Lessons for Nigeria from Kenya’s Solar Ecosystem

By Okafor Akachukwu 30/05/2017

Kenya Solar

Kenya’s renewable energy market and ecosystem particularly for solar energy (off grid solar PV and solar home systems) is unarguably the most successful in sub-Saharan Africa and the world. It has one of the largest per capita markets in the world – its level of product development, penetration and growth, consumer base, use of innovative solutions especially smart metering and mobile payment systems, and efficient customer service has remained a subject of learning in the sector, particularly for other African countries.

In a previous article, I highlighted Nigeria’s poor energy policy environment compared to the other 110 countries that were studied for the Regulatory Indicators for Sustainable Energy (RISE) report. What I did not highlight is that Kenya is the only sub-Saharan African country that scored tops for all three categories – energy access, energy efficiency and renewable energy. The other countries in the developing world that scored highly in the three categories were India and Sri Lanka. Compared to Nigeria’s overall score of 22, 11 and 29 for energy access, energy efficiency and renewable energy respectively, Kenya’s scores are 82, 48 and 63 respectively. Easily observed is the fact that Kenya’s phenomenal solar market development is reflective of a good and enabling sustainable energy policy environment. What this means is that the huge success of Kenya’s solar market is a result of deliberate government and development sector policy interventions that align and connect with other market interventions and activities.

This corroborates the findings of a research team at Sussex Energy Group (Science Policy Research Unit at the University of Sussex, United Kingdom) which provided a clearer understanding of what has contributed to Kenya’s success. They argue that hardware financing – financial investments in the demand and supply sides of solar technologies – and private sector entrepreneurship focusing on investing venture capital in entrepreneurs to drive and grow the market at the micro economic level, are not the only contributors to the Kenyan success as many have long believed. Rather the success was as a result of policy interventions that understood the need for a systemic approach in nurturing innovation and technological change through policy. This systemic approach leads to interventions in a wide range of areas that is generally regarded as creating an enabling environment.

The question is how can policy interventions help create the enabling environment that is required for the kind of success that Kenya has achieved? The authors argue that the overall goal of policy must be to build functioning socio-technical innovation systems that add to other efforts for the transfer, development and diffusion of sustainable energy technologies that meet the needs of all groups of consumers. Goals of policies and interventions must intentionally (1) build networks of diverse stakeholders; (2) foster and share learning; (3) promote the development of shared visions; and (4) support diverse experimentation. Two examples of how these can be achieved are the creation of sustainable energy access relevant innovation-system builders (SEA-RIBS) and using projects and programmes to build socio-technical innovation systems. The system builders are the institutions, including national and international companies, agencies, donors, networks, groups and financial institutions, that work to provide and improve relevant energy access support which may be needed in the implementation of relevant energy access projects and programmes.

In Nigeria, the mandate to lead energy access interventions – projects and programmes especially for rural areas – falls on the Rural Electrification Agency (REA) which is leading government’s effort to electrify rural communities in Nigeria. Unfortunately, in the recent past, REA has failed to provide the leadership that is required of it. Its projects and programmes funded through the Rural Electrification Fund (REF) have failed to build networks of diverse stakeholders, foster and share learning, promote the development of shared visions and support diverse experimentation. Projects have been treated more like a transactional activity than an experimentation and development activity to support learning that will help build systems. Recently, some stakeholders in the renewable energy sector especially project developers, have expressed their displeasure over the contract awarding process in the agency. For instance, the bill of quantities for some of the projects advertised by the agency does not meet industry standards and therefore cannot be executed, even if the projects can work with little or no challenges. The fear is that if solar projects are implemented based on a bill of quantities that are not standardized, not only will the projects fail to deliver on expectations, they will most likely breakdown within a short timeframe, which will start a bad story for solar technology. Project developers in Nigeria are already doing their best to change the bad image given to solar technology over the years due to badly implemented government solar projects. To invest 2 billion Naira of the Rural Electrification Fund on projects which are likely to breakdown in a short time impedes and reverses the efforts of the renewable energy sector to use solar energy to improve energy access in Nigeria. The agency must look at itself as the leading sustainable energy access innovation-system builder who must consciously look at its mandate as not just electrifying rural communities but also building a socio-technical innovation systems. This should be done by applying a broad systemic approach to the way it interacts with other stakeholders, designs and implements policies and interventions.

