini-grid developer
full control over their customer base.

••

Increased financial burden associated with theprocurement of cold storage system(s) if borneby the mini-grid developer.
The mini-grid developer may require equipment
specialist expertise which incurs additional
expenses.
If the commercial partner meets the coolingneeds of the entire community, Local small-scale
cold storage businesses may be priced out of themarketplace due to an inability to compete,
particularly if travel costs are involved and higher
for other local small-scale cold storage
businesses.

Shared Community-owned Model. In a shared community model, members of the community forma group or association and purchase a cold storage system because of its benefits. The mini-grid developer
works with the community, providing technical support such as recommendations on equipment
compatibility based on energy needs. The community owns the cold storage system in this model but
requires funding through grants, loans, and community contributions/savings.
Table 8: Advantages and Disadvantages of Shared Community-owned Model
Advantages

Disadvantages

•

•

•

Increased usage of the cold storage system due tothe trust fostered by internal ownership of the cold
storage system.
Ownership of the cold storage system increases
value and generates revenue for the community.

•

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

Increased financial risk for the community
because of commitment to repaying loans andongoing operational expenses.
The mini-grid developer may require equipment
specialist expertise which may incur additional
expenses.

23

•An additional stream of revenue for the mini-griddeveloper from the increased demand of the cold
storage system.

SPCSS Provider-owned Model. In this model, the SPCSS provider owns, constructs, and operates the
SPCSS. This model requires a facilitator to go into the rural off-grid communities to increase awarenessamong target customers on the benefits of SPCSS for food preservation. As mentioned earlier, the minigrid developer can also be an SPCSS provider under the developer-owned model. Equity cum subsidy,
rental, pay-as-you-store (PAYS) and ice-as-a-service (IAAS) are all examples of the repayment
arrangements of the SPCSS provider-owned model.
Table 9: Advantages and Disadvantages of SPCSS Provider-owned Model
Advantages

Disadvantages

•

•

•

This is the quickest to deploy and implement as the
SPCSS provider retains sole custody of operations.
Therefore, the process is not slowed bynegotiations or disputes with third parties.
The provider has full control over their customer
base.

•

In lieu of proactive measures by the SPCSS
provider, there is a lack of community
involvement and participation in decision making
related to the system, weakening the community’s
sense of ownership and limiting the extent towhich system management decisions reflectcommunity and target customer needs.
The risk of the business venture is borne by the
SPCSS provider who is solely responsible forraising capital. With no partners to share thefinancial burden, the provider could encountersignificant issues raising capital, maintaining
healthy profit margins, and could faceinsurmountable financial challenges should theventure fail.

PAYMENT OPTIONS FOR ACCESSING SPCSSThe options to access cold storage could be through either a full or partial ownership or pay-per-use, if
made available. These are explained as below.
●

Equity cum subsidy. Suppliers provide SPCSS at discounted rates to the target customers within
a community, of which a share of the deployment cost is borne by the government/donors ascapital subsidy.

●

Pay-as-you-store (PAYS). Pay-as-you-store (PAYS) is a financing approach that allows target
customers to pay a daily flat fee for food they store in the cold storage. Alternative names for the
PAYS approach include pay-as-you-chill and pay-as-you-freeze or cooling-as-a-service. This typeof credit system removes the initial financial barrier to solar energy access by allowing consumers
to make a series of modest payments to purchase time units for using the SPCSS instead of paying
upfront for the entire system. In Nigeria, one of the largest solar cold storage providers operates

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via the PAYS repayment model. SPCSS providers adopting a “pay-per-use” approach are reported
in Appendix A.
●

Rental. Through renting, the supplier owns, maintains, and rents the SPCSS to interested target
customers (individual or group). SPCSS such as milk chillers and mobile refrigerated solar trailers
are well suited for this type of arrangement. Alyx Ltd, Nigeria operates via this approach whereby
farmers rent its mobile solar-powered refrigeration truck during harvest for pre-cooling, storage,
and transport.

●

Lease-To-Own (LTO). The Lease-To-Own (LTO) model is intended to make chilling andfreezing services more affordable by allowing the customers to pay for the units in small
installments over an agreed period of time. Depending on the specific arrangement with theprovider, the customer can either acquire or purchase the unit upon completion of payment at
the end of the lease tenure. Eja Ice is currently developing LTO offerings to both group andindividual fish retailers. 73●

Ice-as-a-service (IAAS). Under this service, the SPCSS provider makes ice blocks and sells fora fee to target customers.

73 UpLink (2021). “Eja-Ice: Scaling Cold Chain Access for Women led Fish Retailers & other SMEs”. Source:

https://uplink.weforum.org/uplink/s/uplink-contribution/a012o00001pTYJ2AAO/ejaice-scaling-cold-chain-access-for-women-ledfish-retailers-other-smes
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Table 10: Advantages and Disadvantages of SPCSS Payment Options
Model
Equity Cum
Subsidy

Advantages● Subsidized capital cost encourages target
customers patronage of SPCSS.

PAYS

●

Ease of payment for target customers withlimited finances.

Rental●Eliminates the burden of purchasing
SPCSS, farmers make use of the system
based on their income/ability to rent.
Farmers pay for the system only whenneeded.
Allows customers to test SPCSS units
before making the decision to purchase. 74●

Subject to supplier rates which may
increase when demand is high and limiting
farmers ability to pay.

●

Quick implementation
Suitable payment options for customers
with limited finances.
High utilization factor compared to othercooling methods.

●

Lease payment systems such as mobile
money are still emerging in Nigeria limiting
adoption of LTO
Higher energy demand required forfreezing.

●
LTO

●

IAAS

●
●
●

Disadvantages● Availability of subsidized capital is
temporary and target customers may not
be able to continue payment at
unsubsidized rate.
● Poses a financial risk to the supplier whobears the cost of installation, maintenance,and repairs.

SUSTAINABILITY OF SPCSS DEPLOYMENT
Sustainable development is development that meets the economic, social, and environmental needs of thepresent without compromising the ability of future generations to meet their own needs.75 Hence thesustainability of SPCSS deployment is highly dependent on these factors.
Economic Sustainability. The economic sustainability of powering cold storage systems with solar
energy systems is determined by capital costs, expected additional revenues from solar cold storage
systems, and costs of alternative cold storage systems. SPCSS underlying economics are influenced by thevolume of cold storage, cooling temperature, cooling duration, access to finance, and access to markets.
●

Volume of Cold Storage: Larger capacity of cold storage solutions can accommodate moregoods and cater to a larger customer base, giving rise to lower per-unit costs. This is ideal forservice providers who offer a pay-as-you-go service. Initial capital investments are still greaterwith larger capacity of cold storage systems, requiring more solar panels and batteries. Smallholder
customers may not be able to purchase larger capacity of cold storage equipment individually, due
to high capital cost, but they can do so jointly through cooperatives and joint agreements.

●

Cooling Temperature: The lower the cooling temperature that is required, the higher theenergy demand and therefore associated energy cost. SPCSS requiring lower cooling temperature,
will require more electricity i.e., more solar panels and batteries which leads to increased capital
cost.

●

Access to Finance: As shown in Appendix A, cold storage systems are expensive and require
financial aid (usually administered through grants, equity, or loan). Lack of demonstrable bankablebusiness cases means poor access to finance for enterprises. Solar cold storage companies must

74 CRS Cold Storage (2018). “The Benefits of Cold Storage Lease to Buy”. Source:
https://www.crscoldstorage.co.uk/news/lease-to-buy.html
75 EUR-Lex (2009). Glossary if summaries. Source: https://eur-lex.europa.eu/summary/glossary/sustainable_development.html

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develop and demonstrate bankable business cases and proof-of-concept to attract commercial
financing. 76●

Access to Market: In many developing countries, smallholder farmers and fishermen generally
lack access to market information about crop and dairy prices, and the benefits of cold storage
for profit-making. This emphasizes the need for a facilitator who can facilitate market-linkage andextension programs that promote awareness on the benefits of the SPCSS to support market
expansion.

