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Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria (2007)

Chapter: Appendix A: Solar Photovoltaics: Hypothetical Case Study

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Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Appendix A
Solar Photovoltaics: Hypothetical Case Study

This hypothetical case study on solar photovoltaics was intended to explore the opportunities and challenges inherent in investment in a new enterprise that would capitalize on the effectiveness and low price of solar technology at the home or village level by producing, installing, and maintaining the solar units and accessories in rural villages. At present, no actual company is engaged in all these activities, although some companies, a few of which were represented at the workshop, market solar units to hotels and other higher-demand users.

Participants included representatives of the National Agency for Science and Engineering Infrastructure, Nigerian Association of Small and Medium Enterprises, Cross Rivers State University of Technology, Obafemi Awolowo University, University of Lagos, University of Nigeria at Nsukka, University of Ibadan, and the private sector. The U.S. National Academies were represented by Walter Ratterman, energy consultant with SunEnergy Power Corporation, Oregon, United States; M. R. Pai, executive director, Solar Electric Light Company, Bangalore, India; Wole Soboyejo, Princeton University and a member of the National Research Council committee for the project; and Michael Greene, project staff director at the National Research Council. The Nigerian Academy of Science was represented by its president Gabriel Ogunmola, and by its vice president, Njidda Gadzama. A complete list of participants appears at the end of this appendix.

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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SOLAR PHOTOVOLTAIC TECHNOLOGY

Photovoltaics (PV) is a way of converting sunlight directly into electrical energy. Photons in sunlight excite electrons from the valence bands into the conduction bands of a semiconductor, enabling the generation of electric current. This photoelectric effect was discovered in the nineteenth century, and the theoretical explanation won a Nobel Prize for Albert Einstein. The cost of early units was high because of the expense of producing high-quality silicon ingots and manufacturing the silicon wafer that is at the heart of this technology. As the price of silicon wafers has fallen with improvements in the manufacturing technology, the efficiency of the commercial units has increased to 15 percent with the use of crystalline silicon. Amorphous silicon wafers are cheaper to manufacture, but they are less durable than crystalline wafers, and they have a 5–10 percent lower efficiency that would require a larger solar panel for the same power.

Solar photovoltaic systems suitable for rural households usually consist of several components. They include a PV module containing the silicon cells to be mounted on the roof or another sunny spot, a battery for storing electrical energy for use at night, a charge controller, wires and structural frames, and outlets for lights and other appliances. Such a system can operate several fluorescent lamps (often four), a radio, a black and white television, and perhaps a fan. The system normally operates on 12 volts DC. Long-lasting deep-cycle batteries, which can discharge 80 percent of their charge during extended overcast weather, are best, but automobile batteries, commonly available in Nigeria, may be used as well. The charge controller prevents damage to the system in case of overcharging by the solar module or prolonged battery discharge from overuse. The cost for a 40–peak watt system is about $350–$500 worldwide, depending largely on the input duties on the solar panel. Other requirements are the cost of installation, periodic battery replacement (once every five years), and training for the user, all of which are often part of a service contract for maintenance. But without special arrangements, that price is out of the reach of most Nigerians in a country in which the annual per capita income is about $250.

APPLICATION EXPERIENCE

One of the more successful enterprises selling, installing, and servicing solar home systems (SHSs) is the Solar Electric Light Company of India (SELCO). SELCO Solar Light Pvt. Ltd., with a registered office in Bangalore, Karnataka, was founded in 1995 with initial financing from the Rockefeller Foundation. It is the first rural solar company in India to

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

be engaged wholly in designing, marketing, and servicing a wide range of solar-powered equipment and installations for lighting, TV and radio, water pumping and purification, and many other applications. For the first two years of the company’s existence, however, solar electrification was little known, and there were no sales. Initially, the company installed solar units in prominent places such as the houses of local village chiefs and local religious buildings. These systems acted as demonstrations to other villagers and local financial institutions.

From its earliest years, SELCO realized the importance of consumer financing, and it spent much of its human and financial resources to train bankers in the usefulness of the solar technology. SELCO conducted several rural bank sensitization programs, such as training for bankers on technology assessment, demonstrations at bank premises, and bank-customer meetings. As a result, the confidence of bankers in financing SHSs steadily increased. Within five years, SELCO was able to train and convince more than 550 managers of seven different local banks of the value of financing solar home lighting systems.