It is interesting to note that recently, the Federal Government inaugurated a new board for the Rural Electrification Agency whose Executive Director (Rural Electrification) is Dr Sanusi Ohiare, who holds a PhD in Rural Electrification. As my friend and colleague, I have reminded Dr Ohiare of the enormous responsibility that he has on his shoulders to ensure with the rest of the board that the right things are done at the agency to help build a sector that is resourceful in effectively meeting its mandate. One that is efficient in assisting to create an enabling environment for energy access and building a renewable energy sector and market that is successful. It is my earnest hope that the new board understands that its projects, programmes, policies, interventions and activities can make or mar the actualization of universal sustainable energy goals in Nigeria and beyond.

 

Okafor Akachukwu is the Energy and Environment Editor, The Initiative for Policy Research and Analysis (InPRA) and a Science Policy Research Unit (SPRU), University of Sussex trained Energy Policy, Innovation and Sustainability Expert. Email: akachukwu_okafor@yahoo.com

Advertisements

Promoting a sustainable energy policy environment in Nigeria

By Akachukwu Okafor 28/04/17

energy-access

Sometimes I wish that Nigeria’s power sector challenges are solved so that I will have less to write on, but this seems not to be happening as issues keep arising in this large and troubled electricity market with its various actors and stakeholders.

After my last publication on the feasibility of the power sector recovery plan, I received several messages from key sector players including from a diplomatic mission commending the article’s insightfulness and asking that I share a copy of the recovery plan if I had it. At the time the last article was published, I did not have the plan and my preliminary analysis was based on the media briefing by the Minister of Power after the approval of the plan. However, I have obtained the plan now and I hope to further analyse the plan based on the specific programmes it hopes to embark on. The feedback I found most interesting was from a former Chairman on the Technical Committee of National Integrated Power Project (NIPP) who was not happy that I did not emphasise how DISCOS, in truth, collect a lot of revenue, but turn around to claim to other market players that they collect little and are operating at a loss. He described DISCOS as the problem of Nigeria’s electricity sector for not remitting revenue and refusing to invest in upgrading their infrastructure.

I promised to be more critical of all players in the sector especially DISCOS as I have always been (and as allowed by word count – it will take not less than a 5,000 word article to analyze how DISCOS are a big problem for Nigeria’s electricity sector). I still do not understand how the government strongly believes that DISCOS operate two accounting books and yet, have not taken appropriate and necessary actions to ensure that they are more transparent and accountable. This lack of transparency and accountability helps in the low revenue base of the power sector which starves it of the finance it critically needs for reforms and recovery programmes. Interestingly, these and other issues including enforcing corporate governance from power sector operators, enforcing market discipline, developing a coherent strategy to resolve militancy and making a definite policy statement on tariff are among sector issues that the World Bank listed as conditions for the release of $1 billion needed to help fund power sector programmes.

Speaking of definite policy statements, according to a World Bank global scorecard for policy makers which compares the national policies and regulatory frameworks for sustainable energy amongst different countries, Regulatory Indicators for Sustainable Energy (RISE), February 2017, Nigeria ranked amongst the worst countries with regard to enabling policy environment for energy access, energy efficiency and renewable energy. Of 111 developing and developed countries studied which represents 96 percent of the world’s population and energy consumption, Nigeria scored very low for the three categories. For energy access, Nigeria ranked 10th worst country ahead of Liberia, Yemen, Mauritania, South Sudan, Sierra Leone, Chad, Haiti, Central African Republic and Somalia in that order. Countries that performed better than Nigeria include – Afghanistan, Congo Republic, Madagascar, Ethiopia, Eritrea, Niger, Togo, Sudan, Honduras, Mozambique. For energy efficiency, Nigeria was ranked 8th worst ahead of Somalia, Mozambique, Chad, Loa People Democratic Republic, Mali, Mauritania, Congo Republic while Niger, Central African Republic, Liberia, Vanuatu, Solomon Islands, Yemen, Burundi, Myanmar, Maldives, Haiti, Zimbabwe, South Sudan were among 12 countries that performed better than Nigeria. On the renewable energy category, Nigeria was ranked 21st ahead of Somalia, Haiti, Sierra Leone, Eritrea, South Sudan, Niger, Mauritania, Bahrain, Liberia, Congo Rep while Uzbekistan, Mozambique, Benin, Burkina Faso, Saudi Arabia, Kuwait, Cambodia, Congo Democratic Republic, Qatar were listed countries that performed better than Nigeria.

