There was a launch of the Nigeria Energy Transition Plan in 2022 aimed at paving the way for the country’s plan of achieving net-zero by 2060. The focus of this plan is to ensure reduction of emissions in five common areas which includes Power, Oil and Gas, Cooking, Transport, and Industry. This plan is applauded for its initiative to transit from fossil fuel sources like coal, oil, and gas to renewables. The economic and industrial impacts of this transition to emerging technologies like hydro, wind, biomass, geothermal, solar and other sources of energy will increase in the next few years.
The evolving paradigm of the generation and transmission of energy will request the power industry, stakeholders and policymakers at every level of government to make critical decisions on adaptation, which will have consequent impacts on the country’s economy. There is already a gradual shift of investments to emerging related areas, including recovery of Co2 and enhancement of efficiency for specific plants. This energy shift will also have effects on the construction, power, manufacturing, and agriculture industries.
Majority of the populace lack access to reliable electricity.
Nigeria power sector has been undergoing various reforms and challenges as it struggles to ensure provision of reliable and sustainable electricity to its citizens. The country has had it rough with insufficient power generation capacity, which has led to regular power outages and low access to electricity for its over 200 million population. Nigeria has massive oil, hydro, gas and solar resources, with an installed generation capacity of 13GW of power from existing plants. Despite that, it only has the capacity to dispatch 4GW, which is inadequate to country’s electricity consumption demand.
Distribution Companies (DisCos) responsible for the distribution of electricity to end-users encounter difficulties associated with billing accuracy, revenue collection, and technical losses that affect their operational ability and efficiency for investment in network improvement. Strategies to aid improvement of energy access in underserved and rural areas include the enhancement of off-grid and mini-grids solutions. Despite these efforts, majority of the populace lack access to affordable and reliable electricity, especially in rural areas. There are also policies like the National Renewable Energy and Energy Efficiency Policy (NREEEP) pursuing the renewable energy initiative.
Electricity Act 2023 to unlock the Nigerian Energy Transition Plan.
A close interconnection exists between the Nigerian Energy Transition Plan and the power sector. This is because the plan highlights the actions and strategies for transiting the energy system of the nation towards more sustainable and cleaner sources. Likewise, the power sector is crucial to the implementation of these changes. Nigeria is keen on addressing energy-related challenges, reducing greenhouse gas emissions, and transitioning to a more diversified energy system. This transition will aid reduction of the carbon footprint of the sector, enhancement of environmental sustainability, and improvement of energy security.
Achievement of the energy transition plan relies on the newly signed Electricity Act 2023 by President Bola Ahmed Tinubu and the constitutional amendment signed by the Former President of Nigeria, Muhammadu Buhari. These Acts will boost all legislations associated with the electricity supply industry. With adequate implementation, the Electricity Act 2023 might be the solution to unlocking and directing the Nigerian Energy Transition Plan in the right path. The Act also dedicates specific provisions to the utilization of renewable energy in the power sector.
Financing the net-zero target requires $1.9 trillion.
Also, the Act makes provisions for the establishment of the National Integrated Electricity Policy and Strategic Implementation Plan, which will cover the utilization of renewable energy in the power sector and ensure creation of subsidies for the stimulation of renewable energy development. The Federal Government’s projects responsible for the finance of the net-zero target will need about $1.9 trillion, majorly to develop power supply infrastructure in the industry. A market-driven approach was adopted by the government as its financing model through public-private partnership (PPP).