The International Renewable Energy Agency (IRENA) have announced that Nigeria is the highest premium motor spirit (PMS) and diesel generator importer in Africa. The agency revealed this in a new report that was developed in collaboration with the Energy Commission of Nigeria (ECN) and titled “Renewable Energy Roadmap: Nigeria.” This report revealed that natural gas power stations dominate 86 percent of Nigeria’s power grid generation while large hydropower plants take 14 percent. With this setup, however, unavailability of gas, machine breakdowns, seasonal water shortages and limited grid capacities have severely restricted the operational performance of these power plants.
In turn, this has affected power supply to the nation. Because of these power shortages, many households and businesses have resorted to self-power generation by using diesel and gasoline generator sets as a backup. According to IRENA, 84 percent of urban households use backup power supply systems such as fossil diesel or gasoline generators. Also, 86 percent of the companies in Nigeria own or share a generator. Also, the report highlights the fact that small and medium-sized enterprises (SMEs) and households spend between two and three times more on kerosene, diesel and petrol than they do on electricity from the national grid.
Country’s power sector needs financing to achieve constant power supply.
As the country struggles with access to power supply, stakeholders in the sector insist that alongside other challenges, lack of financing is a major issue that needs to be tackled to power the country for its over 200 million people. The report noted that the Nigerian power sector will require substantially more investments to achieve a constant power supply. “In terms of improving electricity access, around $34.5 billion in total investment will be required to provide electricity access to all households by 2030,” the report says.
The Transmission Company of Nigeria (TCN) suggests that the rehabilitation and expansion of the grid will require an annual investment of $1 billion for the next ten years, with a total of $10 billion. In total, about $45 billion will be needed to properly finance the power sector in Nigeria to be able to supply constant power supply to the populace. IRENA’s position in the report is that since there is no proper financing for the sector, the people have suffered from lack of constant power supply. To mitigate this issue, they buy electricity generators as backup.
Nigeria will gain much from pivoting to renewable energy.
According to IRENA, the low rate of power infrastructure and capacity in Nigeria, provides a context for a paradigm shift towards renewable energy. The agency says that Nigeria has much to gain from pivoting towards domestic renewable energy sources in place of domestic fossil fuels. The agency further revealed in the report that global fossil fuel employment may decrease by 80 percent in a 2° C scenario that is compliant with the Paris Agreement while renewable-based employment could increase by five times.
IRENA urges the government to nurture local development of abundant renewable energy resources. This would potentially spur local innovative renewable energy champions in such a situation. In turn, this would enable the creation of local jobs and spin-off industries. According to the roadmap contained in the report, natural gas, other renewables and hydropower constitute the remainder of Nigeria’s primary energy requirement. These are mostly used in the power sector. “The low penetration of variable renewables such as wind and solar shows the opportunity that lies in integrating them in the power sector given the substantial cost reductions of the technologies in recent years and the enormous natural resource that Nigeria has, especially for solar power,” the report states.
Some power projects are currently being carried out in Nigeria.
A few of the power projects being executed in Nigeria are also highlighted in the report. The World Bank is financing a $468 million International Development Association credit for the Nigerian Electricity Transmission Access Project to support the development of Nigeria’s transmission system. Also, the African Development Bank (AfDB) is working with the country on a $410 million transmission project and has pledged to invest an additional $200 million through the Rural Electrification Agency (REA) to expand electricity access in the country. Finally, there is the Presidential Power Initiative with Germany’s Siemens AG for a three-phase electrification project, which is aimed at increasing Nigeria’s power generation to 25,000 megawatts (MW). This amounts to N1.15 trillion, around US $3.8 billion as of 2020.
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