The Nigerian Energy Sector. An Overview with a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification (GIZ 2015) (pdf, 6.48 MB, EN)

European Union
Nigerian Energy Support Programme (NESP)
The Nigerian Energy Sector
An Overview with a Special Emphasis
on Renewable Energy, Energy Efficiency
and Rural Electrification
2nd Edition, June 2015
Implemented by
2
Acknowledgements
This report on the Nigerian energy sector was compiled as
part of the Nigerian Energy Support Programme (NESP).
NESP is implemented by the Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) GmbH and funded by the European Union and the German Federal Ministry for Economic Cooperation and Development (BMZ).
The authors would like to thank the GIZ Nigeria team for
having entrusted this highly relevant subject to GOPA-­
International Energy Consultants GmbH, and for their
extensive and dedicated inputs and guidance provided
during implementation. The authors express their gratitude to all project partners who provided particularly valuable and interesting insights into ongoing activities during the course of the project. It was a real pleasure and a
great help to exchange ideas and learn from highly experienced management and staff and committed representatives of this programme.
How to Read Citations
Bibliography is cited by [Author; Year]. Where no author
could be identified, we used the name of the institution.
The Bibliography is listed in Chapter 10.
Websites (internet links) are cited with a consecutive
numbering system [1], [2], etc. The Websites are listed in
Chapter 11.
3
Imprint
Published by:
Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ) GmbH
Nigerian Energy Support Programme (NESP)
2 Dr Clement Isong Street, Asokoro
Abuja / Nigeria
Contact: Daniel Werner (daniel.werner@giz.de)
Phone: + 234 8057601986
Federal Ministry of Power
Federal Secretariat Complex
Shehu Shagari Way, Maitama
Abuja / Nigeria
Contact: Engr. Faruk Yusuf Yabo (fyyabo@yahoo.com)
Maps:
The geographical maps are for informational purposes
only and do not constitute recognition of international
boundaries or regions; GIZ makes no claims concerning
the validity, accuracy or completeness of the maps nor
does it assume any liability resulting from the use of the
information therein.
Layout:
FINE GERMAN DESIGN, Frankfurt / Main
The first edition of this publication was funded by the
German Federal Ministry for Economic Cooperation
and Development (BMZ); the second edition is funded
by BMZ and the European Union.
Authors / Editors etc.:
GOPA-International Energy Consultants GmbH
Justus-von-Liebig-Str. 1,
61352 Bad Homburg v.d.H. Germany
www.gopa-intec.de
Karsten Ley
Dr. Jeremy Gaines
Anil Ghatikar
This document was produced with the financial assistance of the European Union.
The views expressed herein can in no way be taken to reflect the official opinion of
the European Union.
4
Table of Contents
Page
1.
2.
Executive Summary
Introduction to Nigeria
2.1 Geography, Climate and Political Situation
2.1.1Geography
2.1.2Climate
2.1.3 Political Situation
2.2Demography
2.3Economy
2.4 Regional Context
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3.
The Nigerian Energy Sector
3.1 Energy Resources
3.2 Primary Energy Supply
3.3 Energy Consumption
3.4 Electricity Market Development
3.5 Electricity Generation
3.5.1 Grid-connected Power Generation
3.5.2 Off-grid Power Generation
3.6 Electricity Consumption and Demand
3.6.1 Electricity Consumption
3.6.2 Electricity Demand
3.7Electrification
3.8 Energy Prices
3.8.1 Fuel Prices
3.8.2 On-Grid Electricity Prices
3.8.3 Off-Grid Electricity Prices
3.9 Transmission and Distribution Sector
3.9.1Transmission
3.9.2Distribution
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4.
Energy Market – Stakeholders and Roles
4.1 National Public Institutions
4.1.1 Federal Ministry of Power
4.1.1.1 Nigerian Electricity Regulatory Commission (NERC)
4.1.1.2 Rural Electrification Agency of Nigeria (REA)
4.1.1.3 Electricity Management Services Limited (EMSL) of Nigeria
4.1.1.4 National Power Training Institute of Nigeria (NAPTIN)
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4.1.2
4.1.3
Federal Ministry of Environment (FMENV)
Federal Ministry of Science and Technology (FMST)
4.1.3.1 Energy Commission of Nigeria (ECN)
4.1.3.2 National Agency for Science and Engineering Infrastructure (NASENI)
4.1.4 Federal Ministry of Lands, Housing and Urban Development (FMLHUD)
4.1.5 Federal Ministry of Water Resources (FMWR)
4.1.6 Federal Ministry of Industry, Trade and Investment (FMITI)
4.1.6.1 Standards Organisation of Nigeria (SON)
4.1.7 Nigerian Bulk Electricity Trading Plc (NBET)
4.1.8 Nigerian National Petroleum Corporation (NNPC)
4.1.9 Presidential Task Force on Power (PTFP)
4.1.10 Nigerian Governor’s Forum (NGF)
4.2 Role and Functions of States and Local Governments
4.3 Market Players in Generation, Transmission and Distribution
4.3.1 Generation Companies
4.3.2 Transmission Company of Nigeria
4.3.3 Distribution Companies
4.4 Other Non-Governmental Stakeholders
4.4.1 Council for Renewable Energy in Nigeria (CREN)
4.4.2 Manufacturers Association of Nigeria (MAN)
4.4.3 Nigerian Society for Engineers (NSE)
4.4.4 Green Building Council of Nigeria (GBCN)
4.4.5 Nigerian Institute of Architects (NIA)
4.4.6 Nigerian Institute of Building (NIOB)
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5.
Energy Policy
5.1 Fuel Market Policy and Strategy
5.2 Electricity Market Policy and Strategy
5.2.1Introduction
5.2.2 Major Programmes and Initiatives, Policy Mix
5.3 Climate Change Policy and Strategy
5.4 Milestones in National Energy Policy and Laws
5.4.1 National Electric Power Policy (NEPP), 2001
5.4.2 National Energy Policy (NEP), 2003
5.4.3 National Economic Empowerment and Development Strategy (NEEDS), 2004
5.4.4 National Power Sector Reform Act (EPSRA), 2005
5.4.5 Renewable Electricity Policy Guidelines (REPG), 2006
5.4.6 Renewable Electricity Action Programme (REAP), 2006
5.4.7 National Biofuel Policy and Incentives (2007)
5.4.8 Roadmap for Power Sector Reform, 2010 and 2013 (Update)
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6.
5.5
5.4.9 Vision 20:2020, 2010
5.4.10 Renewable Energy Master Plan, 2005 and 2012 (Update)
5.4.11 National Renewable Energy and Energy Efficiency Policy (NREEEP), 2015
5.4.12 Multi-Year Tariff Order (MYTO)
5.4.13 Draft Rural Electrification Strategy and Plan (RESP), 2015
Key Electricity Market Regulations
5.5.1 Transmission, Distribution and Metering Codes
5.5.1.1 Transmission Code
5.5.1.2 Distribution Code
5.5.1.3 Metering Code
5.5.2 Embedded Generation Regulations, 2012
5.5.3 Regulations for Independent Electricity Distribution Networks (IEDN), 2012
5.5.4 Regulations for the Procurement of Generation Capacity, 2014
5.5.5 Regulations on National Content Development, 2014
On-Grid Renewable Energy
6.1 On-grid Renewable Energy Market
6.1.1 The Potentials
6.1.1.1 Bioenergy / Biomass / Biofuel
6.1.1.2Hydropower
6.1.1.3 Solar Energy
6.1.1.4 Wind Energy
6.1.1.5 Other Resources
6.1.2 Existing and Planned Renewable Energy Projects
6.1.2.1 NERC Licensees
6.1.2.2 Projects of the Federal Ministry of Environment
6.1.2.3 Projects of the Federal Ministry of Power
6.1.2.4 Projects of the Federal Ministry of Water Resources (FMWR)
6.2 Renewable Energy Stakeholders
6.2.1 Public Authorities
6.2.2 Non-governmental Players
6.2.3 Foreign Development Cooperation Organisations
6.2.4 Key Players in Research, Capacity Development and Training
6.3 Renewable Energy Policies and Regulations
6.4 Renewable Energy Support Mechanisms, existing and planned
6.4.1 Financing from Development and Private Banks
6.4.2 Tax Incentives
6.4.3Current Financial Support Mechanisms – Combination of Unsolicited Bids
and Feed-In Tariff Guidelines
6.4.4 Planned Financial Support Mechanisms
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6.5
From Project to Realisation: Renewable IPPs - The Current Process
6.5.1 NERC - Generation Licence
6.5.2 NBET - Power Purchase Agreement
6.5.3 Embedded Generation
6.5.4Challenges
6.6 Conclusions: Renewable Energy
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7.
Energy Efficiency
7.1 Energy Efficiency Market
7.1.1 Existing Energy Efficiency Projects
7.1.2 Planned Energy Efficiency Projects
7.2 Energy Efficiency: Power Generation
7.2.1 Efficiency of On-Grid Generation, Transmission and Distribution
7.2.2 Genset-Based Generation
7.3 Energy Efficiency: Consumption
7.4 Energy Efficiency Stakeholders
7.4.1 Public Authorities
7.4.2 Additional Energy Efficiency Stakeholders
7.4.3 International Organisations
7.5 Energy Efficiency Policy and Strategy
7.5.1 National Renewable Energy and Energy Efficiency Policy
7.5.2 Draft National Energy Efficiency Policy for Nigeria
7.5.3 Standards and Labelling
7.6 Energy Efficiency Support Mechanisms
7.6.1 Price Incentives
7.6.2 Tax Relief
7.6.3 Financing Mechanisms / Opportunities
7.7Conclusions
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8.
Rural Electrification, Including Off-Grid Renewable Energy
8.1 Rural Electrification Market
8.1.1 Renewable Energy and Rural Electrification Potentials
8.1.2 Existing Rural Electrification Projects
8.1.3 Planned Rural Electrification Projects
8.2 Rural Electrification Stakeholders
8.2.1 Public Authorities and Their Roles
8.2.2 Rural Electrification Market Players
8.3 Rural Electrification Policy and Strategy
8.3.1 Draft Rural Electrification Strategy and Plan (RESP)
8.3.2Tariffs
8.3.3 Further Policy Documents
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8.4 Rural Electrification Support Mechanisms and Price Incentives
8.5Conclusions
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9.
Concluding Remarks
10.Bibliography
11.Websites
12.Annexes
12.1 Supplementary Climate and Socio-Economic Data
12.2 Supplementary Information on the Energy Sector
12.3 Supplementary Information on the Power Sector
12.4 Supplementary Information on Renewable Energy, Energy Efficiency and
Rural Electrification
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List of Tables
TABLE 2 – 1:Nigeria’s Geopolitical Zones with
Corresponding States and Land Mass
TABLE 2 – 2:Nigeria Macroeconomic Indicators
Before1 and After Re-Basing
TABLE 2 – 3: Sectoral Shares of GDP in percent, 2012
TABLE 3 – 1: Overview of Fossil Fuel Resources, 2012
TABLE 3 – 2:Energy Balances for Nigeria in 2012
(ktoe)
TABLE 3 – 3:Electricity Generation Profile
TABLE 3 – 4:Comparison of Electricity Demand
Projections (MW)
TABLE 3 – 5:Electrification Rates in Nigeria
and Sub-Saharan Africa
TABLE 3 – 6:Distribution of Households with Access
to Electricity by Type of Electricity
Supply in %, 2010
TABLE 3 – 7:Developments in Fuel Prices and Fuel
Subsidies, 2006 – 2012
TABLE 4 – 1:Nigerian Power Sector – Key Industry
Participants
TABLE 5 – 1:Embedded Generation – Licensing
Definitions
TABLE 6 – 1: Renewable Energy Potentials
TABLE 6 – 2:Residues Estimate from Agricultural
Crops, 2010
TABLE 6 – 3:NERC Licensees, Renewable Energy
TABLE 6 – 4:
Hydropower Development by FMP, 2014
TABLE 6 – 5:Renewable Energy Stakeholders, Public
Authorities
TABLE 6 – 6:NREEEP: Summary of Renewable
Electricity Targets
TABLE 6 – 7:MYTO II Feed-In Tariffs – Wholesale
Contract Prices (N/MWh)
TABLE 7 – 1:Energy Efficiency and CO2 Indicators
for Nigeria
TABLE 7 – 2:Energy Intensity – A Peer-Group
Comparison
TABLE 7 – 3:Energy Efficiency and Kitchen Cooling
Appliances – A Comparison of Average
Annual Consumption
TABLE 7 – 4: Potential Areas of Energy Savings
across Industrial Sub-Sectors
TABLE 7 – 5:List of Additional Energy Efficiency
Stakeholders
TABLE 8 – 1:Household Electrification Rate by
State in %
TABLE 8 – 2:REA, Summary of Projects / Programmes
TABLE A – 1: Annual Rainfall in Nigeria by State,
2005 – 2009 (millimetre)
TABLE A – 2: Population Forecast for Nigeria up to
the Year 2035
TABLE A – 3:Economic Growth (After Re-Basing)
TABLE A – 4:Energy Consumption by Source
(ktoe, 2011)
TABLE A – 5:Main Sources of Fuel for Cooking
TABLE A – 6:Electricity Production and Consumption for 2001 and 2011 in GWh
TABLE A – 7:Licensees of the NERC, April 2015
TABLE A – 8:Existing Nigerian Power Plant Fleet,
2015
TABLE A – 9:NERC Classification for DISCO
Pricing
TABLE A – 10:NERC: DISCO Pricing according to
MYTO 2.1, updated tariffs – selected
DISCOS (2015)
TABLE A – 11: Components Standards Elaborated /
Adapted / Adopted by SON
TABLE A – 12:NREEEP Biomass and Wind Targets
TABLE A – 13:NREEEP Solar and Hydropower
Targets
TABLE A – 14:NREEEP Renewable Electricity
Supply Projection in MW
TABLE A – 15: Investment Opportunities for Small
Hydro Power Development in Nigeria
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List of Figures
FIGURE 2 – 1:Map of Nigeria
FIGURE 2 – 2:Population Density in Nigeria in 2006
FIGURE 3 – 1:Historical Total Primary Energy
Supply (mtoe) 1971 – 2011
FIGURE 3 – 2:Total Energy Consumption by
Resources in 2012
FIGURE 3 – 3:Total Energy Consumption by
Economic Sectors and Consumption
per Capita for Nigeria and Peer
Countries (2012)
FIGURE 3 – 4:Power Generation Sites in Nigeria
FIGURE 3 – 5:Break-Down of On-Grid Licensed
Power Generation in Nigeria, 2012
FIGURE 3 – 6:Electricity Generation (GWh) in
Nigeria and Peer Countries since 1992
FIGURE 3 – 7:Total Electricity Consumption by
Economic Sectors and Consumption
per Capita for Nigeria and Peer
Countries (2012)
FIGURE 3 – 8:Nigerian Electricity Consumption
(million kWh)
FIGURE 3 – 9:Historic Development of Population
and Electricity Consumption per
Capita in Nigeria from 1990 – 2012
FIGURE 3 – 10:Projected Grid and Off-Grid
Electricity Demand in TWh
FIGURE 3 – 11:Off-Grid Electricity Prices
FIGURE 3 – 12:Existing 330 kV Radial Grid, 2013
FIGURE 3 – 13:330 kV Transmission Grid for
Wheeling 10,000 MW, End of 2014
FIGURE 3 – 14:330 kV Transmission Grid for
Wheeling 16,000 MW, End of 2017
FIGURE 3 – 15:The Distribution Companies Markets
FIGURE 4 – 1:NBET, Transitional Market Trading
Arrangement
FIGURE 4 – 2:Structure of the Power Sector
Post-Privatisation
FIGURE 4 – 3:The Transmission Company of Nigeria
FIGURE 5 – 1: Overview of Principal Policies
and Laws
FIGURE 6 – 1:Location of Major Dams in Nigeria
FIGURE 6 – 2:Hydro Potential: Seasonal Flow
Pattern at Representative Points
FIGURE 6 – 3:Solar Irradiation Levels, GHI
FIGURE 6 – 4:3D Wind Map of Nigeria 80 m above
the Ground
FIGURE 6 – 5: Renewable Energy Licensing Process
FIGURE 8 – 1: Small Hydro Power Sites in Nigeria
FIGURE 8 – 2:Nigerian Energy Support Programme
(NESP)
FIGURE 8 – 3:REF Selection Process
FIGURE 8 – 4: Examples for REF Project Funding
FIGURE A – 1: Climate Zones of Nigeria
FIGURE A – 2: Climate Charts for Kano (BSh)
FIGURE A – 3: Climate Charts for Minna (Aw)
FIGURE A – 4: Climate Charts for Lagos (Am)
FIGURE A – 5: Fuel Prices in Nigeria
FIGURE A – 6:Nigeria Electrical Energy Production
(in million kWh)
FIGURE A – 7:Average Available Generation and
Maximum Peak Generation
(2007 – 2014)
FIGURE A – 8:Variations in Peak MW and MWh
Generation (year-on-year)
11
List of Abbreviations
AcronymDefinition
AADL
Allied Atlantic Distilleries Ltd.
AC
Alternating Current
AFDAgence Française de Développement
(French Development Agency)
ANSEPAssociation of Nigerian Solar Energy
Promoters
APCAll Progressives Congress
ARECONAssociation of Rural Electrification
Contractors of Nigeria (Renewable and
Rural Power Department)
ATC&CAggregate Technical, Commercial
and Collection
BMZBundesministerium für wirtschaftliche
Zusammenarbeit und Entwicklung
(German Federal Ministry for Economic Cooperation and Development)
BPE
Bureau of Public Enterprise
BPP
Bureau of Public Procurement
CCGT
Combined Cycle Gas Turbine
CCN
Climate Change Network
CCTV
Closed Circuit Television
CDM
Clean Development Mechanism
CEO
Chief Executing Officer
CFCChlorofluorocarbon
CFL
Compact Fluorescent Lamp
CNG
Compressed Natural Gas
CREDCCommunity Research and
Development Centre
CREN
Council for Renewable Energy
CSP
Concentrated Solar Power
DC
Direct Current
DCC
Department of Climate Change
DFI
Development Financing Institution
DFIDDepartment for International
Development
DISCO
Distribution Company
DNI
Direct Normal Irradiation
DPR
Detailed Project Report
ECN
Energy Commission of Nigeria
ECOWASEconomic Community of West
African States
EE
Energy Efficiency
EEB
Energy Efficiency in Buildings
EG
Embedded generation
EIA
Energy Information Agency
EIA
Environmental Impact Assessment
EISElectrical Inspectorate Services (former
Department of FMP)
EIU
Economist Intelligence Unit
ELPS
Escravos Lagos Pipeline Systems
EMAS
Eco-Management and Audit Scheme
EMISEnergy Management and
Information Systems
EMSElectricity Management
Services Limited
EPCEngineering, Procurement
and Construction
EPICElectrical Power Implementation
Committee
EPSR
Electricity Power Sector Reform
EPSRA
Electricity Power Sector Reform Act
ESIAEnvironmental and Social
Impact Assessment
ESMAPEnergy Sector Management
Assistance Program
FCT
Federal Capital Territory (Abuja)
FEC
Federal Executive Council
FGN
Federal Government of Nigeria
FHA
Federal Housing Authority
FIPAForeign Investment Forum Promotion
and Protection Agreement
FIT
Feed-in Tariff
FMBN
Federal Mortgage Bank of Nigeria
FMENV
Federal Ministry of Environment
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FMLHUDFederal Ministry of Land, Housing
and Urban Development
FMP
Federal Ministry of Power
FMSTFederal Ministry of Science and
Technology
FMITIFederal Ministry of Industry, Trade
and Investment
FMWR
Federal Ministry of Water Resources
FOB
Free On Board
GACN
Gas Aggregation Company of Nigeria
GBCN
Green Building Council of Nigeria
GDP
Gross Domestic Product
GE
General Electric
GEF
Global Environmental Fund
GENCO
Generation Company
GHI
Global Horizontal Irradiation
GIZDeutsche Gesellschaft für Internationale Zusammenarbeit GmbH (German
Agency for International Cooperation)
GOPA-intecGOPA-International Energy
Consultants GmbH
GTI
Global Tilted Irradiation
HCFCHydrochlorofluorocarbon
hhhouseholds
hhK
household kerosene
High Voltage
HV
HVACHeating, Ventilation and
Air Conditioning
IBRDInternational Bank for Reconstruction
and Development
ICEEDInternational Centre for Energy,
Environment and Development
ICRCInfrastructure Concession and
Regulatory Commission
ICREEEInter-Ministerial Committee
on Renewable Energy and
Energy Efficiency
IDAInternational Development
Association
IEA
International Energy Agency
IECInternational Electrotechnical
Commission
IEDNIndependent Electricity
Distribution Networks
IFC
International Finance Corporation
IMF
International Monetary Fund
IOC
International Oil Companies
IPP
Independent Power Producer
ISOInternational Organisation
for Standardization
JICAJapan International
Cooperation Agency
ktoe
Kilo Tons of Oil Equivalent
KSPP
Karshi Solar Panel Plant
LCOE
Levelised Cost of Energy
LED
Light-emitting Diode
LEEDLeadership in Energy and
Environmental Design
LEMEList of Eligible Equipment
and Materials
LGA
Local Government Area
LHP
Large Hydropower
LNG
Liquefied Natural Gas
LOI
Letter of Intent
LV
Low Voltage
MAN
Manufacturers Association of Nigeria
MEPSMinimum Energy Performance
Standard
MFI
Main Financial Institution
MIGAMultilateral Investment
Guarantee Agency
MO
Market Operator
MRC
Mortgage Re-financing Company
MSMEMicro, Small- and Medium-Scale
Enterprises
MSW
Municipal Solid Waste
Mtoe
Million Tonnes of Oil Equivalent
MYTO
Multi Year Tariff Order
NACANNational Advocacy Campaign on
Adaptation in Nigeria
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NACCIMA National Association of Chambers
of Commerce, Industry, Mines
and Agriculture
NAE
Nigeria Alternative Energy
NAPTINNational Power Training Institute
of Nigeria
NARAPNigerian Association of Refrigeration
and Air Conditioning Practitioners
NASENINational Agency for Science and
Engineering Infrastructure
NASPA-CCNNational Adaptation Strategy and
Plan of Action for Climate Change
in Nigeria
NBETNigerian Bulk Electricity Trading Plc
NBS
National Bureau of Statistics
NCCS National Clean Cooking Scheme
NCEAP
Nigerian Clean Energy Access Program
NCEECNational Centre for Energy Efficiency
and Conservation
NCERDNational Centre for Energy Research
and Development
NCHRDNational Centre for Hydropower
Research and Development
NCPRDNational Centre for Petroleum
Research and Development
NCS
Nigerian Custom Service
Niger Delta Power Holding Company
NDPHC
NEEDSNational Environmental, Economic
and Development Strategy
NEEP
National Energy Efficiency Policy
NEMP
National Energy Master Plan
NEP
National Energy Policy
NEPA
National Electric Power Authority
NEPP
National Electric Power Policy
NERCNigerian Electricity Regulatory
Commission
NESI
Nigeria Electricity Supply Industry
NESP
Nigerian Energy Support Programme
NESREANational Environmental Standard and
Regulatory Agency
NGC
Nigerian Gas Company Limited
NGF
Nigeria Governors’’ Forum
NGEP
Nigerian German Energy Partnership
NGN
Nigerian Naira (Currency)
NIA
Nigerian Institute of Architects
NIAFNigeria Infrastructure Advisory
Facility
NIOB
Nigerian Institute of Building
NIPCNigerian Investment Promotion
Commission
NIPP
National Integrated Power Project
NIS
Nigerian Industrial Standard
NIYAMCONigerian Yeast and Alcoholic
Manufacturers
NNPCNigerian National Petroleum
Corporation
NOO
National Ozone Office
NORADNorwegian Agency for Development
Cooperation
NPC
National Planning Commission
NREEEPNational Renewable Energy and
Energy Efficiency Policy
NSE
Nigerian Society for Engineers
NUMCO
Nigerian Uranium Mining Company
ONEMOperator of the Nigerian
Electricity Market
OPECOrganisation of the Petroleum
Exporting Countries
OPIAMUOzone Project Implementing
and Management Unit
PACPPresidential Action Committee
on Power
PCHN
Power Holding Company of Nigeria
PDP
People’s Democratic Party
PHCN
Power Holding Company of Nigeria
PIB
Petroleum Industry Bill
PMS
Premium Motor Spirit
PPA
Power Purchasing Agreement
PPP
Public Private Partnership
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PSF
Petroleum Support Fund
PTFP
Presidential Task Force on Power
PVPhotovoltaic
PVES
Photovoltaic Energy Systems
Qua Iboe IPP
QIPP
RE
Renewable Energy
REA
Rural Electrification Agency
REAPRenewable Electricity Action
Programme
REEEPRenewable Energy and Energy
Efficiency Programme
REF
Rural Electrification Fund
REMP
Renewable Energy Master Plan
REP
Rural Electrification Policy
REPGRenewable Electricity Policy
Guidelines
Rural Electrification Policy Paper
REPP
Renewable Energy Power Systems
REPS
Rural Electrification Strategy and Plan
RESP
Rural Electrification Strategy and Plan
RESP
RET
Renewable energy technologies
Rural Women Energy Security
RUWES
SCADASubstation Control and Data
Acquisition
Sokoto Energy Research Centre
SERC
Small Hydro Power
SHP
Solar Home Systems
SHS
Small- and Medium-Scale Enterprises
SME
System Operator
SO
SON
Standards Organisation of Nigeria
SONCAPSON Conformity Assessment
Programme for Exports
SURE-PSubsidy Reinvestment and
Empowerment Programme
SWH
Solar Water Heaters
Transmission Company of Nigeria
TCN
Transitional electricity market
TEM
TIB
The Infrastructure Bank, Nigeria
Total Primary Energy Supply
TPES
TSP
Transmission Service Provider
UK
United Kingdom
UN
United Nations
UNDPUnited Nations Development
Programme
UNESCOUnited Nations Educational, Scientific
and Cultural Organization
UN-HABITATUnited Nations Human Settlement
Programme
UNHCRUnited Nations High Commissioner
for Refugees
UNICAL
University of Calabar
UNIDOUnited Nations International
Development Organisation
UNOPSUnited Nations Office for Project
Services
US$
United States Dollar (Currency)
USA
United States of America
USAIDUnited States Agency for International
Development
World Bank
WB
Wholesale Electricity Market
WEM
Wind Information System
WIS
Units of Measurement
UnitDescription
British thermal units
Btu
GWGigawatt
GWh
Gigawatt hours
kVKilovolt
kWKilowatt
kWh
Kilowatt hours
ML
Million Litres
MWMegawatt
toe
Tons of oil equivalent
Exchange Rates
1 Euro (EUR) equals 200 Naira (NGN)
1 US Dollar (US$) equals 160 Naira (NGN)
1. EXECUTIVE SUMMARY
The Nigerian energy sector has changed fundamentally
in recent years. The Nigerian Government has made it
clear that it seeks to deregulate and restructure the sector,
with the goal to completely unbundle the oil and gas sector and to privatise the power sector. An indication of
this approach was the withdrawal of a large percentage of
the subsidy on petrol in January 2012, following the deregulation of the diesel market in summer 2009, in an
effort to free up revenue for infrastructure investments.
15
This study is elaborated under the framework of the Nigerian Energy Support Programme (NESP), financed by
the German Federal Ministry for Economic Cooperation
and Development (BMZ) and the European Union and
administered by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), in cooperation with the
Federal Ministry of Power and other Nigerian partner
organisations.
The Study Purpose
With an installed capacity of 13 308 MW, only 6 158 MW The study seeks to outline the current status of the Nigewere operational in 2014. Of these, only between 3000 rian energy sector and to analyse which opportunities this
MW to 4 500 MW are actually being generated due to spells for the subsectors of on-grid renewable energy, energy
unavailability of gas, breakdowns, water shortage and grid efficiency and off-grid rural electrification.
constraints. The poor performance of the power plants
This study provides national stakeholders, international
has led to acute shortage of power across the country.
development partners and private investors with an overAltogether, up to 2 700 MW of power generation capa- view and supplementary baseline information in order to
bilities are regularly lost due to gas constraints in a coun- initiate and facilitate the flow of private and public intry with one of the largest natural gas deposit in the vestments into the fields of renewable energy and energy
world. Up to 500 MW are lost due to water management, efficiency. The study is based on data gathered from existwhile several hundred megawatts are regularly lost due to ing databases and a series of interviews conducted in the
line constraints. Industry, commerce and private house- country from January until October 2014 and feedback
holds are suffering from a severe shortfall in electricity received by April 2015.
generation.