Although Nigeria’s renewable energy score improved by over ten places when compared to energy access and energy efficiency it was still 4 points below the indicator score mark for low performing countries. Nigeria’s performance on this scorecard will not come as a surprise to people with a good understanding of the energy sector in Nigeria. Space will not allow me analyse the report in detail. For instance, on the energy access category, Nigeria’s overall score for energy access was 22 and 0, 0, 17, 35, 22, 100, 0, and 0 for existence of plan, scope of plan, grid electrification, minigrids, stand-alone systems, affordability, utility transparency and monitoring, and utility credit worthiness indicators respectively. The most interesting aspect of these indicators is that consumer affordability of electricity scored 100 which is an indication that electricity consumers can afford to pay the cost of electricity.

This situation seems to be well understood by government and key electricity market players which may be what the Nigerian government is exploiting in its continued push for a cost reflective tariff for the market. However, consumer affordability of electricity is clearly different from willingness to pay for electricity which is one of the challenges that the grid sector is facing. The problem of willingness to pay borders on social issues of distrust with public utilities and citizens’ perception of government’s role in providing utilities which is mostly informed by politicians’ election campaign promises. The scores of the other indicators means that government has a lot to do in making the right policies and setting the right regulatory frameworks for an enabling environment that accelerates sustainable energy access.

On energy efficiency, Nigeria’s overall score was 11 out of 100, and this equally doesn’t come as a surprise especially when policy makers are not knowledgeable about their responsibilities to the sector. For instance, the Senate Committee Chairman on Power, Senator Enyinnaya Abaribe while responding to a question on how energy efficiency in Nigeria can be increased said that it is the job of energy efficiency appliance vendors to educate Nigerians on energy efficiency as it is not the job of government to lead energy efficiency programs, or in extension make enabling policies.

Unfortunately, the Nigerian Electricity Regulatory Commission (NERC) which should be helping policy makers better understand the sector which they are to make policies for and also supervise are not doing enough. A check on the capacity building programmes designed for legislators will reveal that most of the capacity building programmes are not specifically designed for policy makers in Nigeria’s difficult regulatory environment. Most capability building programmes are via sponsorship to international conferences that will add little or no knowledge for making the right country-specific power sector policies. The legislative committees, relevant government ministries and departments and agencies on power also lack experts who should help in crafting the right policies asides other capacity, institutional and bureaucratic challenges that trouble the sector.

Renewable energy is performing better than other categories; however, there are a few practices by some project implementing stakeholders especially government energy agencies and projects that are not only unhealthy for the immediate growth of the sector, but which will in the medium term, help destroy the progress being made by other stakeholders. These practices include poor design of projects, wrong costing of projects and lack of transparency in procurement and contract processes which lead the implementation of projects that fail within a short time. This gives a bad name to renewable energy technologies and products. To help promote sustainable energy in Nigeria, government must do what is necessary, not just in formulating enabling policies and regulations for growth but to ensure that these policies are implemented and enforced appropriately in line with best practices. While government and other stakeholders are working towards creating a more enabling sustainable energy policy environment, consumers must realize that they hold the power to wheel the ship of policy in the direction they desire, which can only happen when consumers effectively engage with the policy and regulatory making processes.

 

Okafor Akachukwu is the Energy and Environment Editor, The Initiative for Policy Research and Analysis (InPRA) and a Science Policy Research Unit (SPRU), University of Sussex trained Energy Policy, Innovation and Sustainability Expert. Email: akachukwu_okafor@yahoo.com

 

Scientific, technological and innovation capabilities required for an efficient energy system

