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