Any such study is beset by the challenge of identifying
With the intention of incentivising private-sector invest- reliable data. In the absence of a central electronic data
ment in the power sector, the government has privatised gathering unit in the power sector and conflicting statethe generation and distribution sections in two waves. ments made in the context of political agenda setting,
The proceeds are sensibly being dedicated to infrastruc- data verification by comparison with at least one other
ture expansion and, in the case of the second wave, a large data set has been difficult.
part of the revenue has been earmarked for expansion of
Moreover, sources are not always given in studies or pathe country’s array of hydropower plants.
pers that offer statistics, meaning citation of such sources
However, the process of privatisation is still ongoing. At is potentially problematic, especially if they are the only
present it is impossible to say with any certainty whether source. For the purposes of this study we have consulted
the independent power producers who now form the national and international data sets for each case.
backbone of the Nigerian power sector will be commercially viable. As part of the process, however, the govern- Structure of the Study
ment has started to encourage investments in both renew­ Chapter 2 (Introduction to Nigeria) and Chapter 3 (The
able energy and energy efficiency.
Nigerian Energy Sector) give an introduction to the Nige-
EXECUTIVE SUMMARY
16
rian context, the economy and current status of the energy 2.to focus efforts on development of solar photovoltaic
(PV) farms and small hydropower plants (primary
sector. The latter chapter further deliberates on the curfocus on quick wins)
rent status of ongoing privatisation in the energy sector.
Chapter 4 (Energy Market – Stakeholders and Roles) ex- 3.to link the vast biomass potential to rural electrification schemes
plains the energy market, its stakeholders and their main
4.to pin-point the wind potential through detailed
roles and functions.
mapping and the identification of development corridors
Policies and strategies in the fuel and electricity market are
outlined in Chapter 5 (Energy Policy). This chapter gives a 5.to align policies between governmental institutions,
thus mitigating potential conflicts and to continue
fundamental overview of the laws, regulations, policies
the support of the nation’s current electricity delivand programmes currently enacted or under discussion.
ery system
Chapter 6 (On-Grid Renewable Energy) identifies the im- 6.to strengthen key stakeholders capacity in order to
ensure the achievement of the policy targets and to
mense potential for private investment in renewables tomonitor and evaluate its results based on sound data
day and highlights the role this could play in significantly
and reliable statistical records
boosting the national generation capacity. As regards energy efficiency, in Chapter 7 (Energy Efficiency) the study 7.to develop financial and investment instruments inidentifies high potential for energy efficiency gains.
cluding public-private partnerships (PPPs) and promote the contribution of private banks and International Financial Institutions (IFIs)
In Chapter 8 (Rural Electrification, Including Off-Grid
Renewable Energy), the study explores the status of rural
electrification in Nigeria today and the policies put in Energy Efficiency
place to increase access to energy. Conclusions and rec- The energy efficiency market is a start-up market. As part
ommendations and are presented in Chapter 9, Conclud- of the process, the government has started to draft mechanisms to encourage investments in energy efficiency
ing Remarks.
through policies, strategies and support provisions. Up to
now there is neither real experience, nor historical data
Main study findings and recommendations
available. At the same time, it is now well understood
that energy efficiency is a source of energy.
On-Grid Renewable Energy
The reasoning for on-grid renewables is strong. On the one
hand, power plants overcome geographical grid challenges The study’s main recommendations are:
and on the other hand, renewable energies offer fast-deliv- 1.to familiarise institutions with the concepts of energy efficiency and energy management, and to build
ery solutions and are cost-effective especially when replaccapacities for policy development, implementation
ing diesel generation capacity. At the same time, challengand monitoring
es are highlighted in what could be a key pioneering area.
2.to finalise, approve and operationalise the National
Energy Efficiency Policy (NEEP) including the mix
The study’s main recommendations are:
1.to set-up a structured and reliable support mechaof regulatory policy and public financing mechanisms
nism such as a Bidding System for utility scale (largin order to give a clear basis for decision making to
er than 10 megawatt) renewable energy and a feed-in
investors
tariff for small renewable energy projects
3.to develop financial and investment instruments
EXECUTIVE SUMMARY
17
adapted to each energy efficiency market segment 5.for micro-hydro schemes to first evaluate the cost/
benefits of run-of-the-river micro systems and of
(for example for industry/buildings: to offer incenconverting micro-dams into hydropower systems
tives through savings from a better conversion rate
and for the private household segment: microfinance 6.for wind, to encourage stand-alone microsystem water irrigation pumps (backed up by instructions
schemes; non-bank financial institutions; bank conschemes on O&M)
sumer loans for appliances; leasing provisions; donor
7.for biomass, to first assess the prospects of small
lending programmes)
bio-digesters in line with the biomass resource po4.to create a greater government and public awareness
tential
in two areas: the use of efficient diesel generators and
in the introduction of standards and labels
5.for industry to focus primarily on the establishment
of an energy efficiency financing facility designed for
small- and medium-sized enterprises (SMEs)
6.for buildings (with a primary focus on public buildings) to develop and implement energy building codes
7. for household appliances to introduce energy efficiency standards as a first priority
Off-Grid Rural Electrification
The study determines that there is great potential for rural electrification and that some of it could be accounted
from renewable sources. However, the government will
need to address the issue of sourcing of investments. Potentially, this third subsector is the one where government
and international donor agencies will need to join forces.
The study’s main recommendations are:
1.to finalise, approve and operationalise the Rural
Electrification Strategy and Plan (RESP) incl. the
mix of regulatory policy and public financing mechanisms
2.
to operationalise the Rural Electrification Fund
(REF) and IFIs a clear basis for decision making
3.to strengthen institutions to ensure the delivery of
the RESP targets including its monitoring and evaluation based on sound data and relevant statistical
records
4.for solar PV, to encourage the provision of solar
packs (incl. panels and battery storage systems
backed up by O&M instructions) for households
and microsystem water irrigation pumps
2. INTRODUCTION TO NIGERIA
The Federal Republic of Nigeria is a federal constitutional
republic comprising thirty-six states and the Federal
Capital Territory, Abuja. The country is located in West
Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in the north. Its Atlantic coast runs along the Gulf of
Guinea, in the south.
18
2.1Geography, Climate and Political
Situation
2.1.1Geography
Since 1991, the capital city is Abuja. At its widest, Nigeria
measures about 1,200 km from east to west and about
1,050 km from north to south. The country’s topography
ranges from lowlands along the coast and in the lower NiThe following chapters will summarise key aspects around ger Valley to high plateaus in the north and mountains
the geography, climate, political situation, demography, along the eastern border. The country is bifurcated by
two main rivers, the Niger and the Benue. The ecology
economy and Nigeria’s regional context.
FIGURE 2 – 1:
MAP OF NIGERIA
(Prepared by GOPA-International Energy Consultants GmbH)
INTRODUCTION TO NIGERIA
varies from tropical forest in the south through savannah
to the sub-Sahel zone in the far north. Figure 2 – 1 shows
the map of Nigeria.
TABLE 2 – 1: NIGERIA´S GEOPOLITICAL ZONES WITH
CORRESPONDING STATES AND LAND MASS
Geopolitical Zones
States
North-Central
Abuja-FCT
North-East
North-West
South-East
South-South
30,800
Kogi
27,747
Kwara
35,705
Nasarawa
28,735
Niger
76,469
Plateau
27,147
Adamawa
38,700
Bauchi
49,119
Borno
72,609
Gombe
17,100
Taraba
56,282
Yobe
46,609
Kaduna
42,481
Kano
20,280
Katsina
23,561
Kebbi
36,985
Jigawa
23,287
Sokoto
27,825
Zamfara
37,931
Abia
4,900
Anambra
4,865
Ebonyi
6,400
Enugu
7,534
Imo
5,288
Akwa-Ibom
6,900
Bayelsa
9,059
21,787
Edo
19,187
Delta
17,108
Rivers
10,575
Ekiti
5,435
Lagos
3,671
Ogun
16,400
Ondo
15,820
Osun
9,026
Oyo
TOTAL km²
7,607
Benue
Cross-River
South-West
Land Area in km²
26,500
917,434
(Prepared by GOPA-International Energy Consultants GmbH)
19
The Federal Republic of Nigeria is divided into six geopolitical zones and 36 federal states. Table 2 – 1 and Figure
2 – 2 show the federal states and the Federal Capital Territory, Abuja.
2.1.2Climate
Temperatures across the country are relatively high, with
very narrow variation in seasonal and diurnal ranges, and
wide regional differences. There are two main seasons: the
rainy season (usually April to October); and the dry season
(November till March). The dry season commences with
Harmattan winds, a dry chilly spell that lasts till February
and is associated with lower temperatures and dust brought
by the winds blowing from the Arabian Peninsula across
the Sahara. The second half of the dry season, namely February till March, is the hottest period of the year (temperatures range from 33 to 38 °C and are at their highest, as is
aridity, in the north). Given this climatological cycle and
the size of the country, there is a considerable variation in
total annual rainfall across the country, both from south to
north and, in some regions, from east to west. The maximum total precipitation is generally in the southeast, along
the coastal area of Bonny and east of Calabar, where mean
annual rainfall is more than 4,000 millimetres. A table of
annual rainfall by state is included in Annex 1, Table A – 1.
Köppen-Geiger classified the world into climate zones. A
world map of climate zones has been updated by [Peel, M.
C., Finlayson, B. L., and McMahon, T. A; 2007]. According to this world map, Nigeria has five climatic zones
ranging from tropical rainforest climate in the south to
dry desert climate in the north (cf. Annex 1, Figure A – 1).
Examples of climate charts for different locations across
Nigeria, namely for Kano, Minna and Lagos are shown in
Annex 1, Figure A – 2, Figure A – 3 and Figure A – 4.
2.1.3 Political Situation
After decades characterised by intermittent civilian rule
and military leadership, Nigeria has been ruled democratically since 1999. The political system is a presidential
democracy with parliamentary responsibility distributed
INTRODUCTION TO NIGERIA
20
across a bicameral system of a senate and a house of repre- Nigeria has suffered from several attacks by the Islamist
sentatives.
militant group Boko Haram, which is especially active in
the North Eastern geopolitical zone. The group has killed
The party system has gone through a transformation pro- thousands of people in its strive to establish an Islamic state.
cess where the People’s Democratic Party (PDP) has relinquished much political power and faces a strong opposi- 2.2 Demography
tion. In February 2013, the All Progressives Congress
(APC) arose as the result of a merger by Nigeria’s four With a population of over 170 million, Nigeria is the
biggest opposition parties.
most populous country in Africa and the eighth most
populous country in the world. According to the United
In April 2015, former military ruler Muhammadu Bu- Nations, one in six Africans is Nigerian. It is a regional
hari (APC) has become the first opposition candidate to power, listed among the “Next Eleven” economies, and a
win a presidential election in Nigeria. He already ruled member of the Commonwealth of Nations. The current
Nigeria from January 1984 until August 1985 after stag- population density varies among the Nigerian states.
ing a military coup. His predecessor, Goodluck Jonathan States in the north east and north west tend to be less
populated (cf. Figure 2 – 2). There is only one state with
(PDP), led Nigeria since 2010.
FIGURE 2 – 2:
POPULATION DENSITY IN NIGERIA IN 2006
(Prepared by GOPA-International Energy Consultants GmbH)
INTRODUCTION TO NIGERIA
21
more than 1,000 inhabitants per square kilometre, name- businesses in different industries to see how fast they are
ly the megacity of Lagos with a population rate of 2,695 growing. The weight they give to each sector depends on
persons/km² and a total population of 9,113,605 in 2006 its importance to the economy in the base year. Naturally,
[NBS; 2011] (cf. Figure 2 – 2). [25], [60] Approximately these figures become less and less accurate over time. Nihalf of the inhabitants live in urban areas.
geria’s old GDP data relied on an outdated snapshot of its
economy in 1990. The new figures (which have 2010 as
The population growth rate is projected to be between 2.5 the base year) give due weight to fast-growing industries
and 2.7% per annum in the next 20 years. The population such as mobile telecoms and film-making that have
of Nigeria is therefore forecast to potentially grow to 310 sprung up since then. Moreover, Nigeria’s statisticians
million by 2035 (cf. Annex 1, Table A – 2). A total of 54.4% have improved the gathering of data. For instance, the
of the population were living below the international pov- old GDP figures were based solely on estimates of output.
erty line of US$ 1.25 per day in 2011 according to the The new ones are now being reconciled with separate surWorld Bank [25], [60]. Moreover, 46% of the population veys of spending and income.
live below the national poverty line 1. A middle class has
been fast emerging in recent years, especially in the cities. As a consequence of the re-basing, the estimate for Nigeria’s GDP in 2013 was revised upward from 42.4 trillion
Naira to 80.2 trillion Naira ($500 billion), an 89% in2.3Economy
Nigeria’s Gross Domestic Product (GDP) was revised in crease (cf. Table 2 – 2). With the re-based GDP, Nigeria
2013. GDP is typically measured by reference to the overtook South Africa and is now the largest economy on
shape of the economy in a “base” year. Statisticians sample the continent.
TABLE 2 – 2:
NIGERIA MACROECONOMIC INDICATORS BEFORE1 AND AFTER RE-BASING2
Year
1980*
1985
1995
2005
2010
2011
2012
2013
2014 3
2015 3
2016 3
GDP, current
prices,
US$ billion
60.6
26.0
36.9
112.2
369.1
414.1
461.0
515.0
581.9
597.8
661.4
GDP nominal
growth, (%)
–
-57.1
17.4
142.0
15.32
13.87
11.68
7.8
4.9
4.3
5.4
6.2
5.6
6.5
2,396
2,612
2,835
3,082
3,416
3,677
Real GDP
growth (%)
GDP per capita, current
prices, US$**
1
885
331
356
824
Source: [IMF; Oct 2013]
2 Source: [EIU; 2014]
3 EIU estimation and forecast
* 1980 - 2005 figures: before rebasing (italics); figures for 2010 onwards after rebasing
** from 2010 onwards AfDB data [80]
1National estimates are based on population-weighted subgroup estimates from household surveys. World Bank data are based on World
INTRODUCTION TO NIGERIA
The nominal GDP growth rate was 11.68 % in 2012 and
according to the Economist Intelligence Unit [EIU;
2014] real GDP is expected to further grow at a constant
rate of around 7% per year. Based on old data (i.e. before
rebasing) it could be concluded that the non-oil sector
drove the economy, with average growth of about 10% in
2012, compared to –0.35% for the oil and gas sector
[IMF; Oct 2013]. High consumer demand was the main
force behind non-oil sector growth.
The inflation rate averaged 12% over the last 20 years and
stood at 8.1% in 2014.
The Nigerian economy still suffers from inadequate diversification in the wake of first commercial oil production in the late 1950’s and the collapse of the nascent
manufacturing sector from the mid-1980’s onwards. For
example, since that time car assembly in Nigeria has
ceased and the tire industry has collapsed. The sporadic
availability of electricity still forces manufacturers to deploy diesel generators for reliable electricity supply. In
TABLE 2 – 3:
SECTORAL SHARES OF GDP I N PERCENT, 2012
%
New
Old
Agriculture
22.1
33.1
Crude Oil and Gas
15.8
37
Trade
16.5
15.5
Manufacturing
7.4
1.9
Of which food and tobacco
4.4
–
Construction
3.1
1.3
Transportation
1.3
1.6
Telecommunications
8.3
0.8
Electricity and Gas
0.5
0.2
Finance and Insurance
2.8
1.6
Real Estate
7.7
4.5
Entertainment, Broadcasting,
Motion Pictures, Music
2.0
–
Public Administration
3.1
–
Prof., Scientific and
tech. services
3.7
–
Other
5.7
2.5
Source: [NBS 2014]
22
consequence this induces uncompetitive electricity cost
and frequently leads to factory closings (further details in
Chapter 3).
The top five drivers of the economy are the following sectors: agriculture, trade, oil and gas, information and communications, and manufacturing. These top five sectors
represent more than 70% of total GDP [NBS; 2014]. The
main businesses are cement production, light industry
(aluminium processing, paints), food and beverage packaging, as well as subsectors supplying the oil and gas industry. The latter are increasingly indigenous operations.
The country has about 70 million hectares of farmland,
primarily located in the Middle Belt, with areas in the
sub-Sahel zone largely untouched to date owing to a lack
of irrigation capacity. Despite this agricultural potential,
less than 50% of the total farmland in Nigeria is cultivated, and agricultural productivity is low because of the
lack of modernisation. Nigeria today imports food to
meet domestic demand, with the import bill for wheat,
rice, sugar and fish estimated at NGN 1 trillion (US$ 6.4
billion) per annum. Agriculture sources some 20% of GDP
and employs about 70% of the work force. [1]
These main drivers of economic growth do not require
large amounts of labour and thus fail to absorb the 1.8
million new annual entrants into the labour market. The
unemployment rate according to the definition of the International Labour Organisation (ILO) is below 10%,
while a stricter definition applied by the Nigerian government sets this figure at 24% for 2011.
2.4 Regional Context
Nigeria is West Africa’s powerhouse in terms of population and GDP. It represents 55% of West Africa’s GDP,
whereby for instance the GDP of Lagos is larger than that
of Ghana. Nigeria’s rebased GDP (cf. Chapter 2.3) makes
Nigeria the largest economy in Africa and the 26th largest economy in the world.
INTRODUCTION TO NIGERIA
Nigeria is a driving force on the continent through its
strategic and financial leadership in the Economic Community of West African States (ECOWAS). Abuja has
been home to the ECOWAS headquarters since the organisation was founded in 1975. Conversely, Nigeria’s
internal problems dog the sub-region, and commentators
have suggested this has led to the stalling of the political
and economic integration of ECOWAS. At the same
time, Nigeria provided the African Union contingent in
Mali and is driving economic growth in the region, with
Nigerian companies investing in many other West African countries.
Nigeria is also part of the West African Power Pool
(WAPP), a specialized institution of ECOWAS. The target of WAPP is to ensure regional power system integration and realization of a regional electricity market. It
covers public and private generation, transmission and
distribution companies.
23
3. THE NIGERIAN ENERGY SECTOR
The power sector in Nigeria is seen by many analysts as
the key constraint on economic development. Assessing
the ease of getting electricity, the World Bank ranked Nigeria 187 of 189 countries in the 2015 edition of its Doing Business report. For a business in Lagos, to obtain
permanent electricity connection takes 260 days [WB;
2014: b]. Once connected to the electricity provider, Nigerian businesses’ biggest reported problem is the erratic
power supply. About 83% of all managers surveyed considered electricity outages to be a serious problem – more
than any other constraint. Firms of all sizes, in all states
and sectors, report average power outages equivalent to
eight hours per day. The average firm claims outage related losses equivalent to more than 4% of sales. No peer
country experiences such severe business losses related to
the power supply. [World Bank (WB); 2011]
The underlying reasons for the negative development regarding electricity supply in Nigeria are apparent. Investment in the nationalised power sector had seriously diminished by the early 1990’s, with maintenance budgets
greatly reduced and no new capacity added. This statement applies to both the national grid and the fleet of
power stations. The gap between the latter’s nameplate
capacity and actual generation capacity widened constantly by the end of the 20th century and is still the
main barrier to stable and reliable energy supplies to the
Nigerian consumers.
24
Nigeria is Africa’s largest oil producer and in 2012 was
the world’s fourth largest exporter of liquefied natural
gas (LNG from associated petroleum gas). Against this
backdrop it is no surprise that mining and quarrying
(incl. crude oil) is one of the top 5 drivers of the Nigerian
economy. While oil only contributes 16% the GDP, it accounts for approx. 75% of Government revenues and 90%
of export earnings.
However, Nigeria’s oil production is at present impeded
by the challenges of oil theft and supply disruptions
caused by pipelines being sabotaged or failing. The gas
sector is restricted by the ongoing shortfall in infrastructure to monetise gas that is presently flared 2 . And even
though Nigeria is among the leading exporters of crude
oil in the world, it still imports about 85% of its refined
petroleum products due to low capacity utilisation of its
domestic oil refineries (around 30%). While the price of
petrol at the pump is still subsidised in order to compensate for the high prices of international traded refined
oil,3 the diesel price was deregulated in 2009. This significantly increased the cost of private electricity generation.
Due to the high dependence of the Nigerian economy on
its oil industry, changes in oil prices in the international
market naturally have a big impact on Nigeria’s overall
revenue. Accordingly, the sharp fall in oil prices between
July 2014 and January 2015 has resulted in a 28 % drop of
Nigeria’s revenue. [76]
Alarmed by the critical electricity supply situation the
government privatized the electricity sector in 2013 with 3.1 Energy Resources
the aim to improve the reliability of electricity supply (cf.
Chapter 3.4) [75]. However, the restructuring of the sec- According to the Organisation of the Petroleum Exporttor will inevitably take its time and will only gradually ing Countries (OPEC), Nigeria, Africa’s largest oil proalter the reliability of the system.
ducer has about 37 billion barrels of proven oil reserves
and 187 trillion cubic feet of proven natural gas reserves.
In addition to the challenges caused by its weak electricity With an average production of approx. 1.8 to 2.4 million
sector, Nigeria also faces challenges in its historically barrels of oil per day, Nigeria is ranked seventh largest
OPEC crude oil producer between 2009 and 2013 [47].
strong oil industry.
To date, there has been no dedicated gas exploration, and
2Efforts are being made to promote foreign direct investment in the domestic gas infrastructure. One project of note is
the planned Delta Gas City in Ogidigben, Warri-South Local Council Area of Delta State. [17], [64]
3Petrol subsidies amounted to almost 1 trillion Naira (6.25 billion US$) in 2014, but are likely to be reduced substantially in 2015 due to decrease of oil revenues.
THE NIGERIAN ENERGY SECTOR
25
Nigerian Energy Sector). The country’s strong potentials
for renewable energy are further described in Chapter 6 –
On-Grid Renewable Energy.
the gas reserves consist solely of associated petroleum gas.
While the natural gas reserves remain untapped, Nigeria
exported more than 8% of globally traded liquefied natural gas (LNG from associated petroleum gas) in 2012
(4th largest producer worldwide) [63]. Moreover, there
are strong coal seams in Kogi and Enugu states that have
not yet been mined on a large scale, although plans are
already afoot.
3.2 Primary Energy Supply
The historic development of energy supply in Nigeria is
illustrated in Figure 3 – 1. Since the 1970’s the reliance on
biofuels and waste has risen in absolute terms, while that
Proven reserves of oil and gas are listed in Table 3 – 1. of oil and natural gas has remained fairly constant, deWith the current production of fuel, 42 years of extrac- spite the increase in the extractive industries. Presumably
tion of oil and 120 years of extraction of gas remain.
this can be attributed to the cost of oil and natural gas to
the consumer, the lack of domestic refining, and the abTo date, Nigeria has tended to rely on its fossil fuel resourc- sence of a pronounced infrastructure for domestic gas
es. At the same time, the country since the late 1960’s has utilisation. Chapter 8 will further deal with Nigeria’s
focused on establishing hydropower plants in order to high dependence on biofuels and waste.
exploit the great potential available (cf. Chapter 3 – The
TABLE 3 – 1:
OVERVIEW OF FOSSIL FUEL RESOURCES, 2012
Oil
Gas
Coal (total recoverable)
Reserves
37.2 billion barrels
5.2 trillion cubic metres
209.4 (million short tons) (2008)
Production
2417 thousand barrels per day
43.2 billion cubic metres
per year
n/a
Years of extraction remaining
42 years
120 years
n/a
Source: [BP; 2013]
FIGURE 3 – 1:
HISTORICAL TOTAL PRIMARY ENERGY SUPPLY (MTOE) 1971-2011
Source: IEA, [46]
THE NIGERIAN ENERGY SECTOR
26
It bears noting that despite being a leading oil and liquid
natural gas producer, Nigeria paradoxically imports the
fossil-fuel products it currently uses. Accordingly a total
of 8.44 Mtoe of oil products was imported. Exports comprise crude oil with 126.4 Mtoe, oil products with 0.8
Mtoe and natural gas with 21.0 Mtoe. This situation is
mainly caused by the former mentioned shortage of domestic refining facilities.
Table 3 – 2 summarizes the energy balances for Nigeria in
2012, based on the statistics from the International Energy Agency [46]. According to this data, in 2012 total Nigerian primary energy supply was 133.7 Million tons of
oil equivalent (Mtoe) excluding the electricity trade. The
share of biofuels and waste was about 80.9%, while natural gas with 9.4%, oil with 5.7%, and hydropower with
0.4% show significantly smaller shares.
TABLE 3 – 2:
ENERGY BALANCES FOR NIGERIA IN 2012 (KTOE)
Energy Balances
for Nigeria in 2012
(ktoe)
Production
Oil products
Natural Gas
Hydro
Biofuels and
waste
Total
30
129,409
0
33,645
487
108,142
271,712
Imports
0
0
8,440
0
0
0
8440
0
-126,413
-755
-21,032
0
0
-148,201
International
marine bunkers
0
0
-397
0
0
0
-397
International
aviation bunkers
0
0
-186
0
0
0
-186
Stock changes
0
1830
538
0
0
0
2368
30
4,825
7,640
12,613
487
108,142
133,736
0.02%
3.61%
5.71%
9.43%
0.36%
80.86%
100.00%
TPES (%)
1
Crude oil
Exports
TPES1 Total
Primary Energy
Supply
Coal and peat
Source: IEA, [46]
Totals may not add up due to rounding
THE NIGERIAN ENERGY SECTOR
27
3.3 Energy Consumption
Figure 3 – 2 shows the total energy consumption by resources for Nigeria in 2012 [46]. Around 85% of Nigeria’s
consumed energy, 99.3 Mtoe annually, comes from biofuels and waste. Almost 90% of that energy is consumed for
residential usage. This means that biofuels and waste covers about 98% of the energy demand in the residential sector. The lion’s share of that most probably is for cooking
purposes, as only thus can the predominant proportion of
biofuels and waste be explained. The remaining energy in
Figure 3 – 2 stems from conventional energy resources
(~13%), with most of it being reimported oil products.
The share of electricity in final energy consumption is almost marginal at less than 2%.
The use of biofuels is the single largest factor accounting
for the change in the country’s vegetation and the increase in desertification 4. Moreover, the problem will be
compounded as the rural population increases in line
with the forecast rate of 2.5% p.a.
FIGURE 3 – 2:
TOTAL ENERGY CONSUMPTION BY RESOURCES IN 2012
Source: IEA, [46]
Excursus: Annual fuel wood consumption per person:
Given a population of 170 million, primary energy consumption translates into 6,650 kWh per person. With a cubic
metre of wood sourcing 2,600 kWh, per capita consumption of fuel wood is 2.5 m³. Given, moreover, that about 69.8%
of Nigerian population depends on fuel wood for domestic and cottage industry purposes, those using fuel wood for
energy purposes are consuming about 3.3 m³ of wood a year. The situation is compounded by the predominant use
of inefficient cooking methods, based largely on open fire with obviously low thermal efficiency and associated
smoke related ailments, especially among women and children.
4The Approved National Forest Policy of 2006 states that between 1978 and 1995, there was a decrease in natural forests from 23,429,100 ha. to 15,097,900 ha.
(25.7% to 16.0%), with a decrease in shrub/grassland from 13,441,200 ha. to 11,774,300 ha. (14.8% to 12.9%), while the increase in agricultural land use was from
50,293,500 ha. to 58,497,700 ha. (55.3% to 64.4%)
THE NIGERIAN ENERGY SECTOR
Figure 3 – 3 illustrates the total energy consumption by
economic sectors as well as the consumption per capita
for Nigeria and 4 other countries (Bangladesh, Brazil, Indonesia and South Africa), which for the remainder of
this study will serve as a peer group.
28
much lower share of residential energy consumption. In
addition a shortfall in transportation infrastructure can
be deducted. The peer group comparison also highlights
the problems the Nigerian industry faces, as residential
energy consumption outstrips that for industry by a fac-
FIGURE 3 – 3: TOTAL ENERGY CONSUMPTION BY ECONOMIC SECTORS AND CONSUMPTION PER CAPITA
FOR NIGERIA AND PEER COUNTRIES (2012)
Source: IEA, [46]
With a share of about 78%, the residential sector accounts
for most of the final energy consumption in Nigeria, followed by industrial use, whereby the latter only amounts
to approx. 9%, followed by the rapidly expanding transport sector.
The peer-group comparison reveals that in percentage
terms energy consumption in Nigeria is skewed firmly
towards the residential sector. All other countries show a
tor of almost nine. Given the substantial proportion of
the population that lives in rural areas, electricity generation to drive industrialisation and rural electrification
are both policy imperatives.
