Power Punch Is Nigeria’s electricity supply industry (NESI) embracing automation?– Part I by omiesam November 24, 2023 written by omiesam Nigeria’s electricity supply industry has evolved to tackle various challenges over the last two decades. Schemes such as the Electric Power Sector Reform Act, the Credited Advanced Payment for Metering Implementation (CAPMI) and the Meter Asset Provider (MAP) have anchored this evolution. Despite these efforts, ineffective data capturing, poor tariff collections, and coordination challenges persist. The sector’s absence of system automation constrains the power supply and limits energy transition targets. This limitation negatively impacts grid management and data-backed decision-making processes. Existing schemes A mix of manual and automatic systems controls the Nigerian grid. The electricity supply chain utilises a manual tap changer alongside the NSONG platform, supervisory control, and data acquisition. (SCADA). The Transmission Company of Nigeria (TCN), the utility responsible for transmission and market operation services, announced that it is utilising internal tools and vendor-procured applications to improve market operations. Some of these solutions include upgrading the NSONG platform adoption of SCADA and the Central Data Management System (CDMS). These schemes are discussed respectively below. The NSONG platform promotes the skeletal exchange of information, improving its previous functionality. Before the platform’s upgrade, grid control was primarily done via manual logs and email sending. According to TCN, the platform enables transparency within the electricity grid, facilitating seamless integration among generation companies, distribution companies, and the National Control Centre through the Generator Dispatch Tool (GDT) and Distribution Dispatch Tool (DDT). For SCADA, it is internationally recognised as the best solution for coordination and market data recording. Its implementation is yet to be operationalised due to its significant financial implications. In 2018, TCN estimated the cost of a new SCADA system to be $65 million. As of September 2022, TCN announced that its procurement is still being actively pursued. TCN further promulgated its active work towards enabling SCADA implementation by constructing “two state-of-the-art control centres in Osogbo and Gwagwalada to house SCADA infrastructures“. The Central Data Management System was launched by the federal government (FG) in 2020. In conjunction with the government, Sustainable Energy for All (SE4All) initiated this project under the Nigerian Energy Support Programme (NESP). It is intended to monitor power networks across the country to empower data-driven electrification planning and provide the government, investors and project developers to deliver former President Muhammadu Buhari’s power sector vision 30:30:30 – a target to deliver 30,000 MW of electricity by 2030 with at least 30 % coming from renewable energy. The project is carried out in collaboration with the European Union (EU) and the German government. Thus far, the Ministry of Power announced in 2022 that the project successfully mapped 21 states and the Federal Capital Territory, recoding a satellite mapping of 350,000 settlement clusters with over 2.6 million buildings identified and further noted 50,000 km of 33 KV and 11 KV power distribution lines tracked nationwide. Cumulatively, these schemes led to increased metering penetration and reduced revenue losses to an extent, but they have not effectively addressed data capturing and sector illiquidity. This inefficiency contributes to monthly reconciliatory gaps between the Nigerian Bulk Electricity Trading Plc and the discos. Benefit of automation A verifiable electricity database is integral to developing socioeconomic opportunities. Aside from the numerous benefits like reliable load forecasting, reduction in technical and commercial losses, and enhanced grid monitoring and control, the data can be an engine for sustainable economic growth. Integrating the Internet of Things (IoT) enhances checks and balances, suppressing the likelihood of corruption. IoT devices are designed with critical functionalities such as digitalisation and algorithms that improve power quality and transmission reliability, reduce utilities’ operational costs and boost power distribution efficiency. Power underpins societal development. It provides cross-cutting efficiency and development across all sectors and aspects of life. Thus, automating Nigeria’s power system to ensure sustainability and energy efficiency is crucial for overall advancement November 24, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch The West African Power Pool (WAPP) by omiesam October 30, 2023 written by omiesam 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 comment 0 FacebookTwitterPinterestEmail
