African Focus The Africa Energy Bank: A Boon or Bane for Africa’s Energy Transition? by David Omata July 21, 2024 Published by David Omata Nigeria has recently won the bid to host the Africa Energy Bank (AEB). The bank’s establishment is a collaborative effort by the African Petroleum Producers Organization (APPO) and the African Export-Import Bank (Afreximbank), with the primary aim of tackling shortages in energy funding in Africa. The arrival of the Africa Energy Bank (AEB) is poised to significantly shift the African energy sector. However, the AEB’s approach raises critical questions about its impact on Africa’s energy transition goals. This Nextier’s Pan-African series analyses the AEB’s objectives of concurrently funding fossil fuels and renewable energy and its implications for the global drive to phase out fossil fuels. The energy crisis that Africa is currently experiencing is no longer news, as over 600 million people in the continent lack access to power, and over 900 million lack clean cooking options. The AEB’s initial focus on financing energy projects, including oil and gas ventures, responds to this dire situation to fill the void left by global institutions shying away from fossil fuels due to climate change concerns. This approach offers a lifeline to resource-rich African nations struggling to develop their energy infrastructure. The bank’s potential to unlock these resources and stimulate economic growth is undeniable. However, is this fossil fuel focus aligned with Africa’s long-term energy goals? Questioning the Sustainability Path The AEB’s commitment to a “balanced energy mix” seems reasonable since it intends to address Africa’s social and economic components of sustainability. However, supporting fossil fuels alongside renewables generates conflict because it may not mesh well with the environmental pillar of sustainability. While fossil fuels can provide immediate energy security, they also contribute to climate change, directly contradicting Sustainable Development Goal 7 (SDG 7) and net-zero emission targets. The AEB’s success depends on its ability to negotiate Africa’s interest in achieving energy access with the global interest in energy transition. Will it favour short-term advantages from fossil fuels, slowing the shift to greener energy sources? Or can it serve as a catalyst, investing in renewables while sustainably using fossil fuels to close the present energy gap? The Need for Transparency and Scrutiny Each African member nation is expected to donate at least $83 million to raise about $1.5 billion. The Africa Energy Fund’s (AFE) founding members, Afreximbank and APPO, are expected to provide equivalent cash. The remaining $2 billion is anticipated to be raised from outside sources, perhaps even Middle Eastern sovereign wealth funds. Based on the above funding breakdown, the AEB’s funding structure also demands scrutiny. While African nations contributing signifies ownership, reliance on potential funding from Middle Eastern sovereign wealth funds, often heavily invested in fossil fuels, could influence priorities. Transparency regarding project selection and environmental impact assessments will be crucial to ensure accountability. The Path Forward: A Delicate Balancing Act The AEB presents both opportunities and challenges. To truly benefit Africa, it must strike a delicate balance.• Can it foster investment in renewables while supporting responsible fossil fuel resource utilisation?• Can it implement stringent environmental safeguards and prioritise clean energy development in the long run?• Can it promote regional cooperation and knowledge-sharing to accelerate the adoption of innovative energy solutions? The answers to these questions will determine whether the AEB becomes a catalyst for a just and sustainable energy transition in Africa or a bar. Conclusion Establishing the Africa Energy Bank may put Africa’s energy future under critical scrutiny by global leaders. Will it keep the continent stuck on a fossil fuel-based course, or can it be a bridge to a sustainable future? How well the AEB can innovate and adapt will determine the solution. Even when declared, a “balanced mix” is insufficient. In addition to prudent, time-bound fossil fuel consumption, the bank requires a clear plan that prioritises sustainable energy development. Hence, achieving SDG 7 and climate targets requires transparent project selection processes and environmental evaluations. AuthorOmata David OmakojiTechnical Associate – Nextier Power July 21, 2024 0 comments 0 FacebookTwitterPinterestEmail
African Focus The Electricity Access Gap and its Implications for Human and Economic Wellbeing in Africa by David Omata June 15, 2024 Published by David Omata Clean and affordable electricity is central to modern human development. It provides the necessary infrastructure for health, education, and economic activities. In Africa, however, there remains a significant gap in electricity access, which has profound implications for human well-being and economic growth. This article explores the current state of electricity access in Africa, its impacts on human well-being, and the economic consequences of this gap while suggesting potential solutions to bridge this divide. Click here to download June 15, 2024 0 comments 0 FacebookTwitterPinterestEmail