Figure 3 – 3 also lists the per capita consumption per
country. Nigeria’s per capita energy consumption of 0.69
toe is almost equal to the figure in Indonesia. South Africa
(1.36 toe) and Brazil (1.13 toe) on the other hand have a
THE NIGERIAN ENERGY SECTOR
29
significantly higher per capita consumption, while Bang- The Pre-Transition Stage embodies the beginning of the
ladesh (0.16 toe) shows the lowest per capita consumption end of the monopoly and kicks off the physical unbundling and privatisation of the NEPA. For this purpose
of all peers.
the NEPA was restructured and transformed into the
Detailed figures comparing Nigeria with its peers are pro- Power Holding Company of Nigeria (PHCN). From 2007
vided in Annex 2 (cf. Table A – 4). This comparison re- until September 2013 PHCN acted as the state-owned
veals that, unlike the peers, Nigeria has by far the lowest agency responsible for generating, transmitting and distotal electricity consumption.
tributing electricity for the entire country. Meanwhile
the FGN sought to sell-off much of the state-owned stake
in the electricity services industry, only retaining the
3.4 Electricity Market Development
transmission grid as a public entity.
Prior to the enactment of the Electricity Power Sector
Reform Act (EPSRA, 2005), the Federal Government of As a first step the government-owned generating compaNigeria (FGN) was responsible for policy formulation, nies (GENCOs) were put up for sale in two forms: The
regulation, operation, and investment in the Nigerian thermal power stations were to be sold outright and the
power sector. Regulation of the sector was conducted by hydropower stations were concessioned. Moreover, distrithe Federal Ministry of Power (FMP) with operations bution was unbundled into 11 successor distribution
handled by the National Electric Power Authority (NEPA), companies (DISCOs) 5. The privatisation was undertaken
a wholly state-owned entity responsible for power genera- in form of a competitive bidding process and was comtion, transmission and distribution. From 1972 to 2005, pleted in November 2013 with the handover of asset to
NEPA controlled about 94% of the generation capacity the 6 private generation and 11 distribution companies.
and 100% of the transmission and distribution sector of FGN retained control of the transmission and system operation under the Transmission Company of Nigeria
the industry.
(TCN), which has a system and a market operator diviTo address the twin issues of NEPA’s poor operational sion. The transmission lines and generators are interconand financial performance, the FGN amended the then nected in a common grid, with a single control centre at
prevailing laws (Electricity and NEPA Acts) in 1998 to Oshogbo (cf. Chapter 4.3).
remove NEPA’s monopoly and encourage private sector
participation. The National Electric Power Policy, 2001, As a second step, the FGN founded a regulator (NERC)
specified the reform agenda, while EPSRA provided the and a bulk trader (Nigerian Bulk Electricity Trading Plc,
legal basis for the unbundling of NEPA, the formation of NBET), whereby the latter shall only exist until such a
successor companies and the privatisation of the latter. time as the electricity market is fully privatised, after which
The EPSRA envisages a phased implementation of the the power purchase agreements it has signed will be passed
power sector reforms to strategically guide the current on to the DISCOs. It also established the Operator of the
market into a competitive market based on clear regula- Nigerian Electricity Market (ONEM) within TCN which
tory frameworks [75]. Therefore, the evolvement of the acts as wholesale market and settlement operator. It thereNigerian Electricity Supply Industry (NESI) is designed fore manages the metering system among generation,
along four consecutive stages: i) Pre-Transition Stage, ii) transmission and distribution companies.
Transition Stage, iii) Medium-Term Stage and iv) LongTerm Stage [75].
5Distribution companies: Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt, and Yola
THE NIGERIAN ENERGY SECTOR
As a third step, the FGN put all ten new National Integrated Power Project (NIPP) power stations up for sale
(with a combined capacity of 5,455 MW they were owned
by the Niger Delta Power Holding Co. (NDPHC) and
scheduled for completion in 2014) 6. FGN has assigned
NGN 50 billion (US$ 312.5 million) to escrow accounts
to cushion losses that the GENCOs may suffer (be it from
power transmission or due to a shortfall in supplies) and
has also obtained a partial risk guarantee from the World
Bank to the same end. The Nigerian Bulk Electricity
Trading Plc (NBET) manages buying the electricity from
the GENCOs and selling it to the DISCOs in the interim. [African Development Fund; 2013]
30
power purchase agreements (PPAs) between the privatised
generation companies and NBET and vesting contracts
between NBET and the privatised PHCN successor distribution companies has not yet become effective” [74].
In order to proceed into the Transitional stage, criteria
referred to as Conditions Precedent, which are defined in
the Market Rules for Transitional and Medium Stages of
the NESI [74], have to be satisfied. In January 2015 the
NERC determined that “the level of completion of all
Conditions Precedent is sufficient to justify the evolution
of the NESI by the commencement of the Transitional
Stage Electricity Market (TEM)”. Consequently the TEM
commenced with effect from 1st of February 2015.
The Pre-Transition phase was accompanied by interim
rules with the objective “to establish a framework to govern
trading arrangements during the interim period when
The time line below shows the evolution of the electricity market until commencement
of the Transitional Stage Electricity Market (TEM):
2001adoption of the National Electric Power Policy
2005enactment of the Electric Power Sector Reform Act (EPSRA)
2005 – 2007establishment of the Nigerian Electricity Regulatory Commission (NERC); formation of the
Power Holding Company of Nigeria (PHCN); unbundling of the PHCN into 18 independent
companies
2008 – 2009publication of the Multi Year Tariff Oder (MYTO); the Power Sector Reform Committee was
formed
2010 – 2012the Nigeria Vision 20:2020 was launched; the Presidential Action Committee on Power
(PACP) and the Presidential Task Force on Power (PTFP) were established; the Roadmap for
Power Sector Reform was released; the Bulk Trader was established
2012 MYTO II was approved and released
2013full privatisation of the generation and distribution subsectors; the transmission subsector
was retained by Government but its management is currently under concession
2015MYTO 2.1 was approved and released. Petitions by various consumer groups,
evoked by electricity price increases of up to 80%, led to amendment of MYTO 2.1
and a price drop of ~50%
1st of February 2015commencement of TEM, after NERC declared all Conditions Precedent listed in the market
rules as satisfied
May 2015unbundling of TCN into an Independent System Operator (public) and a Transmission Service
Provider (private) has begun
6Regarding the generation assets, a distinction is being made between the PHCN Successor Generation Companies (i.e. the existing gas and hydro power plants that
were sold to 6 so called private GENCOs), the NIPP projects (gas-fired power plants that were built by the Government and that are currently being sold to private
investors) and new Independent Power Producers (IPPs) that will in future build greenfield plants. For more details see Chapter 4.3.
THE NIGERIAN ENERGY SECTOR
31
All existing regulations only affect generation of electricity exceeding 1 MW of installed capacity. Captive generation implies that electricity is entirely consumed by the
generator itself (no PPA required), for instance households or companies running their own Diesel generators.
Hence captive generation is technically off-grid, meaning
that it is not evacuated to the national grid or a distribution grid. Power generation based on an off-grid generation license is obviously also off-grid generation, but additionally requires external off-takers, which typically are
households within a remote village, public facilities (e.g.
schools, health stations) and/or businesses. A distribution
license may also be required for this kind of power generation. On the other hand power generated by means of
embedded generation is evacuated through a distribution
In May 2015 the Nigerian Government has begun to un- system of an external distribution company; hence embundle TCN by creating a state-controlled Independent bedded generators are usually connected to the distribuSystem Operator (which includes the functions of the tion grid. Finally, on-grid generation licenses are necesprevious system and market operator divisions) and an sary for all power plants which evacuate their power on
the national transmission grid. [Detail; 2012]
eventually privatized Transmission Service Provider.
The TEM is characterised by “contract based arrangements for electricity trading and the introduction of competition for entry into the Market” [74]. This means that
all electrical trading arrangements are bound by contracts. Hence Power Purchase Agreements (PPA), Vesting Contracts and Gas Supply Agreements, executed during the privatisation process, are effective now [75]. In
the TEM ONEM as the market operator sets the financing required for generation, transmission and distribution on the basis of the amended Multi-Year Tariff Order
2.1 (MYTO 2.1). MYTO 2.1 is meant to be a fully cost
reflective tariff and is designed to ensure full cost recovery for investors as well as to enforce confidence for financing and investment in the sector. [NERC; March 2015]
The third stage of the evolvement of the NESI is the Medium Term Stage and envisages the “introduction of generation competition within the Wholesale Electricity
Market and a centrally administered balancing mechanism for the Wholesale Electricity Market” [73]. This
stage has not yet been forthcoming.
As a result, Nigerian’s total power generation is a mixture
of the power generation options described above. NERC
only provides statistics on power plants connected to the
transmission grid (option i). Hence, for generation options ii)-iv), other data sources than NERC statistics have
to be taken into account.
3.5 Electricity Generation
In general, there is no comprehensive and commonly accepted database of power statistics,7 which is why this report uses data from local (NERC, PTFP, National Bureau
of Statistics, own surveys) and international sources
(World Bank, IEA, United Nations). While efforts were
made to validate and harmonize the data, certain deviations across the information depicted in Chapter 3.5 and
3.6 are inevitable.
Within the Nigerian electrical power system four basic
power generation options are to be differentiated. These
power generation options include i) transmission based
on-grid generation, ii) embedded generation, iii) off-grid
generation and iv) captive generation. While licenses are
needed to operate a generator according to options i) to
iii), captive generation only requires a permit by the NERC.
In the following, these 4 options are described in more
detail. [Detail; 2012]
7The National Bureau of Statistics e.g. states that the only source of statistics is essentially PHCN (prior to its unbundling). It comments in this regard: „The PHCN
does not have adequate electronic data processing facilities to enable it computerise the production and storage of its administrative statistics. Electricity production
and consumption statistics are, therefore, not available in machine-readable form … „ [23]
THE NIGERIAN ENERGY SECTOR
32
The following Chapter 3.5.1 will focus on generation connected to the transmission grid (options i), while Chapter
3.5.2 will further deal with embedded, off-grid and captive generation (options ii – iv).
FIGURE 3 – 4:
POWER GENERATION SITES IN NIGERIA
Source: Calculations based on FMP and Power Holding Company of Nigeria data and UN 2010 rural/urban population data (for off-grid D projections) listed in the chapter 3 references.
Source: [Detail; 2015]
THE NIGERIAN ENERGY SECTOR
3.5.1
33
Grid-connected Power Generation
TABLE 3 – 3:
ELECTRICITY GENERATION PROFILE
Year
Ave. Gen.
availability
(MW)
Maximum peak
generation
(MW)
Maximum
daily energy
generated (MWh)
Total energy
generated
(MWh)
Total energy
sent out
(MWh)
Per Capita
Energy Supply
(kWh)
2007
3,781.3
3,599.6
77,322.3
22,519,330.5
21,546,192.2
155,3
2008
3,917.8
3,595.9
86,564.9
18,058,894.9
17,545,382.5
120,4
2009
4,401.8
3,710.0
82,652.3
18,904,588.9
18,342,034.7
122,0
2010
4,030.5
4,333.0
85,457.5
24,556,331.5
23,939,898.9
153.5
2011
4,435.8
4,089.3
90,315.3
27,521,772.5
26,766,992.0
165.8
2012
5,251.6
4,517.6
97,781.0
29,240,239.2
28,699,300.8
176.4
2013
5,150.6
4,458.2
98,619.0
29,537,539.4
28,837,199.8
181.4
2014
6,158.4
4,395.2
98,893.8
29,697,360.1
29,013,501.0
167.6
Source: NERC Archive
According to NERC, licenses for on-grid power plants
amount to 19,407 MW in 2014. By comparison, off-grid
licences cover a production capacity of only 305 MW,
while embedded generation capacity represents 49 MW
(cf. Annex 3, Table A – 7). At this point it should already
be mentioned that electrical power from captive generation is much higher than that provided by power plants
with off-grid licenses and embedded generators (see Chapter 3.5.2 for further details).
view of the existing power plant fleet is attached in the
Annex (cf. Annex 3, Table A – 8).
The existing fleet of power plants is a mix of plants built
before the 1990’s and plants built (or being built) since
the mid-1990’s. Since the older thermal power stations
suffer considerably from poor maintenance, the available
generating capacity was just under 6,200 MW in 2012
and has risen to 6 840 MW in 2015. However, unavailability of gas, breakdowns, water shortages and grid conFigure 3 – 5 illustrates how the licenses for grid-connected straints severely limit the power plant performance,
generation capacity (options i and ii) are combined. Dark which means that despite an increase in the available inblue represents ‘available capacity’ and light blue ‘non-op- stalled capacity over the last years (see Table 3.3), only
erational installed capacity’. 13,308 MW installed capac- between 3000 MW to 4 500 MW are actually being genity is attributable to the main power plant fleet, the remain- erated (the highest peak generated ever in Nigeria was
der (~31% of licensed capacity) has not yet been build or 4,517.6 MW on December 23, 2012). Up to 2 700 MW
is under development. Within the existing power plant of power generation capabilities are regularly lost due to
fleet, NIPP thermal power plants (~40%) and former gas shortage,8 up to 500 MW are lost due to water manPHCN thermal power plants (~34%) are contributing agement, while several hundred megawatts are regularly
the most installed capacity. According to NERC statistics lost due to line constraints.
80% of actual generation capacity in 2015 comes from gas
based power plants, while the remaining energy comes The poor performance of the power plants has led to
from hydro power plants. For installed capacity the ratio acute shortage of electricity across the country with powis 84% from gas and 16% from hydro. A detailed over- er outages of several hours per day.9 The Presidential Task
8Unavailability of gas is mainly due to vandalism of gas pipelines, but also and effect of gas companies rather selling to the more lucrative international market than
to the domestic market with regulated prices.
9According to GIZ [Mar 2015], businesses tend to suffer about 25.2 electrical outages in a typical month, with an average duration of 7.8 hours, adding up to almost
197 hours of power outages per month (~27% of total hours).
THE NIGERIAN ENERGY SECTOR
Force on Power regularly publishes the estimated peak
demand and peak generation, whereby the former is with
12 800 MW regularly close to four times the latter. The
only way the shortfall can be made up is by relying on offgrid electricity generation.
FIGURE 3 – 5:
BREAK-DOWN OF ON-GRID LICENSED POWER GENERATION IN NIGERIA, 2012*
Source: GOPA-International Energy Consultants GmbH
* dark blue = available capacity, light blue = non-operational installed capacity
Table 3 – 3 shows that the electricity production stagnated
at about 29 000 MWh over the last years, which means per
capita generation actually dropped to a very low 167 kWh
in 2014.
34
THE NIGERIAN ENERGY SECTOR
Figure 3 – 6 shows the historic development of electricity
generation in Nigeria and of the prior mentioned peer
countries. It can be observed that Nigeria performed worst
of the five countries in terms of absolute electricity generation. Over a 20 year period, there was an increase of 93%
in mainline generating capacity in Nigeria. By contrast,
Indonesia ramped up its electricity production by 372%
and Bangladesh even by 451%. As a result, Bangladesh
generated almost twice as much electrical energy in 2012
as Nigeria did.
35
make this possible will be examined in Chapter 6 – OnGrid Renewable Energy.
Two major new gas thermal power plants are being planned
at present. One is the Azura Edo Independent Power Producer (IPP) project 459 MW open-cycle gas power plant
located in the vicinity of Benin City, in Edo State, Nigeria (Azura). The other is the Qua Iboe IPP (QIPP) 533
MW combined-cycle gas-turbine (CCGT) power plant
to be constructed in Ibeno, Akwa Ibom State.
FIGURE 3 – 6:
ELECTRICITY GENERATION (GWH) IN NIGERIA AND PEER COUNTRIES SINCE 1992
Source: IEA, [46]
Going forward, the Renewable Energy Master Plan (REMP)
assumes that the energy generation backbone will remain
gas, but the percentage accounted for by coal-fired power
plants will further increase [ECN; Nov 2012]. While wind
will play only a marginal role, solar power production is
expected to outstrip all sources of electricity generation
other than gas and thus become the second key pillar of
energy delivery in the nation. The structure that could
One major hydropower plant is currently under development, the Zungeru 700 MW plant in Niger State. The
Gurara 30 MW hydropower plant in Kaduna State and
the Kashimbilla 40 MW in Taraba State are two other
projects being prioritised by the FGN. Plans to build the
3,050 MW Mambilla hydropower plant in Taraba State
have become more concrete since negotiations with the
Chinese Exim Bank are ongoing.
THE NIGERIAN ENERGY SECTOR
In the field of utility-scale solar power projects, there is an
array of solar farms that have just obtained licenses or are
in the license pipeline. They include a 100 MW facility in
Bauchi State, one of 120 MW in Katsina State, and various others in Ekiti, Kaduna, and Nassarawa States. The
Ministry of Power has a 10 MW pilot wind plant in Katsina, which is scheduled for commissioning in the near
future.
Furthermore, the second phase of NIPPs, focused on
building hydro power generation plants, is planned to add
4000 MW of electricity to Nigeria’s generation profile
(see chapter 4.3. for further details).
36
leads Africa as a generator importer and is one of the
highest importers worldwide, with the total annual import figure being NGN 17.9 billion (US$ 112 million).
Within the Nigerian power system, captive generation
offers some distinct advantages. First of all, industrial
consumers can generate the power needed for their operations. Secondly, the request for a permit for captive generation involves the least hurdles in terms of financing
and regulatory risks. And thirdly, captive generation represents the optimal use of electrical power, since there are
theoretically no technical (transmission) or commercial
losses to be dealt with.
But there obviously are some major disadvantages. The
use of decentralized Diesel generators is economically
and environmentally questionable. This is further detailed in Chapter 3.8. Another disadvantage is that a permit for captive generation does not allow for supplying
external off-takers. According to [GIZ; Mar 2015], there
3.5.2 Off-grid Power Generation
As already mentioned in the previous chapter, off-grid li- is an excess of self-generation capacity in the manufacturcences cover a production capacity of only 305 MW, while ing sector. Hence, trading between energy surplus and
licensed embedded generation capacity only represents 49 energy negative firms would be beneficial for both, but is
coupled with the acquisition of an off-grid or embedded
MW (cf. Annex 3, Table A-).
generator license and the management of associated reguHowever, the majority of private investors active in cap- latory issues.
tive generation usually do so in order to ensure sustainable and stable power supply for their manufacturing facil- In this context the acquisition of an embedded generator
ities. The above listed figures do not account for generation license seems more advantageous, since electricity can be
capacity of these privately owned Diesel or gas generators. evacuated through the existing distribution grid, which
makes the acquisition of a distribution license needless.
According to a 2013 survey, approx. 80% of the Nigerians Furthermore embedded generation does not only offer
use alternate sources of electricity supply such as genera- advantages for industrial consumers, but also for states
tors or solar inverters.10 Estimates suggest that between 8 and local governments, which can achieve power supply
and 14 GW of decentralised diesel generator capacity is aspirations within their borders without constitutional
currently installed in the country 11. About 86% of the constraints. However, the propagation of embedded gencompanies in Nigeria own or share a generator and about eration is impeded by missing liquidity of distribution
48% of their total electricity demand is covered by these companies, which hinders them to off-take power from
private generators [GIZ; Mar 2015]. With several mil- potential embedded generators. [Detail; 2012]
lions of privately installed Diesel generators, Nigeria
Finally, plans are underway to use the domestic coal resources in Enugu und Kogi state for power production
purposes; recently, a private company has obtained a license to develop a 1 200 MW power plant.
10Opinion Polls 47: “Percent of Nigerians Experienced Poor Power Supply in 2nd Quarter of 2013” [45]
11GIZ and NIAF estimation
THE NIGERIAN ENERGY SECTOR
3.6Electricity Consumption
and Demand
3.6.1 Electricity Consumption
The available data on Nigeria for electricity consumption
by sector reveals that – similar to energy consumption in
general – it is the residential sector that consumes by far
the most energy. Figure 3 – 7 illustrates this fact and additionally shows a comparison between Nigeria and the
previously defined peer countries.
FIGURE 3 – 7: TOTAL ELECTRICITY CONSUMPTION BY ECONOMIC SECTORS AND CONSUMPTION PER CAPITA
FOR NIGERIA AND PEER COUNTRIES (2012)
Source: IEA, [46]
37
THE NIGERIAN ENERGY SECTOR
Based on data from the International Energy Agency
[46], residential usage accounts for almost 58% of the final electricity consumption in Nigeria. Likewise it is the
residential sector (households) where the increase over the
ten-year period depicted in Figure 3 – 8 is most pronounced.
FIGURE 3 – 8:
NIGERIAN ELECTRICITY CONSUMPTION (MILLION KWH)
Source: UN Stats, [62]
All peer countries, represented in Figure 3 – 7, show a significantly lower share of residential electricity consumption accompanied by a much higher share of industrial
electricity consumption. In addition to that, overall electricity consumption and electricity consumption per capita are also much higher for the peer countries [46]. However, these figures do not account for captive generation
from decentralized Diesel generators, which outstrips the
available grid-connected capacities (see Chapter 3.5.2).
When taking this privately owned generating capacity
into account, the share of industrial consumption is within the range of figures from peer countries. This discrepancy between grid-connected figures and real generation
power has to be kept in mind throughout this study.
38
THE NIGERIAN ENERGY SECTOR
39
FIGURE 3 – 9:
HISTORIC DEVELOPMENT OF POPULATION AND ELECTRICITY CONSUMPTION PER CAPITA IN NIGERIA FROM 1990 – 2012
Source: IEA, [46]
Altogether, generation power still seems to lag behind, especially when considering the fact that absolute consumption per capita is the lowest of all countries represented in Figure 3 – 7. Furthermore Bangladesh managed
to increase its electricity consumption per capita from
0.05 MWh to 0.28 MWh in the same time period, while
experiencing a comparable population growth. This argument is also enforced by Figure 3 – 9, which illustrates
the historic development of population and electricity
consumption per capita in Nigeria. While population in-
creased constantly between 1990 and 2010, electricity
consumption per capita dropped until 2000 – mainly due
to a lack of new generation capacity – and only since then
started to increase slightly.
3.6.2 Electricity Demand
With a fast population and economic growth, electricity
demand is generally expected to increase in the future.
The World Bank’s demand forecast is illustrated in Figure
3 – 10 [WB; 2013].
FIGURE 3 – 10:
PROJECTED GRID AND OFF-GRID ELECTRICITY DEMAND IN TWH
Source: Calculations based on FMP and Power Holding Company of Nigeria data and UN 2010 rural/urban population data
(for off-grid D projections) listed in the chapter 3 references.
THE NIGERIAN ENERGY SECTOR
40
and planned projects. Other estimations are based on scenario assumptions regarding population, GDP and structural changes in the economy, which is why the different
projections for peak power demand show a big spread.
While Agusto & Co. suggests that peak demand will rise
to 41,133 MW by the end of 2015 and 88,282 MW by
the end of 2020 respectively, Tractebel Engineering performed an independent demand analysis in 2007, and derived a peak power demand of only 11,433 MW in 2020
and 24,208 MW in 2030 [PHCN; 2007]. The Renewable Energy Master Plan [ECN; Nov 2012] provides the
most detailed demand projections and estimates a peak
power demand in 2020 of approximately 45,490 MW,
which lies in the middle of both figures mentioned before
Further projections for peak power demand are listed in [ECN; Nov 2012]. For all cases generation capacity has to
Table 3 – 4 and can be used as proxy for the required gen- be increased significantly, while the huge differences show
eration capacity. It should be noted that PTFP projections the importance of a proper demand forecast.
are based on existing infrastructure, considering ongoing
Figure 3 – 10 shows a strong increase in the yearly electricity demand, mainly driven by on-grid demand and –
from 2020 onwards – also from off-grid demand (blue
area, no grid access). According to the World Bank’s projection, electricity demand is to grow by a factor of over 5
until 2035 up to almost 530 TWh. This demand could
be satisfied by generators with a capacity of ~63 GW,
which would have to run throughout the year at maximum
output level. Since 100% utilization of all power plants is
unrealistic and transmission losses as well as peak power
demand are not taken into account yet, even higher generation capacity is necessary for ensuring sufficient supply, if the World Bank’s scenario holds true.
TABLE 3 – 4:
COMPARISON OF ELECTRICITY DEMAND PROJECTIONS (MW)
2014
2015
2020
2025
2030
2035
2040
12,800
41,133
88,282
–
–
–
–
Renewable Energy Master
Plan (reference growth 7%)
–
24,380
45,490
79,798
115,674
161,651
213,122
Presidential Task Force
on Power (PTFP)
–
12,800*
–
–
–
–
–
10,648
–
32,774
–
–
–
–
–
–
11,433
–
24,208
–
–
Agusto & Co.
PTFP, distribution capacity
Tractebel Engineering
* www.nigeriapowerreform.org (peak demand forecast, April 2015)
THE NIGERIAN ENERGY SECTOR
41
3.7 Electrification
Since the pre-independence era, the Nigerian power supply system has been encumbered by the geographical concentration of generation facilities in the South-South and
the related difficulties innate in the transmission system
with high losses and load shedding. It has also been burdened with geographical challenges. Electrical energy has
to be carried to smaller towns over long distances and
through forests without proper protection – and with a
high number of illegal connections and all the attendant
problems of billing.
Reasons for lack of electricity access and frequent blackouts in Nigeria are reported in the General Household
Survey of 2010/2011. Over 60% of rural households sampled during the survey attributed the reason for a lack of
electricity access to frequent blackouts and high connection cost. Unreliability of service was also reported as one
of the reasons for lack of electricity in Nigeria [NBS;
2010/11].
TABLE 3 – 5: ELECTRIFICATION RATES IN NIGERIA
AND SUB-SAHARAN AFRICA
Sub-Saharan
Africa
Nigeria
Population without electricity
621 million
93 million
Overall Electrification rate (%)
32
45
Urban Electrification rate (%)
59
55
Rural Electrification rate (%)
16
35
Region
Source: [IEA 2014]
Table 3 – 6 lists the distribution of households with access to electricity by state. The table shows all households
with electricity supply (100%) and the share of the type of
supply as a percentage. The table distinguishes between
electricity supply by means of PHCN, private generators
or solar panels and electricity supply via rural electrification (i.e. mini-grids). As shown in the table, the type of
electricity supply varies significantly by state and source.
There is a clear North/South divide, possibly attributable
Rural electrification (including off-grid generation), its to the location of the thermal power stations in the south
market, stakeholders and support mechanisms are further and the distance involved when wheeling out the power.
Figures for those states that have made most progress in
dealt with in Chapter 8.
rural electrification are marked yellow, while green has
According to the latest available data (cf. Table 3 – 5) the been used to highlight states where the reliance on diesel
overall electrification rate for Nigeria is just 45 % compared generation was considered exceptionally high. What is
to 32 % average electrification rate in Sub-Saharan Africa. also noticeable is that with the exception of a few states,
As further detailed in Table 3 – 6 this cannot disguise the over the period considered, little progress has been made
fact that there is a sharp discrepancy between cities and in rural electrification or eliminating reliance on generarural areas, as the rate of urban electrification in Nigeria tors – whereby the figures given for generators seem low.
is 55 % as compared to only 35 % for rural electrification.
Going forward the government plans to achieve an over- The differences by state can also be read as an indication
all electrification rate of 75% by 2025, as emphasized in the of market opportunities, since those states where
“Vision 20:20” and the draft Rural Electrification Strategy grid-electrification is lowest, or where reliance on PHCN
is lowest, are those states where there is the greatest need
and Plan [FMP; 2015].
and therefore, by definition, the greatest potential for investments in rural electrification.
THE NIGERIAN ENERGY SECTOR
The same source reveals that most rural areas do not have
their own generators. In other words, rural electrification
42
was until 2010 at any rate largely left to the informal market,
is neither regulated nor structured in a planned manner.