By Okafor Akachukwu 14/12/2016

In my November 15 article, titled “Derisking Nigeria’s electricity market for increased energy access”, I alluded to the Nigeria Bulk Electricity Trading (NBET) Company boss’s position that Nigeria cannot run nuclear and wind technologies for electricity purposes. I stated asides the huge financial cost of deploying these technologies, decommissioning and waste management, our inability to run wind and nuclear can only be understood “from a science, technology, and innovation capabilities and management perspective” which the scope of the article did not allow me go into. Today, I will provide more insight on this statement. This is not to say that wind and nuclear technologies have become high tech ventures in themselves as sending man to space. Actually it is much easier to send a man to space and back than to deploy wind and nuclear technologies and keep it running optimally for more than 40 years. The reason is that these technologies are hosted, embedded and operate within a very complex and complicated environment and sociotechnical – energy system that requires much more than the technological knowhow to be successful. And if an element or component of the system is missing, system failure is inevitable. Unlike decades ago, the increasing waves of socioeconomic, financial, environmental, political, technological and security challenges, particularly security vulnerabilities and instabilities, including cyber attacks – have made managing a nuclear facility more complex and complicated. The myriad of challenges seem to dwarf the challenges of scientific, technological and innovative capabilities, and are the first and principle factor for scientific and technological development and advancement.

Science, technology and innovation policy for socio-economic, scientific, and technological development and advancement is dynamic and changing from what we used to know. The linear model of innovation – Research and Development (R&D) and Regulation – was the dominant model in the 1960s-1980s. This model necessitated the United Nations Advisory Committee on the Application of Science and Technology to Development (ACAST) to develop a World Plan for the Application of Science and Technology for Development in 1970 for the Second United Nations Development Decade (1970-1979) – which produced the document that is widely known as the “Sussex Manifesto”. The essence was to produce a strategy that would help developing countries (Global South) build its own scientific and technological capabilities and move from acquiring technologies from developed North, to adapting technologies to local conditions and mastering them. This is widely referred to as “technology transfer” – and is still a huge controversial topic of debate in the climate change negotiations. An important part of the plan was that scientific and technological/technical services sector should receive several times more funds than what is invested in research. Today’s dominant model is the National Systems of Innovation (NSI) from the 1990s, which has come to stay, while the other- “Transformative Change” is an emerging model that researchers at the Science Policy Research Unit (SPRU), University of Sussex suggest. Many countries especially the Asian Tigers have exploited the provisions of these models to be where they are today. I which to use what happened in China particularly in its energy sector to highlight some practical lessons of how building strong scientific, technological and innovative capabilities can be instrumental to development.

In the 1990s when faced with growing energy demand especially for its manufacturing sector, Chinese government quickly set the right policies, incentives and R&D programmes called the 863 and 973 programmes. The objective, to gain mastery and localize supercritical (SC) and ultra-supercritical (USC) coal-fired power plants technologies, was clearly stated in the policies. With full government support – funding and right environment, Chinese firms acquired its first supercritical units in 1992 from leading international firms such as ABB and General Electric for boilers and steam turbines respectively. There were also research collaborations with Chinese regional design and research institutions headed by Chinese Thermal Power Research Institute (TPRI) in Xian and international firms such as Siemens, Hitachi and Alstom for the design of new coal plants. The outcome of these was that in 2004 China’s first domestically manufactured a supercritical unit with a total capacity of 600MW, which started service in Henan Province and between 2004 and 2007 China had installed 123.6GW of super-critical units. Ultra-supercritical technology (USC) also received significant attention. In 2000, China collaborated with Mitsubishi Heavy Industries, the Harbin Boiler Company and Siemens to acquire, adapt and improve USC technology. In 2006 China installed its first domestically manufactured USC unit in Yuhuan. In 2010, more than 100 USC units were on order from Chinese power companies. This was also replicated for integrated gasification combined cycle (IGCC) technologies. Starting with acquiring licenses from leading international firms such as Shell, TPRI learned the gasification technology and advanced it. Recently, due to higher efficiency of Chinese IGCC it beat competing Shell and General Electric IGCC technologies to win the bid for Good Spring IGCC in the US owned by EmberClear. Similar successes have been recorded for Solar PV, wind and nuclear technologies.