African FocusPower Punch Accelerating Nigeria’s Energy Transition with CNG-Powered Vehicles by David Omata May 17, 2024 Published by David Omata President Bola Tinubu’s recent directive mandating the procurement of compressed natural gas (CNG)- powered vehicles by all government ministries, departments, and agencies is a significant step towards advancing Nigeria’s energy transition agenda. This policy brief by Nextier outlines the implications of this directive for Nigeria’s Decade of Gas initiative and the broader energy transition plan. Background Nigeria’s Decade of Gas initiative, launched in 2021 by President Muhammadu Buhari, was designed to tap the country’s substantial gas reserves to drive economic growth and development. CNG, while not entirely devoid of emissions, emits lower levels of CO2 compared to conventional fuels, positioning it as a transitional element within Nigeria’s energy transition strategy towards achieving net-zero emissions targets. Nigeria has strategically embraced the Decade of Gas initiative as a foundational phase in its journey towards sustainable energy practices. Even though Nigeria is the 9th largest country with natural gas reserves globally, its domestic gas utilization has been underwhelming, with most of the gas directed towards the export market. President Tinubu’s Directive President Tinubu’s directive aligns with the objectives of the Decade of Gas initiative by promoting the domestic use of natural gas. The President’s mandate on procuring CNG-powered vehicles will reduce Nigeria’s reliance on traditional petrol-dependent vehicles and set an example for the private sector and the general populace to follow suit. This move is expected to increase the country’s natural gas demand significantly. Implications for the Decade of Gas Initiative • Increased Domestic Gas Utilization: The mandatory procurement of CNG-powered vehicles will create a substantial new market for natural gas within Nigeria. This increased demand will incentivize further gas exploration, production, and distribution infrastructure investment. • Environmental Benefits: CNG-powered vehicles produce e lower emissions than traditional petrol-dependent cars, contributing to Nigeria’s efforts to combat air pollution and mitigate climate change. This aligns with global trends towards cleaner energy sources and sustainable development. • Economic Growth and Job Creation: The Decade of Gas initiative aims to attract foreign direct investment, generate revenue through royalties and taxes, and create more jobs. The mandatory adoption of CNG-powered vehicles contributes to achieving these goals by stimulating economic activity in the gas sector and related industries. • Energy Security and Cost Reduction: This directive will improve the country’s energy mix and reduce reliance on imported petroleum products. With this, Nigeria can enhance its energy security and mitigate the impact of volatile global oil prices. Additionally, CNG is more cost-effective than petrol, offering potential savings for the government and consumers. Policy Recommendations • Policy Implementation: Not until this recent directive from the President to encourage CNG production did the decade of gas policy receive less attention to its implementation. The presidency and the relevant regulatory agencies should follow up to ensure effective implementation and enforcement of the directive across all government agencies, with clear timelines and targets for transitioning to CNG-powered vehicles. • Infrastructure Development: The federal and sub-national governments need to Invest in expanding CNG refuelling infrastructure to support the growing fleet of CNG vehicles nationwide while creating opportunities for private investors to invest in the project. This includes establishing refuelling stations along major transportation routes and in urban centres. • Public Awareness and Education: A comprehensive public awareness campaign to educate citizens about the benefits of CNG-powered vehicles, dispel myths or misconceptions, and encourage widespread adoption is needed. This should be done through the National Orientation Agency and involve relevant CSOs and NGOs. • Private Sector Engagement: The government should collaborate with private sector stakeholders, including vehicle manufacturers and energy companies, to incentivize the production and adoption of CNG-powered vehicles and support the development of related technologies. Our Conclusion President Tinubu’s directive to mandate the procurement of CNG-powered vehicles represents a significant opportunity to advance Nigeria’s energy transition agenda and realize the objectives of the Decade of Gas initiative. Nigeria can achieve sustainable economic growth, improve environmental quality, enhance energy security, and reduce transportation costs for its citizens if we leverage its abundant natural gas resources. Effective implementation of this policy directive, supported by strategic investments and public-private partnerships, will be critical in realizing these benefits and positioning Nigeria as a leader in the global transition to cleaner energy sources. Click here to download. May 17, 2024 0 comments 0 FacebookTwitterPinterestEmail
African Focus Analysing Wind Energy Projects in New York and Emerging Markets in Africa by David Omata May 17, 2024 Published by David Omata Recent cancellations of major offshore wind projects in New York have dealt a significant blow to the industry. The failure of major offshore wind projects in New York reflects a combination of technical, commercial, and regulatory challenges that have plagued similar ventures, especially in Africa. One significant factor contributing to the cancellation of these projects was the intricate technical and commercial complexities they encountered. Changes in project plans and material modifications introduced uncertainties during negotiations, making it challenging for involved parties to reach final agreements. This mirrors experiences seen in other regions where ambitious renewable energy projects have faltered due to unforeseen technical hurdles and shifting market dynamics. Similarly, the Lake Turkana Wind Power Project in Kenya, one of the largest wind farms in Africa, faced numerous challenges during its development, including delays due to financing issues, logistical challenges in transporting turbines to the remote site, and disputes over land rights with local communities. These challenges resulted in significant delays and cost overruns, highlighting the difficulties involved in large-scale renewable energy projects in Africa. Another critical issue that led to the downfall of the New York projects was the reliance on a complicated supply