Power Punch Is Ghana’s $550 Billion Energy Transition Plan Overly Ambitious? by davidomata October 19, 2023 written by davidomata Ghana’s recent announcement to shift its net-zero emissions target from 2070 to 2060 reflects a significant step towards combating climate change while fostering economic growth. The Energy Transition Plan, unveiled by President Nana Akufo-Addo, outlines a credible pathway for achieving this goal, focusing on key economic sectors. Current Energy LandscapeGhana boasts an impressive 86% electricity access rate, with approximately 12% of its energy mix derived from renewable sources, one of the best in West Africa. However, the nation grapples with high debt levels, especially within the energy sector, which could challenge the ambitious transition plan. Investment and FundingThe energy transition plan outlines an ambitious $550 billion budget, signalling a substantial opportunity for international investors to engage in sustainable development within Ghana. This financial commitment is integral to achieving the outlined goals and is expected to generate an estimated 400,000 net jobs within the Ghanaian economy. Decarbonization TechnologiesThe plan prioritizes four main decarbonization technologies: renewables, low-carbon hydrogen, battery electric vehicles, and clean cookstoves. These innovations will account for over 90% of the targeted emission reductions by 2060. Emission ProjectionsWithout implementing the plan, Ghana’s emissions will surge from 28 Mt CO2e in 2021 to over 140 Mt in 2050. The bulk of this increase is attributed to the transport sector, driven by population growth, rising GDP per capita, and increased vehicle ownership. Potential ChallengesThe plan’s ambitious targets face potential challenges, particularly the high existing debt levels nationally and within the energy sector. Successfully managing this financial burden will be critical to executing the transition plan effectively. The escalating national debt forecasted for Ghana from 2023 to 2028, projecting an increase of 71.82% and culminating in an estimated peak of $106.19 billion in 2028, presents a significant impediment to the finance mobilization for the energy transition plan. With the debt trajectory showing a persistent upward trend in recent years, allocating resources towards the ambitious energy transition goals could become increasingly challenging. The expanding debt burden implies limited fiscal space, potentially constraining the government’s capacity to allocate substantial funds towards the energy transition plan’s budget of $550 billion. This rising debt profile not only narrows the financial scope for new investments but also raises concerns about servicing existing debt obligations, potentially diverting funds from critical initiatives to achieve the transition targets. Navigating this mounting debt challenge will be crucial in successfully implementing Ghana’s energy transition plan. Conclusion Ghana’s Energy Transition and Investment Plan signifies a bold commitment to combating climate change while advancing economic development. The accelerated timeline from 2070 to 2060 reflects a heightened sense of urgency. However, the nation must strategically navigate financial hurdles to ensure the plan’s success. October 19, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch Exploring the Gas-to-Power Value Chain by omiesam October 5, 2023 written by omiesam Natural gas has been heralded as one of the cheapest sources of energy. This information is desirable given Nigeria’s abundant natural gas reserves and the federal government’s Energy Transition Plan that seeks to leverage this commodity to achieve its net-zero carbon emissions by 2060. The enhanced utilisation of natural gas in the evolution of the Nigerian Electricity Supply Industry (‘NESI’) value chain serves as an opportunity for the federal government to: Upscale electricity generation and supply to meet the country’s domestic power needs. Increase its revenue from the reinjection of flared gas into the electricity value chain. Reduce greenhouse gas emissions (GHG). According to the Nigeria Gas Flare Tracker (GFT), in the first six months of 2023, the country flared 138.7 billion standard cubic feet (SCF), losing $485 million in unrealised revenue. The Nigerian Oil Spill Detection and Response Agency (NOSDRA) estimates the country lost $22.9 billion to gas flaring from 2011 to 2021, which is uneconomical. As indicated in the preceding paragraphs, commercialising gas flares yields benefits. For instance, its monetisation can shore up approximately $10 billion annually for the federal government, which can fund the country’s Energy Transition Plan’s $10 billion annual budget. On the other end of the spectrum, the gas-to-power value chain also faces several challenges, one being political misalignment. Gas-to-power value chain: the challenge The gas-to-power is complex due to its highly politicised upstream component in the value chain. The gas-to-power chain starts with the upstream players, gas exploration and production companies, and ends with the generation companies (gencos). In contrast, the NESI value chain starts with the generation companies, then the Transmission Company of Nigeria, distribution companies and the end users. This significant political