… as its expansion in Nigeria requires good policies, financing – Heinrich Boll Foundation
Assistant Business Editor
ENERGY is the stronghold of Nigeria’s economic growth and development. It significantly serves as a tradable product for earning the national income, which is used to support government development programmes.
It also contributes a lot into the production of goods and services in the nation’s industry, transport, agriculture, health and education sectors, as well as an instrument for politics, security and diplomacy.
However, it is disheartening that Nigeria being the most populous black nation in the world, endowed with rich and diverse natural resources, is still one of the poorest countries in the world with an estimated GDP per capita of N1977.97.
In a report by Heinrich Boll Foundation, One hundred million Nigerians, representing 60% of the country’s population, have no access to grid electricity. Those who do have grid access experience extremely unreliable supply. Efforts are underway to accelerate the transition to an adequate electricity generation capacity that can meet the current and future demand of Nigerian citizens and their businesses.
Conversely, there is as yet no clear vision of what Nigeria’s future electricity generation mix can and should be, nor is there a concept of how to align such a vision with the country’s sustainable development, industrialisation and climate protection goals.
Energy crisis in Nigeria has become a norm for several decades and is the bane of her economic development. There is an extreme electricity deficiency in Nigeria and the causes of this deficiency are related to financial, socio-political, and structural issues.
The Nigerian government has not been able to find permanent solutions that will resolve the problems. The irony of the situation is that, as the abundance of the vast oil and gas reserves are in Nigeria, so also are abundance of renewable energy potentials, but the country still depends on alternatives that are still within the limits of fossil fuels, which are the only source that currently powers the nation economy.
As at today, those who are connected to the grid face substantial power interruptions. Systemic issues affect all phases of the power value chain from generation to distribution, thereby forcing Nigerians to rely on self-generation. An estimated 41% of Nigerian businesses generate their own power supply to augment the national grid supply according to a recent World Bank Report. Nigeria lags far behind other developing nations in terms of grid-based electricity consumption with 126 kWh per capita. Based on the Nigeria’s GDP and global trends, electricity consumption should be at least five times higher than it is today.
Considering the huge energy demands in the country, with a teeming population of over 180million people, the quest for an energy mix has become imperative, leading to the 30:30:30 agenda. The agenda seeks to galvanize efforts in achieving a 30% contribution from renewables to the power equation of 30gw by 2030. This is to tackle the issue of about 100 million Nigerians that are currently not connected to the electricity grid.
It is expedient to note that alternative energy sources are at present is the only panacea that will ‘bail the cat’ as seen practised by many other countries including neighbouring Kenya, Ethiopia and South Africa which the Bloomberg New Energy Finance has confirmed is leading in the renewable energy revolution in Africa, leaving Nigeria, the “Giant of Africa behind.” Renewable energy sources are still the best and wonderful option because they are limitless.
From the NIMET’s info sheet, Nigeria is endowed with an annual daily sunshine that is averagely 6.25 hours, which is ranging between about 3.5 hours at the coastal areas of the northern boundary of the nations and also has an annual average daily solar radiation of about 3.5 KWm2/day in the coastal area which is in the southern part and 7.0 KWm2/ day at the northern boundary.
Nigeria receives about 4909.212 kWh of energy from the sun which is equivalent to about 1.082 million tonnes of oil; this is about 4000 times the current crude oil production per day, and also put at about 13 thousand times of daily natural gas production based on energy unit.
It is on this note that Heinrich Boll Foundation in partnership with Nigerian Economic Summit Group (NESG) organised CEOs Business Roundtable on “Renewable Energy”, with a call for stakeholders in the Nigerian electricity sector, to develop a robust policy framework and smart financing measures to help grow the renewable energy sector in the country.
Giving the opening remarks the CEO of the NESG Mr. Laoye Jaiyeola said that the roundtable was focused on establishing the renewable business platform in Nigeria. Mr. Jaiyeola noted that renewables are one of the strongest options for delivering power in Nigeria, and informed stakeholders that the roundtable will encourage and adopt “Made-In-Nigeria” innovative solutions for renewable energy.
Jaiyeola also stressed that the roundtable will intensify the advocacy in the narrative for renewable energy in Nigeria, while it will also discuss investment options in renewable technologies. If the round table objectives are achieved to some extent, they will help address the challenges that numerous Nigerians.
The Keynote speaker and Research Coordinator, Energy and Climate Policy, Oeko Institute, Dr. Felix Matthes in his presentation during the roundtable asserted that the more robust way in the global trend of energy mix and transition is going renewable, but that it was much more capital intensive.
Dr. Matthes said the key issue for adopting renewables in the case of Nigeria, was identifying the business model that is suitable and adaptable. He said that for Nigeria a “Non-technical” infrastructure would be required to ensure a sustainable renewable energy generation.
nevertheless, in the report by Heinrich Boll Foundation, its findings show that, from an investor’s perspective, onshore wind, biomass, and hydropower are currently competitive with coal and gas-fired power stations, despite investment risks being higher in Nigeria than the global average (both for renewables and conventional power).