Social Sustainability. Social sustainability can be defined as identifying and managing both positive andnegative impacts of systems, processes, organizations, and activities on people and social life. 77 Public
opinion and acceptance are important for the successful introduction and adaptation of alternativetechnologies into society. These factors are influenced by certain determinants such as risks and benefitsof the technology, estimated costs, and gender and social equity. 78
Below are the determinants of social sustainability associated with solar-powered cold storage
deployment.
●

Technology Awareness: The absence of information and knowledge about alternative cold
storage solutions serves as a barrier to discovering solutions that are cost effective. There is aneed for awareness campaigns, technology demonstration and training exercises to spreadawareness among farmers and other stakeholders and enable them to make informed decisions.
For this purpose, a facilitator is necessary to champion awareness campaigns leveraging local
knowledge networks to spread information and increase acceptance of solar-powered cold
storage solutions among target customers. 79●

System Theft: Solar panels consist of almost half of the total system costs and are vulnerable totheft and physical damage. Several cases of solar panel thefts have been recorded in developing
countries such as India, Zimbabwe, South Africa, and Mali. Safety measures such as fencing,security fasteners, anti-theft bolts, alarms, and system monitoring tools can be adopted to securesolar panels against risks of theft, however, these safety measures are cost incurring and increase
capital costs.73

Gender-Related Constraints to SPCSS Deployment. Across the cold storage value chain, men andwomen perform different tasks, having different skills and decision-making roles. According to the Federal
Ministry of Agriculture & Rural Development (FMARD), women account for 75% of the farming populationin Nigeria (i.e., smallholder farmers), primarily engaging in farming activities such as irrigation, weeding,harvesting, on-farm processing, and selling of farm produce. However, women farmers are often
disadvantaged and have fewer educational, advancement, or other income-generating opportunities thantheir male counterparts, despite producing over 80% of food consumed in the country. 80,81
76 Agrawal, S. & Jain, A. (2018). “Sustainable deployment of solar irrigation pumps: Key determinants and strategies.” Wiley
Interdisciplinary Reviews: Energy and Environment.
77 Balaman, S. Y. (2019). Sustainability Issues in Biomass-Based Production Chains. In Decision-Making for Biomass-Based
Production Chains (pp. 77–112). Elsevier. Source: https://doi.org/10.1016/b978-0-12-814278-3.00004-2
78 Huijts, N. M. A.; Molin, E. J. E.; Steg, L. (2012). “Psychological factors influencing sustainable energy technology acceptance: A
review-based comprehensive framework”. Renewable and Sustainable Energy Reviews, 16(1), 525 - 531. Source:
https://www.sciencedirect.com/science/article/abs/pii/S136403211100428X?via%3Dihub
79 Food and Agricultural Organization of the United Nations (FAO) (2018). Small Family Farms Country Factsheet. Source:
http://www.fao.org/3/i9930en/I9930EN.pdf
80 Sahel (2016). Sahel Newsletter Volume 7. Source: http://sahelcp.com/wp-content/uploads/2016/12/Sahel-Newsletter-Volume7.pdf
81 Food and Agricultural Organization of the United Nations (2003). Gender – Key to Sustainability and Food Security. Plan of
Action for Women in Development.

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Women dairy farmers tend to sell surplus milk in local markets themselves or to local traders. This
process can be time-consuming and expensive after accounting for transportation costs, especially when
traders do not arrive to offtake the milk, it is up to these women to find a buyer themselves. 82
SPCSS offers business investment opportunities for women who are entrepreneurs, women farmers, andfishermen. However, hard-wired energy systems such as cold storage systems, tend to target male users
giving less attention to increasing women’s access. 83 Additional challenges facing women in the agriculture
sector are detailed below.
Inability to own land: In many parts of Nigeria, the traditional laws and customary practices strictly
prohibit women from owning land. The ownership rights to land are usually conferred exclusively uponmen or male-controlled kinship groups, and women only have the right to access the land through theirconnection to a male relative, often being her father or husband. 84 According to the 2012 “Gender in
Nigeria” report published by the British Council, men are five times more likely than women to own landon average, and as much as 13 times more likely than women to own land in the North-East region. 85
Consequently, women are unable to access the much-needed loans from banks and other financing
institutions as they cannot provide land as collateral.
Limited financial capacity: Although women dominate the agricultural sector in Nigeria, they tend to
be engaged in unpaid labor. 86 This is a result of working on family-owned and male-controlled farmlands,
which does not grant them the authority to determine how any income generated from the land is used.
Furthermore, the majority of these women, especially those who live in rural areas, are from low-income
backgrounds and have little to no formal education. 87 Subsequently, their earning potential is severely
limited, and they are unable to raise sufficient funds from farm produce or other ventures to buy, rent orotherwise gain access to SPCSS.
Environmental Sustainability. The environmental sustainability of solar cold storage solutions islargely understood in terms of its influence on the surrounding environment, especially in its contribution
to electronic waste and climate change. Informed selection and adequate maintenance measures for eachcomponent of SPCSS as well as proper disposal at its end of useful life are essential to its environmental
sustainability. End-of-life management is important for components such as solar panels, controllers, andinverters, which are categorized as e-waste, and their improper disposal could negatively affect theenvironment. As the spread of SPCSS increases in the future, proper disposal at the end of useful life will
become a concern for environmental sustainability.72
Refrigerant selection is an important step towards ensuring environmental safety and sustainability of
SPCSS. Cold storage systems directly contribute to climate change through the leakage of refrigerants
into the atmosphere. A refrigerant is a substance used as a heat carrier in cold storage systems thateliminates heat from an area through absorption and discharges it elsewhere, providing cool air in the
82 Sahel Consulting (2019). Nigerian Dairy Development Program Documentary.
83 Edomah, N.; Foulds, C.; and Malo, I. (2021). Energy Access and Gender in Nigeria: Policy Brief. Cambridge: Global

Sustainability Institute.
84 Africa Renewal (2012). “Women struggle to secure land rights”. African News and Analysis from the United Nations. Source:
https://www.un.org/africarenewal/magazine/special-edition-women-2012/women-struggle-secure-land-rights
85 British Council (2012). “Gender in Nigeria Report 2012: Improving the Lives of Girls and Women in Nigeria”. Source:
https://www.britishcouncil.org/sites/default/files/british-council-gender-nigeria2012.pdf
86 African Development Bank (2015). “Economic Empowerment of African Women through Equitable Participation in
Agricultural Value Chains”. Source:
https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publications/Economic_Empowerment_of_African_Women_through_Equitable_Participation_in___Agricultural_Value_Chains.pdf
87 Girardeau, H.; Aharonian, A.; Zoghbi, E.; Uwamaliya, A.; Mehic, S.; Dean, B.; Hartley, B.; Kent, S.; and Otarra, M. (2021).
“Cooling for All and Gender: Towards Inclusive, Sustainable Cooling Solutions”. Sustainable Energy for All (SEforAll). Source:
https://www.unwomen.org/en/news/in-focus/commission-on-the-status-of-women-2012/facts-and-figures
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process. 88 It can phase change from gas to liquid and back to gas during the refrigeration cycle. 89
Chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), halons (unreactive gaseouscompounds of carbon with halogens such as bromine), and methyl are examples of refrigerants that areozone-depleting substances (ODSs). These are compounds that deplete the ozone layer of the Earth’s
atmosphere when exposed to intense ultraviolet (UV) light in the stratosphere, resulting in the release ofchlorine or bromine, which react with the ozone. Thus, these refrigerants have a high global warming
potential (GWP), which indicates a capacity to absorb more infrared radiation over its lifetime in theatmosphere, thereby accelerating the rate of global warming. 90
The climate impact of cold storage equipment is determined by the direct and indirect effects of its useon the environment, with the direct effect being the GWP of the refrigerants used and the indirect effectaccounting for the energy consumed during the operation of equipment over its lifetime. The extent ofrefrigerant leakage varies considerably between different cold storage equipment types and countries.
Reliable data on refrigerant emissions in Nigeria is scarce but available data from GIZ indicate that
refrigerant emissions are twice as high in developing countries than in industrialized countries. 91 Throughthe efforts of the Montreal Protocol, which was specifically designed to protect the ozone layer by phasingout the production and consumption of substances contributing to ozone depletion, countries havebanned the use of CFCs and HCFCs. Currently, Nigeria is in the process of phasing out HCFCs, promptedby the rapid increase in the use of HFCs as a replacement of CFCs. 92
Alternative solutions include the replacement of HCFCs and HFCs based systems and materials with low
global warming potential (GWP) refrigerant. For example, in the refrigeration and air conditioning systems,
refrigerant alternatives may include: HFOs, blended HFCs, ammonia, and CO2. Also, refrigerant efficientsystems can be adopted to reduce the amount of refrigerant usage. Furthermore, scheduled maintenancepractices can be adopted to prevent the leakage of refrigerants into the atmosphere. 93

