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The Chief Executive Officer of Royal Power & Energy Limited, Adewale Odugbesan, spoke with DARE OLAWIN, delving into the company’s footprints in the renewable sector and the affordability of solar power compared to Band A tariff. Excerpts: What are the impacts of foreign exchange volatility on the renewable sector? How do I explain this? It’s actually such a dynamic issue, even though FX was going up, the cost of solar was going down. Maybe we were lucky; the cost of solar panels was faster than the devaluation of the naira. So, the fall in solar panel prices was more than the rise in the naira versus the dollar. Overall, the cost still ended up coming down and becoming more competitive. So, we’re lucky in that sense, from the middle of 2020, July 2023 to December 2024. And this year, if we look at the first few months, the naira has appreciated quite significantly. I think we’ve gone from about $1,700 to about $1,500 or so. Even with that, it’s still going to become more competitive this year. Is there any government support on imports? The government has done a lot to push renewable energy, and that has resulted in sort of reduced tariffs or reduced duty compared to batteries. A battery would still cost 20 per cent in duty, but the solar panels depend on how you bring it in and whether you have the module. If you bring in the solar panel without the module, it’s actually duty-free. If you bring it in with the module, I think it’s about five per cent. So, the government is doing things to sort of like adopt renewables. Exactly. So, it’s not inhibitive if I compare that with the duty cost of cars or something, which might be more than 35 per cent, even at a time when the government is even still trying to increase revenue or internally generated revenue. I think they’ve done well in trying to support the renewables industry. How affordable is solar power compared to being on the grid? We launched our solar department probably about eight years ago, and we’ve seen significant growth within that department. I think when we first started solar, it was probably about $3 a kilowatt. Now that price has come down from $3 to about $0.10. So, if we’re looking at it, it has dropped to probably three per cent of what it was seven years ago. Back then, I think when you looked at the cost of grid power and diesel, solar was still more expensive than them. But if I’m comparing Band A now, the cost of solar is now probably about N160 per kilowatt-hour, and Band A is probably between N220 and N250, depending on where you are. And the cost of using your diesel generator is probably in the region of about N400, N450 per kilowatt-hour. So, solar is now the most cost-efficient way to power your businesses. Someone may want to know the cost of energising a three-bedroom flat with solar. It depends on the sort of load that you have. Do you have inverter air conditioners, or do you not have any AC? Some people don’t want any ACs on their solar; it’s just fans. There are a lot of different things that you have to take into consideration. It can be up to N3m or less or more. So, there’s a wide range; even that N3m, I’m sure we can remove a significant amount of money from that. It can definitely go down, depending on what the load is, depending on what you want to back up. Someone may want a solution that will provide him 24 hours of power, then the cost has to be high. If someone only wants two or three hours, then that solution might even be less than N1m. It depends on what your actual requirement is. There are concerns about solar affordability. How do you address that? The question is, what kind of affordability? How do you want to build these things? What we do is we can come and do the installation for you or the business for free. We provide a service similar to that of distribution companies. So, we have a meter there that we’ll install on your roof. The infrastructure is there. We install it at no cost to you. But then, you pay for the power that you consume. We have a five, seven, or ten-year contract with you. That way, you’re only paying for what you use as opposed to having to go and buy the whole infrastructure. You’ll see the benefits, and maybe you’ll save money. We’ve seen payback periods for some of our customers as low as 18 months. The savings that they’ve made in the amount of diesel that they have not consumed in 18 months is more than enough to pay off the cost of the solar solution. Several banking and telecom clients have seen those sorts of savings. But again, sometimes it can still be quite expensive for you to deploy. So, we have an alternative where we’ll do the deployment for free, and you just pay for the power you consume. The cost depends on your consumption, but I know that it’s usually below the Band A tariff prices. Does the client own this infrastructure afterward? We have two options. The more expensive option would be for you to own it after the contract period, which is five years. Let’s say I charge you N190 per kilowatt-hour. That N190 might be inclusive if you have to own it upon completion of the contract. But if you are not going to own it, I might charge you N160. So that 30 naira per kilowatt, right, is what goes to the cost of actually acquiring it at the end of the project. What happens if, for example, there’s a disaster or infrastructure carted away by armed robbers? We