The lower range of costs for utility-scale solar PV in Nigeria (US 10-11cents/kWh) is also within the range of coal power generation costs. When forecasting costs up to 2025 based on widely agreed cost reduction assumptions, on-grid solar PV will be fully competitive with coal generation in Nigeria in the next 5 years. The competitiveness of natural gas-powered electricity remains strong, however the availability of fuel in the long term is in doubt, be it due to deficient distribution or to resource depletion in the midterm.
The cost structures of renewable energy sources and natural gas differ widely. Natural gas based power generation has lower upfront costs but is vulnerable to volatile fuel prices ,whereas electricity generation from renewables has higher upfront costs but provides electricity at costs that are highly predictable.
The report noted that at present the costs to society as a whole (encompassing the health-related costs of air pollution and damages of climate change) drive the costs of fossil-fuel based technologies up and make solar PV fully competitive with coal and with natural gas under a cost of carbon of 40 and 100 USD/tCO2e, respectively. If society’s costs are projected ten years into the future, solar PV and wind undercut the costs of even the cheapest fossil-fuel based generation.
In off-grid generation, off-grid solar PV systems are already cost competitive in Nigeria on a lifetime basis, costing an average of USD 20 cents/kWh as opposed to diesel generatorsUSD 30 cents/kWh and gasoline over USD 60 cents/kWh. The lower upfront costs of diesel and petrol generators make them more attractive to investors (who are frequently the consumers of the power as well).
Global innovations in financing and business models that overcome this barrier remain underexploited in Nigeria. While the significance of renewable energy in Nigeria’s future mix is now routinely acknowledged, it is still perceived as a high-risk investment despite recent technological and policy innovations. This study gives evidence that renewable energy is competitive today and in the mid-term in Nigeria, and more so when the costs to society are considered.
For the time being, the Acting President, Yemi Osinbajo at the Nigerian Renewable Energy Roundtable organised by the Ministry of Science and Technology in collaboration with the Nigerian Economic Summit Group (NESG) at the Presidential Villa announced federal government’s plans to provide renewable power supply for no fewer than one million households in rural communities that are not connected to the national grid.
He said the plan would foster economic growth and would be implemented in phases. Stressing, that the first phase will take off with supply in 20,000 homes with additional pay-as-you-go system to another 20,000 households to guarantee target beneficiaries’ access to power supply and consequently create jobs.
He recalled how a rural setting, Wuna, in Gwagwalada Local Government of the Federal Capital Territory (FCT), which he said was hitherto not connected to the national grid, secured access to power supply through renewable energy initiative championed by the Niger Delta Power Holding Company (NDPHC).
He also disclosed that the Rural Electrification Agency (REA) was developing an energy database that would reflect community locations and energy demand profiles, which he said would in turn save time and money for solar home system/solar mini grid providers.
Describing the move as a step towards restructuring the power sector to pave the way for availability of renewable energy, Osinbajo also disclosed federal government’s move to alter the gridlock in the liquidity of the entire electricity value chain through the recent approval of N701 billion by the Federal Executive Council (FEC).
“We are doing 20,000 more homes in this first phase of this exercise and a pay-as-you-go system to 20,000 households to provide access to lighting and electric power for small devices. The plan is to expand the solar home system programme to one million households, creating a few more million jobs.
“The federal government through the Rural Electrification Agency is developing an energy database that will show community locations and energy demand profiles, which in turn saves solar home system/solar mini grid providers time and money because we have already identified the communities before hand.
“We are also championing the use of mobile money for solar home system payments.
The Wuna home solar project is an example of how we can creatively and aggressively provide power to our people by this pragmatic approach to our energy mix.
“We are convinced that renewable energy probably offers us the most sustainable means of increasing energy access to those who have no electricity and have no immediate hope of being connected to the national grid.
“We want to embark on a broader restructuring of the electricity sector and strive to achieve a more systematic development of power market design especially for the renewable energy. To do that, we need a framework that brings together all stakeholders towards ensuring that renewable energy becomes a real engine of growth for the Nigerian economy.
“We have mentioned several of the plans, the power sector plans and so many of those initiatives. The latest is to break the gridlock in the liquidity of the entire electricity value chain and so, our payment assurance system of over N701 billion has been approved by the FEC and in fact, the first payment has been made and we are going to make up the second payment.
“We hope that we free up that value chain which has created several problems of its own and we hope that this injection will help. We are also looking at several other reforms in the sector hoping that the market can become self sustaining, independent and run on its own and free up all of the private sector energy that is waiting to come into the market.
“So as a multi-stakeholder platform, the Nigerian Renewable Energy Roundtable therefore has its work cut out for it. I believe it is to champion this new vision for renewable energy and ensure that we can translate theory to practise for the greater good of the Nigerian people,” he said.
Meanwhile, experts in the power sector have stated that reliable and affordable power was critical to the country’s quest to become one of the most industrialised nations of the world. They said many states in the country lacked the financial capacity to invest in power generation.
In his submission, the Minister of Science and Technology, Dr. Ogbonnaya Onu, said the ministry in collaboration with the private sector had relentlessly pursued alternative energy sources and would sustain the move because of its tendency to enhance diversification.
He added that concentration on renewable energy would be beneficial to rural areas and also help to create jobs as contained in the recently launched Economic Recovery and Growth Plan (ERGP) adding that diversification could only be successful in an atmosphere of renewable energy.
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