Abstract
The significance of a stable and efficient electricity supply cannot be overstated for the progress and prosperity of any economy. Nigeria, facing challenges with its national grid, experiences frequent disruptions in electricity generation, negatively impacting economic and developmental activities across various sectors. This article explores Nigeria’s energy strategies, highlighting the reliance on non-renewable sources and their effects. It further emphasizes the role of energy provision in poverty alleviation and the global initiative of the Sustainable Development Goals, especially SDG 7. In doing this, renewable energy is found to be a viable tool for addressing the recurring energy deficit in Nigeria. Thus, the shift towards renewable energy sources is discussed, emphasizing its role not only as a sustainable source of energy but as a tool to mitigate climate change and reduce greenhouse gas emissions. The paper, at the same time, interrogates the role of the Electricity Act 2023 as milestone legislation in fostering renewable electricity development in Nigeria. Through a doctrinal methodology, the article evaluates the provisions of the Act, identifies challenges, and offers recommendations to address barriers to renewable energy development. Conclusively, the article aims to contribute to the discourse on renewable energy in Nigeria and facilitate an upbeat assessment of the Electricity Act’s role in driving a sustainable energy transition.
The significance of electricity stability and efficiency cannot be overstated, especially when it comes to the progress and prosperity of any economy. Its utilization is indispensable across all sectors of the economy, making uninterrupted energy supply imperative for the smooth operations of businesses and the development of any country. However, Nigeria continues to encounter challenges with its national grid, facing incessant collapse every now and then. Consequently, electricity generation by the country’s power generation companies (GenCos) has been significantly impacted, leading to disruptions in production activities across various sectors. This insufficient power generation by electricity generation companies (GenCos) adversely affects production activities across various sectors. In fact, the sector has continued to be bedeviled by many shortcomings that have denied many Nigerians access to electricity. That is about 85 million Nigerians who do not have access to grid electricity. This represents 43% of the country’s population, making Nigeria the world’s most significant energy access deficit.
As highlighted in the extensive global research, particularly in the 1987 Brundtland Report by the World Commission on Environment and Development (WCED), the inadequate power supply directly contributes to Nigeria’s high poverty rate, highlighting the crucial role of energy provision in poverty alleviation, particularly in developing nations.
As Nigeria’s energy strategies suffer from poor maintenance and lack sustainability despite being a significant exporter of fossil fuels and heavily relying on non-renewable energy sources like petroleum, coal, and gas, it has also continued to suffer adverse environmental issues such as acid rain and the widespread problem of global warming, now recognized as climate change.
To address the persistent issue of unstable power supply, the United Nations introduced Sustainable Development Goal 7, aiming to ensure universal access to affordable, reliable, sustainable, and modern energy for all, and that is where renewable energy comes in.
Renewable energy is imperative to mitigate the stratospheric negative ramifications of climate change and has spurred developing countries like Nigeria to prioritize the reduction of greenhouse gas emissions. This drive necessitates a transition from carbon-intensive fossil fuel energy to renewable energy alternatives. The enactment of the Electricity Act 2023, signed into law by President Bola Ahmed Tinubu on June 9, 2023, emerges as a significant milestone in fostering the development of renewable electricity in Nigeria. Through its provisions, the Act holds the potential to propel Nigeria to the forefront of decarbonization and energy transition
This paper aims to provide a comprehensive understanding of the Electricity Act and its provisions concerning renewable energy in Nigeria. It seeks to facilitate an upbeat assessment of the Act while critically evaluating its role in addressing barriers to the development of renewable energy. By delving into the intricacies of the Act and its implications, this piece endeavours to contribute to the discourse surrounding renewable energy development in Nigeria.
According to the 2015 National Renewable Energy and Energy Efficiency Policy (NREEEP), renewable energy refers to energy obtained from energy sources whose utilization does not result in the depletion of the earth’s resources. Renewable energy also includes energy sources and technologies that have minimal environmental impacts, such as less intrusive hydroelectricity and certain biomass combustion. These sources of energy usually include solar energy, wind, biomass, small and medium hydro, geothermal, tide, and wave energy.