TABLE 3 – 6:
DISTRIBUTION OF HOUSEHOLDS WITH ACCESS TO ELECTRICITY BY TYPE OF ELECTRICITY SUPPLY IN %, 2010
State
Abia
PHCN (NEPA)
only
Rural Electrification*
Private
Generator
PHCN /
Generator
Rural Electricity
/ Generator
Solar Panel
89.6
0.9
0.5
5.0
4.1
0.0
Adamawa
89.5
2.9
1.9
4.8
1.0
0.0
Akwa Ibom
82.8
0.4
2.9
13.1
0.8
0.0
Anambra
81.0
1.7
1.0
15.6
0.7
0.0
Bauchi
77.5
8.0
1.4
9.4
3.6
0.0
Bayelsa
33.1
36.1
2.3
2.3
26.3
0.0
Benue
68.5
14.4
2.7
10.8
3.6
0.0
Borno
87.9
6.1
0.0
6.1
0.0
0.0
Cross River
91.7
6.2
0.5
1.6
0.0
0.0
Delta
93.6
2.7
1.5
1.5
0.8
0.0
Ebonyi
78.9
12.7
0.0
1.4
7.0
0.0
Edo
93.1
2.1
1.2
2.7
0.9
0.0
Ekiti
91.1
1.0
0.8
6.9
0.3
0.0
Enugu
75.0
16.9
1.3
5.9
0.8
0.0
Gombe
94.7
3.2
0.0
2.1
0.0
0.0
Imo
85.4
5.0
2.1
7.5
0.0
0.0
Jigawa
93.2
0.9
0.0
4.3
0.9
0.9
Kaduna
84.8
5.1
2.0
7.6
0.5
0.0
Kano
87.0
6.0
0.0
4.0
3.0
0.0
Katsina
80.4
14.7
0.0
4.3
0.0
0.6
Kebbi
86.4
1.6
3.8
7.1
1.1
0.0
Kogi
79.2
3.3
0.4
15.8
1.3
0.0
Kwara
92.8
1.8
0.3
2.4
2.7
0.0
Lagos
67.9
1.2
1.2
25.9
3.5
0.2
Nasarawa
76.0
0.6
7.2
13.2
3.0
0.0
Niger
75.2
1.8
0.9
21.7
0.0
0.4
Ogun
94.5
0.3
0.0
5.2
0.0
0.0
Ondo
87.5
0.8
2.9
2.9
5.8
0.0
Osun
90.5
0.0
0.4
7.1
2.0
0.0
Oyo
97.7
0.9
0.5
0.9
0.0
0.0
Plateau
92.5
1.3
1.3
3.8
1.3
0.0
0.0
Rivers
66.0
26.3
6.7
1.0
0.0
Sokoto
90.4
6.6
0.6
1.8
0.6
0.0
Taraba
85.7
0.0
0.0
14.3
0.0
0.0
Yobe
77.0
6.9
1.1
11.5
3.4
0.0
Zamfara
87.0
6.9
0.0
3.8
1.5
0.8
FCT Abuja
67.4
0.9
1.9
27.6
2.2
0.0
Sector
Urban
83.2
2.7
0.8
11.3
2.1
0.0
Rural
81.5
7.5
2.0
6.2
2.6
0.1
National
82.2
5.5
1.5
8.4
2.4
0.1
Source: National Bureau of Statistics, 2014
* Rural electrification: Electricity supply via mini-grid, which is not connected with a distribution grid or the transmission grid
THE NIGERIAN ENERGY SECTOR
43
3.8 Energy Prices
Nigeria has administratively set maximum prices for kerosene and gasoline and an indicative price for diesel (cf.
Table 3 – 7). At the core of this system, which was established in 2003, is the Petroleum Products Pricing Regulatory Agency, which sets these prices every month. The
agency applies import parity but is also expected to stabilise prices, which it does with the help of the Petroleum
Support Fund (PSF). Consumer subsidies exist for three
energy products: gasoline (premium motor spirit, PMS),
household kerosene (hhK) and electricity.
and January 2015 the oil price dropped massively from
US$ 115 to US$ 45 per barrel, which resulted in a ~28 %
drop of Nigeria’s revenue (based on Nigeria’s gross receipts) [76]. The loss in revenue could only partly be compensated with the reduced government’s bills on subsidy
(see next paragraph for further details on this).
In the case of petroleum products, the government requires marketers to sell fuel at below market rates. Subsequently paying the difference to petroleum product marketers and licensed importers of fuel. The development of
energy prices in the near and distant future depends on
3.8.1 Fuel Prices
Crude oil is a globally traded commodity, denominated political decisions, private investment in the energy secusually in US dollars; for the purposes of this study, to tor and world market prices. Realistic figures on the deavoid exchange-rate distortions, quotations will be kept velopment of prices in the energy sector cannot be given
in that currency. Demand for oil is pegged to global mac- at the moment.
roeconomic conditions and this influences international
oil prices. Natural gas prices are less dependent on global Diesel prices have been deregulated for several years. Govtrends as there is no world market for gas. Natural gas is ernment removed the gasoline subsidy on Jan 1, 2012 and
traded on more than one regional market with different allowed the retail price to rise above NGN 140 (US$ 0.88)/
prices. In the USA, Canada, Great Britain and Japan the litre or higher. As shown in Table 3 – 7, the fuel subsidy
price for gas is determined on spot markets. In continen- still accounts for a substantial share of GDP and in absotal Europe the price of gas is determined by long-term lute terms has risen by a factor of seven over the six years
supply contracts with fixed prices. Newly emerging mar- covered by the table.
kets for natural gas are China and India, with the Japanese market having changed significantly post-Fukushi- The massive decrease of crude oil prices between July
ma and the US market being emphatically altered by the 2014 and January 2015 led to a comparable drop of refined
introduction of fracking as a means of tapping in-country oil prices. According to an article from “This Day Live”,
gas reserves.
at a crude oil price of $115 per barrel, the expected market
price of imported petrol is NGN 141 (US$ 0.88) per litre,
Export prices for Nigerian crude oil correlate with the while the regulated price is NGN 97 (US$ 0.61), translatinternational market trends. The price has climbed con- ing to a difference of NGN 44 (US$ 0.28) as subsidy. But
sistently over time, bar the signals seen in crisis years. The with the price drop of crude oil to US$ 59.45 per barrel,
US free on board (FOB) price for Nigerian crude oil has the government’s subsidy spending has been reduced, which
risen since 1973 from US$ 7.81 to an initial peak of US$ led government to lower the regulated price to NGN 97
38.10 in the 1980’s, before steadily climbing since 2001, (US$ 0.61) per litre. [78]
when the price was US$ 24.85 upward to as much as US$
114.51 in 2012 [IEA; 2013]. However, between July 2014
THE NIGERIAN ENERGY SECTOR
44
TABLE 3 – 7:
DEVELOPMENTS IN FUEL PRICES AND FUEL SUBSIDIES, 2006 – 2012
2006
2007
2008
2009
2010
2011
2012
Fuel subsidy (bln Naira)
251
290
637
399
797
1,761
1,570
Fuel subsidy (% of GDP)
1.3
1.4
2.6
1.3
2.3
4.7
3.6
• Diesel (deregulated)
81
90
118
94
112
152
144
• Kerosene (subsidised)
50
50
50
50
50
50
50
• Gasoline (subsidised)
65
70
70
65
65
65
97
Fuel Prices (Naira per litre)
Sources: Nigerian authorities and IMF staff calculations and projections
Note: For 2012, includes one-off payment of about 1% of GDP to settle arrears accrued in 2011.
Gas shortages have been cited by the government as major
hindrance to realising the planned power generation. The
industry ascribes the shortage of gas for domestic consumption, especially for gas-fuelled IPP’s, mainly to the
low domestic gas prices compared to the export market
and pending approval of the Petroleum Industry Bill
(PIB). Although the International Oil Companies (IOC)
in Nigeria have an obligation to provide a prescribed percentage of total gas production for domestic consumption this has never materialised, due to the unattractiveness of the domestic market. There are various reasons for
the latter, such as poor gas pipeline assets and infrastructure, misaligned funding incentives, theft and vandalism.
In August 2014, the Minister of Petroleum Resources
announced an upward revision of the gas price from
US$1.50 per million cubic feet (mcf) to US$2.50 per mcf,
and an additional US$0.80 fee for transport costs (up
from US$ 0.30). Such an increase in the gas price may
make the national market more attractive for IOCs.
3.8.2 On-Grid Electricity Prices
Since the privatisation process kicked in, electricity prices have been set centrally by the Nigerian Electricity Regulatory Commission in line with its Multi-Year Tariff
Order (MYTO). Within the electricity system, DISCOs
pay NBET for the electricity they receive from the GENCOs. NBET then pays the GENCOS for the bulk power
sent to the grid. Respective prices are fixed per fuel source.
For example, the wholesale contract price for a gas power
plant is in the order of NGN 10,257 (US$ 64.10) /MWh
(2013), whereas the wholesale prices for hydropower, wind,
solar and biomass range between NGN 25,400 (US$
158.75) for hydropower and NGN 73,300 (US$ 458.13) /
MWh (2013) for solar PV. On the other hand consumers
pay DISCOs for the electricity they consume. Here, prices are fixed per region and consumer category. The price
to be paid by the end consumer for electricity in Nigeria
is therefore not to be confused with the price paid to the
GENCO. This is further detailed in Chapter 4.3.
The MYTO methodology combines the positive attributes of regulating the rate of return and a price cap, which
changes by region and type of electricity customer. The
regulators factor three modules into the calculation: the
allowed return on investment (RoI), the allowed return of
capital, and efficient operating costs and overheads. Since
the costs factored into the prices are assessed individually
for power generation, transmission, distribution and retail, rates differ.
In each instance, in an effort to attract investment in the
sector, MYTO emphasises cost recovery and financial viability, whereby the intention is to encourage efficient
investments. The multi-year structure provides investors
with a firmer basis for planning. Likewise, the tariffs foster an efficient use of the network, as tariffs are destined
to reflect the marginal costs users place on the system and
boost grid efficiency.
THE NIGERIAN ENERGY SECTOR
Worthy of mentioning is the tariff design NERC has implemented for DISCOs. It is intended to ensure that a
distinction is made between private, commercial and industrial users in regard to electricity prices, while enabling
DISCOs to remain commercially viable. Each DISCO
has tariffs reflecting its uniqueness in terms of cost, location and customer profile. The Ministry of Finance has
provided a maximum subsidy of NGN 50 billion (US$
312.5 million) (2012 + 2013) solely for residential customers. Moreover, NERC has retained a lifeline tariff at NGN
4.00 (US$ 0.025) / kWh for all those consuming below
50 kWh / month. Cross subsidies from large residential
(category R), commercial (category C) and industrial (category D) customers to small residential customers are implicit in the tariff design because the Federal Government
subsidy is not sufficient. See [NERC; May 2012] and Table
A – 9 in Annex 3.
45
companies are assumed to be between 35 – 40%, while
technical and commercial losses alone range between
12.0% and 28.4%. The various DISCOs have committed
to lower that figure markedly [WB; 2014]. The technical
and commercial losses are also factored into the amended
MYTO 2.1 conditions for DISCOs, with losses as a percentage of distributed energy being expected to fall. With
the introduction of MYTO 2.1 in December 2014, prices for electricity increased by about 80%. Petitions by various consumer groups, evoked by this electricity price increase, led to amendment of MYTO 2.1 and a price drop
of ~50%. According to NERC, the main reason for the
dramatic price increase was that the collection losses was
passed on to the consumers. In the amended MYTO 2.1
NERC considers, “in the public interest and fairness, the
level of Collections Losses (amount billed but not collected by the DISCOs) as imprudent to be passed on to consumers since it is fully within the control of the DISCOs
At present, DISCOs’ bills to consumers are made up of to collect their bills. Therefore, for the purpose of the level
two elements: a fixed charge and an energy charge. The of loss allowable to pass through to consumers, the Colformer covers capital costs as well as the fixed costs of op- lection Loss has been set at zero …” [NERC; Mar 2015].
eration and maintenance across the industry. The latter is
charged only when electricity is actually consumed and is 3.8.3 Off-Grid Electricity Prices
intended to cover fuel costs, variable operation and main- The projected prices for off-grid electricity can be seen in
tenance costs and tax costs to market participants. For Figure 3 – 11 [76]. In the present set-up of the Nigerian
example, according to the amended MYTO 2.1 [NERC; electricity market, off-grid generation based on mediumMar 2015], energy charges for residential usage 12 range sized diesel gensets is by nature far more expensive for the
between NGN 14.96 and NGN 20.89 (US$ 0.094 – 0.131) consumer than on-grid supply of electricity. The World
/kWh with fix charges ranging between NGN 625 and Bank estimates the cost for generation with medium-sized
NGN 800 (US$ 3.91 – 5.00) / month, depending on the diesel gensets at approx. 250 US$/MWh (corresponds to
region (DISCO). As already mentioned, these ranges dif- NGN 40 (US$ 0.25) / kWh). This is significantly higher
fer for other types of consumers. For an exhaustive list of than the electricity charges for residential usage13 and
the different sub-categories of the main classes (residen- also higher than electricity charges of NGN 19.89 – NGN
tial, commercial, industrial, special, and street lighting) 29.58 (US$ 0.124 – 0.185) /kWh for industrial usage14,
please see Annex 3, Table A – 9; for the full tariff schedule purchased from the DISCOs based on MYTO 2.1 [NERC;
Mar 2015]. Small scale businesses and families spend an
of two selected DSICOs see Table A – 10.
average of NGN 3.5 trillion (US$ 21.8 billion) yearly to
At present, the individual DISCO business plans indi- power their generating sets with diesel and petrol due to
cate that aggregate technical, commercial and collection unstable supply of electricity [65].
(ATC&C) losses over a five-year period for the distribution
12Category R2, single phase and 3 phase
13See above
14Category D1, single phase and 3 phase
THE NIGERIAN ENERGY SECTOR
FIGURE 3 – 11:
OFF-GRID ELECTRICITY PRICES
46
3.9Transmission and
Distribution Sector
The privatisation exercise of NEPA was concluded by the
Bureau of Public Enterprises (BPE) and the Bureau of
Public Procurement (BPP) in 2013 – 2014 by unbundling
the successor companies into 11 distribution companies
and 6 generation companies, cf. Chapter 3.4. The Government only retained control of the transmission and system
operation under the Transmission Company of Nigeria
(TCN). The transmission lines and generators are interconnected in a common grid, with a single control centre
Sources: ESMAP 2007; IEA 2010a
at Oshogbo. Thus, the government bears the cost of high
voltage grid expansion and encourages private investors
The striking element in Figure 3 – 11 is the clear projected to focus on generating capacity. Distribution companies
decrease in the price of electricity generated by solar PV, are responsible for the expansion of medium and low voltwhich is expected to fall to a level similar to that for small age distribution grids.
hydropower plants, with the cost of diesel/solar hybrid
systems falling by equal scale.
3.9.1Transmission
The National Grid operates at 330 kV and 132 kV high
Notably, to date solar PV is already substantially cheaper voltage level (HV). In 2010, more than 12,300 km of transthan electricity produced using diesel generating sets. This mission lines (5,523 km of 330 kV and 6,801 km of 132
especially is the case in areas a long distance from diesel kV) connecting 32 330 kV and 105 132 KV substations
depots – which includes most of northern Nigeria. This were operational. At the current configuration (2014) the
trend seems to be persistent, considering various interna- national grid has an installed capacity of 6,500 MW but
tional predictions of the PV prices in comparison to other can handle a wheeling capacity of maximum 4,500 MW
means of power generation. As shown in Chapter 3.8.1, [Dagogo-Jack, R. B.; 2014]. The ongoing NIPP transmisfossil fuel prices particularly in Nigeria are expected to rise sion projects will further boost the wheeling capacity by
more than in other (comparable) economies, due to expect- 1,300 MW. The long-term planning of TCN is to further
ed cuts in subsidies. Taking this into consideration, solar improve the grid capacity – thereby topping the installed
PV plants broke even with diesel generating set much ear- generation capacity – to 10 GW by 2014, 16 GW by 2017
lier than predicted in the Energy Sector Management As- and 20 GW by 2020 as further detailed in Figure 3 – 12,
sistance Program (ESMAP) 2007 study. Solar PV/diesel Figure 3 – 13 and Figure 3 – 14. However, by April 2015,
hybrid systems can thus be expected to gain sway over time. the proposed system enhancements shown in Figure 3 – 13
are under construction but not yet completed.
The Nigerian national grid is characterised by the poor
voltage profile in the network (especially in the north due
to its radial nature) and is constrained by limited control
infrastructure. Overloaded transmission lines and high
THE NIGERIAN ENERGY SECTOR
47
technical and non-technical losses are a regular feature. There are 3 key issues facing the improvement in the na[NERC; Feb 2011]. Transmission and distribution losses tional grid.
combined are estimated at 17 – 20% 15. The first 15 months •Establishing a clear plan for operational enhancement
to reduce technical and commercial losses.
after privatization saw 20 system collapses.
•Full market integration of TCN in order to operate as
credit-worthy industry participant.
As per the Amended MYTO 2.1, he current wheeling
charges (“TCN Tariff”) amount to NGN 2 743 (US$ •A comprehensive assessment and clean-up of TCN’s
project portfolio to enable the completion of several
17.14) per MWh.
ongoing and stranded projects.
FIGURE 3 – 12:
EXISTING 330 KV RADIAL GRID, 2013
Source: [TCN; 2013]
15TCN archive (supported by NIAF)
THE NIGERIAN ENERGY SECTOR
FIGURE 3 – 13:
330 KV TRANSMISSION GRID FOR WHEELING 10,000 MW, END OF 2014
Source: [TCN; 2013]
FIGURE 3 – 14:
330 KV TRANSMISSION GRID FOR WHEELING 16,000 MW, END OF 2017
Source: [TCN; 2013]
48
THE NIGERIAN ENERGY SECTOR
3.9.2Distribution
The distribution grid operates mainly on 33 kV and 11 kV
level, i.e. medium voltage (MV) and low voltage level (LV).
In 2010 more than 24,000 km of distribution network
were available [NERC; Feb 2011].
Figure 3 – 15 shows the geographical areas covered by the
respective distribution companies as well as the mega-wattage allocated to them. The north/south divide is readily
apparent from the ratio of population to megawatts,
whereby within the north there is a sharp discrepancy between the mega-wattage allocated to the northeast, and
that to the central and western sections of the region. The
companies are generally owned by consortia. In some cases these include larger state governments. The 11 distribution companies are: Abuja, Benin, Eko, Enugu, Ibadan,
Ikeja, Jos, Kaduna, Kano, Port Harcourt, Yola.
FIGURE 3 – 15:
THE DISTRIBUTION COMPANIES´ MARKETS
Source: Securities & Exchange Commission, Nigeria, [53]
49
During the privatisation process preferred bidders were
identified, based on the determination “of the most aggressive but feasible loss reduction trajectory over a 5 year period” [NERC; Mar 2015].
The distribution code innate in the power sector privatisation policy is not specific about off-grid or mini-grid
networks. The general assumption is that it does not apply
to them, giving a greater scope to investors in such areas.
The distribution code is further detailed in Chapter
5.5.1.2. Independent Electricity Distribution Networks
(IEDNs) represent an efficient way of supplying areas
with electricity which are not connected to the national
grid or a distribution grid [Detail; 2012].
4. ENERGY MARKET – STAKEHOLDERS AND ROLES
With the privatisation of the power sector, the composition of its stakeholders has changed markedly. From the
inception of the interim market onwards, the main stakeholders in the sector are and will be private entities, with
government retaining the role of regulator and grid operator only. The World Bank still acts to provide the Federal Government with a partial risk guarantee to cover possible defaults in the system in the event of NBET not being
able to pay a generating company during the lifetime of
the interim market [African Development Fund; 2013].
Public-sector players still active in the market tend to be
those states that have acquired or are acquiring shares either in distribution companies or in independent power
plants. NGOs and international donor organisations’ activities are mainly focused on supporting policy-­making,
energy efficiency and renewable energy projects. Development Finance Institutions (DFIs) are involved in various cases in debt financing for larger power plants. With
the restructuring of TCN there is renewed participation
by DFIs in transmission sector upgrades and expansion.
50
when fast-tracking the use of renewables. Nevertheless,
the distribution and the generation companies will play
as important a role as the central government does. The
current institutional arrangements are discussed in detail
in a study published by GIZ in November 2013 and entitled “Institutional and Policy Mapping of the Renewable
Energy, Energy Efficiency and Rural Electrification Subsectors in Nigeria”. [GIZ; Oct 2013].
The present chapter will provide a concise synopsis of the
major actors in the Nigerian energy sector.
4.1 National Public Institutions
The following chapters summarise the major national
public institutions active in the energy market. Stakeholders will also be mentioned in Chapters 6, 7 and 8
whenever applicable.
4.1.1 Federal Ministry of Power
The liberalization of the power market has resulted in a
Because of the hitherto non-commercial nature of the change in the needs of the sector. As a consequence, the
sector, activities by public institutions have tended to be Federal Ministry of Power (FMP) is now undergoing a
the primary driver of rural electrification (RrE), energy restructuring process that will allow it to adapt to the
efficiency (EE) and renewable energy (RE) initiatives in new environment. In this context, a new department enNigeria to date. Until October 2013 the Federal Govern- titled “Renewable and Rural Power Access” was created.
ment of Nigeria had the largest stake in the energy and
power sector of the country, thus making private investor The FMP is responsible for ensuring the establishment of
involvement limited and also posing the challenge to pol- a robust power sector that fully supports the socio-ecoicymakers to create an investor-friendly climate in a do- nomic needs of the nation. The main goal of the FMP is
main not known for its short-term commercial viability. directed at initiating, formulating, coordinating and imThe role of regional and international institutions on the plementing broad policies and programmes promoting
other hand is based on developmental needs and strictly the development of electricity generation from all sources
non-commercial. For details on the privatisation process of energy.
see Chapter 3.
The Honourable Minister of Power heads the Ministry,
A key advantage of the present structure is that it enables while the Honourable Minister of State is in charge of
the federal government to take the lead in pursuing clean the operational activities, and the Permanent Secretary is
technologies and promoting a diversified electricity mix. the accounting officer. The latter two offices are supportGiven the paucity of the power sector per se, Nigeria can ed by seven departments and five units. They are responpotentially avoid the pitfalls industrialised nations faced sible for the promotion of all forms of electricity generat-
ENERGY MARKET – STAKEHOLDERS AND ROLES
ed from both renewable energy and other non-renewable
energy sources. In order to facilitate diversification of the
nation’s energy mix, the ministry is encouraging the use of
renewable energy sources for power generation, especially in
rural areas of the country. The ministry convenes the Inter-Ministerial Committee on Renewable Energy and Energy Efficiency (ICREEE), has commissioned some solar
power pilot projects in Ogun and Cross River states, and is
building a pilot wind farm in Katsina. [11] The REA, EMSL
and NAPTIN are affiliated to the FMP, whereby the ministry oversees the independent regulator NERC (see below).
4.1.1.1Nigerian Electricity Regulatory
Commission (NERC)
The Nigerian Electricity Regulatory Commission (NERC)
was established as an independent regulatory agency in
2005 under the EPSR Act 2005. Its mandate is to monitor
and regulate the electricity industry of Nigeria, and ensure
compliance with market rules and operating guidelines.
NERC in its function as market regulator shall ensure
fair and competitive electricity trading. It is instrumental
in providing a 15-year tariff path which undergoes major
reviews every six years with minor reviews biannually. As
part of its mandate NERC has at present set the Multi
Year Tariff Order (MYTO 2.1) which defines generation
and consumer offtake prices.
Moreover, and crucially, NERC is responsible for assessing applications for licenses to operate an independent
power plant larger than 1 MW, and thus approves eligibility of the company in question to negotiate a power purchase agreement with the central off-taker in the current
transitional market, the Nigerian Bulk Electricity Trading Plc (NBET).
In order to create an enabling investment climate for rural electrification projects, NERC is currently elaborating regulatory guidelines for mini-grids less than 100 kW
and a light-handed regulation for mini-grids between
100 kW und 1 MW.
51
The commission also plays a key role in consumer protection by developing customer service standards and fair
pricing rules. NERC also provides effective dispute resolution mechanisms.
4.1.1.2Rural Electrification Agency
of Nigeria (REA)
Nigeria’s Rural Electrification Programme was launched
in 1981 aiming at connecting all local government headquarters and selected neighbouring towns and villages to
the national grid. The Federal Ministry of Power and
Steel in collaboration with the Power Holding Company
of Nigeria (PHCN) handled the rural electrification activities centred on grid extensions. They were substituted
by the Rural Electrification Agency (REA), which was
established in 2006 as part of the Electric Power Sector
Reform Act (EPSRA).
REA’s core function is to coordinate rural electrification
activities in Nigeria and to manage the Rural Electrification Fund. Until recently, the REA has been implementing electrification projects on its own with a focus on grid
extension. Most recently the agency has broadened its
scope to include the deployment of off-grid renewable energy systems to accelerate the pace of improvement.
[Montgomery, E.; 2012]
The REA provides overall support and coordination of
rural electrification activities of various stakeholders such
as public -private partnerships, private investors and community owned/operated projects. REA through its offices in each of the six geopolitical zones conducts feasibility
surveys, market surveys, and willingness to pay surveys to
ensure easy offtake. The REF Management Directorate
of the REA is responsible for establishing and administering the Rural Electrification Fund to provide capital
subsidies in a clear and transparent competitive process,
to qualified rural electrification schemes developed by
public and private sector entities.
ENERGY MARKET – STAKEHOLDERS AND ROLES
52
Since 2013, REA’s role is transitioning from centrally ship Scheme (NAPSAS), the latter aiming to train 7 400
managed and government-funded projects, towards a de- graduates in a broad range of technical power professions.
mand-driven (yet still centrally coordinated) market approach. The REA does not have any regulatory mandate. In order to maintain its position as a one-stop-shop training institute for the privatized power sector, NAPTIN
increasingly intends to adopt a private-sector driven ap4.1.1.3Electricity Management Services Limited
(EMSL) of Nigeria
proach in its operations.
The Electricity Management Services Limited (EMSL) of
Nigeria is a governmental agency under the FMP provid- 4.1.2Federal Ministry of Environment
(FMENV)
ing support services to the electricity generation, transmission and distribution sector in Nigeria. It is set up to The Federal Ministry of Environment (FMENV) was esguarantee efficient and reliable production and delivery tablished in 1999 with the statutory responsibility of proof power as well as the safety of lives and property in the tecting the environment against pollution and degradation and to ensure the conservation of natural resources
electricity sector.
for sustainable development in Nigeria. FMENV is also
EMSL inspects, tests and certifies electrical materials, charged with coordinating all climate change matters unequipment, power systems and electrical installations of der its Department Of Climate Change. The department
the Nigerian power industry. Installations are tested for represents the Ministry at international climate negotiations.
their adherence to technical standards and regulations.
Furthermore, EMSL provides advanced trainings for tech- The Department Of Climate Change follows the objective to foster renewable energy and energy efficiency. It
nicians as well as licensing of technical personnel.
thereby mainly focuses on the sustainable use of biomass
After the imminent adoption of the NEMSA Act, EMSL for cooking purposes and small scale agricultural applicawill be renamed into Nigerian Electricity Management tions.
Services Agency (NEMSA).
The FMENV is also the regulator for the Environmental
and Social Impact Assessment (ESIA). ESIA are manda4.1.1.4National Power Training Institute
of Nigeria (NAPTIN)
tory for all development projects as per the Nigerian EIA
As a response to the massive training needs in the power Act No. 86 of 1992.
sector, the National Power Training Institute of Nigeria
(NAPTIN) was established in March 2009. NAPTIN Its roles in renewable energy and rural electrification are
directly reports to the FMP and operates from its head- further detailed in Chapters 6.2 and 7.4, respectively.
quarter in Abuja eight regional training centres in Afam,
4.1.3Federal Ministry of Science and
Akangba, Ijora, Jos, Kaduna, Kainji, Kano and Oji.
Technology (FMST)
So far, NAPTIN has focused on government-funded The Federal Ministry of Science and Technology develop
technician training courses. Flagship programmes include and implements strategies for science and technology dethe National Graduate Skill Development Programme velopment in Nigeria.
(NGSDP) and the National Power Sector Apprentice-
ENERGY MARKET – STAKEHOLDERS AND ROLES
The ministry consists of five technical departments, each
specialising in a certain field of science and technology:
Science and Chemical Technology Department, Renewable and Conventional Energy Technology Department, Technology Acquisition, Adaptation and Promotion Department, Biomedical Science, Health and Environmental
Technology Department and Bio resources Department.
The Renewable and Conventional Energy Technology
Department is responsible for energy issues in the FMST.
The focus lies on nuclear, renewable and alternative energy sources as well as energy efficiency and R&D activities
addressing energy-related problems associated with environmental degradation, pollution and climate change.
Roadmaps are being designed aiming at further integration of renewable energy into the existing energy mix.
Furthermore, the ministry manages energy statistics.
53
dropower research and research in the area of petroleum
respectively.
ECN was instrumental in launching the Renewable Energy Master Plan (2102). Another significant contribution was the preparation of the first National Energy Policy launched in 2003. This policy is currently under
revision.
The roles of ECN in the RE, EE and RrE sectors are further outlined in Chapters 6.2, 7.4 and 8.2, respectively.