chain, particularly the unavailability of critical components such as turbines. The cancellation was linked to supply chain investments by General Electric (GE), emphasizing the vulnerability of wind power projects to disruptions in the supply chain. Although numerous initiatives have been aimed at developing local capacities in Africa for designing and constructing wind turbines, these efforts have not yet fully matured, presenting challenges in reducing the continent’s reliance on imported turbines, affecting the entire supply chain. Case studies such as the “Wind Atlas for South Africa (WASA)” project, which aimed to assess wind energy potential and build local expertise in wind resource assessment, demonstrate ongoing efforts to develop local African capacities. Despite such initiatives, many countries still face challenges in achieving self-sufficiency in wind turbine manufacturing. For example, the lack of advanced technical skills and infrastructure has hindered the growth of the local wind energy industry in countries like Nigeria and Kenya. Cost considerations also played a significant role in the failure of the New York projects. The decision not to proceed was influenced by the increased costs associated with using smaller turbines, which would have required more individual turbine locations and higher installation expenses. This economic challenge has been a recurring theme in renewable energy projects worldwide, where developers often grapple with balancing the need for technological advancements with cost-effectiveness. Egypt’s Renewable Energy Feed-in Tariff (FiT) faced challenges related to regulatory uncertainties, grid integration issues, and delays in project approvals, leading to a slower-than-expected uptake of wind power projects. Also, regulatory constraints contributed to the demise of the New York projects. Policies limiting rate increases for consumers constrained negotiations, making it difficult for developers to meet financial targets and secure viable agreements. Similar regulatory hurdles have hindered renewable energy projects in regions like South Africa, where conflicting policies or stringent regulations have impeded progress towards renewable energy targets. Despite the undeniable success of the REIPPPP (Renewable Energy Independent Power Producer Procurement Program), a commonly discussed drawback has been the significant transaction costs borne by participating bidders. These costs encompass all expenses incurred from bid development to the commercial operation date. While competitive tenders for renewable energy projects are generally more intricate and thus more costly for independent power producers (IPPs) than feed-in tariff programs, the REIPPPP placed exceptionally stringent demands on bidders. The cancellation of offshore wind projects in New York has further shown the challenges of renewable energy development and the importance of addressing various challenges holistically. If we learn from past experiences and collaborate effectively, regions can overcome barriers to renewable energy deployment and accelerate the transition towards a sustainable energy future. Omata David OmakojiTechnical Associate – Nextier PowerDomata@thenextier.com May 17, 2024 0 comments 0 FacebookTwitterPinterestEmail
Power Punch The Urgency for Nigeria’s Hydrogen Development Strategy by David Omata March 22, 2024 Published by David Omata Nigeria has made remarkable advancements in integrating hydrogen goals into its national energy strategies. However, these goals are contained in distinct documents in various government offices. Presently, no institution assumes exclusive responsibility for managing all aspects of the country’s green hydrogen energy agenda. Instead, multiple government bodies undertake diverse roles within the energy sector. This highlights the urgent need for Nigeria to develop a comprehensive hydrogen development strategy. The recent synthesis report from the GIZ Nigeria Energy Support Program outlined the roles and obligations of various agencies in Nigeria regarding hydrogen production. This includes entities with explicit hydrogen targets and those expected to have such mandates but currently do not. The report also indicates that the National Energy Policy (NEP), the National Energy Master Plan (NEMP), and the Energy Transition Plan (ETP) included provisions for H2 in Nigeria’s decarbonization strategy. The above situation calls for an urgent need to fill this conspicuous gap of the absence of a unified strategy specifically targeting hydrogen development. As other countries are already embarking on hydrogen strategies, Nigeria risks being left behind unless it swiftly formulates and implements its comprehensive plan for hydrogen utilization. Drawing insights from international experiences, particularly those of Australia, the European Union (EU), Germany, Saudi Arabia, Namibia, and South Africa, Nigeria can leverage the lessons and tailor a strategy that aligns with its unique context and aspirations. Learning from Global Experiences Australia, for instance, emphasizes the production and export of hydrogen while concurrently addressing domestic consumption needs. Australia aims to build cost-competitive production capabilities and stimulate global markets through phased implementation and establishment of hydrogen hubs. Similarly, the EU’s strategy prioritizes investments, research, and international cooperation, setting phased targets for hydrogen deployment while fostering demand through strategic partnerships and financial mechanisms such as the European Hydrogen Bank. Germany was focusing on its robust governance structure and targeted funding programs to support domestic and international hydrogen initiatives. They use mechanisms like the H2Global program, and Germany incentivizes investment to foster market competitiveness. Meanwhile, Saudi Arabia leverages its abundant renewable energy potential to pioneer green hydrogen production, strategically positioning itself in the global hydrogen economy. Namibia