Cost, grid collapse test Tinubu’s electric vehicle rollout
“Government has no business doing business; so its work is to provide the buffers for the private sector to set up the mobile charging points and deploy the EV buses themselves,”
The President Bola Tinubu-led government is planning to deploy commercial electric buses to alleviate transportation pressures many Nigerians are facing as inflation continues to accelerate nonstop, but cost and the country’s collapse-prone power grid pose challenges.
The government hopes that by converting to electric buses, it will create affordable options for commuters. Yusuf Maitama Tuggar, minister of foreign affairs, who made the announcement, said the plan is to first launch 100 electric buses, and later scale up the fleet to 1,000 electric buses.
When launched, experts say the government will not only struggle to find constant electricity to power the buses, but a potentially high cost of deployment could jeopardise the long-term sustainability of operating the buses. This poses the risk of abandoning the project and letting huge financial resources go to waste.
“There is zero business case for that,” said Adewale Adetugbo, president, growth at Sentient Networks.
To start with, electric buses are more expensive than diesel-powered ones but operationally more cost-saving. A report by the Environment America Research and Policy Centre puts the price of an average 40-foot diesel transit bus at around $500,000, compared with $750,000 for an electric bus, and a diesel school bus costs around $110,000 compared with $230,000 for an electric school bus.
At the estimated range of $750,000, the Nigerian government will be spending the sum of $75 million for 100 electric buses – that is N66.89 billion when converted using an official exchange rate of N891.90/$. The cost of shipping, customs clearance and other logistics are not accounted for in the N66.89 billion cost estimates.
Scaling the number of electric buses to 1,000 takes the cost to $750 million (N668.92 billion). Again, the costs of shipping, duty clearance and logistics to bring them to Nigeria are not factored into the calculation.
It is important to note that the funding for the 100 electric buses is not captured by the ministry of transportation, whose proposed 2024 budget is N46.6 billion.
In the case of Shanghai, which boasts one of the world’s largest fleets of transit electric buses, when faced with the high upfront cost of electric buses, the city had to invest significant resources to subsidise the purchase and develop charging infrastructure, which strained the city’s budget.
“Electric vehicle buses in a nation that doesn’t utilise up to 6,000 megawatts of power in its National Electric Supply Industry (NESI) owing to legacy problems, like historical tariff shortfall from revenue impairment losses, inadequate distribution of gas for thermal plants; seasonality of dams, inadequate grid infrastructure from excessive government control and centralisation, and lack of market-reflective tariff rates, is only embarking on a white elephant project that will pack up after a few months,” said Kelvin Emmanuel, CEO of Dairy Hills Ltd and an energy expert.
Nigeria’s total installed grid power is 13,000MW but the country’s peak generation as of January 3, 2024 was a paltry 4,842MW. The highest generation ever attained by the country is 5,801.6MW, which was transmitted on March 1, 2021.
Apart from low power generation and insufficient distribution, the electric buses would also contend with frequent collapse of the national power grid. Data on grid collapse showed that in 2013, the country recorded 24 power system collapses. The collapse incidents stood at 13 in 2014. In 2015, the grid collapsed 10 times; in 2016 the number of collapse rose to 28. The collapse incidents recorded in 2017 were lower at 21 and have continued to drop in subsequent years. Grid collapse cases in 2018, 2019, 2020 and 2021, were 13,11, 4, and 4. The grid collapsed 10 times between 2022 and 2023.
According to research published in ScienceDirect Journal, while several countries are now using battery-operated electric vehicle (EV) fleets, EVs generally require electricity to charge their battery packs. The increasing number of EVs on the road means high demand on the country’s grid.
The research also highlighted other challenges related to electric buses including difficulties in charging many electric buses and their impact on the grid and batteries.
“Simultaneously charging electric bus fleets could consume a tremendous amount of peak power, likely to require investment in infrastructure and equipment, and thus cost. Despite the significant advantages of the electric bus over the diesel-operated bus, energy consumption is one of the key factors that would affect electric vehicles. Another issue is that of indirect carbon emissions while charging the EV because most power plants produce electricity from fossil fuels. Relatively expensive battery systems and charging infrastructure are the other main challenges for electric buses,” the research said.
For the 100 electric buses to have a chance at survival, the current government would need to significantly improve generation primarily targeted at the high energy demand of the buses. This could be at the expense of individuals and other businesses that require improved energy services. Moreover, the number of customers yet to be metered in the country is still above 50 percent.
Data from the Nigerian Electricity Regulatory Commission show that the total number of metered customers in the country is 5.7 million out of a registered 12.8 million customers, indicating that the rate of metering is at 44.51 percent as of September 2023.
But the government’s confidence may come from a few states that are also sold on the electric bus idea. Borno State, in December 2023, invited Tinubu to commission 107 electric buses it said were assembled locally. The President pledged to see to the commencement of an assembly plant at the national level.
“We are going to take advantage of your foresight and proactiveness to at the sub-national level be able to start an assembly plant and add more value to the economic prosperity of our people. You (Zulum) are doing a good job, thank you very much,” Tinubu told the governor.
Apart from Borno, Lagos also announced plans to launch electric buses. Oando Clean Energy has plans to roll out 12,000 electric buses in Nigeria, in line with the climate solution agenda to limit carbon greenhouse gas emissions in the world.
One critical challenge these states and companies would face is the limited range and battery life of electric buses. Although the range of electric buses has improved in recent years, they are still weighed down by shorter ranges compared to diesel buses and require frequent charging. This can lead to operational challenges and higher maintenance costs. While the response would be to invest in developing a network of charge stations to support the large electric bus fleet as the Shanghai authorities did, this requires significant planning and coordination.
“Government has no business doing business; so its work is to provide the buffers for the private sector to set up the mobile charging points and deploy the EV buses themselves,” said Emmanuel.