involvement is due to the federal government’s pursuit to keep domestic gas prices low to protect public interests. However, this situation results in discord between the public and the private sector as private participants aim to maximise profit. An illustrative example is when the federal government cut gas prices from $2.50/MMBtu to $2.18/MMBtu in July 2021 to prevent higher electricity tariffs. This action forced generation companies to cut prices, which led gas producers to lower gas volumes supplied to the local market, thereby resulting in electricity supply shortfalls. Thus, misalignment inadvertently leads gas actors to default on their market obligations, exacerbating the nation’s energy insecurity. Industry experts explain that a compulsory obligation on gas producers by the government to sell a certain percentage of produced gas to legacy power plants at a controlled price, regardless of production and pass-through costs, disincentivises gas producers from complying. Looking Ahead The political, regulatory and commercial stakeholders must synergise to make the gas-to-power value chain work. A unified approach to regulating domestic gas supply in Nigeria is critical to advancing the gas-to-power value chain. Repeatedly, the gas and electricity regulatory regime has disintegrated because of stakeholder’s unwillingness to take cognisance of the affairs outside the formal politics in the National Assembly. Gas unions, such as the Nigerian Gas Association and Nigeria Union of Petroleum and Natural Gas workers, drive the trajectory of the crystallisation of the gas-to-power value chain. Thus, the extensive commercialisation of the gas-to-power value chain hinges on coordination across the value chain. Conclusion Commercialising gas flares can significantly close energy access gaps. However, establishing an electricity market out of the gas-to-power value chain requires political balancing. The gas-and-power industry regulatory regime is dimensional. It requires uniformity between the political, regulatory and commercial players to open up the gas market for competition and improve the overall sector performance of the gas-to-power value chain. October 5, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch The Role of States in Electricity Generation and Energy Transition by davidomata September 21, 2023 written by davidomata The most recent constitutional amendment, specifically the 1999 Constitution of the Federal Republic of Nigeria (Fifth Alteration) Bill No. 33, 2022 (on the National Grid System – Part I & II, Second Schedule), received unanimous approval from both Chambers of the National Assembly on March 1, 2022. This amendment grants individual states the authority to generate, transmit, and distribute electricity within areas already integrated into the national grid. President Buhari formalized this amendment by affixing his signature on March 17, 2023. This constitutional amendment presents a significant opportunity to enhance the implementation of the national energy transition plan. It provides a means to enhance energy accessibility and leverage the diverse resources available across the states to optimize Nigeria’s energy mix composition. Domestication of the National Energy Transition PlanWhile Nigeria has an established national energy transition plan, it is imperative for individual states to seamlessly integrate and domesticate this plan within their medium and long-term policy frameworks. Each state boasts a distinctive energy landscape with varying renewable energy resources, infrastructural capabilities, and energy consumption patterns. Through a judicious alignment of the national plan with their specific circumstances, states can strategically optimize their transition endeavours and leverage their available resources through several avenues, such as: • Harnessing Abundant Renewable ResourcesNigeria has many renewable energy resources, including solar, wind, hydro, and biomass. States must conduct thorough assessments to identify and capitalize on their indigenous resources. For instance, states in the northern region can tap into the abundant solar potential. Those in the coastal areas can also explore offshore wind and marine energy options. By strategically deploying renewable energy technologies, states can drastically reduce their reliance on fossil fuels and decrease greenhouse gas emissions while electrifying their communities and improving access. • Strengthening Grid InfrastructureA robust and reliable grid infrastructure is the backbone of any successful energy transition. States must invest in upgrading and expanding their transmission and distribution networks to accommodate the increased integration of renewable energy sources. Smart grid technologies, energy storage solutions, and microgrid systems can enhance grid resilience, ensuring a stable and consistent energy supply. • Promoting Energy Efficiency MeasuresImproving energy efficiency is a cornerstone of any sustainable energy strategy. States can implement policies and initiatives to reduce energy wastage in