Renewable energy, often referred to as clean energy, is derived from naturally replenished sources or processes. In contrast, non-renewable energy sources, often labelled as dirty energy, are finite in quantity. While renewable energy is sometimes perceived as a new technology, it has been utilized worldwide for various purposes, such as transportation and electricity generation, for centuries. Despite Nigeria’s abundance of renewable energy sources, they remain largely untapped. However, recent developments indicate a gradual shift towards embracing renewable energy sources in the Nigerian power sector, aiming to reduce reliance on fossil fuels and mitigate associated environmental pollution and degradation.
Renewable energy, sourced from replenishable natural resources, offers a promising avenue for sustainable electricity generation. Among the diverse array of renewable energy options available, several stand out for their potential to revolutionize Nigeria’s energy landscape:
Wind power, harnessed through towering turbines, holds immense promise, especially along Nigeria’s coastal regions and northern borders. These turbines, resembling modern-day windmills, leverage the kinetic energy of wind to drive generators, thereby contributing clean electricity to the national grid. With wind speeds averaging between 4.0 m/s near the coast and 7.0 m/s in the northern regions, Nigeria possesses vast untapped potential for wind energy development.
Nigeria’s abundant sunlight presents a golden opportunity for solar power generation. With solar irradiance levels averaging 5.535 KWh/m2 and an annual incident solar energy of 1831.06 kWh, the country receives ample solar radiation throughout the year. Photovoltaic (PV) systems and solar thermal technologies can harness this solar energy, offering a decentralized and environmentally friendly solution to energy needs, particularly in rural and off-grid areas.
Nigeria’s extensive network of rivers and waterfalls provides a natural bounty for hydroelectric power generation. Through strategically located dams and hydroelectric power stations like Kainji Dam and Jebba Dam, the country taps into the gravitational force of flowing water to spin turbines and generate electricity. This reliable and renewable energy source has long been a cornerstone of Nigeria’s electricity production infrastructure.
Biomass, derived from organic waste materials, offers a carbon-neutral alternative to traditional fossil fuels. While biomass has historically played a significant role in Nigeria’s energy mix, challenges such as drought and human activities have impacted its viability. Nonetheless, innovative technologies for converting biomass into energy, including burning, fermentation, and bacterial decay, hold promise for sustainable electricity generation.
In addition to these primary sources, Nigeria also has potential in geothermal and tidal energy, tapping into the natural heat below the earth’s surface and the ebb and flow of ocean tides, respectively. By embracing and expanding the utilization of these renewable energy sources, Nigeria can enhance energy security, promote economic development, and mitigate the environmental impacts of traditional energy sources.
Renewable energy holds significant promise for Nigeria, offering numerous benefits. Firstly, it provides a pathway to environmental conservation by reducing pollution associated with non-renewable energy sources, thereby safeguarding public health. Secondly, embracing renewable energy drives economic growth by stimulating domestic industries, creating job opportunities, and lifting communities out of poverty. Thirdly, it enhances energy security by diversifying the energy mix and reducing reliance on finite fossil fuels, thereby mitigating risks associated with supply disruptions. Additionally, renewable energy ensures sustainable resource utilization, offering an infinite and eco-friendly energy supply without depleting natural resources. Lastly, the adoption of renewable energy technologies facilitates rural development by providing access to reliable electricity and supporting the deployment of essential services, empowering rural communities.