In 2002 a United Nations Environment Programme (UNEP) electrification project in India began to create a steady market for SHSs, and interest rates fell. In 2002 household systems cost $600, the same as a motorbike, but with market opening and competition building, the costs at present are about $400. SELCO now has 50,000 customers in the state of Karnataka, and agreements to finance SHSs with all the banks in the state, which require no collateral except the system itself. Customers borrow at market rates of $400 for a 40-watt system, repaid in five years. Alternatively, SELCO offers a ”lease to own” scheme in which the consumer pays 10–25 percent of the cost of the system as an upfront payment, and the rest is lent to him or her by a rural bank at the priority sector rate of 12–14 percent interest per annum on a three- to five-year tenure. One of SELCO’s partners is the Karnataka Vikas Bank (previously known as the Malaprabha Grameen Bank), a rural development bank with one of the highest recovery rates in the country. With its 200 branches in the Dharwad and Belgaum districts of Karnataka, the Karnataka Vikas Bank is known for its innovative microcredit schemes.

SELCO procures systems from reputed manufacturers after securing factory guarantees of quality, which are passed on to the consumer as performance guarantees. It has set up branches in villages, and its teams of local technicians on motorcycles ensure quick after-sales service and regular collection of loan installments. A typical SELCO branch has its own set of technician-salesmen and collection agents, all hired locally. The technicians work for SELCO on a salary and commission basis, which acts as an incentive to sell more systems. The company now has 170 employees in 25 centers and over $3 million in revenues a year. SELCO assumes

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

total responsibility for (1) organizing awareness campaigns in rural areas, including PV system demonstrations; (2) identifying and prequalifying potential beneficiaries; (3) training local technicians, installers, and service personnel; (4) installing solar home systems purchased through the lending bank; (5) educating users; and (6) providing after-sales service and maintenance.

The SELCO experience has established that the distribution of PV systems via commercial channels without dependence on government subsidies can be a profitable business in rural areas of India. The following factors have contributed to the success of the SELCO model:

  • By collaborating with local existing financial institutions, SELCO was able to gain the confidence of the people, which made the task of installation and collection of payment easier. Through these credit schemes, SELCO has been able to get around the high capital cost problem of PV devices, which is normally the biggest obstacle in rural areas.

  • By setting up rural branches and training local people as technicians, SELCO has been able to generate local support as well as employment opportunities.

  • By creating a local infrastructure for repair, SELCO has been able to provide quick and effective service in case of any faults with the systems. All travel is by motorcycle.

  • By establishing local branches and operating them as independent entities, SELCO has been able to keep the management system decentralized and simple. A custom home lighting system can be designed and installed within 24 hours.

  • By offering commissions to technicians, SELCO has ensured that they have a direct stake in promotion of solar technologies.

SELCO’s partners have been nongovernmental organizations (NGOs), microfinance institutions, banks, cooperatives, and its rural customers. NGOs have been particularly valuable. They are active in the villages, promoting the solar photovoltaic systems, and they have helped to manage and maintain the systems. They were also instrumental in convincing the banks and cooperatives to support SELCO.

The largest competitor for solar home systems in Karnataka state is a division of Shell Oil, but SELCO has the largest market share. A growing market for SELCO is the urban and rural street hawkers, who typically work from 5:00 to 9:00 in the evening selling food and vegetables. Their daily earnings are about $2. Most of these hawkers use kerosene lamps to light their premises in the evening, but these lamps are smoky, unhealthy, hard to maintain, expensive, and subject to frequent fluctuations in fuel prices. The kerosene lamps are usually rented out by the food distributor

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

for about $0.35 a day. SELCO offers to replace the kerosene lamp with electric lights and a battery and a solar charger. Because the banks will not lend to the hawkers—they are too poor to offer any bank guarantees or fixed assets as collateral—SELCO works directly with the distributor who sells food to the hawkers on a daily basis. The distributor may now own a solar power plant charging station thanks to financing from a bank and guarantees by third parties. He delivers a charged battery to each vendor with the food and at night collects the drained battery. The lights are fixed to each hawker’s cart. The result is that hawkers are now insulated against the rising cost of kerosene and unhealthy kerosene fumes and have reliable lights for $0.25 a day, or less than the cost of kerosene. The food distributor, who collects daily fees for the charged batteries, is able to repay the bank for the loan for the solar charging station within two to three years, thereby making the solar enterprise commercially viable.