88 Dependable Heating & Air Conditioning (2019). The Different Types of Refrigerants Used in Air Conditioners. Source:
https://www.dependableair.com/blog/2019/august/the-different-types-of-refrigerants-used-in-air-/
89 Kubba, S. (2016). “Impact of Energy and Atmosphere”. In Kubba, Sam (ed.) LEED v4 Practices, Certification, andAccreditation Handbook, (Second Edition, pp. 409-518). Butterworth-Heinemann.
90 Gillenwater, M. (2015). “What is a Global Warming Potential? Greenhouse Gas Management Institute.” Source:
http://ghginstitute.org/2010/06/28/what-is-a-globalwarming-potential/
91 Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) (2017). http://www.green-coolinginitiative.org/technology/chillers/green-cooling-potential/
92 The Guardian (2020). “FG commits to ozone depleting substance phase-out”. Source: https://guardian.ng/property/fgcommits-to-ozone-depleting-substance-phase-out/
93 International Finance Corporation (IFC) (2017). “EDGE Guidance Document for Refrigerant Selection to Reduce Climate
Impact based on the Montreal Protocol”. Source: https://edgebuildings.com/wp-content/uploads/2017/04/170403RefrigerantSelection_EDGE_MontrealProtocol.pdf

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FINANCING OPTIONS AND PARTNERSHIPSIn order to facilitate the effective deployment of cold storage solutions in Nigeria, it is crucial to ensurethat adequate financing, sufficient training on SPCSS selection, use and maintenance, and affordable
payment options are available and accessible. Any business model that accounts for these criteria
possesses a strong likelihood of flourishing in the Nigerian market. Well-designed financing structures andpartnerships that have a defined set of interactions and funding flows between actors can enable successful
deployment of SPCSS. Two or more of the financing structures identified in this section can be combined
and adopted to enable successful procurement of SPCSS. There is a great need for actors (i.e. institutions,cooperatives, developers, suppliers) to work together and where possible form partnerships. Somepotential actors are also well-suited to play multiple roles.
The following are examples of key actors necessary for each financing structure discussed:●

Target Customers: Any of the target customers, previously mentioned, may acquire loans, or
grant to invest in SPCSS. They will be responsible for loan repayment and maintenance of thesystem over its lifetime. Target customers include smallholder farmers and agricultural
cooperatives.

●

Mini-grid Developer: The mini-grid developer develops and deploys the mini-grid that provides
the electricity necessary for powering SPCSS. Typically, the mini-grid developers acquire grants
from government and donor agencies, as well as debt financing from Private Finance Institutions(PFI). Alternatively, capital from equity investors or developers' balance sheets, may be invested
in SPCSS projects.

●

SPCSS Provider (Service): The service provider offers cooling as a service to target
customers. They require financial support and may acquire loans and grants to enable acquisitionof cold storage equipment. Under the developer-owned model, the mini-grid developer also plays
the role of a service provider. Alternatively, capital from equity investors or balance sheets, may
be invested in the SPCSS provider's company.

DEBT FINANCING
In simple terms, debt financing is borrowing money up-front for a large expenditure that is repaid overtime at a fee (interest). In the SPCSS context, loan recipients may include customers, cold storage
providers, or mini-grid developers. Debt financing occurs when stakeholders take out a loan from financial
institutions, such as commercial or micro-finance banks at the prescribed interest rate to fund thedeployment of SPCSS.
Additional actors well-suited to fulfill key roles in this financing structure include:●

Credit and Credit Guarantee Facility: The credit facility provides debt financing to Private
Finance Institutions (PFIs) and is disbursed to mini-grid developers, SPCSS providers, or directly
to smallholder farmers (dairy and FFV). The aim is to provide support while reducing risk because
these PFIs have adequate structures to reclaim the loan when due. A credit guarantee facility, on
the other hand, allows the government or other private sector organizations (potentially throughdonor agencies and international funding organizations) to provide guarantees to PFIs on loans, toreduce credit risk, thus enabling and encouraging PFIs to offer loans.

●

Private Finance Institutions (PFIs): PFIs typically receive funding from the credit facility tofund mini-grid developers, standalone system providers, SPCSS suppliers or smallholder farmers.
They usually have adequate channels in place to provide funds to these stakeholders and to makesure that it is used for the purpose for which it is sought. An example of a PFI is the Lift Above
Poverty Organization Microfinance Bank (LAPO MFB), which offers agricultural loans between
NGN 50,000 to NGN 500,000 (US$121.95 to US$1,219.51) to individual smallholder and farmer

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

30

cooperatives. The loan is low-interest without the requirement for collateral and has a flexible
but short repayment period ranging between 12 months to 14 months. Another institution is theGrooming Center, which provides smallholder farmers with NGN 250,000 to NGN 750,000(US$609.76 to US$1,829.27) at an interest rate of 14% to be repaid after 6 months. Further
examples of PFIs are included in Appendix B.
Potential sources of debt financing can be obtained from government credit, credit guarantee schemes,
and commercial bank loans. An example of a credit guarantee scheme is the Agricultural Credit Support
Scheme (ACSS). The ACSS is an initiative of the Federal Government and the Central Bank of Nigeria(CBN) aimed at equipping farmers with the capacity to maximize the untapped potential of Nigeria’s
agricultural sector. 94 Banks will initially grant loans to qualified applicants at 14% interest rate. Applicants
who pay back their loan with the attached interest on time will enjoy an interest rate reduction of 6%,
bringing the total amount of interest payable by farmers to 8%. Another example is the Commercial
Agriculture Credit Scheme (CACS), which provides complementary concessionary funding for existing
programs such as the ACSS that target smallholder farmers. 95 Further examples of sources of debt
financing are included in Appendix B.
There are no available schemes and loans in Nigeria specifically tailored to financing cold storage systems.
Most of the schemes and loan options identified are for Agricultural purposes, which cold storage systems
fall under.
Figure 6: SPCSS Debt Financing Structure

94 Central Bank of Nigeria (2010). Agricultural Credit. Source: https://www.cbn.gov.ng/devfin/acgsf.asp
95 Central Bank of Nigeria (2018). Guidelines for Commercial Agriculture Credit Scheme (CACS). Source:

https://www.cbn.gov.ng/out/2018/fprd/cacs%20guidelines%20incorporating%20non%20interest%20banks.pdf

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GRANT FINANCING
Grant funding, typically provided by donor organizations and development finance institutions (DFIs)
through the country’s government, does not require repayment. Examples of donor organizations include
the United States Agency for International Development (USAID) and UK Foreign, Commonwealth andDevelopment Office (FCDO) while DFIs include the United States International Development FinanceCorporation (US DFC), the CDC Group, Energizing Development (EnDev), the French Development
Agency (AFD), and the Asian Development Bank (ADB). It reduces the capital costs associated withpurchasing SPCSS and provides funds for technical support. Grants are crucial to the increased adoptionof SPCSS across the country due to the high capital cost of cold storage equipment (Table 10). Grants arecompetitive and a limited number of recipients can ultimately receive funds, hence, other financing
structures (debt financing and equity financing) are also important.
Grant facilities provide matching grants to selected grantees, through an independent verification agency,
to reduce the capital cost associated with cold storage equipment purchase especially when projectedcash flows indicate grant can improve business economic viability. The grant facility also funds an
independent verification agency to verify and monitor grants disbursed. In addition to capital cost
reduction, some grants are used to provide technical assistance through feasibility studies and capacity
building programs. Grants can be administered in the form of result-based financing (RBF) or upfront
payments.
Figure 7: SPCSS Grant Financing Structure

Result-based financing is a grant that is paid once the mini-grid developers have proven that the developedmini-grid is already providing electricity to the cold storage systems (i.e., on a per connection basis). In
that case, the mini-grid developers make use of loans or internal funds to execute the project after whichfunds are disbursed based on the number of connections made. The examples below highlight some RBF
available to support SPCSS procurement and facilitation.
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA32●The Nigerian Electrification Project (NEP) is an initiative of the REA supported by the World Bank
and African Development Bank (AfDB). It seeks to provide electricity access to households, aswell as micro, small and medium enterprises in off-grid communities across the country throughthe adoption of renewable energy sources. The initiative provides grant facilities to private andpublic sector organizations which will enable the electrification of rural communities. Grant
funding under NEP is performance-based and provides support to mini-grid developers as well as
SHS distributors for the deployment of solar energy solutions across the country.

●

The AfDB NEP Results Based Financing for Productive Appliances & Equipment, managed by REA,
is aimed at increasing the productive use of electricity through the provision of productive use
appliances (including cold storage systems) to 24,500 MSMEs in Nigeria. The total fund available
under this program is NGN 8.2 billion (US$20 million) targeted towards mini-grid developers
with existing mini-grids in rural communities. The program is currently designed to provide a
subsidy to mini-grid developers who purchase productive use appliances for their customer base.
It is currently in a pilot phase and is scheduled for broader roll-out in the coming years.