various sectors, including industrial, residential, and commercial. These actions may involve incentivizing energy-efficient technologies, implementing building codes, and encouraging adoption of energy-saving practices. • Encouraging Private Sector ParticipationStates should actively engage with the private sector to attract investments and expertise in renewable energy projects. Public-private partnerships can accelerate the deployment of renewable energy technologies, creating a conducive environment for businesses to thrive while contributing to the state’s energy transition goals. • Fostering Research and InnovationInvesting in research and developing clean energy technologies is paramount to advancing the energy transition. States can establish research centres, collaborate with academic institutions, and incentivize innovation hubs to drive technological advancements in energy generation and renewable energy technologies. • Prioritising Education and AwarenessEducating the public about the benefits of renewable energy and energy efficiency is crucial for garnering support and participation. States can implement awareness campaigns, workshops, and educational programs to empower communities with the knowledge and skills to embrace sustainable energy practices. ConclusionBy capitalizing on this unique opportunity, states have the potential to steer the nation towards a sustainable and prosperous energy future. States can enhance energy generation and efficiency through thorough strategic planning, harnessing local resources, and cultivating innovation. This collaborative effort promises to construct a cleaner and more resilient energy landscape, ensuring a brighter future for future generations. September 21, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch The Electricity Act and Private Sector Participation by omiesam September 15, 2023 written by omiesam The Electricity Act (“the Act”) enshrines the liberalisation of the electricity market to allow private sector participation. Section 1 of the Act provides a framework to guide the market’s transition to a purely contract-based competitive electricity market from the previous non-contract-based structure. This liberalisation was done to revolutionise the market’s monopolistic characteristic and disentangle the roadblocks that hinder the influx of private capital into the Nigerian Electricity Supply Chain (NESI). Private sector participation? the benefits Deregulating the market has been heralded by industry experts as the key to revamping the NESI. Private participation in the power industry has recorded numerous benefits in the Global South, including competition, innovation in electricity services and overall sector growth. An illustrative example is China. In China, its state-owned energy producer, the State Power Corporation (SPC) – before it was unbundled into several companies, controlled over seventy (70) per cent of the total generation capacity. However, after deregulating the country’s electricity sector and allowing private sector participation, SPC’s control was reduced to forty (40) per cent. This change led to increased independent power producers (IPPs), which enhanced affordable connectivity and power generation. De-monopolising electricity markets increases competition, which may drive down electricity prices. On the other hand, this begs the question of the challenges that may accompany liberalising the market and how prepared the NESI is to handle them. These potential challenges are discussed below. Private sector participation? “the unknown” Electricity generation cost is volatile in liberalised markets. This volatility is because the market forces of demand and supply determine the cost of electricity and not regulators, which is alarming for a few reasons. One, unlike the consensus that a competitive market reduces electricity prices, the United States electric industry evidenced otherwise. In 2007, the Ameren utility in the U.S. increased its electricity bills by fifty-five per cent for customers, compared to the twenty-six per cent increase noted by Commonwealth Edison customers. Thus, although studies show a link between implementing deregulation policies and electricity price reduction, most studies have shown that such reduction is short-term, noting a reversal to increased prices in the long term. Therefore, deregulation may increase utility prices for you and me, which is worrisome as production costs and other economic factors in Nigeria already diminish the average consumers’ purchasing power. Secondly, the NESI has been subject to a legacy of compounded issues, making the willingness of private participants to invest obscure. The private sector is profit-driven, and the readiness of state actors to tackle NESI’s challenges, such as inadequate infrastructure and regulatory uncertainties, is crucial to ensuring full-scale privatisation for improved reliable electricity. Thus, state governments should consider existing NERC regulations on franchising and third-party investments to guide their market designs in establishing