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
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
Connecting The Dots Enhancing Energy Reliability through Storage Technologies by Doose Iortyom February 29, 2024 Published by Doose Iortyom The imperative for clean energy and concerns about the capacity and resilience of energy grids have heightened the interest in energy storage solutions. These technologies are pivotal in bridging the gap between intermittent renewable energy generation and consistent power supply. This episode features Julia Souder, Chief Executive Officer of Long Duration Energy Storage Council. She joins us to discuss emerging technologies in energy storage and how these technologies promote energy reliability and increase the efficiency of grids worldwide. The conversation also suggests policy recommendations for the Nigerian market. February 29, 2024 0 comments 0 FacebookTwitterPinterestEmail
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 COP 28 FOCUS: Beyond the Pledges by Doose Iortyom December 19, 2023 Published by Doose Iortyom The United Nations Environmental Programme’s (UNEP) latest emissions gap report reveals an alarming surge in global average temperatures. In September 2023, temperatures were 1.8°C above pre-industrial levels. In light of these findings, the 28th edition of the Climate Change Conference of Parties (COP) assumes unparalleled significance. These statistics also indicate an imperative for nations to not only make commitments but, more critically, to implement them swiftly. Annually convened, the Climate Change Conference of Parties (COP) re-evaluates climate commitments, ensuring nations progress towards net-zero targets. A core point of COP is the commitments and initiatives that enable progress on a just, equitable and sustainable energy transition. This approach is crucial to drive down the impacts of climate change. Reasonably, Nigeria’s participation in COP28, led by President Bola Ahmed Tinubu, underscores commitments to end gas flaring, reduce carbon footprint and commit not just to an energy mix but an eco-friendly future driven by sustainable energy sources to turn Nigeria into an investment-friendly environment for the carbon market investments. Despite these commitments, the pivotal task is to turn these pledges into productive actions. Hence, a focal point of COP28 is to examine implementation through the inaugural Global Stocktake. The global Stocktake was designed under the Paris Agreement to assess our global response to the climate crisis and chart a better way forward. Scheduled every five years, the Stocktake is intended to inform the next round of nationally determined contributions (NDCs) to be put forward by 2025. The objective of the Stocktake is to aid policymakers and stakeholders in strengthening their climate policies and commitments in their next round of NDCs, paving the way for expedited action. The success of COP28 depends largely on the effective mechanisms that monitor progress and ensure adherence. For Nigeria, a significant gap remains in advancing the green transition. The Nigeria Energy Transition Plan posits that Nigeria will spend $410 billion above business-as-usual spending, which translates to about $10 billion annually, to support its 2060 Net-Zero goal. Clearly, finance is a critical part of an energy transition; this informed the historic launch and operationalization of the loss and damage fund to cater to vulnerable African Communities like the Niger-delta regions. Nigeria must position itself to access these funds. The Nigerian government must employ different instruments such as climate bonds, public-private partnerships, and mechanisms that incentivize sustainable investments. Adaptation and resilience strategies are also crucial components that must be explored to support the green transition agenda. In addition, actualizing these commitments demands investments in sustainable technologies. COP28 emphasizes the significant role of information and communication technologies (ICTs) in early warning systems, monitoring and adapting to climate change, and mitigation strategies, including increasing energy efficiency, creating green networks, and creating circular economies. Against this backdrop, Nigeria must explore incentives and partnerships that promote developing and deploying green technologies on a global scale. Lastly, turning these commitments into real and meaningful action will require the participation of every citizen. This is because our lifestyles have a profound impact on our planet. Efforts should be intensified towards facilitating knowledge exchange and support systems to empower vulnerable regions in building resilience. Also, emphasizing the importance of environmental education urges nations to integrate sustainability into curricula and engage communities in climate-related initiatives. In conclusion, COP28 marks a crucial juncture where nations must move beyond pledges into tangible, transformative actions. Transparency, stakeholder engagement, technological innovation, finance, adaptation, and public awareness constitute the bedrock for successful implementation. The conference’s impact will be measured by the transformative steps taken to secure a sustainable future for generations ahead. December 19, 2023 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
Power Punch Clean Cooking and the Energy Transition Plan by David Omata December 13, 2023 Published by David Omata The Nigerian Energy Transition Plan (ETP) encompasses five key sectors: power, transport, oil and gas, cooking, and industry. While power often dominates discussions around the ETP, it is essential to note the significance of the cooking sector, which accounts for approximately 22% of Nigeria’s total greenhouse gas emissions, emitting around 40 million metric tons of CO2 in 2020. Sadly, an alarming 87% of the Nigerian population, totalling 175 million individuals, lack access to clean cooking facilities, resulting in severe environmental and health consequences, particularly for women and children. Health Impacts and Environmental Consequences The United Nations reported that in 2021, Nigeria had the highest number of child deaths globally due to pollution-related pneumonia, reaching nearly 70 thousand cases. According to UNICEF, 40% of these deaths are due to air pollution caused by the combustion of solid cooking fuels within households. Decarbonization Strategy Recognizing the urgency of addressing this issue, the Nigerian Energy Transition Plan has outlined a comprehensive strategy