Power Punch COP28: OFF TRACK TO MEET CLIMATE GOALS by Omiesam Ibanibo December 20, 2023 Published by Omiesam Ibanibo The recently concluded Conference of Parties (COP28) was significant for many reasons. One crucial reason is the global stocktake (GST). The global stocktake reveals the collective progress of member states and other stakeholders toward meeting the goals of the Paris Agreement. This stocktake informs countries and investors on the world’s climate action trajectory, identifying the gaps and collaborative areas; this is why COP28 was primarily significant. Who oversees the GST? The Conference of the Parties (the CMA) is the governing body overseeing the implementation of the Paris Agreement and comprises representatives of the countries’ signatories. The technical aspect of the work is carried out by two subsidiary bodies (SBs), the SB for Scientific and Technological Advice (SBSTA) and the SB for Implementation (SBI). The former is responsible for the data collation and technical components of the GST, while the latter assists in the final implementation phase. What does the GST reveal? The Paris Agreement designed the GST to start in 2023 and occur every 5 years. The stocktake process takes two years to conclude and comprises data gathering technical and political phases. The respective phases involve the information collection, technical assessment and consideration of outputs at COP sessions, where the implications of the findings are presented to the Parties. Upon the GST conclusion, a two-year process to 2025 would commence, during which countries must update their Nationally Determined Contributions. The stocktake is benchmarked against the below-listed Paris Agreement goals under Article 2: Drastically reduce greenhouse gas emissions (GHG) to keep global warming below 2°C and ideally 1.5°C Build resilience and reduce vulnerability to climate impacts Secure finance and support for low-carbon and climate-resilient development. The first GST synthesis report revealed 17 key findings and concluded that nations are off-track to meeting global emissions targets. Some of these findings are: 1. Global emissions are not in line with modelled global mitigation pathways consistent with the Paris Agreement’s temperature goal, and the window to raise ambition is rapidly narrowing. 2. More ambition in action and support is needed to implement domestic mitigation measures and set more ambitious targets in NDCs to realize existing and emerging opportunities across contexts to reduce global GHG emissions. 3. Economic diversification is a crucial strategy to address the impacts of response measures with various options that can applied in different contexts. 4. Capacity-building is foundational to achieving broad-ranging and sustained climate action and requires practical country-led and needs-based cooperation to ensure capacities are enhanced and retained over time at all levels. 5. Making financial flows – international and domestic, public and private – consistent with a pathway toward low greenhouse gas emissions and climate-resilient development entails creating opportunities to unlock trillions of dollars and shift investments to climate action across scales. As a result of these findings, the COP28 summit concluded with a signed deal to transition away from oil, gas and coal. What does Nigeria need? These findings are certainly not favourable to Nigeria and developing countries. The Nigerian Energy Transition Plan (ETP) posits gas as its transition fuel, with national leaders such as the director of Nigeria’s National Council on Climate Change (NCCC) expressing his displeasure with the signed deal. The advent of this closed deal to move away from oil, gas, and coal muddles the trajectory of Nigeria’s ETP. Consequently, Nigeria must re-evaluate investment strategies and actively diversify its revenue sources, particularly its foreign exchange earnings, as oil accounts for 95%. Thus, while action is proceeding, much more is needed now on all fronts. The nation’s leaders must advance the political will to implement carbon mitigation and abatement strategies and ease global warming. December 20, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Is NESI embracing automation? Part II by Omiesam Ibanibo November 30, 2023 Published by Omiesam Ibanibo The nation’s power grid lacks adequate automation. Nigeria’s electricity is generated from hydro and thermal sources, whose transmission lines have been continually subject to vandalism. As such, there has been a longtime failure to detect faults during distribution, adversely impacting power generation forecasting and electricity supply. This situation is why fully modernizing the Nigerian Electricity Supply Industry (NESI) for real-time monitoring and control of distribution systems is vital to achieving a reliable electricity supply. The first part of this series highlighted automation benefits. This part explores the challenges. Challenges Automation comes with several challenges. These challenges include cybersecurity risks, financial implications, and regulatory and workforce gaps. For a country like Nigeria, navigating these challenges necessitates political and economic balancing due to its complex composition. The nation’s institutions, governance structures, and social, political, and economic dimensions are heavily interdependent. Thus, seamless automation may be challenging. Cybersecurity Electricity is an integral part of all modern economies, and as electricity sectors become more