More than half of Nigeria’s people have access to electricity, but the country only dispatches around 4,000MW a day. So West Africa’s biggest economic block desperately needs to change its energy profile to provide the electricity needed for socio-economic development.
While South Africa may have been first at COP26 to score billions in commitments to deal with its energy transition, Nigeria pipped them to the post by launching their country’s Energy Transition Plan in the last week of August 2022.
Announcing the detailed plan during a virtual global launch, Nigerian Vice President Professor Yemi Osinbajo explained it is meant to tackle climate change and deliver SDG7 (universal energy access) by 2030 and net-zero by 2060.
He said the new plan anchors on crucial objectives, including lifting 100 million people out of poverty in a decade, driving economic growth, bringing modern energy services to all Nigerians and managing the expected long-term job losses in the oil sector due to global decarbonisation. “Given those objectives, the plan recognises the role natural gas must play in the short term to facilitate the establishment of baseload energy capacity and address the nation’s clean cooking deficit in the form of LPG,” said the vice president.
He enthused that the plan envisions vibrant industries powered by low-carbon technologies, streets lined with electric vehicles and livelihoods enabled by sufficient and clean energy. “The plan has the potential to create about 340,000 jobs by 2030 and 840,000 by 2060. It also presents a unique opportunity to deliver a true low-carbon and rapid development model in Africa’s largest economy,” he said. “We are currently implementing power sector initiatives and reforms focused on expanding our grid, increasing generation capacity and deploying renewable energy to rural and underserved populations,” explained Osinbajo.
Money money, money
The vice president highlighted the significant scale of investment required to implement the plan to increase energy access in the country.
“Nigeria would have to spend $410 billion above business-as-usual spending to deliver a transition plan by 2060, which translates to about $10bn a year. The average $3bn a year in investments in renewable energy recorded for the whole of Africa from 2000 to 2020 will certainly not suffice,” said Osinbajo.
The vice president also chairs an inter-ministerial Energy Transition Implementation Working Group, which is currently engaging with partners to secure an initial $10bn support package ahead of COP27 along the lines of the South African Just Energy Transition Partnership announced at COP26 in Glasgow.
Also speaking at the virtual launch, Shubham Chaudhuri, Nigeria country director for the World Bank, said they plan to commit “over $1.5bn towards the Energy Transition Plan on renewable energy, on power sector reforms, on clean cooking and whatever opportunities arise”.
Energy poverty is the bigger problem
Energy access is the metric most mentioned during the launch, as government officials and development partners explained that Nigeria’s problem is not so much that of turning the country’s electricity capacity green as it is addressing energy poverty.
As Gbemi Akinsipe, research and communication associate from the Nigeria Energy Transition Office, pointed out, “the transition must support and not impede energy access, especially in developing nations”.
She called attention to the 568 million people in sub-Saharan Africa who live without energy access. “Per capita, electricity consumption in Nigeria is about 360kWh compared to 12,000kWh in the US and 6,600kWh in Europe.”
“These energy inequities are staggering and the just energy transition must seek to resolve them,” said Akinsipe.
Nigerian Minister of Power Abubakar Aliyu reminded us that globally, decisive climate action has typically started with the energy sector switching from fossil fuels to renewable energy sources. Energy consumed for electricity, heat and transport accounts for more than 70% of global emissions, but discussions around greening the energy sector cannot ignore the realities faced by developing economies.
“For instance, about 91 million Nigerians still lack access to electricity and about 175 million lack access to clean cooking solutions.
“With this reality, an effective energy transition strategy in our country must capture the urgent need to bring modern energy services to everyone. There can be no energy transition without energy access.
“It is clear from historical trends that sufficient economy-wide energy consumption is necessary for job creation, economic development and poverty alleviation. No high-income countries today have an annual energy consumption below 3,000kWh per capita. Conversely, the average electricity consumption per capita in Nigeria is only 360kWh. This shows the massive scale of development needed in our country to ensure development,” explained Aliyu.
The plan recognises the role natural gas must play in the short term to facilitate the establishment of baseload energy capacity.
Speaking at the launch, Amina J Mohammed, UN deputy secretary-general, pointed out that the Nigerian Energy Transition Plan emphasises the need for a just and equitable transition for energy, which enables both universal energy access for the unelectrified and economic growth and development for country and continent.
“This is critical to note because as we embark on the global energy transition, the stark energy poverty in developing regions of the world cannot be ignored. Universal access to affordable, reliable, sustainable and modern energy for all, as called for in SDG7, is still out of reach. This is particularly true for sub-Saharan Africa.
“Consequently, our global energy transition strategies must tackle energy poverty. We need to develop ways to provide universal access to energy for electrification and clean cooking,” said Mohammed. She felt that Nigeria’s plan recognises a temporary need for transition fuels to speedily meet energy deficits and drive economic growth while ensuring a transition to renewable energy for sustainable and climate-resilient development.
“It is truly commendable that Nigeria has developed this bold plan and remains committed to its implementation even as the ongoing energy crises risks setting some governments back in their commitment to SDG7 and climate goals.
“I hope Nigeria’s example will inspire other nations to act boldly in both energy access and climate goals to secure the wellbeing of people, economies, societies and our planet,” she said.
Mobilising financing through the Stand-Alone Solar for Productive Use programme
While Nigeria’s Energy Transition Plan spells out the country’s plan to achieve SDG7 by 2030 and net-zero emissions by 2060, its ultimate goal is to mobilise financing to implement the plan.
To that end, the Universal Energy Facility, a results-based finance facility managed by Sustainable Energy For All, has launched a programme to scale-up electricity access to small- and mediumsized enterprises and households in Nigeria.
The Stand-Alone Solar for Productive Use programme offers grants as an incentive to renewable energy companies to electrify SMEs which engage in productive uses such as agriculture, industry and other commercial activities. [Ed: See pages 74 & 75 more on Productive Use of Energy]
Grants are results-based and provided to the company once the electricity connection has been established. “The Universal Energy Facility will provide grant payments to enable solar companies to expand their operations to small- and medium-sized enterprises across Nigeria, while crowding in additional private capital. Projects that are sponsored by the Universal Energy Facility will help grow businesses and create jobs, making them key contributors to our Energy Transition Plan,” explained Osinbajo.
The programme is designed to support the growth of business models for electrification, which includes energyas- a-services or lease-to-own models that address the challenge SMEs face by making full upfront payments to purchase solar systems. This challenge limits the level of access to clean and reliable electricity for a majority of SMEs across Africa, not just Nigeria.
Providing grant payments for renewable energy companies to develop projects means the programme also helps derisk projects, which in turn helps the companies attract additional finance. The programme funding window for Nigeria opened on 24 April with a call for Pre-Qualification Applications on the Sustainable Energy For All website. Culled From ESI Africa