• Sunday, June 23, 2024
businessday logo


Sufficient energy supply stimulates economic development

Sufficient energy supply stimulates economic development

In the past two decades, Nigeria has witnessed a significant increase in the demand for energy use. As one of the continent’s greatest economies, Nigeria has a significant installed generation capacity of over 13.5GW. Compared to the country’s peak demand of 8.25GW, generation should adequately meet demand. However, despite this, the available capacity in 2019 was only 3.7GW. Thus, indicating an insufficient supply compare to demand.

Excess capacity and insufficient supply are thus some of the characteristics of electricity generation in Nigeria due to the lack of spare parts and poor maintenance.

In addition to the high prevalence of unemployment in emerging nations, many young people still lack access to adequate electricity. About 60 percent of the population in the country has access to electricity, leaving over 16 million houses without power.

The residential sector utilizes roughly 60 percent of all electricity produced, with business and public services accounting for the remaining.

The importance of electricity use became more revealing during the pandemic when there was movement restriction. Most organizations asked their staff to work from home, while the education sector also used several social media networks to communicate with their students. However, the epileptic/irregular power supply compounded the problem for the majority. Many students miss their online classes while most workers have to bear the extra cost of fuelling their generators or using other energy sources like solar to carry out tasks and assignments given at the workplace and school. This, in effect, reduces efficiency and productivity.

Read also: Petroleum engineering professor urges Nigeria to explore opportunities in energy transition

Furthermore, industries and manufacturing organizations use electricity in their daily operations. Providing electricity as an economic infrastructure facility is critical to a country’s economic development. The efficiency of the energy supply affects returns on investment and the establishment of an economic climate that influences investment decisions.

The intense utilization of energy like electricity in the value creation process can effortlessly help developing economies achieve economic growth and development. The global expansion in industrialization and human progress explains this better.

In addition, according to the neoclassical school of thought, economic growth requires a capital-labour combination. Beyond these two factors, there is the question of technology advancement and human capital development, both of which influence the growth rate of an economy. The progress of technology and the application of mechanization necessitate a massive amount of energy generation. As a result, energy might be considered vital for growth and economic expansion; highly relevant energy resources will increase energy’s overall influence on technology. Invariably, high-quality energy resources can help technological development, whereas low-quality energy resources can stifle technological innovation.

The lack of power has impeded the industrial production of physical goods and services. Thus, human strengths and potential in connection to production and development of value will rarely become a reality without electricity.

Furthermore, the United Nations report shows a tendency for about 660 million people to be without access in 2030. It also shows that approximately 1.2 billion people live in areas with limited access to electricity, and 2.8 billion people rely on other fuels such as charcoal, coal, firewood, and solid fuel.

The overuse of these various energy sources has exacerbated the problem of domestic air pollution during the cooking process. In recognition of the need for a cleaner environment free of air pollution, the United Nations for Energy Sustainability has set three goals to be achieved by 2030. These are; reaching a level of global acceptance of cleaner energy, ensuring an adequate supply of power, and increasing the percentage of renewable energy in the international energy composition. And a conducive business environment can help to achieve this.

The low cost of manufacturing, particularly in generating power, is a sign of a favourable business environment. In this circumstance, the need for public infrastructure spending, which includes providing a steady energy supply, becomes critical for production to thrive. In contrast to instances when individuals are obliged to source for their power supply at a more significant cost, public provision of electricity will ensure energy generation at a minimal cost and maximum social benefit.

Despite tremendous progress in expanding access to power, boosting renewable energy use in the electricity sector, and improving energy efficiency over the last decade, the world still falls short of delivering affordable, dependable, sustainable, and modern energy to all. Several small and medium-scale companies had to fold up due to the inability to cope with economic challenges brought by an inadequate power supply. In addition, the COVID-19 pandemic will stymie future electrification efforts.

Therefore, COVID-19 response, as well as actions to address climate change, should prioritise clean and sustainable energy to achieve sustainable growth in the country.