digitalized, threats of cyberattacks rise. In 2021, 71% of organizations suffered cyber-attacks, with 44% paying an average cost of $3.43 million as ransom to protect sensitive data. These figures indicate the importance of an appropriate cybersecurity regulatory framework to protect against threats. There are several policies and laws for cybercrime activities in Nigeria, and the primary legislation for cybersecurity is the Cybercrime (Prohibition, Prevention, etcetera) Act 2015. Despite the efforts of the Nigerian government to combat cybercrime, there are still stumbling blocks that limit cyber-attacks, such as infrastructure and inadequate regulatory frameworks. On the former, automating the power system requires responsive incident response centres, cybersecurity training facilities and development centres. Whilst on the latter, relevant regulations must be continually reviewed and updated to address current and emerging cybersecurity threats. Financial costs The capital investment required to implement automation technologies is exorbitant. As noted in Series I, the Transmission Company of Nigeria (TCN) estimated $65 million to automate the national grid with a new SCADA system in 2018. This figure has likely increased. Nigeria’s electricity sector’s costs far exceed its revenues, and the deficit has widened. The Federal Government of Nigeria allocated ₦239 billion to the power sector in 2023, highlighting ₦232,620,744 832 as the capital costs for running the sector. According to the National Bureau of Statistics, the revenue collected by distribution companies in the last quarter of 2023 was ₦202.62 billion. Operational costs are typically 10 times the sector’s revenue or higher in most emerging countries. For instance, Iraq’s total explicit operational costs amounted to $9.3 billion, equivalent to 4.0 per cent of its GDP, with revenues totalling less than 800 million dollars. While similar power sector financial challenges exist in other emerging countries, Nigeria faces particularly substantial financial gaps, as evidenced by its market illiquidity. Regulatory and policy framework Several regulatory overhauls have been implemented to increase liquidity in Nigeria’s power sector. These changes aim to improve financial liquidity, fostering an enabling environment for significant automation in the sector. Among these changes is the approval of the Fifth Bill (No.33), the Devolution of Powers (National Grid System), which amends the 1999 Nigerian Constitution. This amendment, signed by former President Muhammadu Buhari, empowers states to generate, transmit, and distribute electricity in areas covered by the national grid. Furthermore, the Electricity Act 2023 stimulates investments for automation by promoting indigenous capacity in technology for renewable energy sources. This regulatory framework signals Nigeria’s readiness to enhance financial feasibility for full-scale automation. Nevertheless, the efficacy of these initiatives is significantly dependent on their implementation. A phased approach to automation Nigeria’s power systems rely on manual tap changers, leading to increased power outages and reduced system safety. Many transmission and generation stations lack supervisory control, data acquisition (SCADA), and telecommunication systems. Automating the electrical power distribution system, including procuring a new SCADA system and integrating the Internet of Things (IoT) into transmission operations, is crucial to swiftly address power sector issues like power outages and revenue losses. November 30, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Is Nigeria’s electricity supply industry (NESI) embracing automation?– Part I by Omiesam Ibanibo November 24, 2023 Published by Omiesam Ibanibo Nigeria’s electricity supply industry has evolved to tackle various challenges over the last two decades. Schemes such as the Electric Power Sector Reform Act, the Credited Advanced Payment for Metering Implementation (CAPMI) and the Meter Asset Provider (MAP) have anchored this evolution. Despite these efforts, ineffective data capturing, poor tariff collections, and coordination challenges persist. The sector’s absence of system automation constrains the power supply and limits energy transition targets. This limitation negatively impacts grid management and data-backed decision-making processes. Existing schemes A mix of manual and automatic systems controls the Nigerian grid. The electricity supply chain utilises a manual tap changer alongside the NSONG platform, supervisory control, and data acquisition. (SCADA). The Transmission Company of Nigeria (TCN), the utility responsible for transmission and market operation services, announced that it is utilising internal tools and vendor-procured applications to improve market operations. Some of these solutions include upgrading the NSONG platform adoption of SCADA and the Central Data Management System (CDMS). These schemes are discussed respectively below. The NSONG platform promotes the skeletal exchange of information, improving its previous functionality. Before the platform’s upgrade, grid control was primarily done via manual logs and email sending. According to TCN, the platform enables transparency within the electricity grid, facilitating seamless integration among generation companies, distribution companies, and the National Control Centre through the Generator Dispatch Tool (GDT) and Distribution Dispatch Tool (DDT). For SCADA, it is internationally recognised as the best solution