Connecting The Dots Unlocking Wind Potential for Sustainable Energy Growth in Africa by admin September 11, 2023 Published by admin This week, the Connecting the Dots podcast features Wangari Muchiri, Director of Africa WindPower, Global Wind Energy Council (GWEC). She joins Emeka Okpukpara to discuss how Wind Energy can be harnessed for sustainable energy growth in Africa. This conversation unravels the possibilities wind energy holds for Africa and how its adoption can address energy deficits, propelling sustainable energy growth in Nigeria and the continent. September 11, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Developing Nigeria’s Carbon Credit Market by Doose Iortyom August 22, 2023 Published by Doose Iortyom A carbon credit is a permit that allows a country, organization or individual to produce a certain amount of carbon emissions. These credits can be traded if the total allowance is not used. Furthermore, it refers to a tradable unit representing one metric ton of carbon dioxide emissions that were either avoided or sequestered from a project. Carbon credit projects encompass forestry, waste-to-energy, renewable projects, afforestation, etcetera. When an individual or a company buys a carbon credit, usually from the government, they gain permission to emit the equivalent ton authorized legally. The carbon market is divided into two fragments: compliance and voluntary. The former is created from regulatory requirements, whilst voluntary markets allow private companies and individuals to purchase carbon credits voluntarily. Globally, carbon credits are gaining traction as a viable response to curtail growing emissions. The Taskforce on Scaling Voluntary Carbon Markets (TSVCM), sponsored by the Institute of International Finance (IIF), estimates that demand for carbon credits could increase by 15 or more by 2030 and up to 100 by 2050. Reports by the World Bank also indicate that more than two-thirds of countries plan to use carbon markets to meet their Nationally Determined Contributions. (NDCs) Countries such as Chile, Ghana, Jordan, Singapore and Vanuatu are already developing digital infrastructure to support their participation in international carbon markets. The advent of industrialization has sprung up several industries and businesses. Most of these businesses and industries contribute heavily to generating C02 Emissions. The World Bank reveals that industries contribute over one-third of direct and indirect global greenhouse gas (GHG) emissions. To control these emissions, the 2015 Paris Agreement had 200 countries endorse the global goal of limiting the rise in average temperatures to 2.0 degrees Celsius above preindustrial levels, and ideally 1.5 degrees. Due to implementing these requirements, businesses and countries are under immense pressure to lower their carbon impact. For some companies, the cost of adopting carbon-reductive technologies can be expensive. For specific industries, the practicality of eliminating fossil fuels is limited. Hence, purchasing carbon credits allows companies to address emissions they cannot eliminate. Additionally, studies have proven that one of the most effective and efficient ways to reduce carbon emissions is to price carbon. This model provides the needed motivation for people to decarbonize. Developing Nigeria’s carbon market holds substantial benefits for the country. According to the African Carbon Markets Initiative’s (ACMI) projections, the West African country can produce up to 30 million carbon credits annually by 2030, which at US$20 per credit would earn Nigeria more than US$500 million annually. These statistics underscore how carbon markets are an incredible opportunity to unlock billions for the climate finance needed to attain Nigeria’s Energy Transition Plan. (ETP) Other benefits include promoting sustainable growth, stimulating economic development and mitigating climate change. Despite this array of opportunities, Nigeria’s exploration of this potential remains low. Nonetheless, Nigeria’s strides towards enhancing its carbon market are noteworthy. In February, Nigeria’s National Council on Climate Change confirmed it was formulating national carbon tax policy plans. This policy gives rights to the government to set a price for emitters to pay for each ton of carbon emissions, consequently generating revenue for the economy whilst aligning the country to its net-zero commitments. Although Nigeria’s emissions are modest, its fast-growing economies, bold development ambitions, and rapidly growing population signify a heightened energy demand in the coming decades. Therefore, developing the Nigerian carbon credit market is critical in ensuring that the continent’s development trajectory aligns with a just energy transition. However, existing policies should be in place. Capacity barriers must be broken to guide businesses and industries on this pathway. In addition, establishing an enabling framework that encourages growth is essential to guarantee a healthy and vibrant carbon market. August 22, 2023 0 comments 0 FacebookTwitterPinterestEmail
Connecting The Dots Stories of Impact on the Nigeria Electrification Project by Doose Iortyom August 17, 2023 Published by Doose Iortyom This episode of Connecting the Dots features Abba Aliyu, Head Project Management Unit (Nigeria Electrification Project) REA. He joins us to share insights on the positive outcomes and challenges from various projects implemented under the Nigeria Electrification Project (NEP). This conversation also delves into real-life accounts of communities and institutions that have experienced transformative changes and improvements through NEP initiatives. Ultimately, this episode reflects on the success and potential of the NEP in shaping Nigeria’s energy and economic landscape. August 17, 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
