Clean Energy on the FGN's Agenda

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Friday, May 07, 2021 / 09:08 AM / By FBNQuest Research / Header Image Credit: USTDA

 

Nigeria's energy challenge has a high cost to the economy and serves as a roadblock to better quality of life for citizens, increased manufacturing and exports. In addition, the absence of constant electrification has contributed to the slowdown of the much-needed industrial take-off the country requires. Based on industry sources, only 57% of Nigerians are connected to the grid. However, 99% of those connected to the grid rely on expensive, fuel or diesel back-up generators to complement the epileptic electricity supply from the national power grid.

 

There is uncertainty around the exact number of back-up generators in the country. Some studies have estimated that Nigeria could have as much as 15,000MW installed capacity of power generators. Other studies have put the installed generator capacity in Lagos alone at around 16,000 MW. These generators range from small 0.5 KVA for a small kiosk to large 75 KVA / 60 kW generators servicing residential estates and industries across the country.

 

According to the World Bank, the economic cost of power shortages in Nigeria is at least USD28bn per annum. In addition, getting access to electricity ranks as one of the major constraints to the private sector.

 

Grid expansion is difficult in rural areas due to non-commercial viability as well as high technical losses. This creates significant opportunities for off-grid alternatives to penetrate the rural economy, thereby improving agricultural output from farms as well as general rural electrification.

 

Solar can provide relatively affordable energy for rural communities across Nigeria. It complements rapid development and reduces the rural–urban drift. Over the past year, some innovative approaches towards boosting socio-economic impact via solar energy have been explored. For instance, the FGN has announced its intent to electrify Nigeria's 104 Unity Schools (i.e. federal government owned secondary schools) and 200 health centres across the country.

 

If implemented properly, schools can accomplish their reading schedule without drawback from power outages. Furthermore, these schools can carry out the practical classes (which are heavily dependent on access to power) in their laboratories with ease.

 

Forward steps towards embracing renewable energy are also being taken in the private sector. Many businesses, especially small companies, are unable to break-even due to the rising cost of electricity. In Abuja, the Jabi Lake Mall solar hybrid power plant has powered the facility, businesses operating within the mall inclusive, over the past 14 months. Actis, an investment firm, is driving this hybrid model with support from the United Nations.

 

Nigeria's latest economic recovery and growth plan has energy access embedded within it. A key provision in the plan is a commitment from the FGN to deliver and maintain 5 million new solar home systems and mini-grids under a 'solar power strategy'. This strategy is expected to support 250,000 new jobs and impact up to 25 million beneficiaries. The plan also supports the upstream value chain by promoting the large-scale assembly of solar components in Nigeria.

 

The World Bank has provided a USD350m facility and the African Development Bank an additional USD200m facility to the Nigerian government for off-grid development as part of the Nigeria Electrification Project (NEP). This investment is expected to leverage over USD81bn in additional funding from the private sector.

 

The FGN targets 30% of national energy to come from renewables by 2030. Investment to boost renewable energy generation would assist with increasing productivity in sectors like agriculture and manufacturing.

 

A better energy mix of non-renewable and green energy will accelerate the process of attaining access to power for all.


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