their regulatory markets for easier integration of new market entrants. Leveraging existing regulations would prevent legal hitches and provide a clear pathway for accessing existing infrastructure, thereby enhancing market coordination and preventing abuse of market power by previous monopolistic forces. Way forward The primary purpose of deregulating the power sector is to improve market liquidity. To achieve this improvement, state regulators must resolve institutional issues that may hinder the transition to a competitive electricity market. A foreseeable challenge is a dip in profits of the companies with monopolistic powers as a result of de-monopolising the NESI, which was the case in Argentina during the global economic crisis. This profit dip may lead to friction between existing and prospective private sector entrants. Hence, deregulating the market necessitates structural transformation and synchronisation between private and state actors, with the government playing a more significant role in promoting coordination. The government must develop strategies to compensate current industry players for profitable losses while levelling the playing field for new entrants. Agreeably, liberalising the NESI promotes holistic sector growth. However, state actors must eliminate entry barriers for better implementation of their respective objectives. September 15, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch Implementing the Electricity Act 2023 by doose September 14, 2023 written by doose The Nigerian power sector has witnessed several attempts by succeeding governments to achieve stability. The most recent attempt is President Bola Ahmed Tinubu’s enactment of the Electricity Act 2023 (EA). The EA marks a crucial step in establishing a comprehensive legal framework for Nigeria’s power industry. Fundamentally, the EA establishes a thorough legal and institutional framework for the Nigerian power industry in electricity generation, transmission, system operation, distribution, supply, trading, and consumer protection. Before this, there was the 1999 attempt by the newly elected democratic government to rehabilitate the Nigerian power sector. This rehabilitation resulted in enacting the Electric Power Sector Reform (EPSRA) Act of 2005, which the new EA repeals. The EPSRA birthed the statutory basis for the privatization of the power sector. A key step in this plan was the setup of the Power Holding Company of Nigeria (PHCN), subsequently unbundled into eighteen successor companies in 2013. Although PHCN was created to address the electricity deficit in the country, electricity access in Nigeria remained one of the lowest in Africa and the world. Some of the challenges of the EPSRA included poor operational performance, a lack of foreign investment, the absence of a long-term power development strategy, no attention to renewable energy exploitation and the inadequate implementation of reforms. These are some challenges the EA is set to address if properly implemented. The EA highlights significant provisions, including cooperation between regulatory commissions, state electricity markets, legal consequences for electricity-related offences, emphasis on clean and sustainable energy, clear regulatory power division, and establishment of an Integrated National Electricity Policy. The efficacy of every legislation lies mainly in its implementation. The ambitious provisions in the Act aim to establish an ideal electricity market in Nigeria. Nevertheless, it can disrupt the Nigerian Electricity Supply Industry (NESI) if ineffective. Therefore, capacity building and education are needed at varying levels of the electricity value chain to ensure success. The creation of state electricity markets will need to be structured cohesively to attract investments. The concern around the technical and financial ability of the various state regulators that will be created needs to be addressed to regulate these markets properly. The daunting question is: Will there be enough resources to do this in the short and medium term? These are some of the dimensions that states need to consider. The reforms in the EA are unlikely to be successful unless there is clarity on what the provisions of the EA are intended to achieve. Such clarity is needed to identify, for example, how the states exercise their powers, how existing national entities and citizens should adapt and respond, what the dangers are, how they should be mitigated, and what obligations. The highlights above spell out a need to close all gaps that hinder the seamless implementation of this Act to avoid misinterpretation, the risk of overregulation, and potential conflicts between the objectives of the Act. Finally, the importance of stakeholder engagement in Implementing the Electricity Act 2023 cannot be overstated. Relevant bodies must convene key actors together, address the existing challenges, and plan the implementation of the provisions of the Act. These actions should also include conducting knowledge-sharing sessions with countries like the United States and