to decarbonize the cooking sector by 2050. The targets include transitioning urban dwellings to 95% electric stoves and 5% efficient wood stoves by 2050, rural dwellings to 57% electric stoves, 22% efficient wood stoves, 20% biogas, and 1% LPG by 2050, and commercial dwellings to 85% electric stoves, 10% efficient wood stoves, and 5% biogas by 2050. Key Components of the Decarbonization Strategy The pivotal elements of the strategy involve a shift from traditional firewood, charcoal, and kerosene to Liquefied Petroleum Gas (LPG) until 2030, followed by the adoption of efficient wood stoves, electrification, and biogas, particularly in rural areas. Given its relevance across household categories and Nigeria’s abundant natural gas resources, LPG is highlighted as a crucial transitional fuel. Post-2030 Focus on Carbon-Neutral Technologies Post-2030, the emphasis shifts to carbon-neutral technologies such as electric cookstoves for grid-connected households and biogas for rural areas relying on off-grid electricity sources. The transition is expected to significantly reduce energy needs as more efficient technologies replace inefficient firewood stoves. Challenges and Accountability Despite the plan’s feasibility, some challenges need to be addressed. One instance is the misappropriation of funds in a past initiative. In 2014, the Federal Executive Council approved 9.2 billion Naira to procure 750,000 stoves and 18,000 Wonder Bags to distribute to rural women. Regrettably, only 45,000 clean cookstoves were provided, and a mere 15% of the approved funds were released to the contractor, raising concerns about financial mismanagement. RecommendationTo ensure the success of clean cooking projects under the energy transition plan, stringent monitoring of associated funds is imperative. Learning from past experiences, the Nigerian government must institute transparent mechanisms and strict accountability measures to safeguard funds allocated to these critical initiatives. Only through responsible governance and rigorous oversight can the laudable strategies outlined in the Energy Transition Plan manifest into tangible and impactful solutions for the Nigerian population, addressing both environmental concerns and public health challenges. December 13, 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
African Focus How Much can Mini-grids contribute to the African Energy Transition Plan? by David Omata November 20, 2023 Published by David Omata In a press release from the World Bank on the 27th of September 2022, it was reported that solar mini-grids have the potential to provide uninterrupted electricity to over 500 million people in unpowered and unserved communities by 2030. Today, there are about 750 million people without access to electricity, and more than 50 per cent of them live in sub-Saharan Africa. In a recent interview, the practice manager for the World Bank’s Energy Sector Management Assistance Programme (ESMAP) spoke on how Africa can leverage private finance and mini-grid technology to bridge the power access gap. However, he emphasized the need to have more sustainable policies that would drive the mini-grids across Africa as the current policies, if not changed, would keep at least 670 million people without access to electricity by 2030. He added that the current pace of electrification on the continent is not fast enough. While Mini-grids have been applauded as crucial in accelerating access, they cost about $0.4/KWh, which is higher than the $0.16 average cost of electricity globally in terms of production cost. In a recent study undertaken by Nextier’s technical associate along with other researchers from Ghana on the profitability of renewable energy sources in the country, it showed that while the levelized cost of energy (LCOE) for a solar PV project is 2.34/KWh. At the same time, the national tariff for electricity is 1 GHC/Kwh. Considering that solar PV is currently the most affordable among renewable energy sources, this calls for concern about the ability of the communities where these mini-grids are connected to pay the associated tariffs. According to the Mini Grids for Half a Billion People Handbook, the production cost currently is high. Still, it is projected to come down to about $0.2 by 2030 if all the necessary measures are put in place to drive the mini-grids. The Nigeria’s Energy Transition Plan established a target of 7GW for mini-grid generation by 2050. However, given the existing state of the sector and the growth in the capacity of mini-grids nationwide over time, this objective is nearly impossible to reach. The sustainability has been called into doubt because, Aside from Husk Power Systems, no other African developer of mini-grids has been able to break even or turn a profit, even though some of them have been in business for roughly ten years. Several studies have demonstrated that customers’ ability and willingness to pay is high, and Husk Power Systems has distinguished itself from other mini-grids by achieving corporate profitability. Early-stage businesses find it extremely difficult to raise capital to advance beyond grant or private equity-backed pilot stages despite the fact that their services are reliable and predictable. The sustainability and scalability of mini-grids in Africa will require targeted interventions. First, large-scale, long-term loans at low-interest rates are crucial. As infrastructure initiatives, mini-grids should receive funding appropriate to their significance. De-risking instruments, patient debt, and equity capital are essential to luring semi-commercial and commercial lenders. Secondly, a concerted effort is needed to empower communities through business training and asset finance. Relying solely on energy for lighting is insufficient to ensure the economic viability of mini-grids. Elevating local incomes through productive use training and micro-finance or implementing cross-subsidization of energy costs will be pivotal in making energy accessible to the most vulnerable segments of society. In conclusion, mini-grids hold the key to unlocking Africa’s energy potential and propelling the continent towards a sustainable future. This feat can be achieved by adopting a multi-pronged approach that encompasses policy reforms, strategic investments, and community empowerment. We can bridge the power access gap and usher in an era of inclusive and reliable electricity for all. The time to act is now, for a brighter, more electrified Africa awaits. November 20, 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