Upfront Grants are grants disbursed to the recipient (mini-grid developer, SPCSS provider, farmer
cooperatives) upfront and provided prior to the commencement of the project. Unlike the RBF, theupfront grants are not dependent on the achievement of particular milestones.
The examples below highlight some upfront grant opportunities that can be leveraged for the provisionof mini-grids for powering cold storage equipment in off-grid communities:●

The Rural Electrification Fund (REF) administered by the Rural Electrification Agency (REA), wascreated to promote electricity access for unserved and underserved rural communities and isfinanced through budgetary allocations from the Nigerian Government. The REF grants between
US$10,000 to US$300,000, or 75% of the total capital costs of the project to the mini-griddevelopers.

●

The U.S. African Development Foundation (USADF) and All On Energy, provide funding tobusinesses looking to increase energy access to communities through the Nigerian Off-grid Energy
Challenge Fund. The fund provides US$50,000 in convertible debt and US$50,000 in grant capitalto businesses including mini-grid developers and SHS providers and can be used to provide offgrid energy to rural communities and most importantly smallholder farmers, for productive use(i.e. solar irrigation).

EQUITY FINANCING
Equity financing involves mini-grid developers, farm-produce aggregators, or SPCSS providers offering partownership of their business (corporate equity) or a part of their project (project equity) in exchange forcash to finance capital costs, growth, and development. 96 Because specific payments such as fees or interest
rates are not expected in return for equity financing, the ownership of the business is expected to delivera return on the investment over time as the capital produces cashflows or the business grows in value.
Farmer cooperatives can also provide equity financing for the provision of SPCSS by pooling together theirfinancial resources and owning percentages of the system.
The main types of some equity investors are highlighted below:●

Development Finance Institution (DFI): DFIs invest in projects or businesses which
demonstrate developmental impact as well as commercial viability. DFIs seek to foster job creationand sustainable economic growth as such, investment in cold storage projects for the preventionof food losses, is logical. Examples of some DFIs that exist within Nigeria are the Bank Of

96 Corporate Finance Institute (2020). “Equity Financing – Overview, Sources, Pros and Cons”. Source:
https://corporatefinanceinstitute.com/resources/knowledge/finance/equity-financing/

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33

Agriculture (BOA), Bank of Industry (BOI), Development Bank of Nigeria (DBN), Nigerian
Export-Import Bank (NEXIM), and the Infrastructure Bank.
●

Impact Investor: Impact investors are equity financiers who invest in projects or businesses
that have the potential to provide adequate financial returns as well as projects that aim for social
impact. Examples of impact investors are Factor[e] Ventures, and All On Energy.

●

Venture Capitalist: Venture capitalists are, in most cases, private equity investors who provide
funds to early-stage startup companies with significant growth potential for an equity stake in thebusiness. Venture capitalists are also capable of investing in cold storage projects provided thereturn on investment (ROI) is significant and the project demonstrates potential for sustainability.

●

Private Equity Investors: Private equity investors, just like venture capitalists, seek to purchaseequity stakes in businesses or projects. The major difference is Private equity investors target
already established businesses who are seeking funds (whereas venture capitalists target startups).
Private Equity Investors can potentially invest in the business of mini-grid developers or SPCSS
service providers to offer cooling services (i.e. IAAS, PAYS) to target customers.

Figure 8: SPCSS Equity Financing Structure

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

34

BUSINESS CASE SCENARIO ANALYSISIn order to better understand the economic viability of solar powered cold storage systems across various
business models, PA-NPSP conducted an analysis examining and evaluating illustrative cold storage
investment scenarios. The analysis models scenarios with different target customers across the cold
storage value chain under four distinct business models, different powering options (solar vs. diesel) andseven different cold storage systems of varying capacities for the preservation of milk, fish, meat, FFVs,
and ice production. Through this analysis, PA-NPSP seeks to gain insight into the economic viability ofdifferent cold storage systems and illustrate the business models which may apply under various scenarios.

VARIABLES
PA-NPSP selected the following variables to develop scenarios for testing cold storage systems andfinancing structures viability.
●

Cold storage system. Scenarios include seven different cold storage systems of varying storage
and production capacities: 38L/day, 500L/day, 8,000L/day, 96,000L/day, 13,281L/day, 14kg/day,
150kg/day.

●

Cold storage power. Scenarios include three different types of power generation for cold
storage systems: solar, diesel, and solar-diesel hybrid.

●

Commodities. Scenarios model outputs for the preservation of four different commodity types:
milk, fish, meat and FFVs.

●

Financing. PA-NPSP assumes farmers, fishermen and SPCSS providers in each of the scenarios
can acquire local loans to cover 75% of the upfront cost of cold storage systems, at a 22% interest
rate. The analysis assumes entities can obtain grants or self-fund the remaining 25% of the capital
cost.

●

Loan repayment. In each scenario, loan repayment is estimated based on sales from cooledcommodities or sales of ice/cold storage. Under Scenarios 1 – 3, the investing communities use
profits earned from increased sales of preserved commodities (milk and fish) to make loan
payments. It is assumed that 20% of sales of milk and fish can be attributed to cold storage. Under
Scenarios 4 – 8 revenue earned from either PAYS or IAAS offered to target customers are used
for loan repayment, after operating cost deductions. Operating costs include maintenance andother costs such as labor and shop rental costs.

Scenarios include shared community-owned, ice-as-a-service (IAAS), pay-as-you-store (PAYS), andcommercial partner business models. Under the shared community-owned business models (Scenarios 13), a community collectively invests in the acquisition of a SPCSS, financing the purchase with both debt
and grants, and uses profits from increased sales resulting from the equipment to pay back debt financing.
Under the IAAS model (Scenario 4), an entity (e.g., an MSME) uses both debt and grants to finance theacquisition of an icemaker, sells ice to target customers (e.g., fishermen seeking to preserve fish), andrepays debt using profits from ice sales. Under the PAYS model (Scenario 5-8), an entity uses both debt
and grants to finance the acquisition of an SPCSS provider, sells cold storage as a service to target
customers, and repays debt using profits from cold storage service sales. Under the commercial partner
business model (Scenario 9), a cold storage service (CSS) provider who powers their CSS via diesel
collaborates with a mini-grid developer to instead power their CSS via a solar-diesel hybrid system. The
CSS provider then offers cold storage as a service to target customers who want to cool or freeze theirproduce.
Scenario analysis is based on cash flow modeling with assumed inputs from literature review andstakeholders’ interviews. For small-scale cold storage systems (Scenarios 1 and 3) revenue is assumed
profit for modeling simplification purpose and operating expenses such as maintenance, labor, and shop
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

35

rental are assumed to be negligible. In all scenarios, all additional profit attributable to the acquisition of
the SPCSS will be available to pay back debt.

OUTPUTSThe outputs generated from the scenario analysis is as follows:●

Net present value (NPV). This is the present value of future cashflows from profit realized
from investment over a 25-year project life, after the operating costs of the system and any debt
service payments from financing (a NPV above zero is profitable).

●Internal rate of return (IRR). The IRR is the percent return on the upfront investment (capitalcost) based on all future cashflows from profit realized over a 25-year project life, after theoperating costs of the system and any debt service payments from financing (an IRR below zerois not financially viable).

●

Payback of capital cost. This output is the number of years of profit from increased yield thatare required to pay back the upfront capital cost, before taking financing or debt into
consideration. This output indicates the time required to recover the upfront cost if the investing
entity were to fully fund the equipment investment up front (without financing).

●

Average debt service coverage ratio (DSCR). DSCR is the ratio of cashflows available fordebt service (profit minus capital and operating costs) to debt service. It indicates the coverage
the cashflows provide against annual debt payments. The output calculated is the average DSCR
for all financing years.

COLD STORAGE SCENARIOS
PA-NPSP developed eight different scenarios for testing the economic viability of different commodities,
cold storage systems, and business models. These scenarios are outlined below. Specific assumptions madefor these scenarios and methodology are documented in Appendix C.
●

Scenario 1 – Solar-powered Dairy Refrigerator, Shared Community Model. Under
Scenario 1, a community of farmers acquires a standalone solar-powered dairy refrigerator(38L/day) for storing milk. The scenario assumes a 20% increase in profit is attributable to the useof the dairy refrigerator. The scenario assumes dairy farmers located in northern Nigeria own 54
milking cows jointly (cooperatives) and each cow produces 207L/year of milk (total milk producedby all cows is approximately 38L/day). The scenario assumes farmers can consistently sell milk for
US$1.85/L.

