The Federal Government’s plan to ban the importation of solar panels could lead to about a 150 per cent rise in the cost of solar installations, and would not only slow down energy transition from the grid but also an increase in electricity challenges.

This planned implementation could also worsen the already humongous energy poverty bedeviling the country, as well as increase the cost of doing business, especially for small businesses who rely on renewable energy to reduce the cost of energy consumption. 

Stakeholders express fears that a possible cartel would arise that would control the market. Plans are currently on the way for solar panel assembly plants of about 1,531 megawatts in Lagos, Enugu, Nasarawa, and other locations, backed by Oando, Shell-backed Auxano, LPV Technologies, and National Agency for Science and Engineering Infrastructure (NASENI).

According to Gbenga Olapade, Managing Director, Deemich Renewable Energy Nigeria limited, currently, a 100W 12V polycrystalline solar panel, containing 36 cells, is imported into Nigeria for approximately N22,000 but sold by some local manufacturers such as the National Agency for Science and Engineering Infrastructure (NASENI) for N28,000 leaving a gap of N6,000.

The high exchange rate and inflation crisis makes the cost of deploying solar 50 per cent more expensive when compared to the cost in early 2023.

Olapade said homes and businesses that were installing 1kva of solar for about N500,000 now have to part with about N1.2 million, even as an average home needs about 5kva, which is about N6 million, while small to medium-sized businesses require an average of 10kva, at a total initial investment cost of about N12 million.

He added that the rising cost of electricity and the cost of premium motor spirit and diesel, has created the need for Nigerians to adopt renewable energy but that the planned ban would stifle the growth of companies operating in teh industry.

According to the Rural Electrification Agency (REA), which controls over 90 per cent of solar funds in Nigeria, more than N200 billion has already been spent on solar importation. This cost if procured locally would amount to a staggering N254.54 billion.

From a mere 11MW in 2015, Nigeria’s solar deployment grew to 102MW by the end of 2022, 143MW in 2023 and 144MW in 2024, according to the International Renewable Energy Agency (IRENA).

The bulk of the solar panels in Nigeria are imported from China, which remains dominant not only in solar production but also across the broader renewable energy value chain, keeping import costs lower compared to local assembly.

Currently, Nigeria’s installed solar PV assembly capacity stands at about 131MW, with around 1,400MW planned capacity, bringing the future capacity to approximately 1,531MW, significantly higher than the current cumulative installed solar capacity of 385.7MW across the country. 

Chief Executive of Green Growth Africa, Dr Adedoyin Adeleke, criticised the proposed ban, questioning the government’s logic.

“Nigeria has several reasonable doubts. Aso Rock wants to spend N10 billion on solar energy systems, yet they plan to ban the import of components. What is the total local production capacity for solar energy components in the country?” Adeleke asked.

“Now that consumers have access to globally competitive brands, banning imports could reintroduce quality concerns,” he warned.

Adeleke urged the government to first strengthen local capacity, attract international manufacturers to set up plants in Nigeria and build a competitive local market rather than resorting to a “military-style” ban.

Former President of the Chartered Institute of Bankers of Nigeria, Prof. Segun Ajibola, also criticised the move.

“One wonders why the government is getting it wrong. What is the current capacity of local producers? Are the raw materials even available locally at the right quality? How significant is solar panel importation in Nigeria’s total import bill?” he asked.

Ajibola described the proposed ban as a distraction from more pressing issues in the power sector, stating that “leadership of the sector should let Nigerians breathe, as the suffocating impact of the controversial electricity tariff banding remains unresolved.”

The Renewable Energy Association of Nigeria (REAN) also kicked against the ban.