THE USE OF SOLAR PHOTOVOLTAICS IN NIGERIA

Despite a large income from oil production and the export of natural gas to neighboring countries in West Africa, Nigeria’s electric power network serves only 36 percent of the population, mostly in urban areas and often intermittently. This limited service has a significant impact on nearly all development goals, especially in rural areas. It is more difficult to stem the migration of agricultural producers to the cities. Communications and transport networks cannot be built in areas where cell phones and transmitting stations cannot be powered and traffic lights fail to function. Hospitals and clinics cannot operate without refrigeration and sterile medical equipment. And children are unable to study at home at night.

Because of the great strides made in silicon wafer technology and thus solar photovoltaics over the past decade, the cost per kilowatt-hour has fallen to almost equal the cost of power from the grid. Solar energy can be employed in as small a unit as a house or in as large a unit as a town. It can provide lighting and power small appliances such as phones, TVs, and small refrigerators, and, in larger settings, street lights and traffic lights. Although the price of this technology has been falling as more effective materials are developed, most applications in developing countries, including Nigeria, are subsidized by governments or donors. Commercialization is probably necessary to ensure the widespread and sustainable domestic use of PV technology.

The primary market for solar photovoltaics in Nigeria is rural villages. Another market is the low-income urban neighborhoods that are poorly served by the grid, or where the grid suffers frequent breakdowns. In cities, the hawkers are mostly ambulatory and sell to cars in traffic, and

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

they appear in villages only on market days. Therefore, battery charging may be of only limited use to the hawkers.

In Nigeria, several demonstration projects have been carried out in which solar systems have been installed in rural villages with donor or government support. For example, the University of Nsukka installed a system in a village 7 kilometers from the university. Fifty households, street lights, and a community center were included. The benefits to the village were realized at once, including longer hours of work and higher incomes and more opportunities for recreation. However, because the system was centralized in the village and was free to residents with no apparent owner, within a short time some abuse and overloading occurred, which burned out the system. The university concluded that training of the beneficiaries should be an important component of such projects.

A U.S.-based NGO, the Solar Electric Light Fund (SELF), has been carrying out a demonstration project funded by the U.S. government and the Jigawa state government in northern Nigeria in which several villages are provided with PV units and services. The services include solar-powered water pumps; lighting, cooling, and vaccine refrigeration for the village health clinic; lighting in primary schools for adult education, homework at night, and computers; street lighting; lighting of mosques; and new solar microenterprise centers. However, the U.S. funding has ended, and the project is presently being managed by a local NGO.

Related efforts by private companies are under way. Solar water pumps, inverters, and solar cookers are available locally, and the National Agency for Science and Engineering Infrastructure (NASENI) has a pilot project on the manufacture of solar cells.

HYPOTHETICAL CASE STUDY

To carry out the hypothetical case study, the participants at the Lagos workshop on photovoltaics invented a hypothetical enterprise that would install solar photovoltaics systems in Nigeria, and then it proceeded to create the elements of a business plan.


The enterprise. The hypothetical enterprise is called the Solar Energy Company of Nigeria.


Statement of purpose. To market, sell, install, and maintain solar photovoltaic products for communities not served by the national or municipal power grid, with a special emphasis on rural areas. Initially, the company will emphasize solar photovoltaic home systems.


What is the product or service? A four-point light solar package for home

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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FIGURE A-1 Photovoltaic home system.

Credit: Dr. Harish Hande, Managing Director, SELCO Solar Light(P) Ltd. India.

systems and small enterprises, installed, with a credit package and a maintenance plan (see Figure A-1). The system should be modular so that it can be expanded. In the short term, the wafers and deep-cycle batteries will be imported; 12-volt appliances are available locally. AC power will be available with installation of an inverter, possibly on a separate system so that if the refrigerator fails the lights stay on.

The unit will sell for about 75,000–80,000 naira (about $500–$600) for a 40-watt solar panel, a battery, a LED panel that monitors battery level, and four lights, based on a cost in Nigeria of 40,000 naira for the panel, 10,000 naira for the battery, and 5,000–6,000 naira for the wires and fixtures. This system would be designed to provide four hours of light at night when there is abundant sunshine during the daytime.


