Solar plus storage: a win-win for Nigeria's data centre market and residents?

With Nigeria’s data centre industry set to explode – doubling capacity from 116MW in 2024 to a forecasted 226MW in 2029 – Sherisse Alexander, chief business officer at WATT Renewable Corporation, discusses how the country can affordably secure the power to make this vision of connectivity a reality, and whether a solar array with battery energy storage can be a feasible solution to this challenge

A global shortage of power is inhibiting the growth of the global data centre market, and Nigeria will be affected more than most. According to the International Energy Agency, IEA, the country’s electricity grid collapsed 46 times between 2017 and 2023. With an unreliable grid, data centre operators in Nigeria are faced with regular unplanned loadshedding events and the need to install back-up generation to maintain uptime for data centre users. However, while fossil fuel generators have been the go-to back-up power choice for many years, record high fuel and equipment costs along with fuel scarcity issues, are forcing businesses to reconsider their options for this new wave of data centre build out.

Globally, the installation of renewable energy – notably solar, wind and batteries – to power data centres has seen a huge boost in the last few years as the world’s largest operators such as Microsoft and Google seek to achieve net zero by 2030. In the US for example, over 4GW of renewable capacity was contracted by data centres including Amazon, Meta and Google’s parent company Alphabet Inc in the last 12 months alone. Closer to home, Microsoft, in partnership with G42, is investing US$1bn to build a geothermal powered data centre in Kenya. In South Africa, Africa Data Centres and Distributed Power Africa broke ground on a 12MW solar farm in April.

Until recently, businesses in Nigeria have been somewhat hesitant to explore the potential of solar plus storage due to its higher capital expenditure in comparison to fossil fuels. However, while fuel prices have levelled somewhat since the 1,000 Naira highs of 2023, it seems unlikely that it will settle back down below 750 Naira without a new subsidy to prop up petrol prices or a period of economic stagnation. This change in dynamics means that solar plus storage has become much more economic in comparison to its fossil fuel counterparts. Particularly if data centre operators sign up to a long-term power purchase agreement (PPA) of 15-20 years.

One of the key challenges often levelled at solar and wind is that of its need for space. While data centres typically need to be close to urban areas to afford fast and reliable connections, renewable generation requires space. However, as the solar and data centre industries have developed there are now several potential workarounds.

Renewable power purchase agreements

Renewable electricity can be purchased under a PPA from an offsite generator. Such an agreement would provide the data centre operator with a guaranteed price per kWh creating energy price security while alleviating local grid constraints. 46GW of wind and solar power purchase agreements were announced publicly by businesses in 2023 according to BNEF with the market growing around 33% on average since 2015.

Co-locating edge data centres with solar

Data centre operators could opt to blend hyperscale facilities with edge data centres. Located on the outskirts of town, edge data centres have much smaller footprints and lower energy needs. Some of these data centres could be co-located with onsite renewable generation. With some clever design work – for example incorporating solar onto carports – a significant amount of the data centre’s electricity baseload could be covered by solar plus storage.

Rooftop solar for inner city locations

Inner city data centre locations could mount rooftop solar as well as batteries that would charge from the grid and supply emergency electricity in the event of an outage. Although this would only cover a small percentage of the power required, it would soften grid related price and outage shocks.

More than just connectivity

The positive economic impact of improved connectivity is well documented, for example a 10% increase in mobile adoption increases GDP by 0.5% to 1.2% on average. Banking is a great example of how connectivity has transformed the lives of Africans with the continent now considered the digital banking leader having brought banking to millions of people who lack access to traditional services.

Reliable access to data, now, is a must, and as data centres come online, there are further benefits created when data centre operators opt for solar plus storage. Less generator use means less noise and air pollution – two factors that are the cause behind a major public health crisis that in unfolding in many of Nigeria’s towns and cities.

In 2018, a study conducted by the World Bank in Lagos found that air pollution led to over 11,200 premature deaths with children under five the most affected. The same study also found that air pollution caused US$2.1bn in losses over the course of the year. Generators were found to be the third most contributing factor to air pollution behind transport and industrial emissions.

Generators also contribute significantly to noise pollution with a study conducted in Kano finding that noise levels reached as high as 82Db, just a few decibels short of causing permanent hearing loss. With little being done to improve the situation, many Nigerians have become apathetic to it despite the physical, mental and financial toll that generators take.

Solar plus storage solutions are a win-win for everyone. Data centre operators benefit from a reduction in their reliance on fossil fuels reducing their exposure to fossil fuel related price shocks. In the case of onsite generation, solar plus storage directly improves energy security and reliability and, on every site, it helps to improve local air quality and reduce noise levels. Local businesses and households also benefit, with solar plus storage helping to alleviate the strain on the grid posed by a new data centre, while also enjoying cleaner air, quieter streets and better connectivity.