Power Punch Adopting a Circular Economy for Economic Growth and Sustainability in Nigeria by Doose Iortyom July 19, 2023 Published by Doose Iortyom The United Nations Conference on Trade and Development (UNCTAD) defines a circular economy as an economic model focusing on closing material loops through repair, reuse, recycling, refurbishment and remanufacturing of end-of-life products. Estimates suggest that only 8.6% of the world’s economy is circular. Countries like the Netherlands are leading the pack in adopting circularity as an economic style. The Dutch government has an ambitious project to become a country 100% based on a circular economy by 2050. Other countries of note are Japan, China and Chile. Nigeria faces enormous socio-economic challenges. Recent statistics by the World Bank state that 4 in 10 Nigerians live below the poverty line. Nigeria’s National Bureau of Statistics, in 2022, showed that 133 million Nigerians are multi-dimensional poor. This statistic reflects Nigeria’s economic state and further reiterates the need to explore untapped opportunities with the potential to lift Nigeria out of poverty. Over the years, the circular economy has gained prominence, given its potential to offer helpful solutions to pressing environmental and economic challenges. This concept is no silver bullet but is a viable alternative to solving Nigeria’s economic and sustainability challenges. It is also essential to note the global concern about climate change and its adverse environmental and health effects. Since waste is a core contributor to carbon emissions, adopting a circular economy in Nigeria is crucial for managing waste, checking carbon emissions and creating a sustainable economic system. This assertion is supported by a European Environmental Agency report which states that transforming to a circular economy can reduce carbon emissions. Despite the wealth creation potential and sustainable circular economy methods, Nigeria still wallows in the grimes of a linear economy. This linear economic model is centred around a “take-make-dispose approach, where products are used and disposed of to waste sites. The United Nations predicts India, China, and Nigeria will house half the world’s population by 2050. It is no doubt a large population equals humongous amounts of waste. Exploring circular economy principles in critical sectors of the Nigerian economy, such as agriculture, energy, and manufacturing, principally contribute to reducing waste and air pollution and decreasing carbon emissions. For instance, Fossil fuel generator components can be reused or recycled in the energy sector, particularly in renewable energy systems. The energy sector’s circularity opens secondary markets for the refurbishment and trading of used components. Thus creating sustainable businesses and local jobs that address Nigeria’s unemployment problems. Waste can be transformed into bio-products such as fertilizers, energy generation materials and compounds in the agricultural sector. Converting agricultural waste into new products introduces the principles of reuse, repair, and recycling. As a result, local economies can generate an additional income stream and, in the long term, reduce environmental damage. Likewise, in manufacturing, implementing practices like product life extension, eco-friendly packaging, and green recycling can curtail waste generation and create economic opportunities. Efforts are in motion towards achieving a circular economy in Nigeria. Recent efforts include the establishment of Nigeria’s Circular Economy Working Group. (NCEWG) The main objective of this working group is to support the inclusive green growth of the Nigerian economy. However, many more coherent policies, incentives, meaningful action, awareness and innovation are required. Transitioning to a circular economy is just as crucial for Nigeria. Due to the dwindling revenue, the country’s growing energy needs and the geostrategic importance of responding to climate change, this transition could offer solutions. July 19, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Barriers to Clean Cooking Technology Adoption in Nigeria by Doose Iortyom June 13, 2023 Published by Doose Iortyom Clean cooking technologies have shown great promise in curbing greenhouse emissions and as a pathway to enable Nigeria achieve its Energy Transition Plan. (ETP) However, their adoption in sub-Saharan countries like Nigeria remains low. The “Tracking SDG7 Energy Progress 2023” report predicts that 1.9 billion people will lack clean cooking by 2030, with most in Sub-Saharan Africa. Therefore, we must identify and overcome barriers to adopting these technologies. Nigeria is generously blessed with vast renewable resources, yet, most citizens still use unclean fuels for cooking, especially those in rural areas. According to the National Bureau of Statistics (NBS) survey, 68.3% of all Nigerian households still use solid biomass (firewood and charcoal) for cooking. Besides being highly inefficient, these traditional, open-fire cooking methods produce toxic particulates that cause household air pollution and contribute to an estimated 3.2 million deaths yearly. The main