●

Scenario 2 – Solar-powered Milk Cooling Unit, Shared Community Model. Under
Scenario 2, a group of milk aggregators (entities which source milk from dairy farmers) acquiresa standalone solar-powered milk cooling unit (500L/day) for storing milk. The scenario assumes a
20% increase in profit is attributable to the use of the cooling unit. The milk aggregators are able
to use the full capacity of the milk cooling unit (500L/day) and consistently sell the milk for
US$1.85/L.

●

Scenario 3 – Solar-powered Ice Maker, Shared Community Model. Under Scenario 3, acommunity of fishermen acquires a standalone solar-powered ice maker (14kg of ice /day) to
produce ice for preserving fish. The scenario assumes a 20% increase in profit is attributable tothe use of the ice maker. The scenario assumes 0.25 kg of ice can cool 1 kg of fish and therefore
the fishermen are cooling 56kg of fish/day. The scenario assumes fishermen can consistently sellfish for US$3.7/kg.

●

Scenario 4 – Diesel-powered Ice Maker, Ice-as-a-service Model. Under Scenario 4, an
MSME acquires a diesel-powered ice maker (150 kg of ice /day) to produce ice for preserving fish.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

36

The MSME sells ice to customers at US$0.4/kg. The scenario assumes that all profit from ice sales(revenue minus operating costs) are available for annual loan payments.
●

Scenario 5 – Solar-powered Refrigerated Trailer, Pay-as-you-store Model. Under
Scenario 5, an MSME acquires a solar-powered 48ft trailer to offer cooling as service (96,000L/day)
to logistics customers for the preservation of FFV and milk. The MSME charges US$0.24 per crateof produce stored per day. The trailer is capable of storing 1,089 crates at a time. The scenario
assumes that all profit from cooling storage sales (revenue minus operating costs) are available forannual loan payments.

●

Scenario 6 – Diesel-powered Freezer, Pay-as-you-store Model. Under Scenario 6, an
MSME acquires a diesel-powered freezer to offer freezing as service (8,000L/day) to target
customers for the preservation of meat and fish. The MSME charges US$1.00 per crate stored
per day. The freezer is capable of storing 113 crates at a time. The scenario assumes that all profit
from freezing service sales (revenue minus operating costs) are available for annual loan payments.

●

Scenario 7 – Solar-powered Cold Room, Pay-as-you-store Model. Under Scenario 7, an
MSME acquires a solar-powered cold room (13,281L/day) to offer cooling as service to target
customers for the preservation of FFV. The MSME charges US$0.33 per crate stored per day. The
freezer is capable of storing 150 crates at a time. The scenario assumes that all profit from freezing
service sales (revenue minus operating costs) are available for annual loan payments.

●

Scenario 8 – Solar-powered Freezer, Pay-as-you-store Model. Under Scenario 8, an
MSME acquires a solar-powered freezer (8,000L/day) to offer freezing as service to target
customers for the preservation of meat and fish. The MSME charges US$1.00 per crate stored
per day. The freezer is capable of storing 113 crates at a time. The scenario assumes that all profit
from freezing service sales (revenue minus operating costs) are available for annual loan payments.

Table 11: Cold Storage Business Case Scenarios
No.

Product

SystemCapacity

Model

1

Milk

Refrigerator

38L/day

Shared community$4,992

2

Milk

Cooling Unit

500L/dayShared community$28,841

3

Fish

Ice maker

14kg/dayShared community$2,927

4

Fish

Ice maker

150kg/dayIce-as-a-service$7,9295

FFV, Milk

Cold Trailer

96,000L/day

Pay-as-you-store$166,883

6

Fish, Meat

Blast Freezer

8,000L/day

Pay-as-you-store$23,540

7

FFV, Milk

Cold Room

13,281L/day

Pay-as-you-store$30,100

8

Fish, Meat

Blast Freezer

8,000L/day

Pay-as-you-store$34,498

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIACAPEX (USD)37

SCENARIO ANALYSIS RESULTS
Table 12 presents financial results for each business case scenario. The results from this analysis indicate
1, 2, 3, 5, 8 as financially viable with high IRRs, positive NPVs, and average DSCRs above 1.5. The mostopportune of these scenarios is Scenario 3 where the high annual revenue from increased sales ofpreserved fish is possible as a result of a relatively low upfront capital cost investment in an ice maker.
This relationship is so powerful that even if only 2% of fish sales was reserved for investment repayment,
the scenario would still result in an IRR of 24%. In Scenario 5, the high upfront capital cost of the cold
trailer is feasible given the resulting annual revenue of approximately US$ 89,000 in the first year. The
daily price per crate can fall as low as ~US$0.21 and this scenario still results in a 20% IRR. The high costof diesel fuel and fuel price escalation as well as high operating costs are the drivers of unfavorable resultsin Scenarios 4, 6, and 7.
Table 12: Business Case Scenario Analysis Results

No
.

CAPEX
(USD)

AnnualRevenue
Attributable
to CSS(USD)

1$4,992$4,218$60,884

63%

2.00

3.35

2

$28,841$55,500$536,000

148%

1.00

6.43

3

$2,927$14,090$275,657

457%

1.00

19.41

4

$7,929$20,400($658,701)

<0%

25.00

-2.11

5

$166,883$88,862$340,554

27%

3.00

1.93

6

$23,540$38,420($936,157)

<0%

25.00

-0.13

7

$30,100$16,690($118,551)

<0%

11.00

1.51

8

$34,498$38,420$168,592

71%

3.00

3.70

NPV (USD)

IRR (%)

Payback(Years)Average
DSCR

Powering a cold storage system (blast freezer) via solar instead of diesel improves the profitability of this
scenario option as illustrated by Scenario 8. The revenue is the same in Scenarios 6 and 8, and the CAPEX
is even 46% higher in Scenario 8 as compared to Scenario 6, but Scenario 8 is unburdened by the cost offuel and escalation of that cost over the life of the project. At a PAYS rate of US$1/crate/day in Scenario
8, investors are able to offer an affordable rate to their customers while still recovering the cost of theircapital investment within three years with a 71% IRR. In Scenario 7, investment in a solar-powered cold
room is only profitable if the PAYS rate is increased to at least US$0.45/crate/year (original rate
US$0.33/crate/year), in which case the IRR increases to 2% and investors can recover the capital
investment in six years before financing.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

38

Additional Blast Freezer Analysis
PA-NPSP conducted further analysis on Scenario 6 to assess the impact on financial viability of a shift in
CSS power generation from diesel generation to solar mini-grid. As discussed above, CSS offers an
opportunity to solar mini-grid developers to increase mini-grid viability through the addition of anchor or
productive use loads. Table 13 presents a cost comparison of annual powering costs of the Scenario 6
blast freezer by diesel versus solar-diesel mini-grid hybrid at different mini-grid tariff rates. Under thesolar-diesel hybrid system, it is assumed the diesel generator will run for 17 hours while a 45kW minigrid with an assumed 50% underutilization rate, powers the blast freezer during the daytime, for 8 hours.
Because of the high cost of diesel and high fuel escalation, over the 25-year life of the project, the solardiesel hybrid scenarios do not meaningfully improve the economic feasibility of Scenario 6.
Table 13: Solar-diesel Hybrid Scenarios
Fuel / Power Generation Scenario

Powering Cost (USD/year)

Scenario 6, diesel fuel cost @ US$0.59/L$29,368

Solar-diesel hybrid mini-grid @ US$0.5/kWh$31,002

Solar-diesel hybrid mini-grid @ US$0.44/kWh$29,778

Solar-diesel hybrid mini-grid @ US$0.34/kWh$27,738

Table 14 illustrates the thresholds at which positive IRRs hold for variations in assumed revenue undereach scenario. IRR outcomes in Scenarios 1 and 3 for example are highly resilient against reductions inrevenue, maintaining positive IRR up to 60% reduction in assumed annual revenue. After a 20% increase
in revenue, Scenario 7 achieves a positive IRR. Table 15 illustrates the impact of an increase in the size ofthe grant assumed (baseline = 25%) on the ability for the entity to cover annual debt service payments.
Scenarios 5 and 7 are the only scenarios which are on the edge of viability in the baseline case but become
meaningfully more viable with an increase in the size of the grant up to 50%.
Table 14: Impact of Variation in Revenue on IRR
Revenue
Variation
-70%
-60%
-50%
-40%
-30%
-20%
-10%
Baseline
10%
20%