do have insurance policies. During the construction of that solution, we have insurance that covers damages. There’s an insurance that we’ve actually taken out for that. Our warehouse is insured. From the warehouse to your place, we have what we call transit or logistics insurance. The construction depends on the complexity. It can take from one week to three months. During that time, we have insurance coverage that indemnifies us. And once the goods are also there, they are our assets. As part of the service, we also have insurance that basically covers that. Who are your clients? We do a lot of work with the telcos, banks, CNI players, and a few residential installations. I’m sure you know the telecoms industry quite well. They have all these mast sites. So, we provide most of the power infrastructure for them. If we’re talking about rectifiers, batteries, solar panels, inverters, and UPS, we focus on that, and we deliver a lot to probably all of the telco guys. And for the banks also, I think every single bank, at least the top 24 banks, are all our clients. We provide solar solutions, battery solutions, and all of that to them. Do you only do standalone installations? We have transitioned now from doing standalone projects to grid-type projects, which means we’re deploying solutions that you might be using in your house. So, we would look at and support grid-type solutions like the Independent Power Projects. We’ve provided solar there, which is probably the first grid-type solar deployment in Nigeria. And we’re looking to do a lot more of that. What sets you apart from other solar providers? I’d like to think in terms of, from what we’ve seen, what I can prove. One is our technical expertise. I don’t think that there’s any company in our space that has the technical expertise that we have. I remember we’ve been operating within this industry for close to 20 years now. So, the experience that we have is top-notch. Most of the solar guys have come to Nigeria over the last 10 years. But we’ve been here. The experience that we have within the sector and the Nigerian market sets us apart. Our technology and our technical expertise also set us apart. And then, we are probably the only player within the sector that provides both EPC and power as a service. So, if you say that you just want to buy, there are people who would just allow you to buy, but if you said that you want power as a service, they wouldn’t do that. They’d say, ’ No, we can only sell it to you’. Then you have the guys who are doing only power as a service, and they don’t want to sell to you. They only do power as a service. But I think within the market, we’re the only company that offers both services at a significant scale. I think those two things would be the key. What would you say about maintenance and durability? Our company currently has a staff strength of about 120. And about 60 per cent of them work in the service department. So, we have field engineers who are on the field all of the time because we provide support for a lot of the deployments that we do. So, we have what is called service level agreements with a number of our clients, where we go every quarter to service, whether it’s the solar, the batteries, the UPS, or the inverters. We go in there, and we provide those services. For some of our deployments, we might, obviously, give you a warranty also. So, if anything goes wrong within that period, you can bring it back, and we’ll exchange it for free. But even after the warranty period, we have a service team of at least one engineer in all states and the Federal Capital Territory. So, with that spread, we’re able to provide after-sales service to any degree that a customer requires. With that, durability is guaranteed. Currently, we service about 4,000 pieces of equipment per quarter. What is your advice for the Minister of Power on the power sector challenges? What would I advise him? He knows more than me; I can’t advise him. Assuming you were appointed the power minister, what would you do differently? No, I can’t be appointed power minister. However, what I would say is we used to have a number of laws in the past. For example, there was a law that, if you’ve done a solar solution that is above 1 MW, you have to sell that power to the grid, and you have to get a license to sell to the grid. Then, if I did a one-megawatt solution next door, that power had to go to the grid. Now, they changed that law sometime last year. If you put a solution here, you don’t have to sell to the grid anymore. You can sell within the confines of your state. That’s a huge deal because, for a power developer, selling to the grid is a lot more taxing for me, and I might not get the returns that I want because there are power losses; we have to go through the Discos. But if I sell directly without going to the national grid, it’s a massive change, which is what the government has done, and they’ve implemented that law. This makes it more lucrative for other power players to come into play. And that will ultimately close the gap on the power deficit that we currently have in the country. The government officials do a lot of work that the public doesn’t see and appreciate.

The recently concluded Edo 2024 election has been a subject of intense debate, with claims and counterclaims of electoral malpractice dominating public discourse. 

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