objective of Sustainable Development Goal 7 (SDG7) is to provide access to affordable, reliable, sustainable and modern energy for all. However, this can hardly be achieved unless we understand the limitations and challenges of adopting improved cooking to eliminate them. In Nigeria, the following are some barriers responsible for the low adoption rate of clean cooking technologies: Affordability: This is reportedly one of Nigeria’s most significant barriers to adopting and using clean cooking. According to the National Bureau of Statistics (NBS), 40.1% of Nigerians are classified as poor. As such, many households in Nigeria, especially those in rural areas, are low-income communities. Hence, they are more likely to adopt affordable traditional cooking fuels like charcoal and wood, despite the security and health risks these methods pose. Even if people understand the benefits of adopting clean cooking, affordability is a barrier. Hence, targeted subsidies and innovative financing models can help bridge the affordability gap. Awareness Creation: despite noteworthy actions in this area, there is a considerable need to intensify awareness, especially in rural areas. These people barely have access to conventional information channels like tv and social media, which could result in low awareness in these areas. Thus, there is a need for the government to invest in a lot of in-person and radio awareness, which is more effective in these areas, based on their current realities. Cultural Bottlenecks: This encompasses how people’s existing beliefs affect their willingness to adopt clean cooking technologies. Some people believe that cooking with firewood improves the taste and aroma of the food. In some cases, certain cultures believe that cooking is traditionally a way to keep their ancestry alive. These beliefs are ingrained in their system, and convincing them to adopt better methods is difficult. These people need to be educated on the risks and opportunities of clean cooking to convince them to adopt these methods. Supply Constraints: Supply constraints can hinder the adoption of clean cooking technologies by limiting their existence in certain Nigerian markets, leading to fewer options for consumers and a challenge to access these technologies. In a report by the International Center for Energy, Environment and Development (ICEED) on Expanding Demand for Clean-Cooking in Nigeria, several participants in the focus-group discussions had never even seen an improved cook stove in their local markets. Thus, the government needs to address these issues that cause supply constraints. Our environment and people, especially women and children, have suffered and continue to suffer the consequences of unclean cooking. Eradicating these barriers is vital to improving people’s lives, communities and achieving the ETP. Therefore, the government must intervene, and collaborate with relevant stakeholders and community leaders, to increase investments and actions towards dissolving these barriers. June 13, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Actions Towards a Healthier Planet by Doose Iortyom May 8, 2023 Published by Doose Iortyom Newton’s third law of motion states, “For every action, there is an equal and opposite reaction.” The actions of humans have ridiculed and diminished the planet over centuries. The consequences now affect us, evident through the deteriorating climate and other biological processes. Therefore, there is an urgency to shed more light on actions towards a healthier planet. Scientists worldwide on the intergovernmental panel on climate change have shared that climate models predict the Earth’s global average temperature will rise an additional 4° C (7.2° F) during the 21st Century if greenhouse gas levels continue to rise at present levels. In tackling climate change, several governments have come together under the Paris Agreement to commit to reducing greenhouse gas emissions (GHG). In addition, the United Nations has also called for climate action through its sustainable development goal Thirteen (13). Despite these efforts, the task is to turn these commitments into real and meaningful action, and achieving this will require the participation of every citizen. This is because our lifestyles have a profound impact on our planet. Statistics have shown that household consumption accounts for around two-thirds of global Greenhouse Gas (GHG) emissions which occur through the energy sources we use, the food we eat, the items we buy, our transportation choices, and our waste management methods, amongst others. Hence, we must seek ways to contribute to a healthier planet. The ways to reduce our carbon footprint are feasible but not immediate; however, they add up and make a significant impact in time. For example, reducing car dependency through cycling and walking contributes to reducing GHG emissions in the air. Likewise, opting for public transportation also contributes to plummeting the number of vehicles on the road and reducing the gases emitted and, consequently, air pollution. Planting trees to augment the high deforestation rate due to furniture, charcoal, and paper production is also a much-needed action in the fight against the planet’s depletion. Another way to contribute to a healthier planet is through proper waste management. Irresponsible waste management results in litter and affects our environment causing air and sea pollution. Despite waste being an inevitable byproduct of human life, it can be managed through