Scenario 1

Scenario 2

Scenario 3

Scenario 4

Scenario 5

Scenario 6

Scenario 7

Scenario 8

<0%
14%
23%
32%
39%
47%
55%
63%
71%
79%

<0%
<0%
7%
69%
89%
109%
129%
148%
168%
187%

121%
168%
216%
264%
312%
361%
409%
457%
505%
553%

<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%

<0%
<0%
<0%
<0%
<0%
<0%

<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%

<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%
<0%

<0%
<0%
<0%
<0%

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

21%
27%
33%
39%

10%

10%
4%
59%
71%
82%
93%

39

Table 15: Impact of Increased Grant on Average DSCR, Sensitivity Analysis
Grant Size

Scenario 1

Scenario 2

Scenario 3

Scenario 4

Scenario 5

Scenario 6

Scenario 7

Scenario 8

0%
5%
10%
15%
20%

2.51
2.65
2.79
2.96
3.14

4.82
5.07
5.36
5.67
6.02

14.56
15.32
16.18
17.13
18.20

-1.59
-1.67
-1.76
-1.87
-1.98

1.45
1.53
1.61
1.71
1.81

-0.10
-0.10
-0.11
-0.12
-0.12

1.15
1.21
1.28
1.35
1.44

2.78
2.92
3.08
3.27
3.47

Baseline

3.35

6.43

19.41

-2.11

1.93

-0.13

1.53

3.70

30%
35%
40%
45%
50%

3.59
3.87
4.19
4.57

6.89
7.41
8.03
8.76

20.80
22.40
24.26
26.47

-2.27
-2.44
-2.64
-2.88

2.07
2.23
2.42
2.64

-0.14
-0.15
-0.16
-0.18

1.64
1.77
1.92
2.09

3.97
4.27
4.63
5.05

5.03

9.64

29.12

-3.17

2.90

-0.20

2.30

5.55

Based on the results from the scenario analysis and the ability for farmers to raise funds from additional
crop yields, PA-NPSP recommends the following for potential deployment models under each scenario.
Fundraising can take place at the farmer level or at the level of an entity that is aggregating funds to achievesufficient volume for a fundraise. In case of the latter, there must be sufficient overall returns (as is thecase in Scenarios 1, 2, 3, 5 and 8) so that cashflows can be spread across the multiple entities involved i.e.
the aggregator and the farmer.
Table 16: Deployment Models Most Relevant to Business Case Scenarios
Deployment
Model

Scenario
1

Scenario2

1. Non-Commercial
Entity Model

Scenario
3

Scenario
4

Scenario
5

Scenario
6

Scenario
7

X

X

X

X

X

Scenario8

2. Commercial
Partner Model

X

X

X

3. DeveloperOwned Model

X

X

X

4. Shared
Community-Owned
Model
5. SPCSS Providerowned Model

X
X

X

X

X

X

X

X

While this analysis provides some insight into the potential economic impacts of solar powered coolingas productive use anchor loads in Nigeria, additional study is critical to understanding these impacts ingreater depth and in various unique contexts across the country.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

40

CONCLUSIONS AND RECOMMENDATIONS
The results of the business case analysis reveal a wide variation in the economic viability of investing incold storage across different types of equipment, business models, and financing. Based on the analysis,
investing in solar powered cold rooms under a PAYS model at rates comparable to those currently
operating in Nigeria, is not profitable under a 75% debt financing structure. That said, in four of the eightscenarios tested (1, 2, 3, and 8) the grant volume could be reduced to 0% (100% debt financing) andborrowers would still achieve at least a 1.5x debt service coverage ratio. Debt financing presents ameaningful solution to farmers, fishermen, and other operators that are positioned to benefit from the
CSS investments, but unable to afford the upfront capital cost. SPCSS service providers can reduce
powering costs by partnering with mini-grid developers under commercial partnership models via solardiesel hybrid systems, but it is important that a thorough investigation is conducted regarding the longterm escalation of fuel costs and the exact volume of diesel fuel generation required. For sustainabledeployment of SPCSS in Nigeria, PA-NPSP recommends the following interventions:●

Consideration of environmental impacts of cold storage technologies: In order tomaintain environmental sustainability, SPCSS users, as well as donors and governments funding
SPCSS, should be cognizant of the Global Warming Potential (GWP) of refrigerants associatedwith different cold storage options, comparing HFOs, blended HFCs, ammonia, and CO2 withtraditional HCFCs and HFCs. Any use of systems which require refrigerants with GWP should be
paired with international best practices for operations, maintenance, and end-of-life management.

●

Understanding of costs, benefits, and deployment models: When assessing the best
deployment model for investing in and implementing SPCSS, users and funders should take due
consideration of PAYS rates, operating costs such as fuel requirements, and escalation costs. As
evidenced by the analysis above, some models may require high PAYS rates to achieve financial
viability and these rates must be validated with customer willingness and ability to pay before an
investment decision is made.

●Awareness campaigns: Given the complex nature and high number of different cold storage
systems, it is necessary that users and customers are equipped with relevant knowledge of costs,
potential benefits, suitability, deployment models, and financing options to allow for sounddecision making. Governments and donor funded programs should engage facilitators toundertake awareness creation campaigns leveraging local knowledge networks to spread
information and increase acceptance of SPCSS among potential users to increase the effectivenessof these solutions.

●Targeted financing and awareness campaigns for marginalized customers: While
SPCSS offers business investment opportunities for women entrepreneurs, farmers, andfishermen, hard-wired energy systems such as cold storage systems, tend to target men, limiting
women’s ability to take advantage of benefits from such investments. Governments and donor
funded programs can mitigate this imbalance through strategic awareness campaigns for women.
Governments and donor funded programs can also offer specialized financing opportunities
specifically for women who are 13 times less likely to own land (a critical collateral for accessingcommercial loans).

●

Further analysis of location-specific business models: There is an opportunity for the offgrid stakeholder community to further develop location specific, data-driven business models forcold storage given different states require different types of cold storage, based on the type ofcommodities produced and transported.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA41

APPENDICESAPPENDIX A: SUMMARY OF COLD STORAGE PROJECTS BY COUNTRY
Geography

Technology

Developer

Africa, Asia,
and South
and Central
America

Cold room

InspiraFarms

Investors/
DonorsDescription

Business Model

SunFunder(Debt
financing)Utilizes thermal storage (referred to as an ice
battery) to keep produce cool and fresh, evenin the absence of consistent electricity

Blended debt fund

Reduces PHL as well as energy costs, andhelps farmers gain access to higher value
markets.

Facilitator: Facilitating the connection
between smallholder farmers, ondemand users, and markets andcommercial opportunities.

More than 5,000 members of ruralcommunities in developing countries haveexperienced improved livelihoods, especially
the women in underserved communities thatnow have jobs.
Ethiopia

Cold storage

Alemu Assefa
SolarEnterprise

USAID

Pay-as-you-chill*Installing solar cold storage facilities to Dek
Island and the surrounding areas of Lake
Tana, outside of concentrated populatedareas.

Renting: Fishermen and farmers will
pay a rental fee for use of the facilities.
Grant: The company received a grantof US$100,000 from USADF to support
the project.

Ethiopia

Solar coldroom, 12kW

RensysEngineeringand Trading

USADF/
USAID*Installing a refrigerator for cold storage
purposes for fishermen.

Grant: The company received a grant
to support the project.

Ghana

Solar cold
storageAtlas Businessand Energy
Systems
Limited

USAID*Planned Construction and operation of asolar powered facility that will provide cold
storage services to fishermen.

Grant: The company received a grant
to support the project.

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA42

Geography

Technology

Developer

India

Milk Chillers,
5kW –12.4kW

PrometheanPower
Systems

Investors/
DonorsAcumen(Impact
investment
funding)
Invested
Development
Total Carbon
Neutrality
Ventures

Nigeria

Solar coldroom, 5.7kW

ColdHubs

GIZ,
Factor[e] andFledgeDescription

Business Model

Milk can be chilled gradually over time, in
multiple stages, or in a matter of seconds. Its
Thermal Storage System allows for thepreservation of produce in the absence of aconstant electricity supply without resorting
to diesel-powered generators.

