Determinants of use of solar energy as an alternative means of energy by small and medium enterprises in Lagos State, Nigeria

Abstract

Frequent power outages and general electricity problems from the national grid in Nigeria have significantly increased in the last 5 years, and these are part of the reasons why many Small and Medium Enterprises in Lagos State, Nigeria find it difficult to survive and some have already folded up. Consequently, some Small and Medium Enterprises have relocated to other places, whilst others have resorted to the use of some alternative means of energy as backup facilities (inclusive of generating sets, and solar energy) to reduce the negative effect of frequent power outages from the national grid. Based on the foregoing, the aim of the study is to investigate whether Small and Medium Enterprises in Lagos State, Nigeria have considered solar energy as an alternative means of energy, find out whether Small and Medium Enterprises in Lagos State, Nigeria prefer solar energy to electricity from the national grid, and to also identify the determinants of use of solar energy as an alternative means of energy by Small and Medium Enterprises in Lagos State, Nigeria. The study covered selected Small and Medium Enterprises in Lagos State, Nigeria and primary data were generated from direct distribution of questionnaires to six hundred (600) qualified Small and Medium Enterprises in Lagos State. Using Descriptive Statistics and Binary Logistic Regression Model to analyze data generated from the questionnaires, the study affirmed that general cost of electricity from the national grid, poor organizational processes and procedures of Electricity Distribution Companies as well as policy support for solar energy by the government were major determinants of use of solar energy as an alternative means of power by Small and Medium Enterprises in Lagos State, Nigeria. However, the findings from the study indicate that poor customer services of Electricity Distribution Companies, inadequate access to electricity facilities of Electricity Distribution Companies, and frequent power outages were not major determinants of use of solar energy as an alternative means of energy by Small and Medium Enterprises in Lagos State, Nigeria as at the time of the research. Consequently, this study recommends that Electricity Distribution Companies should improve their organizational processes and procedures. The study also recommends that cost of maintenance and replacement of major facilities like defective transformers should not be transferred to Small and Medium Enterprises (inclusive of other clients).