Investments in natural gas, renewables and nuclear energy in 2019 paid off above those in oil and coal, an indication that the world is moving towards cleaner energy and rewarding investors in this space. Energy investors in Nigeria stand a chance to take advantage.
Paris-based International Energy Agency (IEA) said the past three years has seen higher growth for carbon-centric energy sources as well as a significant acceleration in renewable energy developments. Investments in renewables exceeded those in fossil fuel-based power.
Renewable power capacity is set to expand by 50 percent between 2019 and 2024, led by solar photovoltaic (PV). This increase of 1,200 gigawatts (GW) is equivalent to the total installed power capacity of the United States today. Solar PV alone accounts for almost 60 percent of the expected growth, with onshore wind representing one-quarter.
Natural gas demand grew at 4.6 percent in 2018, with 314 million tons delivered, and the growth streak has extended to the current year driven by the on-going transition away from coal-fired electric power, decent economic growth and weather-related demand amid a price slump of historic proportions. Natural gas now accounts for 45 percent of the increase in energy consumption over the past decade.
The total value of Nigeria’s proven gas reserves is over $460 billion, more than the country’s gross domestic product (GDP) as of today. Yet, in a world where gas is emerging as the fuel of the future, Nigeria lags due to its inability to articulate a clear vision for energy security around gas.
“We need clearly focused regulations that will create gas-based industries in Nigeria, which will absorb teeming employable youth and create a multiplier effect that will affect the SME corridors which will change the things we do in this country,” Audrey Joe-Ezigbo, president, Nigeria Gas Association (NGA), said.
The United Nations has predicted that the world’s population will grow from 7.6 billion to 9.8 billion by 2050. Coupled with rapid urbanisation, this will continue to drive energy demand but the demand for fossil fuel-based power is falling.
“Certainty of investment is another major concern. Nigeria has adopted an oil philosophy and is failing to understand how to run a gas economy,” Joe-Ezigbo noted. “Nigeria is still focusing on associated gas, when are we going to start focusing on Non-Associated Gas (NAG).”
Global electricity demand has been growing about twice as fast as overall energy use and could climb by more than 50 percent by 2040, with energy demand growing by 25 percent over the time span, said Anes Alic, an analyst at Oilprice.com.
The World Bank’s Off-grid Solar Market Trends Report for 2017 showed that Nigeria is the second largest market in the world for off-grid electricity with 8 percent of global off-grid households. The Nigerian Rural Electrification Agency (REA) says Nigeria’s mini-grid market is worth $9.2 billion a year and solar home systems can save Nigerians $4.4bn a year in energy cost.
However, in the first seven months of 2019, Nigeria flared a total of 147.72 billion standard cubic feet of natural gas amounting to a potential loss of $413.6 billion that would have added value to Nigeria’s economy.
Much is also lost to the Nigerian economy from the lack of gas to power domestic industries due to investment shortfalls and opaque prices for the gas that manages to get to international markets.
The discovered gas resources, located in the south-south geographical part of the country, have become mere assets on paper, and they continue to be in the firm control of government bureaucrats whom analysts say are without a clue how to unlock them to energise the economy.
STEPHEN ONYEKWELU