recycling and reusing waste items that are not recyclable. For instance, plastics like water bottles can be transformed into other useful items, thereby reducing the waste that ends in landfills. Also, minimising energy usage by switching off lights and appliances not used around the home helps preserve energy and reduce footprints. Conversely, opting for cleaner energy sources, like solar, and adopting clean cooking solutions, like liquefied natural gas and biogas, has the potential to reduce emissions. Unfortunately, very few people in Nigeria know about climate change, its effects, and how they, as citizens, can contribute to reducing global carbon footprints. According to Statista, as of 2020, more than six (6) Nigerians out of ten (10) had never heard about climate change. These statistics highlight an awareness gap and a considerable need for everyone to lend their voices to these causes. Speaking up can be done by starting conversations around climate action on social media platforms or by enlightening those within our reach in meaningful climate discussions and actions towards reducing their carbon footprints. Finally, the Nigerian government should prioritise creating more awareness programs on actions towards combating climate change whilst providing enlightenment on those initiatives already in place to catalyse impact and buy-in, as people are better positioned to make sustainable and less harmful environmental choices when informed. May 8, 2023 0 comments 0 FacebookTwitterPinterestEmail
Power Punch Impacts of the New Amendment on the NESI. by Doose Iortyom April 17, 2023 Published by Doose Iortyom In 2023, achieving stable electricity still seems farfetched for Nigeria. According to the World Bank, Nigeria has the world’s most significant energy access deficit. In a bid to improve energy access in the country, the power sector has seen many frameworks, policies, investments, an influx of projects and recently, a new amendment. This article will explore the recent amendment and its impact on the Nigerian Electricity Supply Industry (NESI). On the 17th of March 2023, President Muhammadu Buhari, GCFR, signed a new bill into law that allows “A House of Assembly may make laws for the State with respect to the generation, transmission and distribution of electricity to areas covered by a national grid system within that State.” This new law empowers states to make laws and create frameworks specific to their capabilities and needs in relation to served and underserved areas, unlike in the past, when they were restricted to off-grid or unserved areas. Given the restriction of the state governments in this regard, this amendment is a step in the right direction. One of the significant impacts of this amendment on the NESI is the uprising of state-sponsored financing structures. States can now form their state electricity markets, including laws, policies, and financing mechanisms, which opens up an opportunity for the private sector to get involved and contribute their investments. This development can enhance energy access and increase competition in the industry, resulting in job creation opportunities as states begin to source experienced and capable individuals to manage state power investments. Decentralizing electricity markets allows for much-needed accountability, and this amendment can bring about improved efficiency and transparency. Also, state governments can now be held responsible for supply lapses, which could engender much-needed improvements in the NESI. Another potential impact of this amendment is a tariff hike. States can now effectively engender market-driven tariffs, which permit periodic reviews that sufficiently accommodate and adjust for inflation and exchange rate fluctuation. This development is necessary to address the bane of businesses in Nigeria. Furthermore, this amendment could decrease pressure on the national grid, as states can enact laws on generating, transmitting, and distributing electricity within their territory. Authorization to establish regional or isolated grids that run through their states is imminent, which would reduce pressure and overreliance on the national grid, resulting in a decline in system collapse. This development promotes grid flexibility and a reduction in grid expansion costs. Despite this amendment’s opportunities, there is a risk of overregulation, intrusive compliance requirements, and increased costs due to numerous toll points within the sector. To hedge against these risks, stakeholders like the Nigeria Electricity Regulatory Commission (NERC), National Assembly, Federal Ministry of Power, and all states must chart a path as to how both the state and federal electricity markets will co-exist. Some states have taken the lead in implementing this amendment, with Lagos State and Akwa Ibom State at the forefront. Lagos State had earlier enacted the Lagos State Electric Power Sector Reform Law 2018 and issued the Lagos State Electricity Policy 2021, recording some successes. Considering the array of positive impacts this amendment will have on the NESI, it is evident that this is a much-needed leap and has what it takes to move the electricity market in Nigeria forward. However, critical actors in the power sector must create clear-cut frameworks and networks to facilitate this process and improve energy access. The NESI must take advantage of this amendment and work towards providing reliable and affordable energy to Nigerians. April 17, 2023 0 comments 0 FacebookTwitterPinterestEmail