Who are the customers? The customers will be homeowners and small enterprises not served by the national electricity grid, especially in rural areas. In Nigeria, this customer base may include as much as 60 percent of the population, or about 100 million people. There may also be niche markets such as vendors who require charged batteries at night.


Who is the competition? Legally, the Power Holding Company of Nigeria (PHCN) is the sole supplier of power to homes and businesses. It is not known whether installers of household solar systems will be challenged by the PHCN.

Shell Oil, which offers sales and installation of solar systems in India,

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

has a presence in Nigeria and may enter the market if it is shown to be profitable in Nigeria. The local medium-size solar companies serving larger enterprises such as hotels could grow to become strong competition in villages in Nigeria.


What technologies and procedures would be used in the manufacturing, assembly, delivery, and service of the product? The four components of home solar installation are the module containing the wafers, the battery, the wiring, and the structure. The wafers can be either amorphous or crystalline silicon, whichever is most cost-effective at the time of purchase. For the short term, these items will be imported, but as local industry develops it will be more economical to buy them locally. The deep-cycle battery, also imported initially, will last up to eight years if well maintained and replenished with distilled water. The manufacturer offers a three-year warranty, but it may be necessary to extend the warranty to the customer and the bank for five years and provide service with distilled water.

Assembly of the unit will be at the customer’s site.

A maintenance contract will be required. It can either be included in the price or sold separately. If sold separately, the government may provide vouchers for the maintenance contract, as is done in other countries. Insurance may also be required by the creditor.

An alternative AC system that includes an inverter also can be offered. The system with inverter, usually 50 watts, will cost about 80,000 naira for the solar panel and 26,000 naira for the inverter, acquired locally in Nigeria, or an additional $250.


What are the advantages and challenges for this enterprise in Nigeria? Nigeria has experience and core competency in solar energy. Many small companies are serving niche markets, including solar water heating and drying. Several universities have ongoing research programs, and there have been demonstration projects in villages in several locations. The potential market is huge, arguably up to 100 million people who are underserved by the national grid. Funding may be available for first-stage financing and for credit to buyers from government or even the oil industry. The entrepreneurial spirit is vibrant in Nigeria, and a demonstrated success in one region may encourage imitators in other parts of the country.

Worldwide, a great deal of experience has accumulated on the installation of solar home systems in developing countries. However, it is well known that many of these systems fail, and that the principal reasons are not technical, but failures of the business model and adaptation to local customs and capabilities. These failures include no training of users, no service and maintenance, and no feeling of ownership on the part of the

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

users. The last is characteristic of systems donated by universities or NGOs for demonstration purposes; these systems are typically in operation for less than a year.

A potential local problem in some areas is that users may become discouraged during the rainy season when there is insufficient sun for several months; a complementary program of battery exchange may be a useful paid service during such periods. Another problem may be that customers who are not in the habit of switching off lights or appliances may overuse their systems and run out of power. In the summer or dry season, the dust that may cover the solar panel must be removed daily. It should be obvious that the panel must be kept in the sun, but some users must be trained and reminded to do so. The battery should be kept in a box out of the reach of children; the voltage is low, but the lead and acid in the battery can be dangerous. Distilled water must be added periodically, and this maintenance function should be part of the service contract.


Production requirements. Because most materials will be purchased and because the solar systems will be assembled at the customer’s site, it will not be necessary to require extensive space for manufacturing or assembly. The centralized office space needed (about 300 square meters) will be used mainly to store materials; it should be close to the work area with good road access. In urban areas, the cost of such space will be 2,500–3,000 naira per square meter per year; the cost will be lower in rural areas. The office should contain a small, well-furnished showroom and storage space. Solar modules and batteries should be stored in locked cages with camera monitoring for security. Insurance could be expected to cost 2 percent a year, including fire and theft. The materials can be picked up and brought to the workplace by two workers using a motorcycle or small vehicle, which can be rented when required. The length of travel and access to stored materials will determine the time required between ordering and installation of a unit—an important competitive point.

The service package will also be important in both meeting competition and satisfying banks and financiers. Competition and financing will determine whether the service package should be included in the base price or should be an important add-on that provides value-added to the customer at a modest cost. In some countries, the government offers vouchers to homeowners for service contracts as an indirect subsidy to the solar industry to encourage energy savings. In such cases, it is worthwhile to separate the maintenance from the base cost. Alternatively, if subsidies are available for the complete installation package, it would be better to include service in the base price as a necessary component of the package.