These successes wouldn’t have happened without strong scientific, technological and innovation capabilities built upon strategic research and development and regulation policies and mechanism and National Systems of Innovation that has specific national development targets to achieve. NSI requires having the right R&D policy, intellectual property rights (IPR) law that protects and encourages innovation, education policy that aligns with development plan, foresight, right system regulation, technological spaces/platforms for interaction on various levels, use of demand stimuli – procurement to push for supply improvements and innovation, increasing capacity to absorb and use knowledge, building regional and sectoral systems of innovation, stimulating entrepreneurship and incubators. Along with these, China made significant investments of over USD $50 Billion, and the same applies to technological advanced countries such as Germany, Demark, US, United Kingdom, Japan, Netherlands who have made significant gains in the development of new low carbon energy technologies. These elements are needed for a scientific, technological and innovation side of a complete delivery chain in our interest and to successfully acquire and operate wind and nuclear technologies. Lessons abound for Nigeria and other developing countries. Envisioning a technologically advanced green (low carbon) economy without robust R&D and without an NSI base built on an educational policy that improves and advances science, technology, engineering and mathematics (STEM) outputs, and without improving institutional and organizational capabilities to govern the system will only be an illusion. Nigeria can start today to build these capabilities to enable it effectively and efficiently harness its huge gas, biomass, solar, hydro and possibly wind and nuclear potentials for its national energy security.

Okafor Akachukwu is a Science Policy Research Unit (SPRU), University of Sussex trained Energy Policy, Innovation and Sustainability Expert. Twitter: @akachukwu Email: akachukwu_okafor@yahoo.com

The impatience with grid electricity and our energy future

By Okafor Akachukwu 02/12/16coal-fired-power-plant

It has now been established that patience is the currency that Nigeria needs to have in abundance if they are to have regular electricity supply in the near future. Recently, the Managing Director of Benin Electricity Distribution Company, Olufunke Osibodu while speaking at the Founder’s Day event of a private university in Yola, urged Nigerians to be more patient with government on electricity improvements, as nothing is expected to change at least in the next five years. What a sad tale we are now accustomed to from the late Bola Ige days as Minister of Mines and Power. I think it has gotten to the stage when government should be urging Nigerians to be impatient with it and find alternatives that have been proven to be cheaper. Unfortunately it may not be doing this because it will not help its current relationship with the electricity distribution companies (Discos) which is frosty. Recently the association of Discos placed an advertorial in the dailies to ask the government to pay N100 billion owed by its ministries, departments and agencies (MDAs). The Minister of Power, Babatunde Fashola reacted, stating that the Nigerian government will not pay its estimated debt under an association, and that “debts are not calculated by estimate. It’s either N100 billion or less than N100 billion but not an estimate”. I am left to wonder – have Nigerians not been paying estimated electricity bills? Is what is good for the goose not also good for the gander? I guess these owing MDAs are yet to be disconnected. Let’s watch and see how this unfolds. The earlier people adopt renewable energy technologies for their homes and businesses the less they will have to be patient for grid electricity and estimated bills from Discos.
After I published my article titled “Paris Agreement, Nigeria has to depart from coal”, a reader pointed me to his article which was in defence of the Minister of Finance’s statement in Washington DC. Paul argued that “development funding does not look at the steps required to develop anymore, but is setting a global standard of development which is golden gilted which only the industrialised nations could possibly achieve…The environmental damaged caused by burning wood or refined products in old dirty generators far outweighs that of burning coal in a well managed power station”. These arguments are untrue, flawed and does not help the debate that Nigeria needs to be having about its energy future. It is true that an entire western industrialization was attained on the strength of coal, however this was during an era when the impact of coal on the environment was not known and established as it is today and there were no proven alternatives to the use of coal which could be successfully deployed at commercial scale as coal was. In fact in that period, only wood and coal were the proven fuel sources used except recently towards the end of the 19th century that hydro, oil, gas, nuclear, geothermal, and solar became part of the mix. The environmental damage caused by burning wood or refined products in old dirty generators can never outweigh burning coal in well managed power stations. Wood – biomass is a renewable energy fuel source from trees – which tree planting can be used to offset its carbon emissions. This is not so with coal. None of processes of coal mining, and burning is without severe negative impact to the environment, this is equally not so with oil, and gas exploration and refining expect for tar sands – oil sands, and shale gas which can be as dirty as coal.
The fact remains that there is no such thing as a well managed coal power station. Clean Coal is yet to be proven. While commercial deployment of Carbon Capture Use and Storage (CCUS) technology for sequestering carbon emitted from fossil powered plants holds tremendous potential for the continued use of fossil fuel, however it is decades away from being a commercial success. Till date, only two CCUS large scale projects are in operation, the first was launched in 2014 in Saskatchewan, Canada for the Boundary Dam project at a cost of US $1.2 billion which is meant to capture 1 million tonnes per annum (Mtpa) of CO2. The second is the Abu Dhabi CCS Project for Emirates Steel Industries for 0.8 Mtpa. CCUS is a complex and expensive venture, in 2009, the International Energy Agency (IEA) published a road map that called for 100 large CCUS projects to be implemented by 2020, following failures in delivery, in 2013 it downgraded its plan to 30 projects.
For Nigeria, the debate is not if coal will be part energy mix, already the National Energy Policy plan proposes that coal will be used to meet 30% of Nigeria’s energy needs. The debates are: 1.) How does Nigeria hope to deploy coal technology and still be able to meet its commitments to the Paris Climate Change Agreement – this has to do with the capacity to acquire, install and operate latest coal technology that reduces emissions?. 2.) How prepared are our regulatory agencies especially the environmental agencies to ensure that the operations of this sector comply with world best practices. 3.) What are the assurances that coal mining in host communities around the country will be protected from the toxic environmental – air, water, soil pollution that is evident with coal mining as is already the case in Okobo, and Itobe communities in Kogi State. 4.) How prepared are the government and mining companies to solve the socio-economic, health challenges and possibly social unrest that may arise from the devastation in these communities. We are yet to finish the oil pollution cleanup, Niger Delta crisis, and amnesty program business. We must prepare to pay the price for coal technology and getting locked into it.
Far from these questions on coal, it is important that our policy makers set our nation’s energy priorities right, and design a long term grand energy plan with which we can engage the international community if we will secure our energy future. Else it will continue to be a story of missed opportunities – just like we missed out on coal in the last decades. We must stop playing catch up. Gas and renewable energy sources hold tremendous potentials to sustainably secure Nigeria’s energy future and as a matter of urgent national security we have to do all we must to set the entire system working. We have to engage the right gears and levers, failure in doing this will result to huge. The race for the next energy future has just begun and the time for us join the race is now.