4.1.3.2 N
ational Agency for Science and
Engineering Infrastructure (NASENI)
The federal government has established the National Agency for Science and Engineering Infrastructure (NASENI)
in 1992. NASENI promotes local manufacturing of renewable energy technologies such as solar modules, small
In this function, the FMST also oversees the Energy hydro turbines, pole mounted transformers and wind
Commission of Nigeria and the National Agency for Sci- turbine blades.
ence and Engineering Infrastructure
4.1.4Federal Ministry of Lands, Housing
4.1.3.1 Energy Commission of Nigeria (ECN)
and Urban Development (FMLHUD)
Established in 1988, the Energy Commission of Nigeria The Federal Ministry of Lands, Housing and Urban De(ECN) is “charged with the responsibility for the strate- velopment (FMLHUD) aims at providing adequate housgic planning and co-ordination of national policies in the ing for all Nigerians in a conducive and liveable environfield of energy in all its ramifications” (ECN Act). This ment. This includes the design of urban development
includes advisory services to the government on energy plans as well as the implementation of public housing
strategies, preparation and dissemination of information, programmes. The ministry furthermore is the driver of
promotion of research, development and training, as well building-related policies and has the power to enforce
as liaising with international energy-related organisations. regulations in the building sector. It thus plays a strategic
role regarding energy efficiency in buildings which it lives
Energy research, development and training related activi- up to by e.g. including energy aspects in the ongoing reties are carried out in the six technical departments and view of the building code (see also Chapter 7). The state
the six energy research centres. Two of the centres, locat- ministries of housing can play an equally important role
ed at Nsukka and Sokoto, are responsible for new and at state level.
renewable energy research. The centre in Lagos focuses
on energy efficiency and conservation, while the centre in The FMLHUD supervises the activities of the Federal
Benin City specialises in energy and environment. The Housing Authority (FHA), the Federal Mortgage Bank of
two centres in Ilorin and Bauchi are responsible for hy- Nigeria (FMBN), and the registration boards of the rele-
ENERGY MARKET – STAKEHOLDERS AND ROLES
vant professional bodies. [9] The role of the FMHLUD
in promoting Energy Efficiency will be further discussed
in Chapter 7.
54
government entity affiliated to the FMITI tasked with the
responsibility of ensuring that all products (imported and
manufactured in Nigeria) adhere to stipulated standards.
4.1.5Federal Ministry of Water Resources
(FMWR)
The functions of the SON include [55]:
•preparing Nigerian Industrial Standards and ensuring
The Federal Ministry of Water Resources (FMWR) was
the compliance of products and methods with such
created in its current form in April 2010 with the mission
standards;
to provide sustainable access to safe and sufficient water •establishing a quality assurance system including certification of factories, products and laboratories;
to meet the socio-economic needs of all Nigerians through
efficient water resources management for basic human •fostering interest in the formulation and adherence to
standards by industry and the general public
needs, irrigated agriculture, hydropower generation and
the promotion of a healthy population while maintain- •assessing the conformity of imported products in the
port of origin (pre-shipment verification)
ing the integrity of fresh water bodies.
Through the Department of Dams and Reservoir Operations, the FMWR is involved in numerous hydropower
projects. While the FMWR handles civil works and issues water licenses, the Ministry of Power oversees the
power generation aspects of the projects. To date, ministry has carried out studies on some hydropower projects
as further detailed in Chapter 6.1.2.
The SON has developed and/or adopted some standards
on renewable energy and energy efficiency recently.
Among these standards are a code of practice for the deployment of outdoor solar lighting, design qualification
and type approval of PV modules, safety standards for
use of PV power converters, etc. The current list of SON
standards is attached hereto in the Annex 4, Table A – 11.
4.1.6Federal Ministry of Industry, Trade
and Investment (FMITI)
The Federal Ministry of Industry, Trade and Investment
has the mission to create an economic environment in
Nigeria that attracts investments, advances the industrialization process and expands trade and export in order
to strengthen the domestic economy.
4.1.7Nigerian Bulk Electricity Trading Plc
(NBET)
The Nigerian Bulk Electricity Trading Plc (NBET) is a
government owned public liability company. The Bureau
of Public Enterprises and the Ministry of Finance are its
two shareholders of record with 80% and 20% stakes respectively.
Among other sectors the FMITI supervises products,
processes and companies in the energy industry and supports and enacts renewable energy and energy efficiency
measures. It oversees the production of component parts
of solar panels and is responsible for policies regarding
blending of biomass and provides industry incentives for
renewable energy applications.
NBET was established in 2010 in line with provisions of
the Electric Power Sector Reform Act (EPSRA). It is a
trading licensee holding a bulk purchase and resale license.
Its mandate is to engage in the purchase and resale of electricity and ancillary services from independent power
producers and from the successor generation companies.
4.1.6.1 Standards Organisation of Nigeria (SON)
The Standard Organisation of Nigeria (SON) is a federal
The transitional market trading arrangement is depicted
in Figure 4 – 1. NBET signs PPAs with privatised generation companies, greenfield IPPs and existing state-owned
ENERGY MARKET – STAKEHOLDERS AND ROLES
power plants. They resell power via vesting contracts with
distribution companies and sign power sales agreements
with eligible customers directly. NBET’s power purchase
agreements (PPAs) with independent power producers
are backed by credit enhancement instruments provided
by the FGN.
55
In 1988, the corporation was commercialised into 11 strategic business units, covering the entire spectrum of oil
industry operations: exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments. NNPC by law manages
the relation between the Nigerian federal government and
FIGURE 4 – 1:
NBET, TRANSITIONAL MARKET TRADING ARRANGEMENT
Source: [Wonodi; 2013]
4.1.8Nigerian National Petroleum
Corporation (NNPC)
NNPC has sole responsibility for upstream and downstream developments in the oil industry, and is also responsible for regulating and supervising the sector on behalf of the Nigerian government. NNPC was established
in 1977 as a merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel.
a number of foreign multinational corporations. Through
collaboration with these companies, the Nigerian government conducts petroleum exploration and production.
Regarding renewable energy and energy efficiency, NNPC
explores the use of biofuels (mainly ethanol and biodiesel)
for mixing with conventional fuel and seeks to reduce its
internal consumption.
ENERGY MARKET – STAKEHOLDERS AND ROLES
4.1.9Presidential Task Force on Power
(PTFP)
The Presidential Task Force on Power (PTFP) was constituted in order to drive the implementation, monitoring
and performance evaluation of the power reform agenda.
The PTFP’s mandate covers the development of the
Roadmap and the provision of effective technical support
to the sector reform agenda. Furthermore, it acts as inter-­
agency interface to ensure that every milestone in the
power sector reform roadmap is accomplished.
The Technical Board 16 of the PTFP brings together all
the reform project stakeholders that have a role to play in
removing legal and regulatory obstacles to private sector
investment in the power industry. PTFP also has the
mandate to monitor the planning and execution of various short-term projects in generation, transmission, distribution and fuel-to-power which are critical to meeting
the service delivery targets in the power sector reform
roadmap. [PTFP; 2013]
56
ment, power is a concurrent competency shared between
the federal and state governments, though the delineation
of powers is not clear cut. The federal government has a
mandate to regulate power generation and transmission of
the national grid. States also have a mandate to engage in
power generation, while distribution of electricity seems
to be confined to off-grid areas.
Some Nigerian states deduce a mandate for energy and
climate out of the concurrent competencies for environment, social and economic development, arguing that
energy is a vital and cross-cutting element for the achievement of the constitutional objectives in these three areas
of concurrent competencies.
Some states such as Lagos and Rivers are already exploring various models to generate and distribute electricity
and are now pushing for an enhancement in their powers
so they can become less dependent on the national electricity stem and generate own revenues. With the privatisation of generation companies, states are actively seeking
to acquire stakes in DISCOs as investments that offer
4.1.10 Nigerian Governor’s Forum (NGF)
The Nigeria Governors’ Forum (NGF) is an association both a long-term return and foster the prosperity of their
wielding significant political influence that brings to- inhabitants.
gether the governors of the 36 federal states of Nigeria. It
aims at promoting a cross-state platform to discuss public The power sector reform (cf. Chapter 3.4) has affected the
policy issues and share experience on good governance. distribution of roles between federal level, states and priFurther, the NGF aims to enhance cooperation at state vate sector with the states now able to acquire a stakeholdlevel. The vision of the NGF is to be a non-partisan forum er position in DISCOs. The local reach of the DISCOs
promoting democratic values, good governance and sus- coupled with the possibility of backing from the state can
tainable development in Nigeria.
allow the state to shape the future expansion of the power
distribution to closely match its aspirations.
4.2Role and Functions of States
and Local Governments
Notwithstanding their constitutional mandate, the states
have been engaging in electrification via grid extensions
As is the case in other countries, the Nigerian constitution in the past and are likely to continue in the future. A close
distinguishes between exclusive national, state and local coordination with the newly established DISCOs will be
competencies as well as concurrent competencies. Where- crucial for a successful grid extension.
as mines, minerals, oil, natural gas and water resources are
defined as an exclusive competency of the federal govern-
16Engr. Clement A. Oke, FNSE, Acting Chairman
Engr. Simeon Atakulu, Senior Performance Monitor, Generation
Engr. Joe Ajah, Senior Performance Monitor (Acting), Transmission
Engr. Abu Kadiri, Senior Performance Monitor (Acting), Distribution
Engr. Chike Madueke, Senior Performance Monitor, NIPP
Engr. Chidi Ike, Senior Performance Monitor, Market/Efficiency
and Renewables
M
r. Azu Obiaya, Senior Performance Monitor, Regulatory and Transactions
Monitoring
M
r. Ebipere Clark, Senior Performance Monitor, Program Management Unit
M
rs. Awele Okigbo, Senior Performance Monitor, Media and Communications Unit
M
r. David Tabai – Acting Secretary to the Board
M
allam Salisu Muhammad, Labor Relations Adviser
ENERGY MARKET – STAKEHOLDERS AND ROLES
4.3Market Players in Generation,
Transmission and Distribution
The privatisation process (cf. Chapter 3) has introduced
competition in the generation of electricity as a key aspect
of electricity reform and decentralisation. A central feature
of a decentralised electricity market is the wholesale electricity spot market or pool, where generating entities compete to supply energy through their supply prices or bids.
While transmission remains in the hands of government,
generation and distribution are now in private hands following lengthy and in part fiercely contested bidding processes. The outcome of the bidding is clear and the process has moved forward, with government generating
FIGURE 4 – 2:
STRUCTURE OF THE POWER SECTOR POST-PRIVATISATION
(Source: GOPA-International Energy Consultants GmbH)
57
assets sold and new generating licenses having been
awarded. The chart in Figure 4 – 2 describes the roles and
responsibilities in the sector post-privatisation:
The electricity produced by various generation companies
(GENCOs) is sent to the regional distribution companies
via the Transmission Company of Nigeria. The DISCOs
sell the electricity received to the industrial, commercial
or residential consumers. Consumers in turn pay for the
electricity drawn from the distribution network. These
payments are forwarded by NBET to the generation companies. TCN is being paid for its services providing the
network. The federal government implemented NBET as
a bulk trader to compensate for any uncovered payments
in the system through subsidies.
ENERGY MARKET – STAKEHOLDERS AND ROLES
Table 4 – 1 outlines the key players in the interim and
transitional market which will be further described in
subsequent sections. It will be readily apparent that the
composition is still mixed:
58
In order to speed-up the deployment of new generation
capacities, the Nigerian government embarked on the so
called National Integrated Power Project (NIPP) programme essentially using government funds to build ten
TABLE 4 – 1:
NIGERIAN POWER SECTOR – KEY INDUSTRY PARTICIPANTS
Key Industry Participant
Description
Power Holding Company of Nigeria
(PHCN) Successor Generation
Companies
• Nine companies for ten power plants.
• Three hydropower plants and seven gas-fired plants.
• Total installed capacity of 6,313 MW, of which 3,366 MW available.
• Contracts for privatisation concluded
NIPP Generation Companies 33
• Ten companies, each owning one gas-fired power plant
• Total design capacity at ISO of 5,453 MW.
• Five plants with an installed capacity of almost 2,000 MW fully or partially operational.
Independent Power Producers
(“IPPs”)
• Eight power plants with an installed capacity of 2,127 MW of which 1,320MW available.
• Plants use either gas or oil as fuel.
PHCN Successor Distribution
Companies
• Eleven distribution companies covering all 36 states and the Federal Capital Territory
• Contracts for the privatisation of eleven companies executed
Transmission Company of
Nigeria (TCN)
• State entity responsible for the transmission of electricity from power plants to distribution
companies, eligible customers and for export
• Acts as transmission services provider (TSP), system operator (SO) and market operator (MO)
• Managed by Manitoba Hydro International of Canada under a three-year management contract
• S eparation into an Independent System Operator (ISO) and a Transmission Service Provider
(TSP) ongoing
Nigerian Bulk Electricity Trading
PLC (NBET)
• Government entity responsible for purchasing electricity from generation companies under long
term power purchase agreements and selling it to distribution companies.
Nigeria Electricity Regulatory
Commission (NERC)
• Independent agency established to regulate the power sector in Nigeria.
• Responsible, inter alia, for the issuance and renewal of generation licenses and the determination of tariffs that sector participants may charge for their products and services.
Gas Aggregation Company of
Nigeria (GACN)
• E stablished in 2010 to manage the implementation of the domestic gas supply obligation
regulations.
• Acts as the facilitator between suppliers and purchasers of natural gas.
Nigerian Gas Company Limited
(NGC)
• One of the subsidiaries of Nigerian National Petroleum Corporation.
• Responsible for the transportation of natural gas through its pipeline network.
* These companies are in the process of privatisation.
4.3.1 Generation Companies
Before privatisation, the government-owned generation
companies comprised of three hydropower plants and
seven thermal power generating stations [30]. As a preparation for the privatization, each entity was incorporated
as a single-asset generating company under the rough of
the Power Holding Company of Nigeria (PHCN). Because
they were originally all government owned, after their
privatisation these entities are called “PHCN Successor
GENCOs”.
gas-­fired power plants with the aim of eventually selling
them off to private investors. This innovative approach,
which however was beset with delays, is described more
in detail in the box below.
So called Independent Power Producers are the third
form of power utilities and are characterized by the fact
that they were and are being developed from the beginning
as privately owned greenfield power projects.
ENERGY MARKET – STAKEHOLDERS AND ROLES
59
See Table 4 – 1 above for information on the number of
plants as well as their installed and available capacities for
each of the three modalities.
Development Association (IDA) and the Multilateral Investment Guarantee Agency (MIGA)18. Partial risk guarantees from IDA and IBRD protect private lenders and/
or investors against the risk of a government entity not
The World Bank and the African Development Bank as- fulfilling its end of a contract. Partial risk guarantees are
sist electricity investors with partial risk guarantees17 with suitable for the privatisation of infrastructure assets as in
a total project volume of US$ 670 million. These instru- the Nigerian privatisation programme and those providments are offered through the International Bank for Re- ed by MIGA protect investors and lenders from risks asconstruction and Development (IBRD), the International sociated with changes in government policies.
The National Integrated Power Project (NIPP)
The National Integrated Power Project (NIPP) was conceived in 2004 as a major fast-track initiative to add significant new generation capacity to Nigeria’s electricity
supply industry using gas-based power plants. The generation projects were accompanied by supporting transmission, distribution and gas transport infrastructure projects
and at the time financed from the Excess Crude Oil Fund.
The Niger Delta Power Holding Company Limited
(NDPHC) serves as administering institution for the contracts, management and operation of the assets developed and built under the NIPP using private sector best
practices. After suffering some challenges in year 2008
and 2009 due to financial allocations, a new structure was
formulated under NDPHC to manage the construction
projects and finally disinvest the projects to private investors.
Similar to the other public assets in the power sector,
the ten key NIPP power plants were chosen to be privatised. This involved the following facilities: Gbarain (254
MW), Benin (508 MW), Omotosho (513 MW), Egbema (381
MW), Omoku (265 MW), Geregu (506 MW), Calabar (634
MW), Ogorode (508 MW), Alaoji (1,131 MW), and Olorunsogo
(754 MW), with a combined generation capacity of 5,453
MW. Today, the NIPP power plants have an available generation capacity of 2,500 MW which however is severely
restricted by the shortage of gas. Full capacity can be
reached if challenges in the gas supply for remote plants
are solved and if a steam cycle is installed in the plants
where possible. Up to date government invested $8.26 billion in the NIPP programme and is currently negotiating
contracts with the companies that emerged as preferred
bidders in the competitive disinvestment process.
Prior to their sale, each power plant was structured as individual GENCO. NDPHC required further that the systems
would have to be fully commissioned beforehand with all
contractual structures in place. This set-up should reduce
the exposure of investors to technical risks from the construction and commissioning phase. The plants have been
or are being constructed by international engineering,
procurement and construction (EPC) contractors using
proven technology and established original equipment
manufacturers (OEMs). On the commercial side, the configuration follows the IPP modality recently developed in
the market. The generation companies will sell the electricity under a 20-year power purchase agreement to
NBET. The corresponding tariff will reflect the rates set
forth in the most recent multi-year tariff order. Each GENCO will procure its feedstock (natural gas supplies) under
long-term gas supply agreements with the Gas Aggregation Company of Nigeria (GACN). GACN was formed on
January 5, 2010 and is owned by the upstream joint ventures formed between NNPC and international oil companies operating in Nigeria.
According to NDPHC the second phase of the National
Integrated Power Projects (NIPPs), which will concentrate
on building hydro power generation plants, will add 4000
MW of electricity to Nigeria’s generation profile. This will
include the construction of the 1,030 MW Mambilla hydro
power project and 16 other identified medium and small
hydro power projects. Furthermore, the second phase of
the NIPPs will also include the construction of critical
transmission projects that will enable the country wheel
over 20,000 MW of electricity generated from existing and
new power stations to distribution networks across the
country.
17The development objective of the Power Sector Guarantees Project for Nigeria is to increase the supply of electricity received by Nigerian consumers. The project
supports one component, partial risk guarantee (PRG) series with three sub-components based on the type of transactions supported: (i) greenfield independent
power producers (IPP) transactions will include the option of both credit enhancement for Nigerian bulk electricity trading (NBET) and private debt mobilisation
support, that is: (a) the NBET credit enhancement guarantee, with or without letter of credit; (b) the commercial debt mobilisation guarantee; or (c) a combination
of both forms of guarantees; (ii) privatisation of generation companies (GENCOs) will include both gas-fired as well as hydropower companies; (iii) under privatisation
of distribution companies (DISCOs), the ability of the DISCOs to successfully turn around dismal customer service levels and improve revenues flows to finance
investments upstream in the value chain will make or break the power sector reform efforts. Out of the 11 DISCOs being privatised, four have been identified as
advanced stage candidates: Abuja DISCO, Benin DISCO, Eko DISCO, and Ikeja DISCO. (cf. World Bank Project ID: P120207)
18IBRD, IDA and MIGA form part of the World Bank Group.
ENERGY MARKET – STAKEHOLDERS AND ROLES
4.3.2 Transmission Company of Nigeria
The neutral role of grid owner is played by the TCN,
which holds PHCN’s grid assets and manages it on behalf
of the government. Management has been outsourced to
a private Canadian company. The operation of TCN includes the key three functions of market operator (MO),
system operator (SO) and transmission service provider
(TSP). Governmental plans are to separate the TSP entity
from the MO and SO allowing it to become a privatised
commercial company. Figure 4 – 3 shows the responsibilities more in detail.
FIGURE 4 – 3:
THE TRANSMISSION COMPANY OF NIGERIA
(Source: GOPA-International Energy Consultants GmbH)
60
4.3.3 Distribution Companies
For the market to operate freely, the generating companies
must be able to sell their electricity to distribution companies who then sell it to the end consumers. NERC sets the
tariffs that these off-takers must pay the GENCOs just as
it sets the remuneration the DISCOs shall receive from
consumers in what has to date been a highly subsidised
system in which many electricity bills were never paid.
Nevertheless, planning has gone ahead and the 11 licenses
for the DISCOs awarded. In many cases, the respective
states have shares in the companies (cf. Chapter 3.9).
ENERGY MARKET – STAKEHOLDERS AND ROLES
61
4.4Other Non-Governmental
Stakeholders
arranges study tours, organises conferences and publishes
books and journals.
Other stakeholders are active in the fields of renewable
energy, energy efficiency and rural electrification. Some
organisations are mentioned below in a non-exhaustive
list.
4.4.4Green Building Council of Nigeria
(GBCN)
4.4.1Council for Renewable Energy
in Nigeria (CREN)
The Council for Renewable Energy in Nigeria (CREN) is a
non-profit multi-stakeholder association which promotes
the use of renewable energy technology in Nigeria and
the reduction of greenhouse gas emissions. CREN acts as
a forum where stakeholders such as industry, politics, academics and financial institutions discuss the development
of renewable energies and their integration in a sustainable energy strategy for Nigeria. CREN addresses issues of
awareness, availability, cost and appropriate implementation of renewable energies in order to support a reliable,
economically viable energy system.
4.4.2Manufacturers Association
of Nigeria (MAN)
Nearly 2000 Nigerian companies of the manufacturing,
construction and service sectors are members of the Manufacturers Association of Nigeria (MAN). The association represents their interests vis-à-vis politicians, other
sectors of the economy and society at large. MAN also
formulates policy suggestions seeking to ensure an efficient and profitable environment for manufacturers. (c.f.
Chapter 7.4.2.) [22]
4.4.3 Nigerian Society for Engineers (NSE)
The Nigerian Society for Engineers (NSE) is an organisation for the engineering profession in Nigeria. The society
represents engineers and their matters in politics, society
and industry. For example it seeks to promote and maintain a high standard of formal engineering education and
to enhance engineering research. In this context the NSE
The Green Building Council of Nigeria (GBCN) is involved in the development of a green building rating system. This rating system shall unify competing concerns
in order to provide a single metric to assess the relative
sustainability of a building. [71]
4.4.5 Nigerian Institute of Architects (NIA)
NIA is a member organisation of professional architects,
with the objective of promoting the practice of the profession of architecture in Nigeria. [60]
4.4.6 Nigerian Institute of Building (NIOB)
NIOB is a professional institute in Nigeria for persons
engaged in a managerial, technical or administrative capacity in the development, construction and maintenance
of buildings, including those who are engaged in academic
research and teaching. [41]
5. ENERGY POLICY
The energy policy of Nigeria mainly encompasses the development and regulation of the petroleum and electricity industry. Both sectors were characterised by large government agencies that were responsible for a large part of
the activities but have undergone significant changes in
recent years. These sector and market modifications are
mainly driven by a constant move towards privatisation
and liberalisation.
First a general overview of the two relevant energy markets (petroleum and electricity) is provided followed by a
short excursus on Nigeria’s climate policy. In a second
step, key policy and regulatory documents are reviewed
more in detail in a chronological order.
5.1 Fuel Market Policy and Strategy
One of the pillars of the Jonathan administration’s Transformation Agenda is the progressive deregulation of the
petroleum industry. The partial removal of the fuel subsidy on Premium Motor Spirit (PMS) by the federal government in January 2012 was intended to conserve and
maximise Nigeria’s oil wealth. The government set up a
fund into which the revenue otherwise dedicated to the
subsidy would be funnelled, the Subsidy Reinvestment
and Empowerment Programme (SURE-P) [57]. It is mandated with using the subsidy savings to invest in infrastructural projects and social empowerment initiatives.
At the same time, by initiating a complete elimination of
the fuel subsidy, the administration seeks to promote the
establishment of new private-sector refining capacities
in-country. Applications have been filed for licences for
this purpose, above all to build a large refinery in the Lekki Free Trade Zone, Lagos. The foundation of new refineries would serve to ease the regular market bottlenecks
experienced in petroleum products. This goes hand in
hand with some of the objectives set out in the “Draft Petroleum Industry Bill”. [PIB; 2012] The PIB stipulates
the management and allocation of petroleum resources
shall be in accordance with the principles of good govern-
62
ance, transparency, and promote sustainable development
and economic value added. [PIB; 2012] The approval of
the Bill by Parliament has been pending since several
years. In the course of this period, there has been a tendency among International Oil Companies (IOC) to sell off
onshore oil blocks to indigenous companies and to focus
operations offshore.
The PIB defines all aspects governing the exploitation, administration and organisation of the petroleum sector in
Nigeria. It will supersede all previous petroleum-related
laws such as the Petroleum Profits Tax Act or the Deep
Offshore and Inland Basin Production Sharing Act. After establishing the objectives, the Act tackles all major
areas of the sector which are: the management of the petroleum industry by institutions and definitions for upstream petroleum, downstream licensing, downstream
petroleum, indigenous companies, health as well as safety
and environment, taxation in the petroleum industry
and stipulations for the organisation of the transition towards this new law.
The major items and stipulations can be summarised as
follows:
•The bidding processes for the award of mining licences
is monitored by the Nigeria Extractive Industries
Transparency Initiative (NEITI)
•The re-structuring of the petroleum industry administration, with the
–Minister of Petroleum Resources being responsible
for the formulation and monitoring of the petroleum policy; the negotiating and implementing of international petroleum treaties and agreements with
other countries or agencies on behalf of the government; and advising the President on appointments
of chief executives of all companies and agencies established pursuant to the Act.
–Petroleum Technical Bureau (‘the Bureau’) tasked
to provide technical professional support to the Minster on matters relating to the petroleum ministry.
•The requirement for the administration to conduct a
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public inquiry in the case of planning changes to the
regulation.
•Reorganisation of the petroleum equalisation fund and
its administration
•The transfer of the NNPC into separated, unbundled
companies catering for the sub-sectors and their successive privatisation:
–The National Petroleum Assets Management Corporation
– The National Oil Company
– The National Gas Company
63
The policy was the basis for the formulation of the Electric Power Sector Reform Act (2005), which constitutes
the legal foundation for the process. The transfer of NEPA
to PHCN and the subsequent splitting up of its assets
into 18 separate successor companies responsible for generation, transmission and distribution as well as the establishment of the regulatory authority NERC are the central
pillars of the reform. For a detailed description of the privatisation process see also Chapter 3.
On the commercial side, the Transitional Electricity
Market (TEM) was declared by NERC and commenced
with the beginning of February 2015. Power trading ar5.2Electricity Market Policy
rangements are from now on bound by contracts. This is
and Strategy
the result of the first major step in the reform process set
in motion in 2010, when President Goodluck Jonathan
5.2.1Introduction
The policies governing the electricity market and corre- inaugurated the Roadmap for Power Sector Reform based
sponding regulations have undergone significant changes on the 2005 EPSRA, aiming at the successful delivery of
in the last two decades. The main focus has been the drive the reform milestones embedded in the roadmap. The
from a monolithic, vertically-integrated organisation un- roadmap contained two core objectives at its launch:
der the roof of the state-owned utility National Electric
Power Authority (NEPA) toward a multi-actor landscape Firstly, to transition the Nigerian power sector into a priin a liberalised and privatised market. In the late 1990’s vate-sector led market (“The Reform Objective”) by instithe population and the economy both grew rapidly while tuting transparent and responsible management, limiting
NEPA failed to keep pace with this demand increase by political interference, eliminating government involveadding more generation capacity and expanding the elec- ment in utility management, and encouraging private
tricity system. This development led into an energy sup- investment in generation (privatisation of PHCN and
ply crisis in 2001. In reaction to the situation, in 2001 the NDPHC assets). At the same time, the idea was to create
Federal Executive Council (FEC) issued the National Elec- a level playing field for all investors. Secondly, the reform
tric Power Policy (NEPP), aimed at fundamental changes process was intended to support and improve service deof ownership, control and regulation of the power sector. livery levels during this transition to the Nigerian public
This and subsequent policies as well as legislative changes (“The Service Delivery Objective”).
focused on privatisation and liberalisation of the electricThe overall intention behind the reform process was twoity sector.
fold: to release government funds otherwise tied down in
This fundamental change was kicked off under the as- generating capacity and to avoid having to commit subsumption that the creation of an investor-friendly envi- stantial public-sector revenues to providing additional
ronment with low participation of governmental institu- capacity. In this way, government would be able to focus
tions and strong central regulation would help the more strongly on education, health and other infrastruccountry to overcome the previously poor service, low ture projects. At the same time, the hope was also that
availability and high frequencies of outages in the system. the reform would encourage fast expansion of the power
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64
sector by ensuring it was market-driven and that the 5.2.2Major Programmes and Initiatives,
Policy Mix
shortfall in generating capacity and the attendant potential demand would provide attractive opportunities for All policy stems from the Electric Power Sector Reform
Act of 2005. In line with its goals, a National Energy
private investments.
