Are Decentralized Renewable Energy projects the way to go?

Introduction

The performance of the national grid in Nigeria is evidently quite poor. The objective of unbundling the Nigerian power sector through the 2005 electricity sector reforms has not been achieved, as the situation has not changed much. Despite numerous sector interventions, many Nigerians lack access to sustainable electricity supply. Distribution Companies (DisCos) are inundated with myriad challenges, making investments into their sub-sector difficult. Further, due to financial reasons, they have continued to channel their electricity to areas in which they are assured of payments for electricity consumption, which are predominantly urban areas.

Background

In 2021, the World Bank (WB) reported that 85 million Nigerians do not have access to grid electricity, representing 43 per cent of the population, making Nigeria the country with the most significant energy access deficit in the World. To reduce this enormous electricity access deficit, the Nigerian government has committed to increasing overall energy access in the country through the formulation of energy policies over the past years. Some of these policies include the Rural Electrification Policy (REP, 2005), the Renewable Energy Master Plan (REMP, 2012), the National Energy Policy (NEP, 2003), and the Rural Electrification Strategy and Implementation Plan (RESIP, 2016).

The objective of the Nigerian government on rural electrification is that by 2020, access to electricity in rural areas should have grown to 75 per cent. By 2030 and 2040, it should have increased to 90 per cent and 100 per cent, respectively. Also, in 2025, the objective should have achieved at least 10 per cent of the energy mix from renewables, as incorporated in the Rural Electrification Policy 2005 and National Electric Power Policy 2001. This goal is an ambitious one.

Many communities in Nigeria are without access to sustainable electricity supply. These communities are predominantly peri-urban and rural areas that are usually too far to be reached by grid infrastructure. This situation leaves such communities grossly underserved and unserved and suffering from inadequate electricity access. In some communities, the residents are left to generate their electricity via small-sized generators, which are major sources of air pollution and noise. Conversely, there are areas within the distribution networks of the DisCos that are categorized as Informal Settlements in Peri-Urban and Urban Areas (ISPUAs) and Difficult-to-Manage Rural Areas (DMRAs). The DisCos record high aggregate, technical, commercial and collection (ATC&C) losses in the ISPUAs and DMRAs within their franchises. As a result, less electricity is channelled to these areas due to the DisCos’ quests to meet their revenue requirements and fulfil their monthly market obligations to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator (MO).

Given the abovementioned problems, what solutions are available to improve electricity access to customers in these disenfranchised areas (underserved rural areas, ISPUAs, and DMRAs)? Decentralized Renewable Energy (DRE)!!! Yes, you read right. But this begs the question: what is DRE?
Law Insider defines DRE as a distributed generator powered by sustainable renewable energy or alternative renewable energy supplying electric power to an electric power service company or generated for self-consumption or sale to third parties. In other words, as the name implies, DRE is a composition of the electricity value chain with renewable energy generation and transmission components closer to the end-users.

Read also: Renewables account for 20% of global energy despite climate fears

Analysis

Lebanon has a peak power demand of 1.5GW more than the available generation capacity for the country, causing the utilization of private diesel generators across neighbourhoods to meet electricity demand. Like Nigeria, citizens and residents of Lebanon suffered from rotational load-shedding and blackouts from their national electricity utility. There was an inverse relationship between the adequate supply of electricity and the distance from the capital city of Beirut. The closer you are to the capital, the more electricity you enjoy, and vice-versa. Complex centralized regulatory and governance models were bypassed with the deployment of DRE projects such as hybrid solar-diesel microgrids.

Towns, villages, and neighbourhoods began to enjoy a fair, equitable, and more reliable electricity supply, and there was less reliance on the national grid. Less fuel was purchased for electricity generation, thereby reducing the emission of greenhouse gases (GHG) into the atmosphere.
The Nigerian Electricity Regulatory Commission (NERC) has developed some regulations to drive the deployment of DRE projects in the country. Some of these are the NERC Regulations for Mini-Grids 2016, the NERC Regulations for Embedded Generation 2012, the NERC Regulation for Independent Electricity Distribution Networks 2012, etc.

In recent years, there have been a lot of investments in DRE projects across the country geared at improving energy access, especially in underserved and unserved rural areas. The projects include rooftop solar home systems, mini-grids, embedded generation systems, etc. DRE projects present an opportunity to circumvent the political and administrative bureaucracies of obtaining several approvals and licenses from NERC, which would otherwise be required for on-grid projects. In addition, these projects drastically reduce the timelines for project delivery.

Communities that benefit from DRE project investments are almost immune from mishaps on the national grid, such as regular grid collapses. The deployment of DRE projects tends to improve energy security in underserved areas that require electricity for their safety, domestic use, livelihood, healthcare, education, etc., whilst reducing the reliance on electricity generation from fossil fuels. Another merit of DRE projects is that while expensive, the funding requirements are often not as huge as they would be for on-grid power generation.

Conclusion

With the country’s current energy access deficit, it is important that other renewable energy power generation sources are explored. With DRE projects being clean and sustainable, the government will be able to provide a reliable electricity supply to underserved and unserved communities while also reducing the emissions rate, which will contribute to the climate action targets. The merits of deploying DRE projects are numerous. Hence, more concerted efforts must be made to promote the deployment of these projects across Nigeria.