Technology supplier:Supplies milk chillers of varying capacity
to customers (off-takers and milk
processors)

Installed 1,200 units, which has served 60,000
farmers, chilled 700,000,000 liters of milk, andsaved 3,000,000 liters of diesel.
Increase in revenue generation, profit margins
via cost reductions and advancement ofagribusinesses.
ColdHubs is a solar-powered walk-in cold
room that preserves perishable agricultural
produce off-grid. They are designed tooperate in rural areas and are installed inmarkets and farms.
Farmers increase their revenue fromaugmenting the volume of produce sold.
It enables them to sell their produce atmarket value, as opposed to selling them at
discounted rates due to damage or risk of
spoilage.
Creates employment and income generating
opportunities for smallholder female farmers
by recruiting and training them to work as
ColdHubs operators.
It reduces daily labor costs for harvesting andtransportation from 5 hours per day to 1
hour per day by eliminating the need toreturn to the farm to store unsold, harvested

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

43

Pay-as-you-store: Where customers
are charged a flat rate of NGN 100(US$0.20) per day for each crate of foodthey store.

Geography

Technology

Developer

Investors/
DonorsDescription

Business Model

produce or to harvest additional produce forsale.
Nigeria

RwandaSolar cold
storage, 8kW

Solar cold
storage for40 dairy andlivestockprocessing
unitsTransAfrica
Gas and
Electric(TAGE)

Dassy
Enterprise

USAID

USAID

TAGE won a USAID grant in 2014 to provide
solar-powered cold storage equipped for ice
making to communities in Northern Nigeria.
Its aim is to provide a means for local farmers
to store and cool their produce before
transporting them to be sold in the local
markets. The facility will be powered by an 8
kilowatt (kW) solar photovoltaic system.
Farmers will then pay a small fee towarehouse their products and will purchaseice to preserve daily produce. 97

Technology supplier: Constructs
standalone cold storage facility for thepreservation of all types of vegetables,
fish, and poultry*Dassy Enterprise is to install solar cold
storage for 40 dairy and livestock processing
units in the Gishwati Highlands.

Grant: The company received a grant
to support the project.

Grant: The company received a grant
to support the project.

(US$1 - NGN 502)
* Installation and impact unconfirmed

97 Power Africa (2017). “Power Africa Off-Grid Energy Grants Portfolio”. Source:

https://static1.squarespace.com/static/564bee8de4b05dd815f0baa0/t/58d12fefe6f2e1c8a6b3dbc4/1490104305501/Power+Africa+External+Briefing+Sheet+1-1-2017.pdf
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA44

APPENDIX B: DEBT AND GRANT FINANCING SCHEMESName of PFI

Loan Tenure

Loan Amount

Loan Interest Rate

Eligibility

Lift Above Poverty
Organization MicrofinanceBank (LAPO MFB) 98

12 – 14 months

NGN 50,000 to
NGN 500,000(US$121.95 to
US$1,219.51)

0.75 – 6%

Smallholder farmers

Grooming Center 99

6 months

NGN 250,000 to
NGN 750,000(US$609.76 to
US$1,829.27)

14%

Smallholder farmers

Small and Medium
Enterprises Development
Agency of Nigeria(SMEDAN) 100

30 months

NGN 1.2 million to
NGN 5 million(US$2,926.82 to
US$12,195.12)

9%Micro and Small and Medium-sizeEnterprises (MSEs) i.e. SPCSS
service provider

Bank of Agriculture (BOA) Direct Credit Productloan 101

60 months

NGN 250,000 to
NGN 50 million(US$609.76 to
US$121,951.22)

14%(for Agricultural production andagro-processing)

Smallholder farmers, MSMEs, large
agribusinesses (corporate entities)

NGN 50 million to
NGN 1 billion(US$121,951.22 to
US$2.4 million)

14% (for Agricultural production andagro-processing); 20% (forcommodity marketing)

Bank of Agriculture (BOA) Large Credit Product Loan96

60 months

20% (for commodity marketing)Large agribusinesses (corporate
entities)

98 Lift Above Poverty Organization Microfinance Bank (LAPO MFB) (2015). Agric Loans. Source: https://www.lapo-nigeria.org/loans/agric
99 Grooming Centre (2017). Source: https://groomingcentre.org/products/
100 Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) (2021). “SMEDAN, BOA Target MSMEs with Matching Fund Program”. Source:

https://smedan.gov.ng/smedan-boa-target-msmes-with-matching-fund-programme/
101 Bank of Agriculture (2020). “Direct Products and Services (Small and Medium Enterprises)”. Source: http://www.boanig.com/services/
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA45

Name of PFI

Loan Tenure

Loan Amount

Loan Interest Rate

Eligibility

Bank of Agriculture (BOA) Agricultural Micro-loan96

24 months

Up to NGN 250,000(US$609.76)

12% per year

Horticulture and livestock farmers,
traders, fisheries etc.

Agric-Business Small andMedium Enterprise
Investment Scheme(AGSMEIS) 102

84 months

Up to NGN 10
million(US$24,390.24)

5%Agric-Business Small and Medium
EnterpriseCommercial Agriculture
Credit Scheme (CACS) 103

Maximum tenor
based ongestation periodof enterprise/or
working capital
facility of one
year with
provision for rollover. 104

NGN 1 billion(US$2.45 million)

9%

Banks and State Governments

Private Sector-Led
Accelerated Agriculture
Development Scheme (PAADS) 105

72 months (forannual crops),

NGN 2 billion(US$4.9 million)

9%

Private sector agricultural
producers of staple foods andindustrial raw materials

120 months (forperennial crops)

102 Adetiloye, D (2020). “Apply for ₦10 million AGSMEIS 5 percent Loan Today.” Source: https://www.dayoadetiloye.com/apply-for-n10-million-cbn-agsmeis-5-loan-today/
103 Central Bank of Nigeria (CBN) (2018). Guidelines for Commercial Agriculture Credit Scheme (CACS). Source:

https://www.cbn.gov.ng/out/2018/fprd/cacs%20guidelines%20incorporating%20non%20interest%20banks.pdf
104 Central Bank of Nigeria (CBN) (2018). Commercial Agriculture Credit Scheme: Evaluation and Impact Assessment Report. Source:
https://www.cbn.gov.ng/Out/2018/STD/CACS%20Evaluation%20and%20Impact%20Assessment%20Report_compressed.pdf
105 Premium Times (2020). “CBN launches another program to provide up to ₦2 billion loan to farmers.” Source: https://www.premiumtimesng.com/agriculture/agric-news/425907-cbn-launches-another-programme-to-provide-up-to-n2-billion-loan-to-farmers.html
PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

46

Name of PFI

Loan Tenure

Loan Amount

Loan Interest Rate

Eligibility

Anchor Borrowers’
Program (ABP) 106

Gestation periodof the identified
commodities

Amount for eachsmallholder farmer
shall be determinedby the economics ofproduction agreed
with stakeholders.

9%

Smallholder farmers

106 Central Bank of Nigeria (CBN) (2016). Anchor Borrowers’ Program Guidelines. Source:

https://www.cbn.gov.ng/out/2017/dfd/anchor%20borrowers%20programme%20guidelines%20-dec%20%202016.pdf

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA47

APPENDIX C: BUSINESS CASE ANALYSIS ASSUMPTIONSThis appendix presents an overview of the methodology used to assess the economic feasibility of cold
storage system investment for the preservation of milk, fish/meat and FFVs.
CAPITAL AND OPERATING COST ESTIMATES
The initial capital cost, operating and maintenance cost associated with SPCSS investment is estimated andused to determine the NPS, IRR. Payback period, and Average DSCR through cash flow modelling over a
25-year project life.
Table 17: Scenario Analysis Capital Cost Assumptions
No.

Equipment

1

Solar-powered
dairy
refrigerator

2

Solar-powered
milk cooling unit

3

Solar-powered
ice maker

45

Ice maker

Solar-poweredrefrigerated
trailer

6

Blast freezer

7

Solar-powered
cold room

8

Solar-powered
blast freezer

Description
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●
●

Equipped with 2 modules of 200W panels.
Battery-less system
185Wh/day energy consumption
38 liters per day cooling volume
500 liters per day cooling volume
3.5kW PV panel
Lead battery (33.6 kW)
Battery replacement after 5 years@US$10, 000
1,340 Wh/d energy consumption
Equipped with 400W PV panels
65Ah battery
Ice production of up to 14 kg/day
4.5kW energy consumption
Ice production of up to 50 ice blocks(50kg) blocks in 8 hours
Cost excludes PV system
70 liters diesel tank capacity
Diesel consumption of 5 liters for 4 hours●●

48-ft, ~ 77,000 liters cooling volume
Electric system with Solar PV (5.5kW)
and Battery (80kWh)

●
●
●
●

8,000 liters freezing volume
7.5kW energy consumption
Freezes within 30-90mins
30kVA Diesel generator (to power
7.5kW blast freezer)●●

13,281 liters per day cooling volume
Batteries are charged by solar panels
generating about 5.7 kWh

●
●
●
●
●

8,000 liters freezing volume
7.5kW energy consumption
Freezes within 30-90mins
Inverter (9kW)
9kW PV panels
Lithium battery storage (19.6kWh)

107Cost(USD)

Source/Assumption$4,992

Photovoltaics for Productive
Use Applications (2016). A
Catalogue of DC-Appliances.