Master Plan (NEMP) was formulated with a short-term
Coincidentally, the Presidential Action Committee on horizon of 18 months, which culminated in an Electricity
Power (PACP) was set up to fast-track the reform process Master Plan in 2008. A roadmap for the reform of the
by enabling regular, fast round-table and cross-ministerial sector was drawn up and approved in 2010, on the basis
of which MYTO II was issued in 2012, while the grid
decision-making.
and distribution codes were likewise set. In 2015 MYTO
Finally, the process of the continuous changes over the 2.1 was put into effect, delivering a revalidation of
last two decades has been instrumental to the achievement ATC&C losses as well as a minor tariff review. The TEM
of the following key reform milestones include:
commenced with effect from 1st of February 2015. The
TEM is characterised by “contract based arrangements
• New Tariff (MYTO II) instituted – June 2012
for electricity trading and the introduction of competi•Appointment of Manitoba Hydro International as
tion for entry into the Market” [74]. This means that all
TCN management contractor – June 2012
electrical trading arrangements are bound by contracts.
•Winning Bidders for GENCOs and DISCOS
Hence Power Purchase Agreements (PPA), Vesting Contracts and Gas Supply Agreements, executed during the
announced – November 2012
privatisation process, are effective now [75] (see Chapter
•Payment of 25% of the equity sale value by
3 for further details).
purchasers – February 2013
• TCN Board Inauguration - April 2013
•Eurobond Commitment for Capitalization Support of This overall process occurred simultaneously to the preparation of the Gas Master Plan. During this period, the
NBET and Project Financing of TCN – May 2013
Renewable Electricity Action Programme, launched in
• MYTO II Minor Tariff Review – June 2013
2006, was shored up first, in 2010, by the National Policy
•Outstanding 75% payment of power assets by
and Guidelines on Renewable Energy, and then in 2012
bidders – August 2013
by the Renewable Energy Master Plan. The plan still has
•Handover of PHCN DISCOs and GENCOs to new
to be enacted but is consistent with the MYTO 2.1 tariff
owners – November 2013
provisions for renewables. A National Renewable Energy
•15% cash payments by the preferred bidders for the
and Energy Efficiency Policy (NREEEP) was developed
assets in early 2014.
in 2013 – 14 by the FMP and approved by the Federal Ex•Bidding process for NIPP GENCOs completed in
ecutive Council in May 2015. The draft Energy Efficiency
spring 2014.
Bill still awaits enactment. The same situation prevails as
•MYTO 2.1: minor tariff review and review of
ATC&C losses – January 2015
regards rural electrification, where despite having released
•Commencement of the Transitional Electricity
an initial Rural Electrification Strategy and ImplementaMarket (“TEM”) – February 2015
tion Plan in 2006 and this having progressed in various
•Amended MYTO 2.1: adjustment of ATC&C
forms to culminate in the Rural Electrification Strategy
losses – April 2015
and Plan, no legislation other than the general Power Sector Reform Act has been forthcoming. This means inves-
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65
The strategy entails the vision of creating a country in
which climate change adaptation is an integrated component of sustainable development, reducing the vulnerability and enhancing the resilience and adaptive capacity
of all economic sectors and of all people – particularly
women, children, and men who have little resources – to
Other than the Renewable Electricity Action Programme the adverse impacts of climate change, while also capturand the industry incentives for Renewable Energy (e.g. ing the opportunities that arise as a result of climate
MYTO 2.1), to date no mainline national programmes change.
are in place that complement the policy mix. These two
programmes are intended to support policymaking, but Its goal is to take action for adapting to climate change by
without clearly enacted laws or approved master plans it reducing vulnerability to climate change impacts and inis hard to see what impact they can have. The main bod- creasing the resilience and sustainable wellbeing of all
ies of legislation (policy mix) and the various programmes Nigerians; and to reduce or minimise risks by improving
put in place to support the use of renewable energy sourc- adaptive capacity, leveraging new opportunities, and faes, rural electrification and energy efficiency measures are cilitating collaboration inside Nigeria and with the global community. The principal aspects under this context
the subject of the Chapters 6, 7 and 8, respectively.
are desertification, loss of forest cover, carbon dioxide
emissions, water scarcity or other changes in the environ5.3Climate Change Policy
ment that directly affect the livelihood of people.
and Strategy
tors face a conundrum: The policy intention of buttressing renewables and rural electrification is clear, but as yet
there is no firm regulatory regime governing them. It remains to be seen whether the rather high-level NREEEP
is able to fill this void.
The climate change policy regards energy resources and
connected infrastructure as vulnerable to the impacts of
climate change. Since the supply of energy is a service of
public interest, any negative change of its availability and
quality impedes the development of other sectors and citizens. So-called sustainable energy and also renewable
energy is regarded as a one of the measures to reduce risks
as regards energy supplies and the pressure on the enviA National Advocacy Campaign on Adaptation in Nige- ronment. The mitigation effect such technologies could
ria (NACAN) was set up to review the national policy on have due to their reduced or even non-existent emissions
climate change strategy and the NASPA-CCN in detail on the climate changes themselves are not considered as a
every five years. The first review of the NASPA-CCN in reason for their promotion.
2015 will allow Nigeria to incorporate experiences into
the 2015 review of Nigeria’s efforts to achieve the MDGs. The FMENV’s dedicated climate change unit has a key
Looking further to the future, the ten-year time frame for role to play in the implementation process and has since
the second NASPA-CCN review cycle is in line with the the inception of the policy and strategy been devising the
relevant programmes [52]. The programmes of the ministimeframe of Nigeria Vision 20:2020.
try are further detailed in Chapter 6.1.2.
On September 12, 2012, the Federal Executive Council
(FEC) approved a National Adaptation Strategy and Plan
of Action on Climate Change for Nigeria (NASPA-CCN)
as a national document for implementing climate change
activities in Nigeria [3]. The policy is in line with the United Nations Framework Convention on Climate Change
and the Kyoto Protocol.
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66
5.4Milestones in National Energy
Policy and Laws
This Chapter contains a summary of each of the major
strategies, policies, acts, regulations, norms and standards
with a focus on the power sector. The relevant legislative
FIGURE 5 – 1:
OVERVIEW OF PRINCIPAL POLICIES AND LAWS
Source: [GIZ; Oct 2013]
and regulatory documents are summarised in chronological order. An overview on the policies and regulations is
also depicted in Figure 5 – 1.
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5.4.1National Electric Power Policy (NEPP),
2001
This policy statement was the initial step towards reforming the electricity sector. It is the result of the consultations of the Electrical Power Implementation Committee
(EPIC), the central body tasked to elaborate, coordinate
and monitor all activities relating to the reform, restructuring and privatisation of the power sector [Dayo; 2008].
It defined the three principal phases for achieving the reform goal of a reliable and sufficient energy system. The
first step aimed at the privatisation of the vertically-integrated parastatal company NEPA and the introduction
of IPPs as well as private emergency power producers.
The second step focused on increasing the competition
between market participants, reduction of subsidies (i.e.
payment of full fuel prices) and sale of excess power to
DISCOs. During the last phase the market and competition would even be more intensified by full cost pricing of
supply, liberalised selection of supplier beyond the local
DISCOs by larger customers and full competitive market
trading.
The provisions were – to a large extent – incorporated
into the Electric Power Sector Reform (EPSR) Act of
2005 [FMPS; 2006]. This marked the milestone for the
implementation of the reform policy.
5.4.2 National Energy Policy (NEP), 2003
This document was designed to stand as the first overall
framework for the development of the sector and its effective contribution to the country’s economy. It covers
the development, exploitation and supply of all energy
resources (petroleum and electricity), their utilisation by
different sectors and other related topics such as the environment, energy efficiency and energy financing as well
as energy policy implementation. [ECN; Apr 2003]
67
understood as indicators to measure the achievement of
the policy goals. The policy includes renewable energy
sources, rural electrification and expansion of electrification as well as energy efficiency at many points of the sector-wide framework. In this context, it elaborates in a
very straight-forward manner on the policy goals, strategies and goals for the respective energy sources including
renewable energy and rural electrification. It therefore
provides the basis for subsequent changes in the sector
such as the establishment of the Rural Electrification
Fund later incorporated under the Rural Electrification
Agency as well as constituting a blueprint for all subsequent policies on the promotion of renewable energy.
Although parts of the policy required an update and new
developments in the sector were covered in subsequent
policy papers or acts, the policy still remains in force as
the guiding principle for the direction of sector reforms.
In 2013, NEP was reviewed to reflect recent developments Energy sector with emphasis on Renewable Energy
and Energy Efficiency, amongst others [48]
Renewable energy: The NEP 2003 recognises that the
level of energy utilisation in an economy coupled with efficiency of the conversion of energy resources is vital for
the development of the economy. Thus, it made provision
for all forms of energy including renewable energy sources and how they can be effectively utilised. However, no
concrete quantitative targets have been set.
Energy efficiency and conservation: NEP 2003 pointed
out that energy utilisation of the country is far from efficient and called for the promotion of energy conservation
at all levels of exploitation of the nation’s energy resources
by adopting energy efficient methods in energy utilisation.
However, no concrete quantitative targets have been set.
After a short introduction and overview, it looks briefly at Rural electrification: NEP 2003 recommends the prothe various aspects, describes the policy goals and lists in- motion of off-grid and standalone systems in order to
dividual objectives for the policy – which could also be supply electricity to remote areas of the country.
ENERGY POLICY
5.4.3National Economic Empowerment and
Development Strategy (NEEDS), 2004
68
opment of a competitive electricity markets; setting out
of a legal and regulatory framework for the sector; a
The strategy issued in 2004 by the National Planning framework for rural electrification; a framework for the
Commission under President Obasanjo was intended as enforcement of consumer rights and obligations: estabthe response to the development challenges of Nigeria. It lishment of performance standards. It resulted in the
was intended to guide combating the grossly underesti- transfer of the previously public power company, NEPA,
mated extent of social, political, and economic decay in into a (temporary) Holding Company, the Power Holdthe country since 1999, to serve as an overarching state- ing Company of Nigeria (PHCN) - called “Successor
ment for the following years (2003-2007) to consolidate Company” in the legal text. The reform act in general
the achievements of the previous legislative period and kicked off the horizontal and vertical unbundling and
formulate the basis for further sustainable poverty reduc- privatisation of the NEPA by the following processes:
tion, employment generation, wealth creation, and value
1.Transfer of NEPA assets to the holding company
reorientation.
PHCN and its successive restructuring by privatisation and transfer into 18 different generation, distriAs regards infrastructure, the policy promotes the privabution and transmission companies;
tisation of infrastructure which is regarded as key instrument for achieving improved service delivery. The gov- 2.Development of a competitive electricity market by
creation and operation of a wholesale electricity
ernment would still remain important for funding projects
market in Nigeria;
with high investment requirements or low attractiveness
for the private investors (i.e. rural areas). The document 3.Foundation of the Nigerian Electricity Regulatory
Commission (NERC) as national regulatory body
further suggests increasing the share of renewable energy
to oversee the market and administer licences;
in the total energy mix. It again stresses the need for the
renewable energy agency and its equipment with respec- 4.Requirements for licensing, its conditions and regulation of the generation, transmission, system operative funds through the Electric Power Sector Act (i.e. the
tion and distribution, as well as supply of generated
National Power Sector Reform Act). It therefore repreelectricity;
sents one more step towards inclusion of the role of renewable energy in the power sector and emphasises the 5.Introduction of tariffs and corresponding calculation methodologies to be elaborated and adopted by
importance of continued efforts for rural electrification.
NERC;
6.Implementation of consumer rights and consumer
5.4.4National Power Sector Reform Act
(EPSRA), 2005
protection including the Power Consumer Assistance Fund to subsidise the tariff for less-privileged
In 2005, the Nigerian power sector was liberalised by the
consumers;
Electric Power Sector Reform Act (EPSRA) [EPSRA;
2005]. This Act, which is a consequence of the National 7.Use guiding standards and codes as guidelines and
requirements for activities in the sector;
Electric Power Policy adopted in 2001, provides a new
legal and regulatory framework for the sector. The funda- 8. Establishing a Rural Electrification Agency to expand
mental change it entailed was the privatisation of the govaccess to electricity to the rural areas and the financernment-owned electricity company and the process toing of its activities.
wards a completely liberalised market. It makes provisions
for the vertical and horizontal unbundling of the electric- The reforms under this Act were to be done in consecuity company into separate and competitive entities; devel- tive phases. The implementation of the reform started
ENERGY POLICY
well, but suffered delays. For instance, even though licences were granted for the private sector to build independent power plants, the very low tariffs made it impossible
to fully recoup the costs of doing business and thus prevented investments in new generation capacity and necessary upgrades to the transmission and distribution networks.
In short, the law restructured the whole energy landscape
of the country along the value chain with different players for generation, transmission, distribution and commercialisation. The intention was to increase competition
significantly by establishing a Wholesale Electricity Market (WEM) and promoting the participation of private
companies in the generation as Independent Power Producers (IPP).
5.4.5
69
enewable Electricity Policy
R
Guidelines (REPG), 2006
The document issued by the Federal Ministry of Power
and Steel stipulated that the federal government would
expand the market for renewable electricity to at least 5%
of total electricity generation and a minimum of 5 TWh
of electric power production by 2016.
The Policy Guidelines on Renewable Electricity (herein
referred to as the Policy Guidelines) is the federal government’s overarching policy on all electricity derived from
renewable energy sources. The Policy Guidelines sets out
the federal government’s vision, policies and objectives
for promoting renewable energy in the power sector.
In the document, renewable energy is clearly regarded as
means to extend electricity services to those not yet conThe law can be considered as the most important legisla- nected to supply sources (e.g. new settlements in urban
tion in the sector and resulted in a broad range of changes areas) and to run electrification campaigns in rural areas.
within recent years since it lays a foundation for the new These aspects make a clear distinction between renewable
institutions, restructuring older public enterprises, and energy and other energy generation technologies – with
the exception of diesel based generation. As a final goal,
sets the future direction of the power market.
renewable energy shall in the mid-term be integrated into
In terms of renewable energy, the Act encouraged the pro- the energy mix of the national grid. The policy recognises
motion of electricity generated from all sources of energy the advantages renewable energy can bring to the system
including renewable energy by mandating NERC to cre- such as adding additional generation to the constrained
ate a level playing field in the Nigerian electricity market. system, enhancing the stability by mitigating local disruptions in supply and reduction of emission.
The Act also mandates NERC to ensure that all electricity generated is fed into the grid and is efficiently sourced The document gives a very brief overview of the electricity
and delivered to the consumers. The Act recommended sector situation, recaps the role and situation of renewathe creation of the REA and stipulates under section ble energy against the background of other policies and
88(9) that information presented to the President by the the legal framework, reviews the existing and preceding
Minister of Power and Steel should include expansion of policies including their targets, formulates RE policy obthe main grid, development of isolated and mini-grid sys- jectives, and sets the following policy goals along with
tems, and renewable energy power generation. The REA respective strategies:
was also mandated to provide a strategy plan for expanding access to electricity including the use of renewable 1.Expansion of the market for renewable electricity to
at least five percent of total electricity generating caenergy.
pacity and a minimum of 5 TWh of electric power
production;
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2.Establishment of stable and long-term favourable
pricing mechanisms and ensuring of unhindered access to the grid with guaranteed purchase and transmission of all electricity produced by renewable electricity producers and obliging the grid operators to
upgrade the system accordingly;
3.Construction of independent renewable electricity
systems in areas not covered by the electricity grid;
4.Development of innovative, cost-effective and practical measures to accelerate access to electricity services in rural areas through renewable sources;
5.Setting up of a Renewable Electricity Trust Fund to
be governed by the Rural Electrification Fund.
6.Creation of a multi-stakeholder partnership for the
delivery of renewable electricity to meet national development goals;
7.Broadening international cooperation in expanding
the role of renewable electricity for meeting national
development goals and contributing to global efforts
in addressing climate change.
70
5.4.6Renewable Electricity Action
Programme (REAP), 2006
The Renewable Electricity Action Programme (correspond­
ing to the REPG) was issued by the Federal Ministry of
Power and Steel in 2006.
The Renewable Electricity Action Programme (REAP)
was produced the same year and sets out a roadmap for
implementing this policy. The core focus of the document
is on utilising all forms of renewable energy sources for
electricity generation and highlights potential gaps, technical assessments and financial implications. The REAP
gives an overview on the Renewable Energy potentials,
technologies and markets and then elaborates on the development targets per technology and application, strategies for their achievement. It also outlines financing procedures via the Renewable Electricity Fund (REF) and
other sources, looks into roles of government bodies and
concludes with a risk assessment as well as structures for
monitoring and evaluation.
Further to these goals, the document looks at the energy The study is relevant for mid-term on-grid renewable enreserves and renewable energy potentials, the global ca- ergy but more interesting for the rural energy supply
pacities and technologies together with their costs trends. since this was the principal application area of renewable
energy at the time of writing.
REPG recognised that Nigeria’s electricity needs cannot
be met through conventional energy sources alone, espe- However, this programme seems to be abandoned with
cially in rural areas where grid expansion and access is the restructuring of the Ministry of Power and Steel to
very limited in the short-medium term. Off-grid renewa- the new Ministry of Power.
ble energy electricity operations are vital to meeting the
federal government’s policy on the electric power sector 5.4.7National Biofuel Policy and Incentives
(2007)
and expanding access to rural areas. Rural electricity options offered via renewable energy sources include mi- This document was issued at the peak of the global biofuni-grid concession and standalone systems. In financing el promotion trend and formulates a biofuel support prorenewable electricity, REPG provides that rural electrifi- gramme aiming at integrating the agricultural sector of
cation trust funds (RETF) should be set up to promote, the economy with the downstream petroleum sector. The
support and provide renewable electricity through pri- authors assumed that biofuels would impact on the qualvate and public sector participation. [FMPS; 2006]
ity of petroleum products from a market perspective
where the use of fossil-based fuels have been increasingly
ENERGY POLICY
71
regarded as an environmental concern and demand for
more environmentally friendly fuel has risen worldwide.
foreign loans, dividends, services rendered from outside
Nigeria to biofuel companies by foreigners will be required.
As regards biofuels, the document refers to ethanol and
bio-diesel or other fuels made from biomass and primarily
used for automotive, thermal and power generation, according to quality specifications stipulated by the national norms and standards. Under biomass, the policy-makers understand agriculturally produced raw materials
which are available on a renewable or recurring basis, including trees, crops, plant fibre, cellulose based materials,
industrial wastes, and the biodegradable component of
municipal solid waste.
With off-take guarantee by NNPC for biofuels as buyer
of last resort, the Biofuel Production programme could
aspires to achieve 100% domestic production of biofuels
consumed in the country by 2020.
The objective of the policy was the development and promotion of a national fuel ethanol industry utilising agricultural products in order to improve the export properties of automotive fossil-based fuels produced in Nigeria.
The policy sets out to link the agricultural and energy
sectors with the underlying aim of stimulating development in the agricultural sector. The following benefits
were intended to be achieved: additional tax revenue by
economic activities of this industry, job creation, increased economic development and empowerment of rural communities, agricultural benefits via improved
farming techniques, increased agricultural research, and
increased crop demand resulting from activities in the
industry, energy benefits from co-generation benefits, environmental benefits with the reduction of exhaust emissions and ozone pollution as well as reduction in particulate emission and replacement of toxic octane enhancers
in gasoline.
The objective was to implement the policy in two phases:
the market-seeding phase and the operational biofuel
production programme. During implementation, several
components were to be considered for a successful attainment of the objective: setting up a Biofuels Energy Commission, establishment of a Biofuels Research Agency
and further measures such as granting the industry and
its products pioneer status, support of importation, execution of blending by NNPC, installation of industry
incentives, instantiation of off-take guarantees and integrating government ministries and state agencies in the
sector development activities.
Although the policy seems to be in force, no information
is available as to the extent to which it has been implemented and whether adjustments have been made to it in
light of experiences gained with the first steps and after
feedback from players in the agricultural and petroleum
subsectors. The major player, NNPC performed feasibility studies on ethanol production as well as cassava and
palm-oil-based products but only mentions a few projects
and initiatives on its website. It can be concluded that the
topic gained most interest during the peak years 20092012 of the global move towards biofuels but lost momentum after this source was largely criticised for its conThe most distinct targets of the policy include a contribu- flicting use of foodstuff and agricultural land for the
tion of all biofuels companies with 0.25% of their reve- cultivation thereof.
nue towards funding research into feedstock production,
local technology development and improved farming 5.4.8Roadmap for Power Sector Reform,
2010 and 2013 (Update)
practice. An import duty waiver for biofuels granted by
for 10 years and exemption from taxation, withholding In December 2012, the Presidential Task Force on Power
tax and capital gains tax imposed in respect of interest on (PTFP) presented its Roadmap for Power Sector Reform –
ENERGY POLICY
72
•Continuation of the clear and firm political will to resist efforts that could undermine privatisation and the
reform.
•Firm commitment to deliver the gas development and
transportation infrastructure projects earmarked for
gas-to-power alignment.
•Prevention of frequent acts of vandalism to pipelines
such as the Trans-Forcados and Trans-Niger crude oil
lines, and the Escravos Lagos Pipeline Systems (ELPS)
gas pipelines.
•Clarity on the interim operation and maintenance of
the National Integrated Power Projects (NIPP) generation assets;
•Firm commitment from NIPP to deliver its critical
transmission projects scheduled for 2013 as well as the
Omoku, Gbarain and Alaoji power plants to come on
After describing memoranda from key market institutions
stream without further delay;
and assessing their respective performance with regards
to the implementation of the reform, the roadmap takes •Meeting of the conditions precedent to the declaration
of TEM, before the handing over the successor compaa closer look at the key aspects of the sector and the develnies to the new owners.
opment including fuel-to-power (i.e. fossil fuel supply),
generation, transmission and distribution as well as the •Positioning a well-capitalised Nigerian Electricity Liability Management Company (NELMCO) to address
National Integrated Power Projects. It develops a set of
post hand-over fall outs from creditors.
recommendations and proposals for the continued devel•Securing a minimum, transitional service-delivery level
opment and reviews the media coverage of the reform.
through project and process optimisation.
The principle issues and activities required for the full imThe Roadmap is very limited in terms of renewable enerplementation of the reform agenda are:
gy, energy efficiency and rural electrification. The core
•Development of an optimal transmission capacity ex- focus of the Roadmap was on other forms of energy delivpansion plan and funding strategy to provide a reliable ery systems. In summary, it is the guiding high-level planning document of the administration containing a review
highway for wheeling generated power;
•Acceleration of the management and operational effi- of the reform process until 2010 and a listing of action for
ciency levels of the Transmission Company of Nigeria the next planning period complied based on the check of
the performance, development and progress.
(TCN);
•Improvement of collection efficiency and returns to the
market during the pre-Transitional Electricity Market 5.4.9 Vision 20:2020, 2010
The Vision 20:2020 as released at the end of 2010 out(TEM) declaration stage;
•Commencement and conclusion of all labour negotia- lines the path for the global and national vision to positions, settlement of liabilities, rationalisation and even- tion the country among the leading 20 economies of the
tual winding down of the Power Holding Company of world in 2020 and aims at a holistic transformation of
the economy. The vision programme identifies the barriNigeria (PHCN).
Revision 1 (August 30, 2013) [PTFP; 2013] based on the
Roadmap for Power Sector Reform 2010 [PTFP; 2010]
including reviewed and fine-tuned plans and strategies to
finalise the drive to complete the power sector reform
and setting the nation on a steady course to produce clean
and efficient electricity in the country at competitive
rates. The Roadmap does not, in principle, introduce new
policies but rather sets strategies to accelerated actions for
achieving the objectives of the National Energy Policy
(2003) as enshrined in the Electric Power Sector Reform
Act (EPSRA) of 2005. It aims at providing an update on
the status of the reform as well as pointing out critical issues and challenges which should be addressed in the period of 2013 – 2014.
ENERGY POLICY
ers to the country’s development (e.g. unreliable power
supply, poor and decaying infrastructure, high dependence on the oil sector) and names the directions for
achieving the target using a strategy of three main pillars
building one on to each other. These central parts aim at
guaranteeing the foundations of productivity and wellbeing, optimising key factors of economic growth and at
promoting a sustainable economic development. [24]
73
electricity provision. Mitigation of climate change and
protection of the environment play a far smaller role. By
aiming at including these aspects into education and
awareness programmes, this may change in the future, i.e.
during or after implementation of the Vision’s plan.
The objectives for the development of the energy sector
are based on the assumption that, in order to achieve the
Vision 20:2020 targets, Nigeria will follow an energy inEnergy provision is regarded as a key component of all tensive growth trajectory, similar to other emerging or
three pillars. Its development is intended to be led by the developing countries (India, China). The Vision docuprivate sector in a liberalised market. The role of govern- ment set forth a strategic roadmap for power generation
ment and state agencies shall then be limited to provid- with three different horizons:
ing the legal and regulatory environment. Overall, an increase of the installed capacity to 35,000 MW by 2020 is •Horizon I (short-term): a 6 GW capacity base by 2009
achieved by rehabilitation of the existing Power Holdplanned for. The vision does not detail what study or facing Company of Nigeria (PCHN) plants and completor was used to determine this target nor does it state
tion of on-going IPP projects;
whether any efforts are planned to de-couple economic
development (growth) from an increase in energy con- •Horizon II (medium-term): encouragement of IPPs to
increase capacity at their plants and putting ongoing
sumption, e.g. by undertaking major efforts to increase
NIPP projects on fast-track shall more than triple the
the overall energy efficiency.
capacity to 20 GW;
The country’s dependence on the exploration of petrole- •Horizon III (long-term): the plan is to achieve the final
target capacity of 35 GW by adding large hydropower
um is seen as a major weak spot in the economy and the
schemes, coal-fired power facilities and renewable enerdocument establishes the need to diversify the national
gy plants through the IPP model.
income away from that source. This concern is based on
major market and demand-side trends and dampens the
production outlook. This includes the assumption that The Vision documents do not mention any analysis of esthe world market for petroleum does not evidence the timated demand or load expressed in energy consumed
same upward trend as in previous years and will thus not but simply establish capacity targets.
allow sufficient revenues to be garnered to sustain the envisaged GDP growth. It is recognised further that other Since these plans require a considerable amount of investcountries are trying to move away from exclusive depend- ment – with the expectation being that this is mainly
ence on fossil fuels and that global treaties on carbon driven by the private-sector – the Vision creates an enviemission reductions require relevant policy changes in ronment that is purportedly attractive to outside investors. The idea in the Vision is to achieve this by further
order to react to the new circumstances.
liberalisation and a transparent regulation, provision of
The impact on the national economy is mentioned as be- guarantees for investments and allowance for a reasonaing the most prominent driver for triggering a change in ble rate of return.
the energy sector – including petroleum production and
ENERGY POLICY
Measures proposed to achieve the targets include:
74
For each of the subsectors, further objectives, goals, strategies and initiatives were outlined which will help to
•The promotion of alternative technologies which in- achieve the overall vision targets described. The objecclude hydro, wind, solar, biomass, coal and nuclear – all tives were stipulated quantitatively per subsector (oil, gas)
with the goal of decreasing reliance on gas-fired plants. and per technology. These clear goals were underpinned
This statement ironically contradicts other stipulations by the respective strategy necessary to drive the initiain the Vision document, such as the fact that reducing tives described. The group has also listed the time-frame
the dependency on external markets does not sit well (short, mid, long term) for the required activities and the
together with the plan to use nuclear power and coal- authorities required executing these.
based generation as major energy supply sources, whereas the share of gas (a source which could be easily com- Vision 20-2020 recognises the importance of Nigeria’s
bined with renewable energy systems) shall be decreased. renewable energy resource potential in meeting national
•An increase in training efforts by strengthening the electricity targets. Therefore, it called for various measNational Power Training Institute of Nigeria (NAPTIN) ures and strategies as contained in the document to sup•An enforcement of transmission capabilities, system port the sustainable integration of renewable energy genredundancies, demand-side management, introduction erated electricity into the energy mix of the country.
of energy efficiency measures in industry, enlargement Some of the goals highlighted in the document include:
of the gas network for supplying gas-fired power plants
•
Complete privatisation of the distribution systems •chieving a 15% and 20% contribution of hydropower to
the nation’s electricity generation mix by 2015 and
(DISCOS) including billing and factorisation.
2020 respectively;
•
Broad adoption of renewable energy technologies
(RET) for electrification and heating in the context of •ensuring a 1% contribution of wind energy to the nation’s electricity generation mix by 2020;
rural and semi-urban settlements.
