Beyond those already covered by the grid extensions mentioned above, NIGELEC is also currently considering extending the grid to reach the community-level mini-grids, and connecting these to the grid. Further projects are currently focusing on increasing the number of households reached close to the major transmission and distribution lines; i.e. branching off the artery lines into substations and small distribution lines. For many of these projects, the government and NIGELEC are receiving considerable support – both financial and technical – from international development banks and agencies. Some of the most notable projects to increase rural energy access include: “Programme special d’electrification du President de la Republique”. This government program was launched in 2011, with the goal of electrifying 500 villages by 2016, i.e. to an additional 100 villages each year, with these typically being situated within 5 km of the current grid infrastructure. The goal of reaching 100 villages per year will increase to 200 villages per year from 2017 onwards. Electricity Access Expansion Project (NELACEP). In December 2015, the World Bank approved an IDA credit of US $54.5 million and a grant of US $10.5 million to increase energy access in Niger. The funding will be used to finance NIGELEC investments in distribution, with a focus on increasing grid density, through short leader line extensions, in seven major urban areas, including Niamey; the project is expected to benefit around 330,000 people, including households, small business, and public institutions. AFD program to expand electricity access in Niamey. This program is run by the French Development Agency (AFD) and aims to extend urban electricity distribution, with a focus on providing electricity in several currently off-grid peri-urban neighborhoods of Niamey. An additional AFD program focused on rural grid extension is currently in planning. In addition, the new Electricity Act called for the establishment of further authorities to promote rural electrification and regulate the energy sector. This led to the creation of the National Agency for the Promotion of Electrification in Rural Areas (ANPER) in January 2015, whose main mandate is to extend electricity access into rural areas of Niger.
off-grid. As a result, primary schools represent nearly 80% of the solar market size. Together with nurseries, the primary schools are – due to their relatively limited electricity needs – also the key driver of the market opportunity for medium and large solar home systems meeting Lighting Global Quality Standards. summarizes these results at the Region level. Table : Number of schools and solar market size by region Of the total annual potential sales volume of around 2,700 quality-verified products, the medium solar home system sold at US $500 accounts for nearly 2,600 units. The PV installations for secondary schools have an average capacity of 1.3kW, ranging from 1.1kW to 3.0kW. As all tertiary institutions are on-grid, the small market here (average annual volumes below 1) is purely for grid backup options; on average, these backup options have a capacity of 2.8kW, ranging from 1kW to 10kW. Health facilities Our analysis for health facilities closely mirrors that of schools above; we separately consider the following public health facilities: de Santé. Small health kiosks managed by registered nurses; provision of most basic outpatient health services e.g. for simple colds and flu. Centres de Santé 1 (“CSI 1”). Small health centers, typically with a waiting room and treatment room, managed by a doctor or clinical officer, often with nurse support; provision of a broad range of outpatient preventative and curative health services. Centres de Santé 2 (“CSI 2”). Medium sized health centers, often with multiple treatment rooms and a maternity room, managed by one or several doctors with several nurses; broad range of outpatient services including maternity and laboratory. For each type of health facility, we assume different quantities of electric appliances as well as more sophisticated medical devices, based on consultations with the Ministry of Health (see Appendix B.2.2). Business case Table 9 shows the business case under the same scenarios as for schools. This is positive under all scenarios for CSI 1 and CSI 2 except those that operate exclusively on grid power – that is, all facilities would realize cost savings by switching to solar whether they are replacing a diesel generator, are on-grid but replacing a diesel back-up generator, or are switching from traditional lighting sources. The business case for Cases de Santé is only positive for
water to the relevant place of extraction. Further details on the approach are available in Appendix B.5. Table 23 gives an overview of the nationwide average size requirements for water pumps and solar systems, as well as daily electricity consumption by type of pumping station; note that there are significant size variances across each type of pumping station. Table : Average pump size, electricity consumption, and solar system size by pumping station Business case We first assess the annualized cost of different energy sources to power the pumping stations; the outcome of this analysis, on Region-level average, is shown below in Table 24. Table : Overview of annualized costs of different power alternatives for pumping stations While we show the business case for solar as compared to diesel-generators and grid power, consultations have revealed that the vast majority of PC, FPMH, PEA, SPP, and Mini-AEPs are in off-grid areas, leaving only hand pumping or generator-powered pumping as alternatives. In contrast, the AEPs are the urban water providers, and based on our understanding, all Based on the power needs of the water stations, we find a positive business case for all pumping stations from using solar rather than diesel powered generators. The analysis also reveals that there is frequently a business case for using solar over the grid for large pumping stations of 8 kW and above. Our analysis is purely based on direct equipment cost, including replacement components, but does not account for additional operating expenses that would be incurred to manage large scale solar production facilities. In addition, such solar production sites would require vast land areas, which are not always available in direct proximity to water stations, especially for AEPs in urban locations. A breakdown of the business case by type of water station and region is provided in Table 25. Table : Annualized cost savings of switching to solar power for water pumping stations Variations in the percentage of average annualized cost savings are, to some extent, also driven by the modelling approach, i.e. marginal increases in power needs lead to a significant jump in investment levels for solar technology as larger system sizes are required. grid-