for coordination and market data recording. Its implementation is yet to be operationalised due to its significant financial implications. In 2018, TCN estimated the cost of a new SCADA system to be $65 million. As of September 2022, TCN announced that its procurement is still being actively pursued. TCN further promulgated its active work towards enabling SCADA implementation by constructing “two state-of-the-art control centres in Osogbo and Gwagwalada to house SCADA infrastructures“. The Central Data Management System was launched by the federal government (FG) in 2020. In conjunction with the government, Sustainable Energy for All (SE4All) initiated this project under the Nigerian Energy Support Programme (NESP). It is intended to monitor power networks across the country to empower data-driven electrification planning and provide the government, investors and project developers to deliver former President Muhammadu Buhari’s power sector vision 30:30:30 – a target to deliver 30,000 MW of electricity by 2030 with at least 30 % coming from renewable energy. The project is carried out in collaboration with the European Union (EU) and the German government. Thus far, the Ministry of Power announced in 2022 that the project successfully mapped 21 states and the Federal Capital Territory, recoding a satellite mapping of 350,000 settlement clusters with over 2.6 million buildings identified and further noted 50,000 km of 33 KV and 11 KV power distribution lines tracked nationwide. Cumulatively, these schemes led to increased metering penetration and reduced revenue losses to an extent, but they have not effectively addressed data capturing and sector illiquidity. This inefficiency contributes to monthly reconciliatory gaps between the Nigerian Bulk Electricity Trading Plc and the discos. Benefit of automation A verifiable electricity database is integral to developing socioeconomic opportunities. Aside from the numerous benefits like reliable load forecasting, reduction in technical and commercial losses, and enhanced grid monitoring and control, the data can be an engine for sustainable economic growth. Integrating the Internet of Things (IoT) enhances checks and balances, suppressing the likelihood of corruption. IoT devices are designed with critical functionalities such as digitalisation and algorithms that improve power quality and transmission reliability, reduce utilities’ operational costs and boost power distribution efficiency. Power underpins societal development. It provides cross-cutting efficiency and development across all sectors and aspects of life. Thus, automating Nigeria’s power system to ensure sustainability and energy efficiency is crucial for overall advancement November 24, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch The West African Power Pool (WAPP) by Omiesam Ibanibo October 30, 2023 Published by Omiesam Ibanibo Electricity demands in West African countries have rapidly increased over the last decades. However, meeting these demands has been a formidable challenge for the region. The Economic Community of West African States (ECOWAS) estimated electricity demand to double its present levels by 2030 with an average annual growth rate of 6%. This situation is why the ECOWAS heralded the pool of power resources in the region to facilitate cross-border electricity trade. WAPP: a specialised institution? ECOWAS member states established the WAPP to curtail regional power deficits in 2000. By 2006, The ECOWAS Heads of State and Government adopted the Article of Agreement in Niamey, which recognised WAPP as a specialised institution. The ECOWAS Regional Electricity Regulatory Authority (ERERA), in conjunction with the National Association of Regulatory Utility Commissioners (NARUC), was established to develop a functional model on system reliability and electricity market design to provide market operations standards based on the existing national electricity markets within the ECOWAS region. This structure allows member and non-member states to retain regulatory sovereignty over their national grids and cross-border interconnectors. A cursory examination of WAPP’s institutional set-up also reveals this intention. The WAPP was designed to augment and not replace domestic electricity markets and systems. Existing WAPP projects Several inter-country electricity trading have been launched since WAPP’s inception in 2006. Some of these WAPP projects include: Birnin Kebbi (Nigeria) – Niamey (Niger Republic) – Ougadougou (Burkina Faso) – Bemebreke (Benin Republic) 330KV WAPP North Core Transmission Project. 2nd Line 330KV Ikeja West (Nigeria) – Sakete (Benin Republic) Transmission Line. The Organisation of the Development of the River Senegal line connecting Senegal, Mali, and Mauritania to a hydropower plant in Senegal enabled trading from 2002. The Organisation for the Development of the Gambia River linked the Gambia, Guinea, Guinea Bissau, and Senegal. However, these cross-border electricity markets were inefficient due to three primary reasons. First, there were no clear regional market rules. Secondly, electricity supply contracts were not securitised but politicised. Thirdly, the limited reach of the market resulted in more discrepancies between countries engaged in trading and those not. To resolve these discrepancies, WAPP consolidated regional market rules and processes in 2015 to harmonise and launch the regional electricity market (REM) three years later. WAPP: from a Nigerian lens Nigeria’s liberalisation of its