•attaining a 1% contribution of solar energy to the nation’s electricity generation mix by 2020;
Over and above these general plans, the dedicated energy
working group detailed the Vision’s goals further and re- •replacing 50% of firewood consumption for cooking
with biomass energy technology by 2020;
defined them slightly. This led to the following global
•putting in place an power generation capacity of 1,000
priorities, namely to:
MW using biomass resource;
•Attract private investments for a capacity increase in all •maintaining a biofuel blend not exceeding 10% in
transport fuels by 2020 using locally produced renewasubsectors
ble biofuels from secondary biomass
•Consolidate and complete the ongoing efforts to establish effective institutions and an appropriate regulatory
The Jonathan administration has responded to the need
environment;
•Enhance supply security by utilisation of renewable en- for a holistic transformation of Nigeria in its Transformation Agenda, which covers the period 2011-2015. This
ergy sources
•Reinforce and broadly expand local content in all energy Transformation Agenda is based on the Nigeria Vision
20:2020 and the 1st National Implementation Plan
subsectors (oil and gas, electricity)
•Foster sustainable generation and consumption patterns. (NIP). [56]
ENERGY POLICY
75
5.4.11National Renewable Energy and Energy
Efficiency Policy (NREEEP), 2015
The National Renewable Energy and Energy Efficiency
Policy (NREEEP) outlines the global thrust of the policies and measures for the promotion of renewable energy
and energy efficiency. NREEEP seeks to bring to the attention of policymakers the economic, political and social potential of renewable energy. It recommends that an
appropriate strategy should be developed to harness these
potentials in order to add value to the ongoing changes in
Nigeria’s power sector. The document also stipulates that
existing policies lack a coherent and all-encompassing
framework that drives the sector and therefore calls for
Simultaneously to the overall increase in power supply an integrated renewable energy and energy efficiency polfrom renewable energy sources, the REMP targets high- icy which will serve as a useful vehicle that limits coner electrification rates, from 42% in 2005 to 60% in 2015 flicts in the future and promotes development and deand 75% by 2025. However, in this context it is impor- ployment of renewable energy technologies in Nigeria. It
tant to note that the REMP has still not been signed off can be regarded as an umbrella document consolidating
by the government or formulated into a law governing the various other afore-mentioned policies and strategies
the renewable energy development. Only once that has in one document. NREEEP was developed by the FMP
happened, investors will have a clear path for drawing on in 2013/14 [FMP; March 2014] and has been approved
the various financial incentives envisaged, such as pioneer by the Federal Executive Council in May 2015.
status (tax exemption) and custom duty waivers.
This policy encourages the development of a national reIt stresses the importance of solar power in the country’s newable energy action plan and a national energy effienergy mix. Based on the, Nigeria intends to increase the ciency action plan which will facilitate the overall
supply of renewable electricity from 13% of total electric- achievement of the objectives it sets out. The NREEEP
ity generation in 2015 to 23% in 2025 and 36% by 2030. recognises the multi-dimensional nature of energy and
Renewable electricity would then account for 10% of Ni- therefore addresses diverse issues such as renewable energy supply and utilisation; renewable energy pricing and
geria’s total energy consumption by 2025.
financing; legislation, regulation and standards; energy
The master plan also includes topics that are common to efficiency and conservation; renewable energy project implementation issues; research and development; capacity
all subsector programmes, such as:
building and training; gender and environmental issues;
planning and policy implementation. The overall focus of
• The legal, regulatory and institutional framework,
the policy is on optimal utilisation of the nation’s energy
• Incentives (financial and fiscal, e.g. tax exemptions),
resources for sustainable development.
• Capacity building (human and infrastructural),
• Inter-agency/governmental collaboration,
This policy on renewable energy and energy efficiency sets
• Research and development,
• Monitoring and evaluation,
out a framework for action to address Nigerians’ challenge
• Renewable energy portfolios and feed-in-tariffs.
of inclusive access to modern and clean energy resources,
5.4.10Renewable Energy Master Plan,
2005 and 2012 (Update)
The Renewable Energy Master Plan (REMP), drafted by
the Energy Commission of Nigeria and the United Nations Development Programme (UNDP) in 2005 and
reviewed in 2012, expresses Nigeria’s vision and sets out a
road map for increasing the role of renewable energy in
achieving sustainable development [ECN; Nov 2012].
The REMP does not specifically differentiate between
on-grid and off-grid generation, however, it refers to integrating renewable energy into buildings, electricity grids
and “other distribution systems”. [ECN; 2013]
ENERGY POLICY
improved energy security and climate objectives. It aims
at raising the national significance of renewable electricity generation activities by providing for the development,
operation and maintenance, and upgrading of new and
existing renewable electricity generation activities.
While meeting ECOWAS’s regional policy targets for renewable electricity generation and energy efficiency for
2020 and beyond, the policy declares energy efficiency to
be a major, low-cost, and under-utilised source of energy
offering savings on energy bills, opportunities for more
jobs, improving industrial competitiveness, and lowering
air pollution. As poverty mitigation and environmental
protection are hindered by the continued predominance
and inefficient use of oil and natural gas in meeting targeted energy needs, the policy broadens the definition of
energy security to include renewable energy and energy
efficiency as equally important indigenous sources of energy, in addition to oil and gas.
76
5.4.12 Multi-Year Tariff Order (MYTO)
The Multi-Year Tariff Order (MYTO), which is set to
cover a total of 15 years going forward and is reviewed
biannually, sets a feed-in bandwidth in order to ensure
there are clear rules in the interim market. The MYTO II
policy document states:
“In Nigeria, the true cost of electricity production is not reflected in the consumer tariff. MYTO II is intended to be
cost-reflective and provide financial incentives for urgently-needed increased investments in the industry. These investments, in turn, lead to a significant and continuous improvement in the quantity of energy and quality of service
enjoyed by the consumer (…). NERC has determined that
the price of electricity to be paid to generators will be at the
level required by an efficient new entrant to cover its life cycle
costs (including its short-run fuel and operating costs and
its long run return on capital invested) (…). It is pertinent
to note that feed-in tariffs have been developed for investors
wishing to invest in generation capacity that utilises other
The policy includes provisions for renewable energy and sources of energy including solar, wind, biomass and small
energy efficiency generation activities into government hydro.” [NERC; Jun 2012]
policy statements and plans and thus recognizes the importance of enabling framework conditions for private In January 2015 MYTO 2.1 was put into effect. The upinvestment in renewable energy and energy efficiency.
dated MYTO financial model now has the costs of each
GENCO treated separately. Power Purchase Agreements
The Ministry of Power is set to develop of an integrated (PPAs) prices have been obtained from Nigerian Bulk
resource plan (IRP) and ensure the continuous monitor- Electricity Trading Plc (NBET) and the model now recing and review of the implementation and effectiveness of ognises the following types of PPAs:
the action plans prescribed under the national policy • Successor thermal,
statement. Furthermore, the FMP is to facilitate the es- • Successor hydro,
tablishment of a framework for sustainable financing of • NIPP thermal,
renewable energy and energy efficiency projects and pro- •Olorunsogo,
grammes in Nigeria.
•Omotosho,
•AES,
The situation and expansion path for the renewable ener- •Agip,
gy sector is described in Chapter 6 – On-Grid Renewable •Shell,
Energy while the status and development of energy effi- • Ibom Power,
ciency is detailed in Chapter 7 – Energy Efficiency.
• Rivers IPP,
• Trans Amadi and
•Omoku.
ENERGY POLICY
MYTO II sets the feed-in tariff for the following categories of generation (which have not been amended by
MYTO 2.1):
• new-entrant gas power plants
• new-entrant coal-fired power plants
• small hydropower plants
• land-mounted wind power plants
• solar power plants
77
• Embedded Generation Regulations NERC, 2012
•Regulation for Independent Electricity Distribution
Network (IEDN), 2012
•Regulations on the Procurement of Generation
Capacities, 2014
• Regulations on National Content Development, 2014
5.5.1Transmission, Distribution and
The details of the Multi Year Tariff Order (MYTO) and
Metering Codes
the implications of a feed-in tariff system are outlined in The Nigerian electricity networks are governed by two
detail in Chapter 6.
main codes, the National Grid Code for the Transmission System (Tx) and the Distribution Code (Dx). For
5.4.13Draft Rural Electrification Strategy
commercial operation of a power plant the Metering Code
and Plan (RESP), 2015
is another important document and provides details on
Rural electrification is coordinated at the federal level, the limits of supply and invoicing. All codes currently in
whereby implementation is at the state level. The draft force refer to related sections in the Electric Power Sector
RESP, which is also an outline of the policy as innate in Reform Act. [35]
the EPSRA section on rural electrification. RESP is a national document that applies at the same time to the The Grid Code and Distribution Code of Nigeria destates and local government areas. According to a draft scribe in a clear and consistent way the requirements for
version of April 2015, it proposes that: “The primary ob- synchronous generators connected to transmission levels
jective of the Nigerian Rural Electrification Policy and by and embedded generators. However, renewable generaextension this Rural Electrification Strategy and Imple- tors are not specifically addressed either in the connecmentation Plan is to expand access to electricity as rapid- tion conditions of the Code or in the Operation Code.
ly as can be afforded in a cost-effective manner. This im- This mainly includes requirements for the behaviour of
plies full use of both grid and off-grid approaches, with renewable generators during network disturbance (e.g.
subsidies being primarily focused on expanding access FRT capability, voltage support during grid faults; Reacrather than consumption.” It seeks to do so by “promot- tive power capability during partial load operation; and
ing a full menu of rural electrification options, grid, off- Frequency control/Active power requirements). Such regrid, mini-grid and standalone systems”. [FMP; 2015]
newable energy-specific stipulations are likely to be added in the current review process of the codes.
The relevance to rural electrification is outlined in Chapter 8.3.1.
5.5.1.1 Transmission Code
The Grid Code stipulates the conditions for the electricity transmission system in Nigeria. According to [EPSRA;
5.5Key Electricity Market
2005], the Transmission Company of Nigeria (TCN) is
Regulations
tasked to guarantee functioning transmission system opIn the following, key regulations for the electricity mar- erations of the high-voltage network and is responsible for
ket are referred to. The main regulations are:
overseeing operations. The code is the reference document
• Transmission, Distribution and Metering Codes
for the day-to-day operating procedures and principles
ENERGY POLICY
governing the development, maintenance and operation.
It was designed with two goals in mind: facilitating efficient production and supply of electricity for all users of
the transmission system and TCN itself, on the one hand,
and enabling competition in the generation and supply of
electricity in the country, on the other. Thus, it is mandatory for all users of the transmission system, including
TCN, to comply with these prescriptions. The document
is being reviewed by the dedicated Grid Code Review
Panel. [34]
The code is prepared in a well-structured manner explaining the background, scope and application of the document itself, establishes principles for system planning including load forecast, expansion planning, user involvement
and requirements for relevant data. The key section from
a plant developer’s and operator’s point of view is the chapter on connection conditions. It details the requirements
on the performance characteristics with the principal parameters such as frequency and voltage, the sequence and
conditions of the connection process and generally specifies the SCADA system (substation control and data acquisition), telecommunication and data exchange. The last
chapter dealing with the system operation is important
for keeping up availability, stability and performance,
and includes provisions for the processes and situations
that occur during the operation: system control with voltage and frequency regulation, reserve operation, emergency handling, planning of system operation, necessary
information exchange, scheduling and dispatch, testing
and safety rules.
78
works in the voltage range from 240 V up to Kev. By law,
the DISCOs are responsible for overseeing network operations and retail sales of electricity. [35], [40]
To support this function the Distribution Code (DCode)
establishes a Distribution Code Review Panel and regulates how unforeseen circumstances beyond technical
definitions of the document shall be handled. The first
chapter explains the processes during distribution planning with requirements on the relevant planning data,
planning documents, load forecasting, exigencies on distribution planning and system studies. Conditions for
alterations of the system by new connections or modification are governed in Section 3, starting with the application process including connection agreements and describing commissioning, showing ownership boundaries
(i.e. limits of supply). The most important part for the
system designer is Section 4, which states the details of
the requirements of the grid connection point including
frequency, voltage, protections and grounding, standards,
requirements on generators with the definitions of the
connection point. The DCode regulates operations including planning, system texting and safety prescription
and concludes with construction and maintenance provisions.
Given the nature of the document as a general code for
the distribution networks of various types and characteristics of the different DISCOs, the Code avoids being
very specific on technical parameters and sequences or
procedures. Instead, it stipulates responsibilities, rights
and duties for information, agreement and relevant proGIZ under its Nigerian Energy Support Programme has cesses between the responsible parties. For detailed techmade recommendations for specific definitions for re- nical specifications, parameters and settings, a consultanewable energy schemes which will be integrated into tion process between the corresponding DISCO and the
participants of the system (generation facility or consumsubsequent updates.
ers), called the user, is still required. The connection
agreement between the DISCO and the user is therefore
5.5.1.2 Distribution Code
Based on the EPSRA, the document is the reference for the essential result of the consultation defining the conall distribution networks operated by the DISCOs that ditions into more detail. In this sense, the DCode makes
perform the functions of distributing electricity in net- reference to standards and prudent industry practice
ENERGY POLICY
without further detailing the standard or actual method
to be employed.
79
If embedded generation units are to be connected to the
distribution network, then this shall be done in accordance with the Distribution Code. However, embedded
generation providers are not obliged to provide electricity
to the public. In addition, operators of renewable energy
power systems shall ensure that where storage is not required, flexible generation exists to allow the intermittent and uncertain power to be absorbed into the grid on a
priority basis. The regulation prescribes that the licensee
shall enter into the various network agreements such as a
power purchase agreement, a connection agreement/interface agreement, a use of networks agreement, and an ancillary services agreement with the relevant authorities, such
as NERC and NBET, as further detailed in Chapter 6.5.
5.5.1.3 Metering Code
The last overall document which can be regarded as essential for the set-up of a commercial project is the Metering
Code [35]. It covers metering in the transmission system
and the distribution networks. It defines the conditions
and requirements for electricity meters in the country.
Important for the developers and owners of energy projects is the type and characteristics of the metering devices, description of exchange of acquired data and the location of the meters. The location of the meter is very
important since it marks the commercial limits of supply
and thus of responsibility for the interconnection line
losses.
5.5.3Regulations for Independent Electricity
Distribution Networks (IEDN), 2012
5.5.2Embedded Generation Regulations,
This document states the necessary provisions for the is2012
suance of licences for distribution network operators and
In the Embedded Generation Regulations NERC defines electricity distributors independent of a distribution comthe standard rules for embedded generators and the oper- pany. An Independent Electricity Distribution Network
ation of electricity supply systems. It equally describes the (IEDN) entails all isolated rural or urban networks not
responsibility of distribution planning including fore- connected to the national grid and embedded networks.
casting of demand, analysis of the impact of new connec- An IEDN is required either to operate its own generator
tions, grid expansion planning, monitoring and solving or to obtain electricity from another distribution compasupply quality problems, execution of necessary studies ny via a service agreement. [NERC; 2012]
and attributes these to the holders of distribution licenses.
After a definition of licences and their application, the
[37]
procedures state in detail how these permits will be
Embedded generation is defined as generating units that granted, establish the conditions for operation of the netare connected to the distribution grid. The definitions as works including provisions on the detailed evacuation
capacities to be foreseen per plant type or peak capacity,
listed in Table 5 – 1 apply.
TABLE 5 – 1:
EMBEDDED GENERATION - LICENSING DEFINITIONS
Rated Capacity
Connection Voltage Level
Small units with 1 MW - 6 MW
11 kV medium distribution voltage
Large units with 6 MW - 20 MW
33 kV medium distribution voltage
≥ 20 MW
33 kV medium distribution voltage for every 20 MW being evacuated
Source: [NERC; Jan 2012]
ENERGY POLICY
80
and finally conclude with the obligatory definition of
terms.
the employment of domestic goods and staff as well as to
strengthen Nigerian companies in the electricity sector.
5.5.4Regulations for the Procurement of
Generation Capacity, 2014
The Regulations for the Procurement of Generation Capacity, 2014 issued by NERC, sets out rules and requirements for the acquisition of additional generation capacities by a licensed buyer authorised to trade electricity from
generation companies. The regulation requires that any
such procurement shall be done via a competitive tender
process. The objective is to establish clear instructions,
specify technical standards, enable full transparency on
that process and facilitate the involvement of the private
sector. The definition extends to any generation system
being connected to the transmission system or an embedded generator in the distribution network.
The intention of the regulation reads as follows:
•Deliberate utilization of Nigerian human and material
resources, goods, works and services in the industry;
•Opening the NESI at all levels of its complexity to involve Nigerian people and expertise;
•Building capabilities in Nigeria to support increased
investment in the industry;
•Leveraging existing and future investment in the NESI
in an effort to stimulate growth of Nigerian and Nigeria-located enterprises.
Licensees under the Electric Power Sector Reform Act
2005 are required to give primary considerations to Nigerian employment and training, goods and services, including insurance, financial and legal services. Depending on
The procedures include the procurement process (expres- the scope of the activity the NERC requires development
sion of interest followed by a request for proposals), crite- plans and periodic reports. The Commission reviews reria of bidders and their qualification, requirements for ports and can issue directives. [NERC; 2013]
requests for proposals, the bidding process and the implementation of the contract including PPA. Further to the
central aspects, the communication protocols as well as
auditing and control procedures are defined.
The regulation includes all transactions for generation facilities beyond the lower threshold (“small power plants”)
of 10 MW. The main actor in the process is the future
buyer (currently only NBET) of the additional capacities
while its procedures are overseen and approved by NERC.
The regulation only outlines the structure, sequence and
formal requirements for the process. The actual criteria
and detailed conditions (often subject to the specific
technology or project) are not part of the document.
5.5.5Regulations on National Content
Development, 2014
In December 2014 the NERC enacted the “Regulations
on National Content Development for the Nigerian
Electricity Supply Industry”. Its main goal is to increase
6. ON-GRID RENEWABLE ENERGY
Renewable energy is energy which can be obtained from
natural resources that can be constantly replenished. Types
of renewable energy technologies include, in alphabetical
order:
•Bioenergy
• Geothermal energy
• Small hydropower
• Tidal energy
• Solar energy
• Wind energy
81
ty-scale IPPs). In Chapter 8 we refer to renewable energy
as means of rural electrification, i.e. small-scale “off-grid”
systems.
6.1On-grid Renewable
Energy Market
6.1.1 The Potentials
The Renewable Energy Master Plan (REMP) in its second
draft of November 2012 as prepared by the Energy Commission of Nigeria seeks to increase the supply of renewable electricity from 13% of total electricity generation in
Renewable energy technologies also include hybrid and 2015 to 23% in 2025 and 36% by 2030. Renewable elecrelated technologies. This chapter refers to large capacity tricity would then account for 10% of Nigerian total ener“on-grid” renewable energy technologies with the poten- gy consumption by 2025 [ECN; Nov 2012]. The REMP,
tial to provide electricity as a generation company (utili- although not ratified, identifies the following potentials:
TABLE 6 – 1:
RENEWABLE ENERGY POTENTIALS
Resource
Potential
Current Utilisation and further remarks
Large Hydropower
11,250 MW
1,900 MW exploited
Small Hydropower
3,500 MW
64.2 MW exploited
Solar
4.0 kWh/m2/day – 6.5 kWh/m²/day
15 MW dispersed solar PV installations. (estimated)
Wind
2–4m/s @ 10m height mainland
Electronic wind information system (WIS) available;
Biomass (non-fossil
organic matter)
Municipal waste
18.5 million tonnes produced in 2005 and now estimated at
0.5kg/capita/day
Fuel wood
43.4 million tonnes/yr. fuel wood consumption
Animal waste
245 million assorted animals in 2001
Agricultural residues
91.4 million tonnes/yr. produced
Energy crops
28.2 million hectares of arable land; 8.5% cultivated
Source: [ECN; 2013]
ON-GRID RENEWABLE ENERGY
However, the viability of wind as a primary energy source
needs to be investigated more diligently before any further
recommendations can be made. The REMP lists wind
speed figures at a height of 10 metres above the ground.
This figure is not very relevant for large-scale wind farms.
Detailed wind measurement campaigns are necessary to
identify potentials. The solar energy potential is given as
a figure in kWh/m² and day. Yet, the method of measuring (Direct Normal Irradiation; DNI), Global Horizontal Irradiation (GHI) and Global Tilted Irradiation
(GTI)) is not indicated. Thus the pure figure may be misleading for project developers. Moreover, the figures for
biomass (non-fossil organic matter) are not substantially
described for developers to get a concrete idea the potential of this technology. Finally, the hydro power potential
might have been overestimated: Initial re-assessments of
feasibilities studies for selected micro-hydro sites reveal
that the commercial viability is seriously limited by the
seasonal variation of the water flow (see also Chapter
6.1.1.2).
Below we depict the potentials for large-scale renewable
energy in detail.
6.1.1.1 Bioenergy / Biomass / Biofuel
Data covering biomass projects or companies active in
the sector is unavailable, since there is no central body responsible for this segment, which cuts across various
ministries as well as federal, state and local government
levels. One exception is the Jatropha Growers Association19. While there are numerous very small-scale projects
mooted, any figures on total volume would be guesses.
However, a variety of biomass resources exist in Nigeria
in large quantities with opportunities for expansion. Biomass resources include agricultural crops, agricultural
crop residues, forestry resources, municipal solid waste
and animal waste. Agricultural crop residues include
those produced from the processing of crops. The agricultural crops that have potential as biomass feedstock for
biofuel production include sugar cane, cassava, rice,
19
82
maize and sorghum for ethanol and oil palm, groundnut,
coconut, cotton, soybean, Jatropha and sesame (locally
called biniseed) for biodiesel. [Agba A.M., Ushie M.E.,
Abam F.I., Agba M.S., Okoro J; 2010]
Another source of biomass is municipal solid waste
(MSW), which is generated by households, commercial
and industrial sectors as result of concentration of population, and is collected with vast majority disposed of in
landfill dumps. The waste takes many forms including
plastics, paper, textiles, glass, metal, wood, and other organic waste. Municipal solid waste can be converted into
energy by direct combustion, or by natural anaerobic digestion in the landfill. At landfill sites, the gas produced
by the natural decomposition of MSW (approximately
50% methane and 50% carbon dioxide) is collected from
the stored material and scrubbed and cleaned before being fed into internal combustion engines or gas turbines
to generate heat and power. The organic fraction of MSW
can be anaerobically stabilised in a high-rate digester to
obtain biogas for electricity or steam generation. According to a study in 2009 about 25 million tonnes of municipal solid waste are generated annually in Nigeria. [Ogwueleke T.; 2009]
From the perspective of available land and wide range of
biomass resources, Nigeria has significant potential to
produce biofuels and even become an international supplier. Bioenergy feedstock is not only abundant in Nigeria, it is also widely distributed. Nigeria is the largest producer of cassava in the world. Nigeria could also become
a major player in the biofuel industry given the enormous
magnitude of various waste / residues (agricultural, forestry, industry and municipal solid) available in the country.
The World Bank in its “Low Carbon Report”, while firmly
advocating the use of solar PV, also suggests “other sources
of power include using municipal waste to generate methane to generate power, combusting other biomass to make
power, and small-scale (micro or pico) hydropower. (…)
These technologies are promising and advantageous with
National workshop on Jatropha for sustainable energy development, 6th – 7th may 2008
ON-GRID RENEWABLE ENERGY
suitable local conditions, and are well worth pursuing.”
[WB; 2013]. It is suggested that by 2015 biomass-to-power
could deliver as much as 1,643 GWh/year, with the figure rising to 13,140 GWh/year by 2035. Worthy of mentioning here are the attempts by the Lagos Waste Management Authority to investigate methods for generating
power with the waste they collect as an alternative to
opening up new landfills. With similar forms of waste
collection in place in Abuja, Kano and Port Harcourt,
and the very large volumes of waste accumulating there,
the potential for waste-to-power projects in the large conurbations needs to be investigated in greater detail.
83
model developed in Brazil for sugarcane plantations,
where the crushed fibres (bagasse) are used as the feedstock to great effect. This is even more surprising given
the prevalence of academic literature demonstrating the
biomass potentials on the ground in Nigeria. Using the
huge quantities of biomass resources, mostly in the form
of agricultural residues and waste for energy production
could potentially increase the energy supply thereby increasing energy mix and balance in Nigeria. [Simonyan,
K.J. & Fasina, O.; 2013] or [Audu, T. & Aluyor, E.; 2012];
and [Agbro, E. & Ogie, N.; 2012]
Table 6 – 2 summarises the potential of residues from agriTo date, there has been little mention of any plans to es- cultural crops in Nigeria at approximately 1,958 PJ (or
tablish large biomass power plants, for example along the 543,890 GWh) per annum.
TABLE 6 – 2:
RESIDUES ESTIMATE FROM AGRICULTURAL CROPS, 2010
Crop
Production (‘000 t)
Rice
Maize
Cassava
Groundnut
Soybean
Sugar cane
Cotton
3,368.24
7,676.85
42,533.17
3,799.25
365.06
481.51
Weight available
in million tons
Total energy available
(PJ)
Straw
7.86
125.92
Husk
1.19
23.00
Stalk
10.75
211.35
Cob
2.10
34.19
Husk
0.92
14.32
Stalks
17.01
297.68
Peelings
76.56
812.30
Shells
1.81
28.35
Straw
4.37
76.83
Straw
0.91
11.27
Pods
0.37
4.58
Bagasse
0.11
1.99
Tops/Leaves
0.14
2.21
Stalk
2.25
41.87
Millet
5,170.45
Straw
7.24
89.63
Sorghum
7,140.96
Straw
7.14
88.39
Cowpea
3,368.24
Shell
Total
Source: [Simonyan, K.J. & Fasina, O.; 2013]
602.44
Component
4.89
95.06
145.62
1,958.94
ON-GRID RENEWABLE ENERGY
6.1.1.2Hydropower
The Ministry of Power classifies the hydropower plants
that have a generating capacity of less than 30 MW as
small and of less than 1 MW as mini hydro, while plants
large than 30 MW / 100 MW are classified as medium
and large hydro respectively [FMP; 2015]. Currently
there are 1.9 GW hydropower capacity installed in 3
large power plants (Kainji: 760 MW; Jebba: 570 MW;
Shiroro: 600 MW), although only roughly half of it is
operational (cf. Annex 3, Table A – 8). A World Bank reference scenario following FGN plans and feedback from
stakeholders suggests hydropower utilisation could be
increased to 7.2 GW by 2035. [WB; 2013]. The ECN estimates the large hydro potential even at 11 250 MW and
FIGURE 6 – 1:
LOCATION OF MAJOR DAMS IN NIGERIA
84
the small hydro potential at 3 500 MW (cf. 6.1.1). As
shown in Figure 6 – 1, various dams are available for retrofitting with hydropower plants.
However, this potential has to be assessed carefully: A recent GIZ study [GIZ; 2015)] based on a data set provided
by JICA suggests that hydropower potential might be
more limited. Figure 6 – 2 shows flow patterns vary considerably between wet and dry season. The large seasonal
variation (some rivers only showing 5 to 10 % of flow in
the dry season) may significantly restrict the economical
viable potential for hydropower in the country. This is
particularly true for run-of-river plants typically applied
for small and mini hydro power.
ON-GRID RENEWABLE ENERGY
FIGURE 6 – 2:
HYDRO POTENTIAL: SEASONAL FLOW PATTERN AT REPRESENTATIVE POINTS
Source: [GIZ; May 2015] based on data from JICA; time-frame of data used: 1970 – 2009
6.1.1.3 Solar Energy
Nigeria has a potential for electricity production from
Solar PV technology in the range of 207,000 GWh per
year if theoretically only 1% of the land area (e.g. 920 km²
= 920*106 m²) were covered with state-of-the-art poly-­
crystalline PV modules, 20 with an electricity yield of
1,500 Wh/Wp per year. This figure is tenfold the total
electricity production of Nigeria in 2011 (cf. Figure 3 – 6).
20
p-Si Module, 150Wp per m²
85
ON-GRID RENEWABLE ENERGY
Flat-plate photovoltaic devices utilise both diffuse and
direct radiation. Since Nigeria has a better potential for
photovoltaic systems than for concentrating optical equipment, Figure 6 – 3 shows the irradiation levels of global
horizontal irradiation (GHI) in Nigeria.
FIGURE 6 – 3:
SOLAR IRRADIATION LEVELS, GHI
86
ON-GRID RENEWABLE ENERGY
As can be seen from the map in Figure 6 – 3, the best potential for large-scale solar power plants (preferably PV)
lies in the northern part of the country. Long-term annual
average GHI values in the northern states ranges from
2,000 to 2,200 kWh/m². This high solar irradiation is
comparable to very high-yield sites in southern Spain,
northern Africa, Australia and Latin America. The south
of Nigeria has less potential for solar energy as it is often
cloudy and has a longer rainy season.