and South Africa also leverage the significance of coordinated efforts and strategic planning in realizing their hydrogen ambitions with clear goals, governance frameworks, and funding mechanisms in place. The Imperative for Nigeria’s Hydrogen Strategy Against this backdrop, Nigeria’s absence of a cohesive hydrogen development strategy becomes increasingly glaring. Despite having individual policies touching on energy and sustainability, there is a pressing need for a unified approach that explicitly addresses hydrogen utilization. A comprehensive hydrogen strategy, referred to as “The Hydrogen Document,” would serve as a roadmap to harmonize existing policies, capitalize on Nigeria’s vast renewable energy potential, and position the country as a critical player in the global hydrogen market. Recommendations • Policy Harmonization: The Hydrogen Document would consolidate and align existing energy and sustainability policies incorporating hydrogen elements. This may be done by streamlining efforts and ensuring coherence across sectors. By this, Nigeria can maximize the impact of its initiatives and avoid duplication of efforts. • Stakeholder Engagement: Engaging stakeholders from government, industry, academia, and civil society is paramount. Establishing advisory councils similar to Germany’s National Hydrogen Council would ensure diverse expertise and perspectives are considered in strategy formulation and implementation. • Investment Framework: Like the EU’s European Hydrogen Bank and Germany’s H2Global program, Nigeria should establish mechanisms to incentivize investment in hydrogen projects. Public-private partnerships and innovative financing models can mobilize capital and mitigate investment risks. • Research and Innovation: A robust research and innovation ecosystem is essential for technological advancements and market competitiveness. As demonstrated by Australia and the EU, collaboration with international partners can accelerate knowledge transfer and capacity building. • Capacity Building: Developing a skilled workforce capable of driving Nigeria’s hydrogen agenda is critical. Training programs, knowledge-sharing platforms, and educational partnerships will nurture talent and foster innovation in the hydrogen sector. • International Cooperation: Engaging with global hydrogen initiatives and forging partnerships with leading hydrogen-producing nations will facilitate knowledge exchange, market access, and technology transfer. Conclusion With the existing hydrogen road map and strategies by other countries, Nigeria stands a better chance to draw inspiration from international experiences. With this, the government can chart a path towards a hydrogen-powered future. The formulation and implementation of a comprehensive hydrogen strategy, encapsulated in “The Hydrogen Document,” will harmonize existing policies and catalyze investment, innovation, and socioeconomic growth for the nation and its people. Now is the time for Nigeria to seize the opportunity and embrace the hydrogen revolution. AuthorOmata DavidTechnical Associate- Nextier Power March 22, 2024 0 comments 0 FacebookTwitterPinterestEmail
African Focus Ghana’s Energy Transition Plan: Advancing Clean Cooking Solutions by David Omata March 22, 2024 Published by David Omata In September 2023, the government of Ghana unveiled its Energy Transition Plan (ETP) to achieve zero by 2060, marking a significant stride towards sustainable development. The ETP entails a substantial capital investment, estimated at a bare minimum of USD 550 billion by 2060, representing a USD 140 billion increase compared to business-as-usual (BAU) scenarios. Over 70% of these investments are earmarked for the power and transport sectors, primarily driving a comprehensive shift towards renewable energy sources and reducing carbon emissions. This ambitious initiative is projected to catalyze new economic activities within the energy sector, potentially creating up to 400,000 net new jobs by 2060. Ghana’s ETP outlines six key decarbonization technologies under the Orderly Transition Pathway. A significant portion, approximately 40%, of the required emissions reduction is expected to be achieved through transport electrification. These technologies include electrification and renewables, which involve displacing fossil fuel consumption with electricity sourced from solar, wind, geothermal, and possibly nuclear power, complemented by energy storage solutions. Carbon capture and storage technologies will also be deployed to capture CO2 emissions from industrial processes, while low carbon hydrogen will serve as a greener alternative for industrial and transportation needs. Battery electric mobility aims to replace internal combustion engines with electric batteries across various vehicle types. The plan also emphasizes the adoption of Clean Cooking Technologies to replace traditional biomass fuels with efficient electric biomass cookers and advocates for Negative-Emission Solutions like Bioenergy with Carbon Capture and Storage (BECCS) to mitigate carbon emissions effectively. Ghana is positioned to use this orderly transition pathway to embark on a sustainable path towards a low-carbon future, fostering economic growth while mitigating environmental impact. Advancing Clean Cooking Solutions Less than a year after adopting the ETP, Ghana has taken a significant step in embracing clean cooking solutions in collaboration with international partners and stakeholders to prioritize promoting clean cooking technologies. The recent authorization of the ‘Transformative Cookstove Activity in Rural Ghana’ is a testament to the country’s commitment to advancing clean cooking solutions. Through partnerships with organizations like ACT Group, Envirofit, and the KliK Foundation, Ghana aims to distribute improved cookstoves (ICS) to rural and peri-urban households, significantly reducing smoke and toxic emissions while cutting cooking fuel costs. According to the report by ACT, a leading global provider of market-based sustainability