electricity market impacts the feasibility of WAPP. Although WAPP has recorded several milestones, such as the synchronism of the interconnected system to advance works on the 225 kV Cote d’Ivoire – Liberia – Sierra Leone – Guinea interconnection project. The Nigerian state governments’ legal authority to create their state electricity laws and markets makes coordination more bureaucratic and complex. The Electricity Act 2021 devolved powers to the states because of the poor coordination of market processes at the federal level. Therefore, advancing a West African regional pool would involve a circle back to central coordination, which is unlikely. Thus, even though the institution has presented its objective as primarily technical rather than political, coordinating market processes for the power pool may become more bureaucratic and complex as states exercise their regulatory autonomy. A West Africa Power Pool is beneficial due to the significant economies of scale advantages. However, achieving WAPP’s infrastructural objective(s), though presented as purely technical, also necessitates political balancing and will from member and non-member states. October 30, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Exploring the Gas-to-Power Value Chain by Omiesam Ibanibo October 5, 2023 Published by Omiesam Ibanibo Natural gas has been heralded as one of the cheapest sources of energy. This information is desirable given Nigeria’s abundant natural gas reserves and the federal government’s Energy Transition Plan that seeks to leverage this commodity to achieve its net-zero carbon emissions by 2060. The enhanced utilisation of natural gas in the evolution of the Nigerian Electricity Supply Industry (‘NESI’) value chain serves as an opportunity for the federal government to: Upscale electricity generation and supply to meet the country’s domestic power needs. Increase its revenue from the reinjection of flared gas into the electricity value chain. Reduce greenhouse gas emissions (GHG). According to the Nigeria Gas Flare Tracker (GFT), in the first six months of 2023, the country flared 138.7 billion standard cubic feet (SCF), losing $485 million in unrealised revenue. The Nigerian Oil Spill Detection and Response Agency (NOSDRA) estimates the country lost $22.9 billion to gas flaring from 2011 to 2021, which is uneconomical. As indicated in the preceding paragraphs, commercialising gas flares yields benefits. For instance, its monetisation can shore up approximately $10 billion annually for the federal government, which can fund the country’s Energy Transition Plan’s $10 billion annual budget. On the other end of the spectrum, the gas-to-power value chain also faces several challenges, one being political misalignment. Gas-to-power value chain: the challenge The gas-to-power is complex due to its highly politicised upstream component in the value chain. The gas-to-power chain starts with the upstream players, gas exploration and production companies, and ends with the generation companies (gencos). In contrast, the NESI value chain starts with the generation companies, then the Transmission Company of Nigeria, distribution companies and the end users. This significant political involvement is due to the federal government’s pursuit to keep domestic gas prices low to protect public interests. However, this situation results in discord between the public and the private sector as private participants aim to maximise profit. An illustrative example is when the federal government cut gas prices from $2.50/MMBtu to $2.18/MMBtu in July 2021 to prevent higher electricity tariffs. This action forced generation companies to cut prices, which led gas producers to lower gas volumes supplied to the local market, thereby resulting in electricity supply shortfalls. Thus, misalignment inadvertently leads gas actors to default on their market obligations, exacerbating the nation’s energy insecurity. Industry experts explain that a compulsory obligation on gas producers by the government to sell a certain percentage of produced gas to legacy power plants at a controlled price, regardless of production and pass-through costs, disincentivises gas producers from complying. Looking Ahead The political, regulatory and commercial stakeholders must synergise to make the gas-to-power value chain work. A unified approach to regulating domestic gas supply in Nigeria is critical to advancing the gas-to-power value chain. Repeatedly, the gas and electricity regulatory regime has disintegrated because of stakeholder’s unwillingness to take cognisance of the affairs outside the formal politics in the National Assembly. Gas unions, such as the Nigerian Gas Association and Nigeria Union of Petroleum and Natural Gas workers, drive the trajectory of the crystallisation of the gas-to-power value chain. Thus, the extensive commercialisation of the gas-to-power value chain hinges on coordination across the value chain. Conclusion Commercialising gas flares can significantly close energy access gaps. However, establishing an electricity market out of the gas-to-power value chain requires political balancing. The gas-and-power industry regulatory regime is dimensional. It requires uniformity between the political, regulatory and commercial players to open up the gas market for competition and improve the overall sector performance of the gas-to-power value chain. October 5, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch The Electricity Act and Private Sector Participation by Omiesam