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

Human resources. The enterprise could be started with a minimum of five people: a manager, two engineers, a secretary, and a sales/marketing agent. In a rural area, the minimum salary is about 15,000 naira per month, 25,000 naira in Lagos. An engineer earns about 30,000 naira a month, whether in Lagos or in a rural area.

The marketing agent could be paid 35,000 naira a month, plus commission. Paying a uniformed guard would require an additional 12,000 naira a month. The installations could be carried out by the two engineers equipped with a cell phone who would travel by motorbike. They should be able to install a four-light system in two hours. Thus they should be able to complete two installations and spend two more hours on sales a day, with travel.


Legal and regulatory requirements. Every new company must register in Nigeria, at a cost of about 145,000 naira, including legal fees. Registration, which takes about three months, requires a search of names and registrations and the participation of a lawyer, preferably based in Abuja. An environmental impact statement may be required.

Under Nigerian power company (PHCN) rules, a PHCN subsidiary has exclusive rights to provide electrical service in its area. Thus privately generated electricity may be subject to a legal challenge or a tax. To clarify the point and to encourage alternative energy sources, renewable energy legislation would be valuable. It should allow renewable energy equipment to be imported duty-free, provide businesses with credit for using renewable energy, and arrange for net metering on the electric grid to encourage the private generation of electricity.


Marketing requirements. The market entry point can be urban or rural. Although in the long term rural areas may provide the largest and most stable market, it may be easier to find paying customers and arrange financing in an urban area. Urban dwellers who donate systems to relatives in a rural village may provide an entry point to the rural market. Similarly, installing a system in a chief’s house at a reduced cost may influence others in the village to buy. Experience in other countries suggests that thereafter the best marketing will be via word of mouth, and a system installed in a village is the best showroom. In any case, microfinancing will be necessary for rural customers.

Most likely, it will be necessary to approach banks on behalf of clients and to demonstrate the system and describe the guarantees. The Nigerian Association of Small and Medium Enterprises (NASME) in Lagos has a microcredit arm, the Small and Medium Industries Equity Investment Scheme (SMIEIS), that could be helpful. Although customarily it lends to enterprises, the funds might be used by the new company described here to build a rotating fund that finances the purchase of solar systems.

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

Outreach, education, and training. Training will be an important part of the business—for staff, for customers, and for banks and financial institutions. Training manuals for the sales and service staffs should be designed for classroom instruction, to be followed for service staff by training in carrying out installations in the field with experienced technicians.

For financial institutions, training may be offered on an occasional basis in the form of conferences of bank managers and field officers, led by university professors of engineering hired for the purpose. The banks may develop their own manuals to train, in turn, the inspectors who approve the loans for the installations.


Implementation plan. The steps recommended here reflect the experience of SELCO in India and several Nigerian solar energy entrepreneurs.

Before entering a new area of operations or a new business, an entrepreneur must make certain calculations. Most important are the start-up costs and the anticipated costs of operations, including service, taxes, and travel, depending on the anticipated volume of business. These costs also depend on the target area, the ease of transport, the number and rental costs of office sites, staff salaries, and Internet service (and web site) costs. A would-be entrepreneur also must estimate the cost of inputs, materials, and imported items in order to calculate the price of the product and service contract. That price will determine when the company can expect to begin making a profit. Other decisions that must be made revolve around a strategy for brand building and marketing, the sources and availability of the various components, which products to promote, and how to maintain the quality of the product. The entrepreneur also must prepare a business plan to assist in planning and seeking funding. It may be useful to prepare a five-year plan, and then back it down to the first year. The entrepreneur should anticipate a 10-year period for nucleation and expansion before the market becomes saturated and a new market area or technology is needed for sustainability.

To assist with these calculations, the entrepreneur must estimate the average insolation (hours of sunshine) in the projected target area, which will determine the size of the unit and its potential for satisfying customer need. These data may be available from government, or they could be acquired using simple instruments (although a complete record will require a year). Estimates of the number of families in the area without electric power and the number currently served by the grid but who also might purchase a unit to protect against outages will be needed as well.

It is possible that the government would offer grants or subsidies to a new or established company to provide service to areas not served by the grid. For that reason, it would be worthwhile to prepare a description of the social impacts of the technology to use in requesting support or incentives from the government. Possible incentives include an interest

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

discount or depreciation benefits for the first year (in India this benefit is 80 percent) or a reduction in registration license fees.