International solar companies are unlikely to enter Niger in the near future. These players currently consider other markets more attractive, based on considerations such as regulatory environment, size of addressable market, as well as availability of partnerships for sales and distribution (including MNOs). As a result, scaling solar in Niger will likely need to be a effort in the short term, with sales, distribution, and end-consumer service channels set up by local businesses. on this assessment of the Nigerien market, we believe significant government and development sector support for the solar market will be required to accelerate private sector growth. At present, neither the supply side, the financial sector, nor end-consumers appear ready to drive solar market growth in the absence of significant intervention. In particular, we recommend focusing interventions on market stimulation for smaller household systems and solar pumping kits. Solar businesses serving institutional clients and large corporates are generally able to secure project financing from banks, and these sectors are mostly based on discrete tenders and contracts that are less suitable for rapid, market-led growth initiatives. Furthermore, businesses serving institutional clients will likely enjoy collateral benefits from systemic interventions aimed at unlocking household and irrigation markets. Table 28 summarizes our recommendations: Table : Recommended interventions for standalone solar systems Intervention Description Rationale (in short) Tax exemptions on technology Make solar products exempt from VAT and import duties Currently to solar companies are artificially inflated by high import duties; these costs are passed on to customers, making solar less affordable. Consumer education programs Widespread, multi-channel consumer education and benefit awareness building campaigns Target end-users and the supporting ecosystem including distributors and retailers Coordinate efforts of private, public and development sector Overcome negative consumer perceptions and build benefit awareness Influence purchase decisions and ease access to distribution channels Inventory financing facility (IFF) Concessionary credit line so financial institutions (FI) can access liquidity for solar market lending FI use liquidity to offer solar companies loans (potentially at subsidized rates) to refinance inventory holding Loans available to all solar companies (small household systems, larger PV installations, and mini-grids) Long inventory financing periods present a key challenge to growth for solar lantern and solar home system distributors High upfront financing requirements present a key challenge to distributors of larger PV systems (including pumps)
Start with few FI, maybe ASUSU and one large bank, and gradually expand Credit guarantee scheme for IFF Private sector lending portfolio is through guarantees Loss sharing agreements to cover irrecoverable inventory loans De-risking encourages private sector lending to solar sector Initial security until the proof case of economic viability of lending to solar businesses has been established Consumer loan financing facility (CLFF) Concessionary credit line so FI can access liquidity for solar market lending FI offer consumer lending schemes to finance solar asset purchases Focus on liquidity for private households Sharia compliant financing required to reach broad share of population Low purchasing power among private households is key constraint to growth for solar home systems (and larger solar lanterns) Credit line and underlying guarantee required to establish proof case of economic viability of receivables financing Facility can be expanded or transformed to provide PAYG operators financing of on-balance sheet consumer loans Credit guarantee scheme for CLFF Private sector lending portfolio is through guarantees Loss sharing agreements to cover irrecoverable consumer loans De-risking encourages private sector lending to solar sector Initial security until the proof case of economic viability for solar consumer loans has been established Market entry and expansion grants Combination of upfront grants and results-based financing to invest in infrastructure and working capital Awarded to distributors of small household systems, as well as mini-grid operators Significant upfront investment to build distribution network and source inventories to serve household market Significant upfront investment and long amortization periods for mini-grids Technical assistance Government: Assistance in strengthening the regulatory environment, with a focus on import regulation, industry standards and licensing processes Financial Institutions: Capacity building related to financial services aimed at solar industry, credit risk assessment etc. Solar companies: Best practice transfer from international markets and support in setting up technology platforms for PAYG; incubation and acceleration of early-stage businesses MNOs: Best practice transfer regarding platforms, interfaces, and market development from international markets Make the business environment more conducive and profitable Strengthen the overall ecosystem surrounding the solar market Ensure knowledge transfer from abroad for faster, more cost-efficient progress