Ibanibo September 15, 2023 Published by Omiesam Ibanibo The Electricity Act (“the Act”) enshrines the liberalisation of the electricity market to allow private sector participation. Section 1 of the Act provides a framework to guide the market’s transition to a purely contract-based competitive electricity market from the previous non-contract-based structure. This liberalisation was done to revolutionise the market’s monopolistic characteristic and disentangle the roadblocks that hinder the influx of private capital into the Nigerian Electricity Supply Chain (NESI). Private sector participation? the benefits Deregulating the market has been heralded by industry experts as the key to revamping the NESI. Private participation in the power industry has recorded numerous benefits in the Global South, including competition, innovation in electricity services and overall sector growth. An illustrative example is China. In China, its state-owned energy producer, the State Power Corporation (SPC) – before it was unbundled into several companies, controlled over seventy (70) per cent of the total generation capacity. However, after deregulating the country’s electricity sector and allowing private sector participation, SPC’s control was reduced to forty (40) per cent. This change led to increased independent power producers (IPPs), which enhanced affordable connectivity and power generation. De-monopolising electricity markets increases competition, which may drive down electricity prices. On the other hand, this begs the question of the challenges that may accompany liberalising the market and how prepared the NESI is to handle them. These potential challenges are discussed below. Private sector participation? “the unknown” Electricity generation cost is volatile in liberalised markets. This volatility is because the market forces of demand and supply determine the cost of electricity and not regulators, which is alarming for a few reasons. One, unlike the consensus that a competitive market reduces electricity prices, the United States electric industry evidenced otherwise. In 2007, the Ameren utility in the U.S. increased its electricity bills by fifty-five per cent for customers, compared to the twenty-six per cent increase noted by Commonwealth Edison customers. Thus, although studies show a link between implementing deregulation policies and electricity price reduction, most studies have shown that such reduction is short-term, noting a reversal to increased prices in the long term. Therefore, deregulation may increase utility prices for you and me, which is worrisome as production costs and other economic factors in Nigeria already diminish the average consumers’ purchasing power. Secondly, the NESI has been subject to a legacy of compounded issues, making the willingness of private participants to invest obscure. The private sector is profit-driven, and the readiness of state actors to tackle NESI’s challenges, such as inadequate infrastructure and regulatory uncertainties, is crucial to ensuring full-scale privatisation for improved reliable electricity. Thus, state governments should consider existing NERC regulations on franchising and third-party investments to guide their market designs in establishing their regulatory markets for easier integration of new market entrants. Leveraging existing regulations would prevent legal hitches and provide a clear pathway for accessing existing infrastructure, thereby enhancing market coordination and preventing abuse of market power by previous monopolistic forces. Way forward The primary purpose of deregulating the power sector is to improve market liquidity. To achieve this improvement, state regulators must resolve institutional issues that may hinder the transition to a competitive electricity market. A foreseeable challenge is a dip in profits of the companies with monopolistic powers as a result of de-monopolising the NESI, which was the case in Argentina during the global economic crisis. This profit dip may lead to friction between existing and prospective private sector entrants. Hence, deregulating the market necessitates structural transformation and synchronisation between private and state actors, with the government playing a more significant role in promoting coordination. The government must develop strategies to compensate current industry players for profitable losses while levelling the playing field for new entrants. Agreeably, liberalising the NESI promotes holistic sector growth. However, state actors must eliminate entry barriers for better implementation of their respective objectives. September 15, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Nigeria’s Mining Sector and its Energy Diversification Agenda by Omiesam Ibanibo August 28, 2023 Published by Omiesam Ibanibo For two reasons, improving the mining sector is vital to Nigeria’s green transition. First, the minerals utilised for manufacturing renewable energy technology, such as lithium and cobalt, are abundant in Nigeria. Second, large-scale production of renewable energy components and raw materials raises global electricity access and accelerates Nigeria’s energy diversification goals. According to the nation’s Renewable Energy and Energy Efficiency Policy 2015, Nigeria targets 30GW of electricity by 2030, with renewable energy contributing 30%. With seven years to 2030, the International Renewable Energy Agency (IRENA) 2022 reported Nigeria’s renewable electricity output at 18.2%. This percentage is still far from the 