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Why Nigeria’s 178,000MW renewable energy target may fail – GenCos

By Kingsley Jeremiah, Abuja
18 January 2023   |   4:57 am
Plans by the Federal Government to generate 178,00 megawatts of electricity through renewable energy may remain a mirage, power generation companies have said.

Plans by the Federal Government to generate 178,00 megawatts of electricity through renewable energy may remain a mirage, power generation companies have said.

Managing Director of the Association of Power Generation Companies (APGC), Dr Joy Ogaji said the challenges that kept the power sector in limbo in the past persist and may remain bottlenecks to the sector unless addressed.

To achieve the ambitious energy plan, the FG is scouting for investors to raise $1.22 trillion to shift its energy sources to renewable, with a projected 178,000 Megawatts of electricity over the next 27 years.

Minister of Science, Technology and Innovation, Adeleke Mamora dropped the hint while launching the ambitious plan at the 13th International Renewable Energy Agency (IRENA) Assembly in Abu Dhabi, United Arab Emirates (UAE).

Though renewable energy generation in the country is currently around 1,000MW, the Federal Government and its partners, especially International Renewable Energy Agency (IRENA) are pitching to global investors the ambitious plan aimed at ending energy poverty, addressing climate change and aiding Nigeria in achieving Paris Agreement projections as well as the Sustainable Development Goals.

Ogaji said while Nigeria is never short of plans this year, implementation, monitoring and enforcement have been the problem and may be the same problem for the laudable programme.

According to her, for any plan to work effectively, it must be underpinned by a policy for needed guidance, consistency, accountability, efficiency, and clarity on how such a plan can be implemented.

“Key amongst these policies and plans are the Sustainable Energy for All Action Agenda (SE4ALL) and the Renewable Energy and Energy Efficiency Policy plan (REEEP), popularly known as the electricity vision 30:30:30.

“The Renewable Energy Roadmap, though a welcome development, if not properly structured with a firm securitization arrangement, may end up like every other roadmap which at best can be described as paper tiger or looking only good on paper retiring on the shelves like others gathering the harmattan dust and eaten eventually by the wood ants,” Ogaji said.

Ogaji said the challenge of demand in the country must also be confronted, stressing that Nigeria at an estimated population of 216 million by global standard should be consuming about 200, 000 MW if 1,000 MW is allocated to one million people however, the reality of the country only utilising 4000MW questions the forecast of Renewable Energy Road Map.

She decried that Africa, though the world’s second largest continent with over 1.3 billion people, remained the least electrified region in the world.

Ogaji said the Nigerian electricity or energy sector is overwhelmed by lack of effective planning and monitoring; leading to reliance on emergency rental plants, which further inflates costs.

She also described the imbalance in bilateral contracts for the purchase and sale of electricity, especially for deliveries beyond the borders, payment defaults of buyers, as well as the failures to deliver the electricity promised by several sellers.

“There is a lack of synergy in the regulatory frameworks of some member states. There are also contractual arrangements and disparities in the organization of national markets. We also have a lack of harmonization and standardization in operational, security rules, contractual provisions and tariffs.

Given challenges of payment / liquidity and security of supply and lack of sanctity to contract, Ogaji said the renewable road map could only work with improved sector creditworthiness, through a well-designed securitization model to encourage the provision of guarantees.

She called for a viable and synergized commercial structure to reinforce the commercial framework of the power sector as well as a strategic framework through energy mix and integration coordinated and bench marked.

“There is an urgent need to encourage movement towards willing seller/willing buyer contracts to effectively balance risk and reward. We need to also design a national corporate governance framework, which dovetails in the states and instills market discipline. We also need to design an incentive regulatory model that awards performance and punishes defaults apolitically. We must incorporate cybersecurity considerations into the NESI’s reliability planning and promote existing and future contracts regime

“The success of this laudable and very ambitious target is hinged on the national Government’s ability to align all institutions to create a transparency and accountability framework in the implementation of the associated projects. This is because the needed transformation in the power sector relies on a wide range of financial, policy and enabling environment-related conditions taking place in the near-term.

“With a current installed capacity of about 13,500 megawatts, and utilisation ranging between 3500 to maximum 4000, over nine years post privatisation, the government’s aim to boost electricity access from 45% to 90% by 2030 as well as the Renewable Energy Road Map which forecast 178,000MW of renewable generation by 2050is not feasible without a benchmarkable framework.

“The right policy mix combined with aggressive funding can position the country as a renewable energy leader, both on the African continent and globally. And it will reap the benefits in technology development, foreign investment, decreased emissions, poverty reduction, and energy for the population without access to the national grid – all of which could ripple into millions of clean energy jobs in manufacturing across the country,” Ogaji said.