The regulation of renewable energy in Nigeria has always been governed by a series of legislations and policies rather than a single comprehensive document. These include:
The ESPRA was enacted in response to changes in the power sector. Pursuant to the National Electric Power Policy of 2001, the ESPRA brought significant changes to Nigeria’s power sector. Notably, it led to the privatization of the power sector and the establishment of the Nigerian Electricity Regulatory Commission (NERC). Section 88(1) of the Act mandates the establishment of a Rural Electrification Agency, which is tasked with establishing a fund to stimulate innovative approaches to rural electrification, potentially including renewable energy sources. Additionally, under section 96, NERC has the authority to make regulations to give effect to the provisions of the Act. In line with this, NERC has enacted regulations such as the Feed-in Tariff for Renewable Energy Sourced Electricity in Nigeria (2015) and the Mini-grid Regulations (2017) to promote renewable energy generation and encourage private sector participation. As it is today, the ESPRA has been repealed by the Electricity Act 2023.
This Act requires public and private entities to conduct environmental impact assessments for projects likely to have significant effects on the environment, including power projects. Power developers intending to utilize renewable energy sources for power generation must register their projects with the Federal Ministry of Environment for an environmental impact assessment, as mandated by section 2 of the Act.
The Nigerian Electricity Management Services Authority Act of 2015 established the National Electricity Management Services Authority (NEMSA). NEMSA’s mandate includes enforcing technical standards and regulations, conducting technical inspections, testing, and certifying all electrical installations, meters, and instruments. These functions are aimed at ensuring the efficient production and delivery of safe, reliable, and sustainable electricity supply while guaranteeing the safety of lives and property in Nigeria’s electricity sector.
The National Electric Power Policy (NEPP), introduced by the Electric Power Implementation Committee, laid the groundwork for power sector reforms in Nigeria. It served as a precursor to the Electric Power Sector Reform Act and facilitated most of the changes associated with the EPSR Act.
Geared towards optimal utilization of the nation’s energy resources for energy security and sustainability, the National Energy Policy outlines strategies, objectives, and plans to harness Nigeria’s abundant renewable energy sources for sustainable energy access.
The Renewable Energy Master Plan (REMP) sets out a roadmap for addressing key development challenges in Nigeria’s electricity market through the utilization of renewable energy. It identifies hydropower, solar energy, ocean energy, and tidal energy, among others, as relevant to achieving sustainable energy goals. The plan recommends establishing a Renewable Energy Fund and a National Renewable Energy Agency to address institutional leadership gaps.
The Renewable Electricity Policy Guidelines express the Federal Government’s aims and objectives for promoting access to viable energy sources. These guidelines provide a framework to integrate renewable energy sources into the energy technology sphere, aiming to improve electricity supply reliability and grid stability.
This program primarily focuses on utilizing all forms of renewable energy sources for electricity generation. It assesses potential gaps, technical aspects, financial implications, and development targets for renewable energy technologies and applications.
Approved by the Federal Executive Council, this policy aims to foster access to modern, reliable, and clean energy resources. It recognizes hydropower, biomass, solar, and wind energy as viable renewable sources and provides strategies to leverage these sources for energy security and a reliable energy delivery system in Nigeria.
Various obstacles have challenged renewable energy development in Nigeria. One major hurdle is the limited infrastructure, which includes insufficient transmission networks and storage facilities, hindering the effective utilization of renewable sources like solar and wind power.
Again, financing constraints pose significant barriers as well, characterized by high upfront costs and limited access to financing options, particularly for smaller developers and rural communities.
Notworthily, policy and regulatory uncertainty exacerbate the situation, as the inconsistent implementation of laws creates an environment of ambiguity for investors, deterring long-term commitments and impeding sector growth.
Additionally, technical and technological challenges, such as a lack of local expertise and dependency on foreign resources, further hinder progress.
Finally, environmental concerns, market dynamics favouring fossil fuels, and limited public awareness and acceptance of renewable energy technologies compound the challenges, highlighting the need for comprehensive strategies to address these barriers and promote sustainable energy transition in Nigeria.