More broadly, it may be useful to form a stakeholders’ group to advise and assist any individual or company interested in pursuing this initiative. It should include experts from Nigerian universities (particularly the business and energy centers), government, NGOs, and the private sector. The National Center for Women Development in Abuja, the International Center for Business Research, the National Agency for Science and Engineering Infrastructure, and the Nigerian Association of Small and Medium Enterprises would be useful participants. The Nigerian Academy of Science could convene the group, taking care to show objectivity and impartiality toward potential entrepreneurs. The Academy might be well positioned to partner with a university or NGO to offer nationwide courses and other training activities in entrepreneurship and photovoltaic technology and to initiate the presentation to the government in favor of renewable energy legislation.

The many international NGOs with broad experience in solar photovoltaics in rural areas also could be called on for advice and assistance. Among them are Solar Energy International (SEI), SunEnergy Power Corporation (SEPC), Green Empowerment, and the Solar Electric Light Fund, all in the United States.


Financing. For most entrepreneurs unaffiliated with larger enterprises, first-stage financing will be required. Several sources in Nigeria might have a particular interest in businesses of this sort. The just-mentioned Small and Medium Enterprises Equity Investment Scheme of the Nigerian Association of Small and Medium Enterprises offers equity loans. The association takes an equity position in the borrowing firm, which it can convert or sell after a fixed time period. Twenty billion naira are available per year for bankable projects. The association also may provide entrepreneurs with references to commercial banks. Some insurers will require an insurance policy, which must be included in the cost of operation.

The other critical type of financing is a credit system for purchasers. Banks, both formal and informal (market), are often seeking to make loans, and, with some training, they may see the benefits of microloans, secured with operational solar systems. Currently, most loans are for one year, and the interest rate is not a critical parameter. (In India, SELCO began to work with interest rates of 24 percent.) Regional banks, cooperative banks, and other forms of cooperative investment also may be worth approaching. Alternatively, a cooperative society or NGO working in the villages may buy in quantity for its members or clients. However, this relationship must be considered with care, because experience has shown that if the solar unit is donated to the household, there is a high probability that it will not be operated or maintained properly.

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×

Partnerships. Partnerships may be important for the success of the new enterprise. Partnerships are helpful for marketing, finance, and possibly purchasing or manufacturing materials and technologies. Potential partners include NGOs, state governments, cooperative societies, financial institutions, and other businesses.

In the short term, solar modules and deep-cycle batteries will have to be imported to Nigeria, but in the longer term they could perhaps be manufactured domestically. Nigerian scientists have been active in initiatives with foreign partners that make use of amorphous silicon and, in the longer term, might use organic materials, so-called polymer electronics. The government has promised support. A joint venture with a local manufacturer of solar cells and batteries could have positive benefits for both parties.

PARTICIPANTS, SOLAR ENERGY WORKSHOP

Ike Abugu

Nigerian Association of Small and Medium Enterprises

G. Adetunji

Obafemi Awolowo University

O. Adewoye

National Agency for Science and Engineering Infrastructure

Alex Animalu

University of Nigeria, Nsukka

E. Ene-Ogong

Cross Rivers State University of Technology

Njidda Gadzama

Nigerian Academy of Science, University of Maiduguri

Michael Greene

U.S. National Academies

G. B. Ogunmola

Nigerian Academy of Science, University of Ibadan

V. O. S. Olunloyo

University of Lagos

O. Oparaku

University of Nigeria

M. R. Pai

Solar Electric Light Company (SELCO)

Walt Ratterman

SunEnergy Power Corporation

A. Salau

Obafemi Awolowo University

R. I. Salawu

University of Lagos

Wole Soboyejo

Princeton University

B. Sogunro

Jombas Ventures

H. Udemba

Prime Energy Ventures

Joshua Uzoukwu

Juneko Engineering

Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×
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Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×
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Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×
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Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×
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Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Page 83
Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Page 84
Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
×
Page 85
Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Page 86
Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Page 87
Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Page 88
Suggested Citation:"Appendix A: Solar Photovoltaics: Hypothetical Case Study." National Research Council. 2007. Mobilizing Science-Based Enterprises for Energy, Water, and Medicines in Nigeria. Washington, DC: The National Academies Press. doi: 10.17226/11997.
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Page 89
Next: Appendix B: Water Purification: Hypothetical Case Study »
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