$28,841

Moffat, F et. al. (2016).
Technical and investment
guidelines for milk cooling,
FAO.

$2,927

Photovoltaics for Productive
Use Applications (2016). A
Catalogue of DC-Appliances.

$3,414$4,515$165,88
4

De Kooler Nigeria Price List
Jiji Brand New 18KVA
Soundproof Diesel Generator
Wabash National, Diesel-only
vs. eNow Zero-Emission
Trailer
Solaris, LG Solar Lithium Ion
Battery$16,833

De Kooler Nigeria Price List

$6,707

Jumia Generators$30,100

Engineering for Change, Cold
Hubs
Watt U Need, Lithium Battery
SunWatts Solar Inverters$34,498

Solaris, LG Solar Lithium Ion
Battery

107 Updated to 2021 with 7.5% added as VAT

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

48

Table 18: Scenario Analysis Operating Cost Assumptions
Scenario

Cost(USD/year)

Source/Assumption

Scenario 1 and 3-

Assumed no shop rental and labor is required since equipment is
procured for personal cooling and no service is offered.

Scenario 2

US$5,269● Two personnel for milk cooling @ US$2,341/year 108● Shop rental @ US$2,927/ year 109● Two personnel for ice block operating @ US$2,341/year

Scenario 4

US$ $21,637● Shop rental @ US$2,927/year● Fuel cost @ US$16,369/year = Fuel price US$0.59/L * fuelconsumption for 18kVA generator of 3.4L/hour● Two personnel for refrigerated trailer @ US$2,341/year

Scenario 5

US$5,269● Land rental @ US$2,927/year● Fuel cost for trailer transportation not included● Two personnel for freezer operation @ US$2,341/year

Scenario 6

US$34,636

Scenario 7

US$4,098

Scenario 8

US$5,269

After-sales service andmaintenance (all CSS)

1.5% capitalcost● Shop rental @ US$2,927/year● Fuel cost @ US$29,368/year = Fuel price US$ 0.59/L * fuelconsumption for 30kVA generator of 6.1L/hour 110● One personnel for cold room @ US$1,171/year● Shop rental @ US$2,927/year● Two personnel for freezer operation @ US$2,341/year● Shop rental @ US$2,927/year

Assumed after-sales service and maintenance as 1.5% of capital cost. It
assumed the aftersales cost for cold storage includes technicalsupport from the manufacturer. Heavy duty repairs are not inclusiveof this estimate.

108 Above minimum wage (US$ $878)
109 https://nigeriapropertycentre.com/for-rent/commercial/shops/showtype
110 https://www.ablesales.com.au/blog/diesel-generator-fuel-consumption-chart-in-litres.html

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA49

CASHFLOW INPUT ASSUMPTIONS
Table 19: Scenario Analysis Cashflow Input Assumptions
Assumptions

Input

Explanations

Inflation rate

12%

Based on 2020 inflation rate in Nigeria. Cash flow is in US$;initial exchange rate of NGN 410 to US$1.

Discount rate

4%

Assumed based on interest rate range (2-6%) for bank savings in
Nigeria

Profit escalator

3%

Assumed profit margin for local markets in Nigeria range from 16%

Fuel price escalator

8%

Assumed based on average rate of increase in diesel price from2014 till 2020

Tariff (electricity price)escalator

6%

Assumed rate at which mini- grid electricity price will increaseeach year.

Project life (years)

25

Assumed to be greater than the lifespan of PV panels to capture
project return on investment more accurately.

Solar panel life (years)

20

After 20 years, panels work at about 90% of its original output.

Battery life, Lead acid (years)

5

Lifespan of lead acid batteries is 3-5 years

Refrigerator life (years)

15

Lifespan of refrigerators/freezers ranges from 10-20 years

Ice block maker life (years)

10

Lifespan of refrigerators/freezers ranges from 10-20 years

Diesel generator life (years)

6

Estimated lifetime ranges from 20,000 - 80,000 hours
It is assumed the generator runs for 24hours a day 340 days a
year.

Batter inverter life (years)

10

Life span of inverter is 10-15 years

Cold room, solar trailer life
(years)10

Lifespan of Lithium battery is 5-15 years

45kW mini-grid load utilization
factor50%

It is assumed the mini-grid paired for electrifying blast freezer is
50% underutilized and thus capable of powering a 7.5kW blast
freezer during the daytime

45kW mini-grid tariff(US$/kWh)

0.34–0.86

Assumed estimate based on tariff range of US$0.34–0.86/kWh
for mini-grids in Nigeria

Loan interest rate

22%

Based on interest rates for observed agricultural bank loans
ranging from 5% to 40%. 111

Loan tenor (years)

5

Grid extension-

Based on observed average loan tenors for agricultural loans in
Nigeria.
Grid extension cost was not factored into the cash flow inputs.
It is highly dependent on local circumstances, population
densities, and distances.

111 Start credit (2021). https://startcredits.com/free-loan-search/?swoof=1&product_cat=micro-

finance&product_tag=group_loan-nigeria

PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

50

Table 20: Business Case Scenario Revenue Calculations
Scenario

1

2

3

4

5

6, 8

7

Revenue(USD/year)

Calculation$4,212● 20% of milk sales revenue attributable to cold storage (see Table 2)● 300 milking days/year 112● 54 cows● 213kg of milk/cow/year 113● 1 kg of milk = 0.971 L of milk
● (213kg * 54 cows * .97)/300 = ~38L/day● Price of milk / L = US$ $1.85
38L * US$1.85 * 20% * 300 days = US$4,212$55,550● 20% of milk sales revenue attributable to cold storage (see Table 2)● 300 milking days/year● 1 kg of milk = 0.971 L of milk
● Cooling unit capacity = ~500L/day● Price of milk / L = US$ $1.85
500L * US$1.85 * 20% * 300 days = US$55,550$14,090● 20% of fish sales revenue attributed to cold storage● 0.25kg of ice can cool 1kg of fish 114● Icemaker produces 14 kg of ice/day● 14kg ice /0.25kg of fish cooled kg of ice = 56kg of fish cooled/day● Days of operation / year = 340● Price of fish / kg = US$3.7
56kg * US$3.7 * 20% * 340 days = US$14,090$20,400● 150kg ice produced/day● 340 days operational/year 115● Price of ice US$ $0.4
150kg * US$ 0.4 * 340 days = US$20,400$88,862● Pay-as-you-store charges of US$0.24/day● Crate volume is of 53L● 1,089 crate capacity of cold trailer● 340 days of operation/year
1,089 crates * US$0.24/day/crate * 340 days = US$88,862/year$38,420● Pay-as-you-store charges of US$1/day● Crate volume of 53L● 113 crate capacity of blast freezer● 340 days of operation/year
113 crates * US$1/day/crate * 340 days/year = US$38,420/year

16,830● Pay-as-you-store charges of US$0.33/day● Crate volume of 53L● 150 crate capacity of the cold room
● 340 days of operation/year
150 crates * US$0.33/day/crate * 340 days/year = US$16,830/year

112 Source:

http://www.milkproduction.com/Library/Scientific-articles/Housing/Cow-comfort-15/
Santana, S.; Allee, A.; Meng, Z.; Omonuwa, W.; Sherwood, J.; Balaji, M. K.; Rosi-Schumacher, K. (2020). “Agricultural
Productive Use Stimulation in Nigeria: Value Chain & Mini-Grid Feasibility Study”. Rocky Mountain Institute, Deloitte Consulting
LLP. Prepared for the U.S. Agency for International Development Power Africa Nigeria Power Sector Program
114 http://www.fao.org/3/v7180e/V7180E0e.htm
115 Based on production plant principle. Allowing a number of days in a year to enable plant maintenance and repairs. Coulson,
J. M., Richardson, J. F., & Coulson, J. M. (1999). Coulson & Richardson's chemical engineering. Oxford: Butterworth-Heinemann.
113 Source :PA-NPSP PRODUCTIVE USE COLD STORAGE SYSTEMS IN NIGERIA

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