Nigeria leads affordable powering options

From the newsletter

It costs 17 times more to power an ICE vehicle in Nigeria compared to an EV. In South Africa, it costs 13 times more, while in Kenya, it is 7 times more. This ratio is calculated by comparing the cost of petrol per litre with the cost of charging per kWh. Nigeria has the cheapest electricity tariffs compared to Kenya & South Africa.

• Nigeria’s residential electricity costs are 87% cheaper than Kenya’s and 15% cheaper than South Africa’s. On the other hand, commercial electricity costs are 80% and 54% cheaper compared to Kenya and South Africa, respectively.

• As a major fossil fuel producer, Nigeria also enjoys lower petrol prices. Petrol in Nigeria is 48% cheaper than in Kenya and 30% cheaper than in South Africa.

More details

• While the affordability of electricity is a key factor in EV adoption, reliable access to electricity is another critical consideration. Unfortunately, electricity reliability in Nigeria scores very low. A 2023 Statista survey revealed that only 1% of Nigerians have access to a 24-hour electricity supply. This poses a significant challenge to grid-based EV charging. Unless reliable off-grid charging options are available, charging EVs in Nigeria could prove difficult.

• African charge providers have adopted different models for pricing EV charging. In South Africa, companies like GridCars, Rubicon, and Chargify charge customers based on the amount of electricity consumed (kWh). In contrast, Kenyan EV charging companies, such as EVChaja and Chaji, charge per the duration of time as opposed to electricity consumption. When comparing DC fast charging rates, South Africa emerges as the more affordable option. Rubicon charges $0.39/kWh, and GridCars charges $0.41/kWh. In Kenya, DC fast charging can cost up to $0.47/kWh. However, Kenya offers cheaper AC charging, with UTU Cars charging $0.28/kWh compared to South Africa's $0.33/kWh.

• Electric motorcycles in Africa predominantly use the battery-swapping model. Roam and Mazi Mobility offer the cheapest rates in Kenya, charging $1.17 and $1.37, respectively per battery swap. Powerhive has the highest rate at $3.46 but allows riders to swap unlimited times in a day. EVChaja and Chaji maintain a standard rate of $0.03 per minute for charging.

• Most consumers rely on commercial charging to power their EVs. However, Africa’s charging infrastructure is still in its infancy. To address this, Roam has adopted a home-based charging solution, enabling customers to charge their e-motorcycles at home. Similarly, Electrify Africa in Uganda has introduced portable EV chargers to the market. Spiro CEO Kaushik Burman has affirmed that home charging solutions are currently a game changer in driving EV adoption.

Our take:

• The African EV market is still maturing, as are the policies surrounding it. The introduction of specialised and lower EV tariffs could help lower charging costs and make EVs more competitive with fuel-powered vehicles. At the same time, the reliability of electricity supply is a crucial factor. Off-grid charging solutions, such as solar-powered charging stations, can help address this challenge. Countries like Nigeria, with unreliable grids, and South Africa, where grid capacity is constrained, could particularly benefit from off-grid charging infrastructure.

• Home charging presents a cheaper alternative to public charging stations. Residential electricity tariffs are typically lower, and home charging avoids extra costs like battery depreciation associated with battery swapping schemes and the operating expenses incurred by commercial charging station providers. This makes home charging a potentially more economical and convenient option for EV owners, and consumers need to explore this option.

• High charging rates can be attributed to several factors, including the high cost of electricity, the need to recoup investments in charging infrastructure, and the limited competition in the EV charging market.