solutions, the authorization of this cookstove activity not only contributes to mitigating greenhouse gas emissions but also aligns with Ghana’s Sustainable Development Goals (SDGs). The proposed distribution of the 180,000 Improved Cookstoves (ICS) will improve the lives of 0.75 million Ghanaian citizens and create local job opportunities; the initiative addresses environmental and socio-economic challenges. Up to 10,000 deaths annually in Ghana are associated with air quality issues; the ICS technology mitigates this by decreasing smoke and toxic emissions in individual households by as much as 80%. Additionally, it trims cooking fuel costs by approximately 60%. Ghana’s readiness to achieve its energy transition plan, particularly in the clean cooking sector, is evident through several critical factors, as discussed below: • Policy Framework: Ghana has developed a comprehensive policy framework supporting clean cooking technologies through regulations, standards, and incentives; the government is promoting modern and low-carbon cooking solutions while addressing affordability and accessibility challenges. • International Cooperation: Ghana’s collaboration with international partners, including Switzerland, demonstrates its commitment to leveraging global expertise and resources to accelerate the adoption of clean cooking solutions. Bilateral agreements, such as the one signed at COP26, provide a legal framework for implementing greenhouse gas mitigation activities and ensuring environmental integrity. • Innovation and Monitoring: Ghana is embracing innovation and technology to enhance the effectiveness of its clean cooking initiatives. Digital monitoring and verification techniques, as exemplified by Envirofit’s state-of-the-art usage and performance monitoring strategy, ensure accountability and transparency in project implementation. • Community Engagement: Ghana recognizes the importance of community engagement and awareness in driving the adoption of clean cooking technologies. The government and its partners empower households to transition to cleaner and more sustainable cooking practices through targeted outreach programs, product demonstrations, and financial incentives. Conclusion Ghana has emerged as a frontrunner among its West African counterparts by taking this huge step to implement Improved Cookstoves (ICS) as part of its Energy Transition Plan to decarbonize the cooking sector. With this strategy, the nation is undoubtedly laying the groundwork for a more promising and sustainable future by meeting its citizens’ energy requirements while reducing environmental impact. AuthorOmata David OmakojiTechnical Associate – Nextier Power March 22, 2024 0 comments 0 FacebookTwitterPinterestEmail
African Focus Harnessing Tax Incentives to Accelerate E-mobility in Africa by David Omata March 8, 2024 Published by David Omata The transport sector remains a significant emitter of greenhouse gasses, responsible for approximately one-quarter of global emissions. Despite efforts to transition to cleaner energy sources, the fact sheet on climate change has shown that 95% of the world’s transport energy still relies on fossil fuels. The fact sheet also reveals that in 45% of countries, transport is the largest source of energy-related emissions; in others, it ranks as the second largest. The transport sector accounts for 57% of global oil demand and 28% of total energy consumption. In Africa, transport emissions are fast increasing from a low baseline. Between 2010 and 2019, Africa experienced a 27% increase in transport emissions, ranking second only to Asia (41%) according to the data from the SLOCAT partnership on sustainable low-carbon transport. The global target for a 60% share of battery-electric and plug-in hybrid vehicles by 2050 could save more than 60 billion tons of CO2 emissions. As the global transition towards electric vehicles (EVs) gains momentum, African nations must intensify their decarbonisation efforts in the transport sector through collective efforts against climate change to accelerate the adoption of EVs. This commitment is reflected in implementing policies centred on tax incentives and waivers to promote the uptake of electric vehicles across the continent. Overview of Countries’ E-mobility Tax Policies In a bold move towards sustainability, Ghana’s 2024 budget speech unveiled a series of tax incentives to promote the adoption of electric vehicles (EVs). These measures, including the waiver of import duties on electric vehicles for public transportation and incentives for registered EV assembly companies, mark a significant step towards reducing emissions and addressing traffic congestion issues in the country. The decision to waive import duties on electric vehicles for public transportation for eight years, coupled with similar incentives for locally assembled EVs, demonstrates Ghana’s commitment to fostering a greener transportation ecosystem. By extending the zero VAT rate on locally assembled vehicles, the government encourages domestic manufacturing and paves the way for sustainable mobility solutions. Ghana’s initiative reflects a broader trend across Africa, where several countries have taken steps to reduce or eliminate import duties and taxes on electric vehicles. From Tunisia to Kenya, Uganda, and other African countries, their governments recognise the importance of incentivising EV adoption to combat climate change and promote sustainable development. Tunisia’s 2023 financial act reduces customs tariffs on electric car charging equipment to 10% and lowers value-added tax to 7%. The Tunisian Ministry of Environment anticipates that these efforts will deploy 50,000 electric vehicles by 2025. According to the Ministry, this project is expected to dramatically reduce oil usage (5.9 million barrels) and fossil fuel imports by US$660 million between 2020 and 2030. These incentives indicate Tunisia’s commitment to sustainability and are consistent with broader efforts throughout Africa to promote environmentally