The power sector is always front and centre on the minds of Nigerians after an elaborate privatization exercise in 2013.
10 years after, many of the headlines of leading national dailies once again told the story of how bad things are with the on-grid power sector.
In the National Tribune, we read that “Ten years after privatisation, power sector objectives not met — Tinubu” while The Guardian tells us “Despite N2.8tr subsidy, power averages 3,000MW in 10 years.”
This is a shockingly poor on-grid power supply statistic for a country with over 200 million people, after 63 years of independence,
To put that in perspective, Egypt, which has a population half the size of Nigeria has increased electricity production by over 30,000 megawatts (MW) in six years
Data from the Energy Progress Report 2022 released by Tracking SDG 7 showed at least 60 percent of the country’s population lacks access to a steady power supply, forcing households and businesses to use diesel and petrol generators.
Unfortunately, fossil fuel dependence not only contributes to harmful environmental impacts such as air pollution and climate change but also poses significant economic and security risks.
Nigeria’s overreliance on oil exports also makes its economy highly susceptible to global oil price fluctuations, as seen in the past, which can destabilize the country’s financial stability. Moreover, the environmental consequences of fossil fuel usage, including air pollution and deforestation, negatively affect the health and well-being of its citizens.
While the problems continue to mount for Nigeria’s on-grid power sector, opportunities are on the rise for states operating in the country’s off-grid power sector.
Backed by a sound regulatory environment, strong government support from the centre, and increasing capital from investors and donors, the off-grid energy sector is The Light at the End of the Tunnel fast emerging as one of Nigeria’s most exciting new sectors.
For instance, the country’s largest grid-connected solar PV plant deployment went into operation, last February.
The project, which included over 21,000 solar PV panels, two 6MVA transformers, 52 inverters, a control room building, offices, a state-of-the-art warehouse and storage building, and more, was completed turnkey by a group of international and local partners.
Tentered in 2020, the project was carried out by Haske Solar Company, a special purpose entity established by the Nigeria Sovereign Investment Authority (NSIA) at the request of the Federal Government. Thus, the Federal Government of Nigeria owns 80 percent of Haske Solar, Kano State owns 15 percent, and Kumbotso Local Government owns percent.
The park covers a 24-hectare site just 16 km from Kumbotso.
“It is currently the largest grid-connected solar plant and is proof of a successful medium-sized solar deployment in Nigeria. The park will catalyse the growth of the power sector, as it shows that renewable projects of this scale can be achieved,” said Aminu Sagir, the managing director of Nsia at the inauguration ceremony.
The construction of the Kumbotso solar plant required an investment of $15 million.
Critics may be tempted to write off the 10 MW Kano Solar Power Project because, on a daily basis, the Kano Electricity Distribution Company (DisCo) receives between 250 and 360 MW of electricity.
However, experts said because it’s the first of its sort in Nigeria, the initiative is the first of its kind in Nigeria.
“It proves that the states can effectively execute renewable projects up to and including this size,” David Uka, a UK-based renewable energy analyst said.
This is due to the fact that our nation’s environment, which enjoys an abundance of more than 2,600 hours of sunshine annually, makes solar energy an abundant natural resource with the capacity to produce between 5.5kWh and 6.7kWh per square meter on a daily basis.
In Nigeria, there are great prospects for wind energy utilization from offshore areas like Lagos through Ondo, Delta, Rivers, Bayelsa and Akwa Ibom States to the mountainous terrains of the middle belt and northern fringes which have demonstrated high potential for great wind energy harvest.
Despite the huge potential, wind energy development in Nigeria is still at an infant stage while the few wind energy technologies found in the country are mainly windmills which are used for irrigation water pumping in some rural communities in the northern regions.
There is an opportunity for Nigeria. Rystad Energy estimates that total expenditure in wind energy will hit $810 billion within a decade.
Another report from Solar-finance Africa said Given that Nigeria has tremendous solar energy potential as Africa’s largest economy, solar could reliably power large swathes of the country, if not the entire country.
Victor Ikem, a media consultant and energy analyst said addressing energy poverty with adequate energy supply and availability is an important measure of development, with huge implications for productivity and job creation.
“What has become paramount is that there is a need to sustain energy adequacy through leveraging opportunities in alternative sources and renewable options,” Ikem added.
He noted that this development will require committed and strategic investment from the state governments most especially the Delta state government.
Other experts also identified the new Electricity Act 2003 signed into law by President Bola Tinubu as a new building block that will for the first time allow providers of energy from renewable sources, such as solar, wind or water, to receive a price for what they produce based on the generation costs.
Fundamentally, the aim of the act is to create a market for renewable energy, thereby stimulating investments in the sector, analysts at Brickstone Africa, an infrastructure advisory service noted in their analysis.
The new law also mandates the imposition of renewable purchase obligations on distribution or supply licensees.
“The aim of imposing renewable purchase obligations on distribution licensees, supply licensees, and bulk customers is to foster the consumption of energy produced from renewable energy sources and thereby stimulate the growth of the renewable energy market in Nigeria,” said Chinedu Kema, energy lawyer and partner at Dentons ACAS-Law practice.
Another important provision in the new act is bringing in private investment into the sector. “Anyone may construct, own or operate an undertaking for generating electricity not exceeding one megawatt (MW) in aggregate at a site or an undertaking for distribution for electricity with a capacity not exceeding 100 kilowatts (kW) in aggregate at a site, or such other capacity as the NERC may determine from time to time, without a licence,” the act states.
The Electricity Act now consolidates all legislations dealing with the electricity supply industry to provide an omnibus and ideal institutional framework to guide the post-privatisation phase of the Nigerian electricity supply industry and encourage private sector investments in the sector.
The primary aim of the bill, as stated in its very first section, is to create a comprehensive legal and institutional framework to guide the Nigerian electricity supply industry (NESI).
It de-monopolises the generation, transmission, and distribution of electricity at the national level, to empower states, companies and individuals to generate, transmit and distribute electricity.
States would also have the authority to grant licenses to private investors so they can run mini-grids and power plants there; but, these state licenses cannot be used for the interstate or international distribution of electricity.
Particularly in underprivileged areas, renewable energy offers the chance to swiftly expand energy access. The Rural Electrification Agency achieved and surpassed the milestone of one million connections in 2022 by implementing Standalone Solar Home Systems (SHS) to enhance energy accessibility throughout Nigeria.
Certain states that have established their own power markets have maintained that renewable energy is an essential part of the energy production process.
The Lagos State Energy Policy was released in 2021 by the Lagos State Ministry of Energy and Mineral Resources in order to provide licensing requirements and a regulatory framework for all companies involved in the state’s energy industry.
By enacting the ordinance, the state hopes to drastically cut emissions from off-grid generators and promote the development of a natural gas market in Lagos State by implementing a transitional program from distillate fuels to natural gas and renewable energy sources.
“Regulatory synergy between the NERC and the regulatory agencies that will be established by states to oversee state-focused electricity matters cannot be overstated in order to have a viable state electricity market,” added Kema.