 

Okafor Akachukwu is a Science Policy Research Unit (SPRU), University of Sussex trained Energy Policy, Innovation and Sustainability Expert. Contact: Twitter- @akachukwu, Email: akachukwu_okafor@yahoo.com

 

Derisking Nigeria’s Electricity Market for increased Energy Access

By Okafor Akachukwu| 04/11/2016

 

electricity-market-2

It may not currently be the best time to invest in Nigeria but the risk of investing in Nigeria may be worsening – possibly worse than as reported in the World Bank Doing Business 2017 report. Nigeria was ranked 169 out of 190 countries, reviewed from her 170th position in the 2016 report. Of the ten (10) indices used, only getting credit and getting electricity recorded upward improvements by 16 and 2 points from 44 and 182 positions in 2016 respectively. However, while getting electricity for business improved by 2 points is creditable, recent developments in Nigeria’s electricity sector may be threatening this improvement significantly.

Just this Monday, during an oversight visit by Nigeria’s House of Representatives Committee on Power to Nigerian Bulk Electricity Trading (NBET), it announced that the Power Purchase Agreements (PPA) which NBET had secured with 14 power generation firms “may have breached due process”, because the process of securing the agreements appeared to have “no proper guideline” and therefore was “null and void”. The Committee further threatened to subject the agreements to legislative investigation. This presents more questions than answers for the sector – how soon will this investigation commence, how long and what process will be taken, what penalties will be prescribed to defaulting parties, what impact will this investigation have on the electricity sector – achieving current project timelines, sector generation plans, and how would prospective investors in the electricity market respond to this? These questions present a challenge and it is currently unclear what the total volume of affected transactions is in megawatts (MW).