friendly transportation options. The Kenyan government has unveiled plans to reduce excise duties on electric vehicles (EVs) from 20% to 10% to encourage the manufacturing of EVs within the country. Additionally, the Energy and Petroleum Regulatory Authority has implemented measures to regulate the price of charging stations nationwide. Lowering the taxes on EVs and regulating charging station prices will encourage investment in EV technology and infrastructure while addressing concerns about affordability and accessibility. Uganda’s 2023/2024 budget included several tax reforms, including eliminating import tariffs on electric vehicles (EVs) and hybrids, including electric motorbikes. This strategic initiative, as detailed in a paper by the Uganda Revenue Authority (URA), is based on encouraging the use of electric vehicles and reducing pollution. The tax breaks are intended to accelerate the transition to cleaner transportation choices, demonstrating a commitment to environmental sustainability and harmonising with global initiatives to promote greener practices in the car industry. According to Ethiopia’s current e-mobility policy, all-electric vehicles are now exempt from VAT, excise tax, and surtax. The only remaining tax is the customs tax, which has been reduced to 15% for fully assembled vehicles and 5% for semi-assembled ones. Completely knocked-down (CKD) vehicles assembled within Ethiopia are exempt from taxation. The Ministry of Transport and Logistics established charging stations in three locations within Addis Ababa before transferring the responsibility to the private sector. ConclusionAs Africa grapples with urbanisation, population expansion, and climate change challenges, the transition to electric cars appears as a critical potential for transformation.Africa can chart a course for a more sustainable and prosperous future through innovation and collaboration. The current development regarding tax incentives from several African countries is welcoming; however, it is critical to emphasise that increasing EV adoption necessitates comprehensive policies that promote equity for all and tax breaks. Supporting local entrepreneurs, increasing access to financing, and building technical expertise are critical activities for maximising the benefits of electric mobility throughout society. Tax incentives are essential for increasing electric car use in Africa, increasing the momentum toward greener transportation alternatives. With creative policies and strategic investments, Africa can lead a long-term mobility revolution to benefit current and future generations. We look forward to seeing these initiatives in Africa as we reach the net zero target. March 8, 2024 0 comments 0 FacebookTwitterPinterestEmail
African Focus Assessing the Levelized Cost of Energy for Solar PV Technology in Nigeria, Ghana and the Benin Republic by David Omata February 21, 2024 Published by David Omata In the quest for sustainable energy solutions, adopting renewable energy sources like solar photovoltaic (PV) technology has gained prominence globally. In West Africa, countries such as Nigeria, Ghana and the Benin Republic are increasingly looking towards solar PV as a viable option to diversify their energy mix and address pressing energy challenges. One critical metric in evaluating the economic viability of solar PV is the Levelized Cost of Energy (LCOE), which measures the lifetime cost of electricity generation per unit of energy produced. The Levelized Cost of Energy (LCOE) is a metric used to assess the lifetime cost of electricity generation from a particular energy source or technology, such as solar photovoltaic (PV) technology. It represents the average per-unit cost of electricity generated over a power plant or system’s lifetime, considering all relevant fees and financial considerations. LCOE = CAPEX +OPEXYIELD • CAPEX, or capital expenditure, is the initial investment, including the cost of components, labour and additional costs the solar system entails.• OPEX or operating expenditures include utilization, maintenance, taxes, etc.• Yield or energy production is the amount of energy the system harvests during its use. Analysts and investors can calculate the LCOE of solar PV technology by considering these factors and applying appropriate financial modelling techniques. The LCOE provides valuable insights into the economic viability and competitiveness of solar PV projects in various countries; it can also be used to compare energy generation costs with conventional energy sources such as fossil fuels and nuclear power. It helps policymakers, investors, and energy stakeholders make informed decisions regarding energy investments, project financing, and renewable energy deployment strategies. Various factors, including importation and production tax, solar irradiation levels, installation costs, financing mechanisms, policy frameworks, and local market conditions, influence the LCOE of solar PV technology in West African countries. Solar PV’s LCOE Assessment Nigeria, the largest economy in West Africa, possesses abundant solar resources, particularly in the northern regions. However, the high upfront costs of solar PV have hindered the widespread adoption it ought to. Despite these challenges, Nigeria’s LCOE for solar PV in Nigeria has been steadily declining due to technological advancements, economies of scale, and decreasing installation costs. The average LCOE in the Northern region is 0.395 $/kWh, whereas in the Southern part it is 0.453 $/kWh. This is unsurprising, given that the Northern part receives more solar irradiation than the South. With the most recent developments and supportive initiatives like the Bank of Industry’s six billion naira solar energy fund, Nigeria has the potential to significantly reduce its reliance on fossil fuels and harness its solar potential for sustainable energy development. Ghana, similarly, boasts favourable solar irradiation levels, especially in the northern regions. The Ghanaian government has implemented