The Electricity Act of 2023 places significant emphasis on advancing renewable energy integration within Nigeria’s energy framework, as evident from its overarching objective highlighted in the long title. The preliminary sections of the Act are dedicated to establishing an enabling environment conducive to the optimal development of renewable energy. Specifically, it grants the Minister for Power the authority to formulate policy directives aimed at nurturing the renewable energy sector. Additionally, the Act empowers the Nigerian Electricity Regulatory Commission (NERC) to promote the growth of renewable electricity actively. Furthermore, the Act introduces various financial measures, such as a rural fund for renewable energy projects, feed-in tariffs, the N-HYPPADEC, and a renewable purchase obligation, to facilitate the advancement of renewable energy. These provisions will be examined in detail.
Interestingly, the Act articulates its overarching goal of supporting electricity generation from diverse renewable energy sources. It seeks to establish a regulatory framework conducive to renewable energy development by addressing existing barriers and promoting indigenous technology capacity in the sector. Recognizing the lack of public awareness regarding the benefits of renewable energy, the Act also emphasizes the importance of public education initiatives to enhance investor confidence and promote sectoral growth.
Specific provisions relating to Renewable Energy in the Act
An important provision of the Act is the authorization of the National Integrated Electric Policy and Strategy Implementation Plan (NIEPSIP), which is aimed at driving renewable energy development. This policy framework, mandated by Section 3 of the Act, outlines strategies for optimizing the utilization of multiple energy sources, including renewables like solar, hydro, wind, and biomass. It also includes measures to address financial barriers through waivers and subsidies. While the policy itself is not legally binding, it serves as a significant guiding document shaping the evolution of laws promoting renewable energy development.
The Act grants NERC overriding authority to regulate and promote renewable energy utilization within Nigeria’s electricity supply industry. Notably, the NERC is tasked with simplifying the licensing process for renewable electricity projects, addressing the historical disparity in licensing procedures between renewable and fossil fuel projects. Additionally, NERC is mandated to implement pricing mechanisms that favour renewable energy consumers, thereby incentivizing investment in the sector.
The Act establishes the Rural Electrification Fund (REF) and assigns its management to the Rural Electrification Agency (REA). Unlike previous legislation, the REF under the Electricity Act of 2023 is exclusively dedicated to promoting, supporting, and financing renewable electricity projects in rural and underserved areas of Nigeria. Additionally, the Act mandates the REA to manage the REF and promote rural electrification, with a specific focus on renewable energy. Furthermore, the Act introduces tax incentives and affordable interest loans for local renewable energy producers, further encouraging investment in the sector.
Section 82 of the Act establishes the National Hydroelectric Power Producing Area Development Commission (N-HYPPADEC) to promote hydroelectricity development in collaboration with state and federal governments. This commission is tasked with promoting, supporting, and executing plans for hydroelectricity development while addressing ecological challenges associated with hydroelectric power production.
The Act introduces financial mechanisms such as feed-in tariffs and renewable purchase obligations to support renewable energy integration. Feed-in tariffs obligate entities like the Nigerian Bulk Electricity Trading Company (NBETC) to purchase electricity produced from renewable sources for integration into the national grid. Additionally, the Act mandates bulk buyers/traders of electricity to ensure a certain percentage of their total purchase comes from renewable sources, thereby encouraging investment in renewable energy.
Renewable energy is crucial for Nigeria’s climate change goals, as outlined in the Paris Agreement. The Electricity Act 2023 prioritizes renewable sources like solar, wind, hydro, and biomass to reduce greenhouse gas emissions and foster sustainable development. Nigeria’s abundant renewable resources offer stable and affordable electricity, mitigating the risks of fossil fuel dependency and supply interruptions. Despite challenges like limited manufacturing capacity and awareness, promoting renewable energy is essential for Nigeria’s energy security and economic stability. The Act’s provisions reflect this commitment, aiming to accelerate Nigeria’s transition to a cleaner, more resilient energy future in line with the UN SDGs, especially SDG 7.
To avert the challenges posed by the previous regime, the following must be done to ensure the fruits of renewable energy as envisaged by the Electricity Act are achieved:
Source: @BarristerNg
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