The first effects of this announcement will be that these 14 firms would suspend their project implementation until the investigation is concluded. This means that new utility scale electricity additions to the grid would have to wait – which threatens the actualisation of Nigeria’s generation targets and electricity sector reforms. On the short term, investment in the sector will stagnate and prospective investors will be forced to reconsider their investment interests. Depending on the process and recommendations of the investigation, the confidence of investors may be strengthened if there is an indication that the outcome will introduce a new process and guideline of securing PPAs that complies with due process, and transparent procedures. If not handled properly, this incident may be the start of an end to Nigeria’s electricity sector improvements and reform. Already, in the last 10 months, Nigeria’s general investment environment has witnessed increased currency and exchange rate risk, interest rate risk, inflationary risk, liquidity risk, credit risk and market risk. In the electricity sector, the market risk is that the revenue generation of Discos have dropped since the start of the year. Also there is currently a legal challenge of the current electricity tariff at the courts, including the political/social/legislative risk that the sector is now faced with. Nigeria’s electricity market is a failed market and the government should be seen to be doing all it can to intervene and correct the failures and not increase the level of risk and uncertainty that investors have to face in making investments.

In response to the committee’s announcement, the Managing Director and Chief Executive Officer of NBET, Marilyn Amobi stated that the management under her new leadership will work to correct identified anomalies. In other statements, she said, “From my perspective, we have no business talking about 20,000MW for 2020. It is clear we can’t achieve that by 2020….We can’t make that happen. Nigeria is not financially buoyant to embark on [nuclear energy]. We cannot run nuclear in Nigeria, and the question of wind energy, forget it. It’s just a story. We cannot run all that in Nigeria. It’s just a wish list.” These are big and weighty statements, which need some clarifications.

Amobi may have drawn her conclusions from the fact that the generation contribution of the 14 firms would not be realized based on original timeline if an investigation is conducted. She also does not see new PPAs being secured speedily by any means that would mobilize to site and deliver 20,000 MW by 2020. Incidentally, independent power producer (IPPs) application and licensing processes and PPA negotiations for large scale, centralized utility grid projects and transactions takes upwards of 3-6 years to secure and the construction of the power generating plant takes 1-10 years, depending on planned capacity and technology being used. This is the big challenge. On the other hand, decentralized renewable energy (DRE) off grid technologies and other solutions can generate 20,000MW by 2020 if the right policy, regulatory framework, and financial mechanisms for the sector development and growth are put in place. Renewable energy technologies do not require very lengthy, bureaucratic and expensive licensing and PPA processes required for large scale utility plants. Government needs to acknowledge this fact and act on it. While government has already indicated that Nigeria will generate 50% of its energy needs in 2020 from renewable energy, the sector is yet to see or set a clear roadmap of how that will be achieved.

On another hand, Amobi’s position that Nigeria can’t go into nuclear and wind can be understood from a science, technology, and innovation capabilities and management perspective which the scope of this paper will not permit me to go into. The financial cost of nuclear technology is huge, with its waste management challenges. Nigeria cannot afford to have a Three Mile Island, Chernobyl, or Fukushima nuclear disaster on her door step. It will be the worst human catastrophe; we should first concentrate on effectively running our gas and hydro-plants at full capacity. Depending on the way you choose to look at it, wind technology is still new and will require significant investments along its delivery chain in Nigeria – if it will ever work as it is currently does in countries such US, UK, Germany, China, Denmark, Japan and South Africa. I see this as a challenge to wind power IPPs. In all, the Nigerian government has a huge responsibility in correcting the electricity market failure, derisking the sector for investment inflow, building our science, technology and innovation capabilities and systems, building and strengthening institutions that would be able to effectively deliver on its mandate based on due process, transparency, fairness and global set standards.

 

Okafor Akachukwu is a Science Policy Research Unit (SPRU), University of Sussex trained Energy Policy and Sustainability Expert. Contact: Twitter- @akachukwu, Email: akachukwu_okafor@yahoo.com

 

 

Paris Agreement -Nigeria has to depart from coal

By Okafor Akachukwu | 07/10/2016

coal-fired-power-plant

It is becoming increasingly obvious that those saddled with the responsibility of governing Nigeria’s energy/power system or articulating and implementing a strategic national energy plan starting from the federal ministries of power, petroleum resources, solid minerals development, environment, water resources, finance, budget and national planning, agriculture need to be properly schooled in the work that they should be doing. It is easy to decipher that they are not listening to briefs from experts, not talking to themselves across ministries, departments and agencies or not in touch with developments beyond the shores of Nigeria.