30 per cent target by 2030, but it is attainable with the right strategies. How will advancing the mining sector accelerate Nigeria’s energy transition plans? Since renewable energy minerals are abundant in Nigeria, the mining sector can manufacture renewable energy technologies to amplify the country’s current initiatives. A robust supply and utilisation of renewable energy components reduces Nigeria’s reliance on imports and makes the transition to renewable energy more sustainable and cheaper. An illustrative example of the impact of supplying renewable energy minerals in accelerating green energy transition is China. China is a major producer of wind turbines and components. By manufacturing these domestically, China increased its renewable energy capacity, diversified its energy mix and increased its economic growth and government revenue, which can be further invested in renewable energy infrastructure and research. The expected trend for energy transition minerals provided by IEA is seen below. Key considerations: How do we ensure environmentally sustainable practices? There are existing laws in Nigeria to ensure environmentally sustainable practices. These laws include the Environmental Impact Assessment Act, which mandates the compulsory conduction of an Environmental Impact Assessment (“EIA”) for any project or activity likely to affect the environment adversely. The assessment guarantees that proposed projects integrate environmental and sustainability issues into development planning. The Act mandates the project’s promoters to submit the EIA report to the National Environmental Standards and Regulations Enforcement Agency for approval. However, this statutory requirement has been criticised as being ineffective. According to industry experts, Nigeria’s environmental safeguards continue to weaken. The requisite assessments are sparsely conducted, and environmentally unfriendly projects progress. An example is the Lower River Niger dredging. In this case, the federal government committed itself to dredging Lower River Nigeria without an impact assessment report as required by the 1992 Act. Upon a cursory examination of the EIA Act, one can presume that a reason for its lack of compliance is its inadequate penalty for defaulters. Per section 60 of the Act, failure to comply with the provisions results in a fine of ₦100,000 or up to five years’ imprisonment for private individuals or between ₦50,000 to ₦100,000 for companies. In addition, the EIA provides for public participation under sections 2 and 24 to ensure inclusivity in decision-making, but this has proved impractical. Opportunities for public participation are usually announced towards or after the project’s commencement. Environmental experts have opined similar dissension with enforcement provisions in the Act, terming the announcements of projects as public relations and not actual involvement. Moreover, the EIA Act does not accord aggrieved members sufficient channels to seek redress, as the only dispute mechanism available is litigation, which is time-consuming and sometimes inadequate. Alternative dispute mechanisms should be explored and adopted to resolve disputes. It is crucial for the relevant stakeholders to uniformly proffer policy-making solutions to upscale renewable energy technologies to bolster clean energy access and foster economic growth. Parallel to this, enforcing and upgrading environmental protection laws should be considered. August 28, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch The Off-grid and On-grid Utilities Tango by Omiesam Ibanibo August 15, 2023 Published by Omiesam Ibanibo Decarbonization has become a global priority. As a result, utilities in the Nigerian electricity supply chain must find innovative ways to transition to low-carbon electricity to achieve improved energy access and net-zero carbon emissions by 2060. Regulatory Overview The Nigerian Electricity Regulatory Commission (NERC) is the primary regulator of the electricity sector. The utilities in the Nigerian electricity value chain are partly owned and operated by the government and private companies. Section 80 and 167 of the Electricity Act (‘the Act’) 2023 mandates NERC to promote renewable sourced electricity and consider technology, financial viability, and impact on tariffs to ensure sustainably, respectively. Alongside this, section 164 of the Act further directs the NERC to develop and publish policies that: 1. simplify the licensing requirements for renewable energy service frameworks; 2. specify the responsibilities of renewable energy service companies in generation, transmission, and distribution activities for energy-generated capacity into the national grid and distribution network; and 3. provide guidelines for issuance on net-metering for roof-top solar PV systems, small wind power per the Act and renewable energy standards on installation, decommissioning and disposal of renewable energy accessories. The Challenge? The regulator is yet to show commitment to the objectives mentioned above. For instance, the NERC is yet to update the 2015 Regulations on Feed-in Tariff for Renewable Energy Sourced Electricity in Nigeria and provide guidelines on the rates that public utilities may charge for electricity generated from renewable per s.168 of the Act. The current regulation only prescribes feed-in tariff rates for the 2016 base year, which is problematic because s.169 of the Act stipulates that public utilities shall not demand a feed-in-tariff for electricity