various initiatives to promote solar PV deployment, including net metering policies and feed-in tariffs. Currently, the LCOE for utility-scale solar PV technology in Ghana ranges from a minimum of about $0.04/kWh to a maximum of $0.15/kWh. It is yet to be entirely ascertained if the net metering and feed-in-tariffs have contributed to a declining trend in the LCOE of solar PV to make it more competitive than conventional energy sources. Also, challenges such as grid instability and limited access to financing options persist, necessitating further investment and policy support to unlock the full potential of solar energy in Ghana. Solar PV presents a compelling solution to energy access challenges in smaller economies like the Benin Republic, particularly in rural areas with limited grid connectivity. The country is growing interest in off-grid solar solutions, driven by declining costs of installations and innovative financing models such as pay-as-you-go systems. The LCOE for Benin Republic varies from 0.110 USD/kWh to 0.128 USD/kWh, with an average value of 0.120 USD/kWh. Conclusion and Recommendations Despite the progress in reducing the LCOE of solar PV across West Africa, several barriers remain to the general adoption of the technology. These include limited access to financing, inadequate infrastructure, regulatory uncertainties, and the intermittent nature of solar energy. Addressing these challenges will require coordinated efforts from governments, development partners, and the private sector to drive investment, enhance technical capacity, and create an enabling environment for solar PV deployment. The levelized energy cost for solar PV technology in Nigeria, Ghana and the Benin Republic reflects a promising trajectory towards affordable and sustainable electricity generation. Suppose these countries leverage their abundant solar resources and implement more supportive policies and investments; in that case, they can accelerate the transition towards a renewable energy future, improve energy access, and foster economic development. February 21, 2024 0 comments 0 FacebookTwitterPinterestEmail
African Focus OPEC Exits: The Delicate Dance of National vs Global Priorities in the Era of Fossil Fuel Phase-Down. by David Omata January 16, 2024 Published by David Omata The decisions by Angola and Ecuador to exit OPEC and that of the United Arab Emirates (UAE) to encourage other OPEC members to increase their production have potential implications for the global effort to phase down fossil fuels, as proposed in COP28. Angola’s decision to leave OPEC is primarily driven by its reluctance to accept further production cuts. This move may complicate OPEC’s efforts to collectively reduce oil production to stabilize prices and address concerns related to oversupply. Angola’s emphasis on avoiding production decline and respecting contracts reflects a focus on national economic interests. This approach may challenge the broader global commitment to reduce fossil fuel production and consumption in line with COP28 goals. With Angola no longer bound by OPEC production quotas, there’s a possibility that the country could increase its oil production, contributing to a higher global oil supply and potentially undermining efforts to transition away from fossil fuels. The UAE’s indication to increase oil production aligns with its historical role as a significant energy supplier. If the UAE successfully persuades other OPEC members to follow suit, it could increase global oil supply, which may counter the COP28 objective of phasing down fossil fuels aside from the OPEC regulations on cutting down production to regulate oil prices. The UAE’s emphasis on stability in oil markets suggests prioritizing economic considerations. This stance may challenge the transition towards renewable energy sources if it leads to prolonged dependence on fossil fuels. Ecuador left OPEC in January 2020, citing economic reasons and a need to increase oil production to address its financial challenges. The country faced economic difficulties, and the decision to exit OPEC was part of its strategy to boost oil revenues. This departure emphasized some member countries’ internal economic pressures, influencing their organisational stance. Among all the countries that exited OPEC, it’s only the exit of Qatar from OPEC in 2019 to focus on gas that aligns with the climate goals of transitioning towards cleaner energy sources; the rest gave economic reasons. OPEC’s historical exits and suspensions indicate challenges in achieving a unified approach to global climate goals. Differences in national priorities and economic interests continue to shape the decisions of member countries. Countries’ decisions to leave OPEC offer valuable insights into the challenges and dynamics that may be relevant to the global energy transition plan and the goal of achieving net-zero emissions by 2060. When nations come to a crossroads where emission reduction initiatives overlap with economic prosperity considerations, the precedent set by OPEC exits suggests a predilection toward prioritizing economic prosperity. Key Lessons and Recommendations National Interests vs. Global Commitments: Countries prioritize national economic concerns when making decisions about their energy strategies. Economic considerations, such as the need for revenue and energy security, can sometimes take precedence over global commitments. In the context of the global push for net-zero emissions, countries may prioritize their immediate economic interests, especially if they rely heavily on fossil fuel industries either as a net importer or exporter. Striking a balance between national economic concerns and global environmental goals will be a significant challenge.Economic Pressures and Transition ChallengesEconomic challenges, such as financial pressures and the need for increased revenue, were key factors in some OPEC exits. These economic pressures can influence a country’s energy strategy. Countries pursuing net-zero emissions must