India, which have similar jurisdictions and multi-tier regulatory oversight on the energy sector. The EA, like every other legislation, is not perfect. However, The Act is a stride towards achieving a well-functioning power sector that meets the needs of consumers and promotes sustainable growth. September 14, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch Nigeria’s Mining Sector and its Energy Diversification Agenda by omiesam August 28, 2023 written by omiesam For two reasons, improving the mining sector is vital to Nigeria’s green transition. First, the minerals utilised for manufacturing renewable energy technology, such as lithium and cobalt, are abundant in Nigeria. Second, large-scale production of renewable energy components and raw materials raises global electricity access and accelerates Nigeria’s energy diversification goals. According to the nation’s Renewable Energy and Energy Efficiency Policy 2015, Nigeria targets 30GW of electricity by 2030, with renewable energy contributing 30%. With seven years to 2030, the International Renewable Energy Agency (IRENA) 2022 reported Nigeria’s renewable electricity output at 18.2%. This percentage is still far from the 30 per cent target by 2030, but it is attainable with the right strategies. How will advancing the mining sector accelerate Nigeria’s energy transition plans? Since renewable energy minerals are abundant in Nigeria, the mining sector can manufacture renewable energy technologies to amplify the country’s current initiatives. A robust supply and utilisation of renewable energy components reduces Nigeria’s reliance on imports and makes the transition to renewable energy more sustainable and cheaper. An illustrative example of the impact of supplying renewable energy minerals in accelerating green energy transition is China. China is a major producer of wind turbines and components. By manufacturing these domestically, China increased its renewable energy capacity, diversified its energy mix and increased its economic growth and government revenue, which can be further invested in renewable energy infrastructure and research. The expected trend for energy transition minerals provided by IEA is seen below. Key considerations: How do we ensure environmentally sustainable practices? There are existing laws in Nigeria to ensure environmentally sustainable practices. These laws include the Environmental Impact Assessment Act, which mandates the compulsory conduction of an Environmental Impact Assessment (“EIA”) for any project or activity likely to affect the environment adversely. The assessment guarantees that proposed projects integrate environmental and sustainability issues into development planning. The Act mandates the project’s promoters to submit the EIA report to the National Environmental Standards and Regulations Enforcement Agency for approval. However, this statutory requirement has been criticised as being ineffective. According to industry experts, Nigeria’s environmental safeguards continue to weaken. The requisite assessments are sparsely conducted, and environmentally unfriendly projects progress. An example is the Lower River Niger dredging. In this case, the federal government committed itself to dredging Lower River Nigeria without an impact assessment report as required by the 1992 Act. Upon a cursory examination of the EIA Act, one can presume that a reason for its lack of compliance is its inadequate penalty for defaulters. Per section 60 of the Act, failure to comply with the provisions results in a fine of ₦100,000 or up to five years’ imprisonment for private individuals or between ₦50,000 to ₦100,000 for companies. In addition, the EIA provides for public participation under sections 2 and 24 to ensure inclusivity in decision-making, but this has proved impractical. Opportunities for public participation are usually announced towards or after the project’s commencement. Environmental experts have opined similar dissension with enforcement provisions in the Act, terming the announcements of projects as public relations and not actual involvement. Moreover, the EIA Act does not accord aggrieved members sufficient channels to seek redress, as the only dispute mechanism available is litigation, which is time-consuming and sometimes inadequate. Alternative dispute mechanisms should be explored and adopted to resolve disputes. It is crucial for the relevant stakeholders to uniformly proffer policy-making solutions to upscale renewable energy technologies to bolster clean energy access and foster economic growth. Parallel to this, enforcing and upgrading environmental protection laws should be considered. August 28, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch Developing Nigeria’s Carbon Credit Market by doose August 22, 2023 written by doose 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 comment 0 FacebookTwitterPinterestEmail
Power Punch The Off-grid and On-grid Utilities Tango by omiesam August 15, 2023 written by omiesam 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 comment 0 FacebookTwitterPinterestEmail