generated from renewable sources unless the billable rate has been approved and published by the NERC in the Federal Government Gazette and the mass media. As such, distribution utilities cannot buy or negotiate Power Purchase Agreements (PPAs) with a renewable energy generator unless they are under the guidelines published by NERC. On the other hand, critics may rebut this observation by highlighting the incentives for renewable energy participation as a signal of the sector’s commitment. Section 166 of the Act mandates the Federal Ministry of Finance to introduce incentives to facilitate the generation and consumption of energy from renewable energy sources. Some of the incentives include: 1. tax exemption: utility companies engaged in generating electricity from renewable energy sources are granted pioneer status (tax exemption) for the first three years, renewable for another two years; 2. duty allowance for imports and exports of renewable machinery and materials; 3. free custom duties for two years on the importation of equipment and materials used in renewable and energy efficiency projects; 4. guaranteed purchase of power generated – the Feed-in Tariff Regulation for Renewable Energy Sourced Electricity directs distribution companies and the Nigerian Bulk Electricity Trading Company to each procure 50% of the total output of a renewable energy plant; and 5. five-year tax exemption for prospective manufacturers of renewable energy machinery from the commencement date of manufacturing, amongst others. Although these initiatives are commendable, the bureaucratic challenges for decentralized energy projects to participate in the electricity market outweigh the incentives. Bureaucratic challenges such as complex licensing and approval processes and sub-optimal political priorities have delayed the seamless integration of off-grid renewable energy. Nigeria generates its electricity through thermal and hydro, resulting in heavy dependence on the oil and gas industry. The oil and gas industry is a dominant sector in Nigeria with influential personalities. Thus, prioritizing the mix of renewable systems to the national grid would result in a dip in profits, and such an outcome may not be ideal. Moreover, the Federal Government of Nigeria, in July 2023, unveiled a policy to propel gas investment of about $18 billion to offset Nigeria’s $1 billion gas legacy debt. Conclusion The power sector is crucial in achieving Nigeria’s decarbonization targets. Therefore, the NERC must take active steps to ensure that the integration of off-grid systems envisaged in the Electricity Act is implemented. August 15, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Biomass: Two Birds with One Stone? by Omiesam Ibanibo August 2, 2023 Published by Omiesam Ibanibo Curbing the environmental impacts of climate change is critical. To ensure a sustainable planet for future generations, curating national climate mitigation efforts to address several socio-economic challenges, such as limited energy access and poor waste management, is imperative. Using Biomass to Generate Energy: The Mechanics Biomass energy is the conversion of waste or plant residuals into more valuable products to generate renewable energy and capture greenhouse gases emitted. This process can also be known as waste valorization. Recycling residual matter combats the release of new carbon because it maintains a close loop. The carbon from biomass is reabsorbed by regrown trees through photosynthesis, unlike fossil fuels that release new carbon into the atmosphere. Amongst the numerous derivatives of biomass, ethanol – a biofuel- is a primary product which can be used as liquid fuels for cooking, pharmaceutical-grade chemical, biodegradable plastics and electricity generation from sugarcane bagasse. In 2021, the Energy Commission of Nigeria unveiled its report on assessing Biofuel and Bio-energy potentials in Nigeria’s Sugar industry. The former Director-General of the ECN highlighted that the detailed biomass resource assessment would identify potential sites for biomass mini-grids throughout the Federation. Although, the communication on the project’s development has been silent since its announcement. Before this announcement, Nigeria launched the National Biofuel Policy and Incentives in 2007, which was to be coordinated by the Ministry of Petroleum and the Nigerian National Petroleum Corporation (NNPC). Nonetheless, the Group Managing Director, Mele Kyari, of the NNPC Limited – through a representative – also acknowledged the ‘self-sufficient’ process of sugarcane utilization for energy generation. Why Sugarcane and Cassava? Sugarcane and cassava are abundant in Nigeria. Converting the biomass waste from their respective produce, bridges the electricity gaps and acts as an asset to alter the poor management of urban and industrial wastes, which is a severe public health issue. Nigeria is a festering ground to landfills and is home to six dump sites in Africa, notably Olusosun. On average, a poor waste management site in Nigeria emits about 491,000 tonnes of methane annually. This is notable because, although CO2 emissions are more significant in the atmosphere than methane, CH4 emissions are 25 times more potent at trapping heat in the atmosphere, according to the US Environmental Protection Agency (EPA). The increased potency of methane scales the warming power of carbon dioxide in the near term, which is incompatible with Nigeria’s Nationally Determined Contributions (NDCs) and energy transition