address economic challenges associated with the energy transition. Economic incentives, supporting affected industries, and ensuring a just transition for countries reliant on fossil fuels are essential to a successful global energy transition plan. Shifts in Energy DynamicsThe exits from OPEC also reflected broader shifts in global energy dynamics, with countries like Qatar focusing on emerging energy sources like natural gas. As the world works toward net-zero emissions, acknowledging and adapting to changing energy dynamics is crucial. Embracing new technologies, fostering innovation, and leveraging emerging energy sources are vital to a successful transition plan. Unity and Collaboration Challenges OPEC faced challenges maintaining unity and cohesion among member countries with divergent priorities. Internal divisions can hinder the effectiveness of collective efforts. Global efforts toward net-zero emissions require international collaboration. Balancing the interests of different nations and fostering cooperation will be essential to overcome challenges and achieve the shared goal. ConclusionThe experiences of countries leaving OPEC highlight the complexities involved in aligning national interests with global goals. As the world strives for a net-zero future, addressing economic concerns, fostering innovation, and promoting international cooperation will be critical to overcoming the challenges of phasing down fossil fuels and achieving the 2060 net-zero emission target. January 16, 2024 0 comments 0 FacebookTwitterPinterestEmail
Power Punch ETP: Decarbonizing Nigeria’s Industrial Sector by David Omata December 18, 2023 Published by David Omata In 2020, the industrial sector contributed significantly to Nigeria’s emissions totalling 29MtCO2. To drive down these emissions, the Nigerian Energy Transition Plan (ETP) details a comprehensive strategy designed to achieve net-zero emissions in the country’s energy consumption, with the industrial sector as one of the five targeted areas. The ETP details a decarbonization strategy focused on the cement and ammonia production industries. The plan sets ambitious targets for clinker substitution for cement production, aiming to transition to a composition of 19% calcined clay and 81% clinker by 2030. In addition, the plan envisions an even split of 50% calcined clay and 50% clinker substitution by 2050. Simultaneously, integrating Bioenergy with Carbon Capture and Storage (BECCS) is proposed to play a crucial role in reducing emissions. The short-term goal is to implement 2% BECCS and 98% conventional heating by 2030, gradually progressing to an equal distribution of 50% BECCS and 50% conventional heating by 2050. In the ammonia production sector, the ETP is set for a shift in hydrogen sources. By 2030, the plan aims to adopt 33% blue hydrogen and 67% steam methane reforming to transition to an equal distribution of 50% blue hydrogen and 50% green hydrogen by 2050 to align with global efforts to reduce dependence on fossil fuels and promote sustainable alternatives. Potential Challenges with the Industry Decarbonization Target While the Nigerian Energy Transition Plan (ETP) outlines ambitious targets for decarbonizing the industrial sector, several challenges, including financial barriers, may pose obstacles to achieving these goals. The transition to sustainable technologies often requires significant upfront investments. Industries may face financial constraints, hindering their ability to adopt new processes and technologies. With a total target of $1.9 trillion and an annual target of $10 billion, financing this ambitious target may pose some challenges, except some pragmatic steps are taken through foreign direct investments (FDI), Public-Private Partnerships (PPP) PPPs and creating a more enabling business environment to attract investments into the country. Another potential challenge of the ETP will be Nigeria’s technological readiness. The readiness and availability of technologies for clinker substitution, BECCS, and hydrogen adoption are still in the early stages. Industries may face challenges integrating and adapting these technologies to their existing processes. This goes hand in hand with the challenge of the workforce transition; shifting to new processes and technologies requires a skilled workforce. Addressing potential skill gaps and retraining the existing workforce poses a challenge and may lead to temporary disruptions in productivity. Also, Public perception and acceptance of new technologies may affect their adoption, which can delay the transition. Other challenges may include Inadequate infrastructure for renewable energy sources and hydrogen distribution, as this can impede the widespread adoption of clean technologies. Therefore, developing the necessary infrastructure may require substantial time and resources. Also, implementing regulations promoting low-carbon practices depends on effective enforcement and industry compliance. Inconsistencies or delays in policy enforcement could hinder progress. In addition, the market volatility may be a challenge because the global market dynamics, especially in sectors like hydrogen production, can be volatile. Dependence on external factors may affect the availability and cost-effectiveness of certain technologies, impacting the transition. Conclusion The industrial sector’s decarbonization strategy outlined in the Nigerian ETP presents a comprehensive roadmap to achieve emission reduction targets. By focusing on clinker substitution, BECCS, and hydrogen adoption, Nigeria can significantly contribute to global climate goals while fostering economic growth and job creation. Navigating these challenges will require a concerted effort from the government, industry, and other stakeholders. Flexibility in approaches, proactive problem-solving, and continuous adaptation to changing circumstances will be essential to overcoming these obstacles and realizing the goals set for 2060. December 18, 2023 0 comments 0 FacebookTwitterPinterestEmail