It’s shocking to read the statements allegedly made by Nigeria’s Finance Minister, Kemi Adeosun this Wednesday in Washington at some World Bank and IMF meetings where she accused western nations of blocking Nigeria’s efforts in building new coal fired power plants. While, I wouldn’t want to go into academics of climate science that led to the new Paris Climate Change Agreement which just a few weeks ago, (at the annual September United Nations General Assembly meetings) Nigeria’s President signed. Our dear Adeosun should have clarified the contents of the agreement before her statements. What she should have said was that Nigeria is blocking Nigeria’s efforts to build new coal fired plants. Our government officials and policy advisers should have informed her or Mr President that signing the Paris Agreement will mean no ‘cheap’ coal power plants for Nigeria – meaning that he may find it difficult to fulfil his electoral promises on delivering constant power to Nigerians by the end of his tenure.

We may have signed the agreement because it’s fashionable – other countries are signing. However, we failed to remember that we do not have the finances and technologies to solve our power challenges the way we prefer if we have no intentions of complying with the Paris Agreement. Else we forget, our ambitious Intended National Determined Contributions (INDCs) to the Paris Agreement of cutting 476 million tonnes per year of greenhouse gases (GHGs) emissions reductions in 2030 was drafted and submitted to the United Nations Framework Convention on Climate Change (UNFCCC) by the current President Buhari’s administration – we should have known better. Probably there was no communication and coordination across government at all levels to know what our national energy plans were, what should go into the INDC and what shouldn’t.

Did our government not know of the of US, UK, other European countries and the World Bank’s clear position to stop funding coal power plants in developing countries since 2013? In fact, the US stopped investing in new coal technology projects since 2011. The last World Bank funding approval for a coal fired plant was in 2010 for a plant in South Africa, which was strongly opposed by the US. The World Bank however is currently discussing a draft new energy strategy that may allow it to finance new coal plants only “in rare circumstances” where there are no alternatives. The Nigerian government should have known better, instead of the blame gaming it should be more focused, coordinated, proactive and innovative and go for other available energy options – if it is interested in solving Nigeria’s power challenges.

The world has moved on, the game has changed and if we don’t want to move with it, or join the game, or beat the game – we get stuck, stuck in darkness and underdevelopment. In the past month alone, there has been increased discussion on how to develop and grow the mini-grids sector (decentralized electricity generation and supply) especially using solar and accelerate investments in these sectors to boost Nigeria’s power supply and solve the energy access problem. For instance the Nigerian Electricity Regulatory Commission (NERC) has been conducting series of consultations around Nigeria on its 2016 Draft Minigrids Regulation, there was an International Finance Corporation (IFC – World Bank) and UK Department for International Development (DFID) workshop in Lagos and Abuja on developing and financing the solar mini-grids market in Nigeria, Power for All also held a workshop for government ministries, departments and agencies on accelerating the growth of Decentralized Renewable Energy (DRE) sector.

The Power for All workshop ended with a five point action plan which were: “1.) The need to Streamline government policies and regulations for the sector, 2.) Eliminate VAT and import duties, 3.) Streamline importation, 4.) Enforce quality and standard, 5.) Build markets – through equitable financing.” Aside these plans and more unmentioned, government should also make it easy for renewable energy funds trapped in various national financial institutions to be accessible to entrepreneurs that have the capabilities to utilize them. The usual argument is that renewable energy is expensive – but compared to what? The fact is that the initial cost of deploying renewable energy technologies and solutions may be expensive but it is far cheaper and affordable for consumers to pay for, cheaper for operators to operate and maintain and delivers enormous economic, social and environmental benefits compared to coal technologies which impacts can be generationally devastating.

A question we should rather be asking ourselves is why did we fail to develop our coal reserves in the past 50 years? Nigeria agreed that coal technology should be phased out when it signed the Paris Agreement and constructing new coal would be contrary to that agreement; hence it should quicken its efforts to harness other energy resources that Nigeria is abundantly endowed with. One thing I know is that no one would block Nigeria from building new gas, hydro, solar, wind, biomass, geothermal and tidal plants.

 

Okafor Akachukwu is a Science Policy Research Unit (SPRU), University of Sussex trained Energy Policy and Sustainability Expert. Contact: Twitter- @akachukwu, Email: akachukwu_okafor@yahoo.com