goals. However, biofuel adoption has been criticized for two main reasons, poor return on investments (ROIs) and the energy vs. food crisis. On poor ROIs, biofuels in developed countries have recorded low-profit margins because of high startup costs and extended timelines to recoup ROIs. Also, it has been commonly accepted that the cultivation of sugarcane and cassava for biofuel will incentivize farmers to sacrifice other food crops for biofuel, increasing food prices. These consequences are indeed plausible, but an implementable regulatory policy and institutional framework for biomass will resolve these challenges. For example, tax credits for biofuel producers can level market competition with petroleum products to achieve cost parity. In addition, mandating the Nigerian Electricity Regulatory Commission to reflect the Waste-to-Energy framework in grid assessments and tariffs in line with the National Renewable Energy and Energy Efficiency Policy (NREEEP) which targets 16% renewable energy to the grid by 2030. Biomass is a form of renewable energy that the NNPCL has heralded as an economically viable pathway for electricity generation. Its adoption offers an opportunity for methane reduction in Nigeria’s climate fight and opens an avenue for the nation to have an effective waste management system. August 2, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Is Nigeria Returning to Coal Mining? by Omiesam Ibanibo July 20, 2023 Published by Omiesam Ibanibo Nigeria symbolized its commitment to limiting global warming by launching its thirty-seven-year Energy Transition Plan (ETP). The World Bank estimates that about ninety-one million Nigerians still don’t have access to electricity, indicating Nigeria’s energy poverty. As a result, the President announced a return to coal mining to close energy access gaps; however, this response is insufficient for climate change mitigation. The Bureau of Public Enterprises (BPE) announced the investor call for public bids on the following five blocks in Enugu State: Amasiodo Coal Block; Onyeama Coal Block; Okpara Coal Block; Inyi Coal Block; and AgwasiAzagba Coal Block. Why is Nigeria Returning to Coal Mining? One may interpret Nigeria’s return to coal mining as a sign of a liquidity crisis. The World Bank Poverty Outlook for Nigeria revealed that only 3.7% of the nation’s revenue was unused to service debts. As of June 2023, Nigeria’s inflation records at 22.2%, outpacing wage growth. With these economic indicators, the government does not have the money to fund renewable energy projects to improve electricity access. However, operationalizing coal mining activities is counterproductive to attracting prospective investments to support the ETP’s $410 billion objectives. In the World Energy Transitions Outlook 2023 June editorial, the International Renewable Energy Agency (IRENA) analysis indicated a continuous plummet in investments in Nigeria and other African countries. The IRENA further predicts access to financing to become more constrained due to the unfavourable risk-return profiles of African countries. Nigeria should dredge people-centred approaches such as Just Energy Transition Partnerships (JETPs) to achieve near-zero emissions and bridge the energy access gap. People-Centred Approaches: why JETPs? Just Energy Transition Partnerships is a financing mechanism that combines climate mitigation with energy access. It incorporates blended financing that addresses socioeconomic consequences, enabling Nigeria to achieve low-cost energy access, economic empowerment and industry competitiveness. The objective of a JETP is to allow wealthier nations to fund coal-dependent countries’ transition towards clean energy according to the receiving country’s transition plan. Focusing on increasing house income reduces the dependence on fossil fuels such as charcoal and firewood is preferable to mainstreaming charcoal use to increase energy access. The elasticity between household income and fossil fuels used is apparent. International organizations such as Sustainable Energy For All (SE4All) have endorsed the adoption of JETPs as a technological solution to clean energy transition. On the other hand, JETPs have not been wholly welcomed. Industry experts have objected to its full-scale adoption, concluding JETPs to be narrow. Critics opine that transition designs must be heterogenetic to reflect the diversity of countries’ energy demands, oil and gas dependence and its contribution to GDP, energy level and type of energy needs. Also, the minimal footprint of Africa’s emissions has been emphasized as justification for new fossil fuel energy investments. However, regard must be given to Africa’s minimal past emissions because of its lack of industrialization. The global North has been the most significant emitter because of its heavy fossil-fueled industrial activities. For example, China and the U.S. China is rated the largest emitter of coal-generated carbon, with 10,668 million metric tons emitted in 2020; whilst the U.S. is the primary producer of crude oil. So, if African industries rely on coal and gas for energy generation, Africa’s footprint will inadvertently increase, which is ecologically harmful. Foreign investors have signalled intentions to withdraw support for fossil-reliant projects. While seeking $10 billion annually to fund its ETP, mainstreaming coal use is an investor deterrent and an impediment. Thus, it may leave Nigeria with stranded assets. July 20, 2023 0 comments 0 FacebookTwitterPinterestEmail