Solar PV Power Plant – an Example:
A 15 MWp solar IPP is under construction in Yola, in
Adamawa State, giving a specific yield in average between 1,450 kWh/kWp and 1,650 kWh/kWp per year.
For comparison, we calculate with a diesel generator producing same amount of electricity (66 MWh per
day). Assuming a fuel efficiency of this equipment of
33% the diesel genset needs around 19,925 litres of
diesel fuel and a truck transporting 20,000 litres of
diesel from Warri to Yola every day. The return trip is
2,100 kilometres. This truck uses 630 litres diesel
daily for the trip (30 litres diesel consumption per 100
kilometres). The solar PV plant in operation would
thus substitute for around 7,502,600 litres of diesel
fuel per year.
Specifically, the World Bank recommends in this context
that off-grid solutions be developed using renewable energy sources, commenting that “PV and hybrid systems are
already economically competitive for many off-grid applications. Gasoline and diesel generators produce power at levelised cost of energy (LCOE) between US$ 0.23 and $0.42/
kWh. The cost of electricity from PV and hybrid PV-winddiesel systems are in the range of $0.30/kWh and $0.22/
kWh, respectively. As the costs of renewables continue down
the learning curve, and fossil fuel prices in Nigeria revert to
global market prices (“export parity”), the economic advantages of renewables will become ever greater.” It proposes
that solar PV in particular be used for water pumping
and irrigation, as further detailed in Chapter 8.
87
The economic viability of solar PV is meanwhile beyond
question. As mentioned earlier, this becomes doubly true
if the location of the solar IPP is somewhere that is not
close to a diesel depot and the investment case becomes
increasingly strong if this can be converted into a carbon
credit.
6.1.1.4 Wind Energy
The Ministry of Science and Technology has carried out
wind energy resource mapping [Lahmeyer; 2005]. This
wind mapping project indicated wind speed of up to 5
meters per second in the most suitable locations, which
reveals only a moderate and local potential for wind energy. The highest wind speeds can be expected in the Sokoto region, the Jos Plateau, Gembu and Kano / Funtua.
The stations at Maiduguri, Lagos and Enugu also indicated fair wind speeds, sufficient for energy generation by
wind farms. Apart from these sites, other promising regions with usable wind potential are located on the Nigeria western shoreline (Lagos Region) and partly on the
Mambila Plateau. The calculations indicate the highest
energy yield at the coastal area of Lagos, followed by the
Sokoto area and the Jos Plateau. The computed 3D wind
map is shown in Figure 6 – 4 .
The afore-mentioned wind resource mapping was carried
out on-shore. However, in the absence of a detailed wind
mapping, constant speeds that would enable commercially viable power generation may only be obtained offshore.
To date, the Federal Ministry of Power reports that an
off-shore wind mapping is being undertaken [12]. However, no details about this have been disclosed. Such information would beneficial for further investigation of
the potential of wind power in Nigeria.
There are two larger wind farm projects ongoing at present, namely 10 MW in Katsina, and 100 MW in Plateau
State. As regards the 100 MW wind-power farm outside
Jos, due diligence has been completed on the application
for a license to operate. The owner reports that a provi-
ON-GRID RENEWABLE ENERGY
88
FIGURE 6 – 4:
3D WIND MAP OF NIGERIA 80 M ABOVE THE GROUND
Source: Ministry of Science and Technology, Nigeria 2005
sional Independent Power Producer (IPP) license has
been obtained from the National Electricity Regulatory
Commission (NERC) acknowledging that JBS Wind
Power Limited has met all regulatory requirements to
commence operation [20]. The smaller 10 MW Katsina
pilot wind farm is being built by a French company on
behalf of the FMP and is about to be completed.
6.1.1.5 Other Resources
Presently, the potentials of some resources such as geothermal, nuclear energy, waves, tidal and ocean thermal
gradient still remain untapped and unqualified. Nevertheless, a study has been conducted on geothermal power,
e.g. by the Ahmadu Bello University, Department of Geology in collaboration with University of Silesia, Faculty
ON-GRID RENEWABLE ENERGY
89
of Earth Sciences, Poland [Kurowska E., Schoeneich K.;
2010]. The study concluded that geothermal analysis
based on geothermal gradients indicated areas of higher-than-average gradient values and geothermal anomalies within sedimentary basins. Further detailed studies
are necessary to identify the potentials.
Private investors and developers have obtained NERC licences for various projects, but none of these projects have
yet been completed. However, some of these are at an advanced planning stage, such as e.g. the Anjeed Kafanchan
solar project. The project is 15 MW grid-connected solar
project located in Kafanchan, Kaduna State and is the first
grid-connected solar plant to be awarded an Environmen6.1.2Existing and Planned Renewable
tal Impact Assessment (EIA) certificate by the Federal
Energy Projects
Ministry of Environment in November 2013. The project
The nationwide potential for large-scale renewable energy is estimated to be completed in 2015. Other private comprojects is huge, especially for solar PV. Each technology panies such as e.g. SkyPower FAS Energy or Super Solar
has its specific challenges and many projects are under de- Nigeria have signed Memoranda of Understandings with
velopment for implementation. Existing large-scale grid the Nigerian government. However, the targeted project
connected renewable energy projects mainly take the sizes (in this case 3 000 MW of solar power each) seem to
form of large hydropower plants. To date, no real com- be unrealistic. Synergent Powershare Group of Companies
mercial large-scale project has been successfully imple- is investing in a 50 MW solar farm in Kaduna, officially
mented, other than hydropower (and small biomass, e.g. initiated in September 2011. For further private sector
ethanol production.
driven project development activities see next section.
NERC, the Federal Ministry of Environment and the 6.1.2.1 NERC Licensees
Federal Ministry of Power all have programmes to sup- Some companies have applied to NERC for licenses for
port and implement various renewable energy technolo- solar PV or wind power plants. Table 6 – 3 21 lists approved
gy projects in the near future (see the following sections). licensees for unsolicited renewable generation by NERC
as of 2014. [36]
TABLE 6 – 3:
NERC LICENSEES, RENEWABLE ENERGY
Name of Licensee
Capacity (MW)
Fuel Type
State
Geopolitical Zone
JAP Energy Limited
504
Premier Energy Limited
50
Biomass
Lagos
South-West
Hydrogen fuel cell
Adamawa
North-East
Rook Solar Investment Limited
50
Solar
Osun
South-West
Quaint Global Nigeria Limited
50
Solar
Kaduna
North-West
Nigeria Solar Capital Partners
100
Solar
Bauchi
North-East
Anjeed Kafanchan Solar Limited
10
Solar
Kaduna
North-West
Lloyd and Baxter LP
50
Solar
Abuja
North-Central
KVK Power Pvt Limited
50
Solar
Sokoto
North-West
Pan African Solar
54
Solar
Katsina
North-West
Mabon Limited
39
Hydro
Gombe
North-East
JBS Wind
100
Wind
Plateau
North-Central
21
Latest information: NERC does no longer maintain this list of Licensees related to „fuel type“
ON-GRID RENEWABLE ENERGY
90
It is worth mentioning that some of the licensees named
in Table 6 – 3 are not actively pursuing the full capacity
in their current projects. The licenced 504 MW biomass
plant in Lagos, for example, will certainly not be implemented in one phase due to the immense investment that
would be necessary. Actual figures (from private licensees) about the “real” capacities to be expected by implementing the projects in the near future are not available.
lishing an integrated “Rice Processing and Power Generating Facilitator”, to the economic benefit of the investing state, garnering the advantages of large-scale rice
production and self-generated power from the rice husks.
The Renewable Energy Programme office, Adamawa
State Government and Green Carbon Afrique is developing sugarcane based biofuel plants in Girei and Demsa
Local Government Areas of Adamawa State covering
2,000 hectares of plantations. This initiative is to produce sugar for local use and export, ethanol and ultimately electricity. This integrated project is being replicated in
ten states of the country.
On the other hand, FMP is pursuing the development of
large-scale hydropower projects. Table 6 – 4 lists hydropower development as of 2014. The projects are described
as being at different stages of implementation. The major
national projects are the Mambilla and Zungeru plants.
While financing for the former has not yet been secured,
the latter is loan-financed through China’s Exim Bank.
Considering the prospect of solar energy in a developing
economy like Nigeria, the Synergent Powershare Group
of Company is investing in a 50 MW solar farm in Kaduna which was officially launched by the Honourable
The full list of NERC licensees for power generation (on- Minister of Environment and Kaduna State Governor in
grid, off-grid and embedded) is presented in Annex 3, Ta- September 2011.
ble A – 7.
6.1.2.3 Projects of the Federal Ministry of Power
6.1.2.2Projects of the Federal Ministry
Since large-scale projects in renewable energy are assigned
of Environment
to the private sector under the ongoing privatisation proUnder the Renewable Energy Programme the Federal gress, the Federal Ministry of Power is no longer pursuing
Ministry of Environment (FMENV) has initiated sever- such projects. However, as of February 2014, the FMP
al projects. [52] Global Biofuels Ltd is developing a biofu- has awarded several contracts to Nigerian consultants to
el production complex at Ilemeso in the northern part of undertake “consultancy services for wind, solar and bioEkiti state of Nigeria. Similar plants are planned to be mass projects in different locations nationwide”. [10] The
established at Ondo, Kwara, Osun, Oyo, Kogi, Kaduna, consultancy contracts were all awarded in December
Kano, Zamfara, Benue, Plateau, and Nasarawa.
2013 and results from the studies are yet to come.
Currently, rice production and processing in Nigeria is
typically undertaken by small local farmers using basic
processing technology. Typical issues limiting economies
of large-scale rice production include lack of access to improved technologies, the high costs of energy for parboiling, and lower output quality (post processing). However,
working in conjunction with Carbon Quest and Adamawa
State, the Renewable Energy Programme office is estab-
ON-GRID RENEWABLE ENERGY
91
TABLE 6 – 4:
HYDROPOWER DEVELOPMENT BY FMP, 2014
No.
Power Station
MW
Zone
Status
1
Zungeru project - Niger State
700
North Central
financing secured
2
Mambilla Project - Taraba State
3,050
North East
under development
3
Gurara II Project - Niger State
360
North Central
under development
4
Gurara I Project - Niger State
30
North Central
under development
5
Itisi Project - Kaduna State
40
North West
under development
6
Kashimbilla Project - Taraba State
40
North East
under development
Source: Federal Ministry of Power, [10]
In addition to the projects named in table 6 – 4, the FMP
is engaged in the 10 MW Katsina Wind Project. The
Ministry is currently evaluating the procurement of contractors for the erection of a 33 kV transmission line/
sub-station and wire mesh fencing of the project site. [15]
The wind farm project has reached 98 percent completion
and is currently undergoing test runs.
6.1.2.4Projects of the Federal Ministry of
Water Resources (FMWR)
In line with the policy directive of government to increase energy supply to meet the nation’s energy demands,
Federal Ministry of Water Resources (FMWR) is collaborating with the Federal Ministry of Power (FMP), with
the latter handling the power generation component,
while the FMWR handles civil works in the dam projects with hydropower potentials. Small hydropower
schemes have been integrated into some dam projects
across the country in order to increase the energy supply
of the nation.
To date, FMWR has identified and carried out studies on
some of the completed and on-going dam projects for hydropower, nineteen of which have the potentials for hydropower generation with a total capacity of 3,557 MW.
These dams include; Gurara, Oyan, Ikere Gorge, Bakolori, Dadin Kowa, Tiga, Kiri, Jibiya, Challawa Gorge,
Owena, Doma, Waya, Mgowo, Zobe, Kampe, Kashimbilla, Ogwashiku, Zungeru and Mambilla.
Two large-scale projects are under consideration of implementation, Kashimbila /Dadin Kowa (40 MW) close to
Gombe in the North-East, and Gurara (360 MW) in
Niger State, a few kilometres north of Abuja. The Ministry
of Water Resources and Ministry of Power are working
with Niger Delta Power Holding Company (NDPHC)
on two other hydropower projects under the NIPP programme. The second phase of the NIPP programme shall
eventually lead to the construction of 4 000 MW of hydro plants.
The FMWR has setup a new regulatory agency – the Integrated Water Regulation Commission – to address water concession issues for power and agriculture. This new
commission regulates water concessions by the water resources act which is not yet gazetted. Special incentives
for hydropower projects do not currently exist.
ON-GRID RENEWABLE ENERGY
6.2 Renewable Energy Stakeholders
6.2.1 Public Authorities
Using the analysis of the mandates, roles, relationships
and activities presented in Chapter 4, it is clear that FMP
drives activities in the on-grid electricity from renewable
energy sources. By extension, TCN, NERC and ECN all
have pivotal roles to play in the renewable energy market.
However, rather than having a symbiotic relationship,
there seem to be overlaps especially when it comes to policy and strategy development.
According to its mandate, the FMP is the clear lead in
policy formulation and implementation to promote a diversified electricity mix for the country including electricity generated from renewable energy sources. The inclusion of electricity generated from renewable energy into
the power mix of the country is technically the responsibility of FMP, NERC and TCN.
FMWR is also becoming important in the sector. Due to
its role in hydropower development (e.g. dam construction, hydrological activities etc.), its engagement in the
near future will become more pronounced. Currently, it
undertakes civil works on hydropower stations. Therefore,
a strong relationship with the FMP could further promote more hydro generation capacity in the country.
The FMP currently leads the Inter-ministerial Committee
on Renewable Energy and Energy Efficiency (ICREEE),
which is the key to coordination. ICREEE started to
meet regularly in 2014 and is well positioned to address
the overlap in activities and shortfalls in regulations and
support programmes.
NERC as a national regulator also has an important role
to play. Granting preferential tariffs is pivotal to achieving diversification in the electricity mix of the country.
However, in line with the “Regulations on the Procurement of New Generation Capacities”, the support mecha-
92
nism of the Feed-in Tariff (FIT) system is likely to change
to a competitive bidding system for large-scale renewable
energy.
NBET is the state entity responsible for purchasing electricity from generation companies under long term Power Purchase Agreements (PPA) and selling it to distribution companies. NBET so far acts as single buyer for
transmission-connected power, and hence would be responsible for the implementation of a bidding system for
large-scale renewable energy.
FMENV plays a secondary role, as it has no direct mandate in the power sector. The Ministry approves Environmental and Social Impact Assessments.
Table 6 – 5 summarises the functions and roles of the
public authorities in the renewable energy sector.
ON-GRID RENEWABLE ENERGY
93
TABLE 6 – 5:
RENEWABLE ENERGY STAKEHOLDERS, PUBLIC AUTHORITIES
Main actors
Functions
Role in Renewable Energy
Federal Ministry
of Power (FMP)
FMP is responsible for policies, programs and
monitoring of the power sector in the country.
To promote a diversified electricity mix for the country
including electricity generated from renewable energy
sources.
Drafted the National Renewable Energy and Energy
Policy and leads the Inter-ministerial Committee on
Renewable Energy and Energy Efficiency (ICREEE)
Federal Ministry
of Environment
(FMENV)
The FMENV prepares comprehensive national policies
for the protection of the environment and conservation
of natural resources, including procedure for
environmental impact assessment of all developing
projects
Plays a secondary role, as it has no direct mandate in
the power sector. It approves ESIA. In addition, FMENV
grants tax holiday for utility scale PV plants.
Federal Ministry
of Water Resources
(FMWR)
The FMWR formulates National Water Resources
policies towards ensuring adequate water supply for
agricultural, industrial, recreational, domestic and
other uses. It develops programmes and policies
towards surface water storage schemes and guiding
principles for dam construction nationwide
Role in hydro development (e.g. dam construction,
hydrological activities etc.). Currently, the FMWR
undertakes civil works on hydropower stations in
cooperation with the FMP.
Nigerian Electricity
Regulatory
Commission (NERC)
NERC is a key organisation responsible for regulation
of the power sector across power generation,
transmission and distribution. NERC is responsible for
the creation of a competitive power sector; establishment of operating codes and standards; licensing and
regulation of persons engaged in any of the power
subsector activities; tariff determination; approval of
amendments to electricity market rules; and other
related regulatory functions. It is governed by 7
commissioners, 6 from geopolitical regions and 1
designated Chairman/Chief Executing Officer (CEO).
NERC issues generation licenses to applicants in
Renewable Energy and administers and implements
preferential tariffs (e.g. the MYTO feed-in tariffs).
Energy Commission
of Nigeria (ECN)
ECN’s role as per the ECN Act is mainly research, data
gathering and coordination.
The commission promotes the use of renewables and
alternative energies via research, pilot project and
strategy development. These ECN activities are carried
out by the departments at its head office and the
Energy Research Centres located at Nsukka, Sokoto,
Lagos, Bauchi, Ilorin and Benin.
Nigerian Bulk
Electricity Trading
Plc (NBET)
NBET is the off-taker o electricity and inter alia
concludes PPAs. NBET receives payments from
DISCOs for energy received and pays generation
companies for bulk power sent to the grid.
Enter into and execute PPAs with power generating
companies and procure new generation capacity on
competitive basis, as required.
Transmission
Company of Nigeria
(TCN)
State entity responsible for the transmission of
TCN is responsible for grid-connection agreements and
electricity from power plants to distribution companies, may assist in the determination of MW targets for
eligible customers and for export.
renewable energy
Acts as Transmission Services Provider (TSP), System
Operator (SO) and Market Operator (MO).
Managed by Manitoba Hydro International of Canada
under a three year management contract.
ON-GRID RENEWABLE ENERGY
6.2.2 Non-governmental Players
For on-grid renewable energy technologies there are not
sufficient national manufacturing facilities in Nigeria.
No sole national contractor is currently capable of building a large-scale renewable energy project. At least no local company would be able to handle the development
and implementation of a large-scale multi-million US$
project on its own and without support by accomplished
international partners. The manufacturing and industry
market is working to gain competence and the financial
power to implement such projects with the support of international partners and financing institutions.
94
conventional and renewable power projects, investment
in Nigeria’s power grid, gas gathering projects, as well as
know-how and technology transfer. [44]
6.2.3Foreign Development Cooperation
Organisations
Most of the major international institutions currently active in the general field of energy in Nigeria are active in
one way or another in the field of renewable energy. Clean
and efficient modern energy services are the cornerstone
of sustainable development, economic activity and poverty reduction. International and national donors and organisations’ initiatives and programmes contribute sigSome positive examples of companies coming into the nificantly towards raising awareness of the increased role
market can be given, e.g. a PV module manufacturing fa- of renewable energy sources in the global energy supply.
cility built by a German company in Sokoto. The facility
completed in February 2014 was partly financed by the The major bilateral implementing agencies with a local
World Bank, and the plan is to produce solar panels de- office in Nigeria are:
signed to operate in extreme climates. Further to this
plant in Sokoto, Karshi Solar Panel Plant (KSPP) with an •Agence Française de Développement (AFD), French
development cooperation agency
annual production capacity of 7.5 MWp has been built
under the intervention programme of the National Agen- •Department for International Development (DFID),
British development cooperation organisation
cy for Science and Engineering Infrastructure (NASENI)
•Gesellschaft für Internationale Zusammenarbeit
in Abuja.
(GIZ), German Agency for International Cooperation
Also non-profit organisations have recently become ac- •Japan International Cooperation Agency (JICA),
Japanese development cooperation organisation
tive in the field, especially when it comes to information
exchange amongst professionals, lobbying and awareness •The Norwegian Agency for Development Cooperation (NORAD), Norwegian development cooperation
creation. Amongst them are the Council of Renewable
Energy (CREN), (cf. Chapter 4.4), the Nigeria Alterna- •United States Agency for International Development
(USAID), US development cooperation organisation
tive Energy Association (NAE) and the Association of
Nigerian Solar Energy Promoters (ANSEP).
The main development banks active in Nigeria are:
In 2008, the Nigerian and German governments agreed
on cooperation in the energy sector. Based on this formal • African Development Bank (AfDB); Côte d’Ivoire
agreement the Nigerian German Energy Partnership • International Finance Corporation (IFC), USA
(NGEP) was founded. NGEP has been facilitating main- •Islamic Development Bank (IsDB), Kingdom of Saudi
Arabia
ly utility-scale solar IPPs in Northern Nigeria since 2011.
The portfolio has since been expanded to include projects •Kreditanstalt für Wiederaufbau (KfW), Germany
of German companies in Nigeria such as investment in •World Bank (WB), USA
ON-GRID RENEWABLE ENERGY
Last but not least the following UN Organisations have
an office in Nigeria:
95
professionals ranging from unskilled workforce over
technicians to specialized engineers.
•United Nations Development Programme (UNDP), The courses will are being developed in cooperation with
and will eventually be hosted by the following training
USA
•United Nations Industrial Development Organisation institutions which already by now possess a certain experience in clean energy technology training:
(UNIDO), Austria
•United Nations Office for Project Services (UNOPS),
•Centre for Renewable Energy Technology, Federal
Denmark
University of Technology Akure
•Sokoto Energy Research Centre (SERC), University
6.2.4Key Players in Research, Capacity
of Sokoto
Development and Training
Several pilot projects, surveys and studies have been un- •National Centre for Energy Efficiency &
Conservation (NCEEC), University of Lagos
dertaken under the supervision of the ECN, which has
registered five energy research centres. Centres dedicated •National Power Training Institute of Nigeria
(NAPTIN), Kainji
to renewable energy and energy efficiency include:
•Centre for Renewable Energy Research, Umaru Musa
Yar’adua University, Katsina
•National Centre for Energy Research and Development (NCERD), at the University of Nigeria, Nsukka •National Centre for Energy Research & Development
(NCERD), University of Nigeria, Nsukka
(responsible for research in solar and renewable energy)
•Sokoto Energy Research Centre (SERC), at Usmanu • BAS Consulting, Lagos
Danfodiyo University, Sokoto (also responsible for research in solar and renewable energy)
6.3Renewable Energy Policies
•National Centre for Hydropower Research and Develand Regulations
opment (NCHRD) at the University of Ilorin (responsible for research in hydropower).
On overview of policies, acts and regulations has been
provided in Chapter 5.4. This sections provides further
The National Agency for Science and Engineering Infra- details on aspects within the documents which are of
structure (NASENI) advises the science and engineering particular relevance for renewable energy.
community and SMEs to take advantage of the facilities
available to fast-track their manufacturing processes and The following documents contain the guiding policy
upgrade their Research and Development (R&D) knowl- statements for renewable energy:
edge.
•Renewable Energy Policy Guidelines, 2006, see
In terms of capacity development and training, GIZ
Chapter 5.4.5
through its European Union and German Government •Renewable Energy Master Plan (REMP). 2012,
funded Nigerian Energy Support Programme is currentsummary in Chapter 5.4.10
ly in the process to develop six clean energy training •National Renewable Energy and Energy Efficiency
courses (renewable energy project design, solar PV instalPolicy (NREEEP), 2015, see Chapter 5.4.11 and
lation, hydro power civil works, energy auditing, energy
expansion targets in Annex 4
management and energy efficient building design) for
ON-GRID RENEWABLE ENERGY
The Renewable Energy Master Plan (REMP) sets out in
the short, medium and long term what the national energy
supply mix should be and articulates the strategic approach and measures to meet the targets. There is therefore
a roadmap for implementing government’s commitment
to create the necessary enabling environment for sustainable energy supply for national development with active
participation of the private sector. It is divided into different programmes with targets, timelines and activities. Incentives to promote the attainment of the programmes as
well as generally grow the renewable energy market are
also provided. However, the roadmap still has to be approved by the National Assembly to be passed into law.
96
gets for power generation using biomass, wind, solar and
hydropower as well as renewable electricity overall supply
projections are listed in Annex 4.
The NREEEP recognises the importance of renewable energy for both on-grid and off-grid systems. The document
points out that energy use in the nation is far from efficient at all levels, i.e. household, industry, and transport.
As per its objectives, the NREEEP declares that the proportion of Nigeria’s electricity generated from renewable
energy sources shall increase to a level that meets or exceeds the ECOWAS regional policy targets for renewable
electricity generation and energy efficiency for 2020 and
In May 2015, the National Renewable Energy and En- beyond. An overview of the renewable energy targets
ergy Efficiency Policy (NREEEP) was approved by the (based on 7% growth scenario) is presented in Table 6 – 6 22;
Federal Executive Council (cf. Chapter 5.4.11). This new for a more detailed breakdown of the targets see also Anpolicy will presumably replace the REMP. NREEP tar- nex 4, Tables A – 12, 13 and 14.
TABLE 6 – 6:
NREEEP: SUMMARY OF RENEWABLE ELECTRICITY TARGETS
S/N
Resource 55
2012 [MW]
Short Term
(2015) [MW]
Medium Term
(2020) [MW]
Long Term
(2030) [MW]
1
Hydro (LHP)
1,938.00
2,121.00
4,549.00
4,626.96
2
Hydro (SHP)
60.18
140.00
1,607.22
8,173.81
3
Solar
15.00
117.00
1,343.17
6,830.97
4
Biomass
5
Wind
All renewables plus LHP
All energy resources (on-grid power plus
12,500MW of self-generated power)
–
55.00
631.41
3,211.14
10.00
50.00
57.40
291.92
(1,985.18)
2,023.18
(2,438.00)
2,483.00
8,188.20
23,134.80
21,200**
24,380**
45,490**
115,674**
% of renewables incl. LHP
(23%)
10%
18%
20%
% renewable energy excl. LHP
0.80%
1.30%
8%
16%
* NREEEP classifies Hydropower as follows:
Pico Hydropower: Pico <100 kW
Micro Hydropower: 100 kW ≤ Micro <500 kW
Mini Hydropower: 500 kW ≤ Mini <1 MW
Small Hydropower (SHP): 1 MW ≤ Small < 30 MW
Medium Hydropower: 30 MW ≤ Medium < 100 MW
Large Hydropower (LHP): Large > 100 MW
**T he projection for “all energy resources (on-grid power plus 12,500 MW of self-generated power)”
is based on the addition of on-grid power, and a base capacity of 12,500 MW of self-generation
(i.e. power generated for own use) including off-grid generation from year 2012 to 2030.
Source: [FMP; March 2014]
22
The figures shown in the table are original figures from the source. Figures in (red) are obviously arithmetically wrong.
ON-GRID RENEWABLE ENERGY
The emphasis is on delivery of a substantial mega-wattage
volume and seems ambitious compared to the current
generation capacity. The targeted percentage in renewable energy by NREEEP shall be understood as tentative,
as (in view of high cost of renewable energy power plants)
NERC has for the next five years set a cap on energy from
renewable sources at 10% of total energy sent out. The
cap may be subject to review whenever the federal government’s policy on energy mix is established.
There are two areas of crucial regulations for on-grid renewable energy projects. The first covers submission of a
dossier to NERC to obtain a license for a renewable energy IPP (cf. Chapter 6.5.1). Here the same rules are valid
as they are for conventional independent power projects,
even if the PPAs are remarkably different. For example,
while the conventional PPAs require an analysis of feedstock prices, this does not apply to renewable energy.
The second relates to grid access and requirements: namely the grid code and potential injection points (cf. Chapter 5.5.1). These are decided by NERC in consultation
with TCN. The grid code is a regulatory document initiated by the NERC as mandated in the EPSR Act 2005. It
outlines the day-to-day operating procedures and principles governing the development, maintenance and operation of an effective, well-coordinated and economic
transmission system for the electricity sector of Nigeria
[34]. As noted in the document, the grid code is designed
to facilitate an efficient production and supply of electricity for all users of the Transmission System and TCN itself without any act of discrimination between users or
class of users; and facilitate competition in the generation
and supply of electricity in the country. The scope of the
grid codes (transmission and distribution codes) applies
to power stations connected to the transmission and distribution system. The grid code thus covers the ability of
an IPP to connect to the national grid without jeopardizing the latter’s stability. As a matter of fact, renewable
energy aspects are currently being included in the code in
line with international best practice.23
23
97
6.4Renewable Energy Support
Mechanisms, existing and planned
IPPs relying on renewable energy can expect to face the
same difficulties as their larger conventional “sisters”: The
lack of coherence in the regulatory regime as will be outlined below in the discussion of PPAs. The key hurdles in
the transition to a fully operational market are the guarantees NBET and by extension the DISCOs shall provide. In the absence of a firm metering system there are
fears that DISCOs may not be able to recoup their costs,
and thus they will find themselves unable to pay the IPPs
the tariffs they have committed to. To date, only one privately-financed large gas thermal IPP has been finalised,
with market players no doubt waiting to see how the interim market evolves. While power purchasing agreements
for gas-fired power stations are a highly complex undertaking (especially given the difficulties of indexing of gas
prices), this will not apply to renewable PPAs, where the
feedstock is steady and has no price.
6.4.1Financing from Development
and Private Banks
With regards to financing opportunities, international
Development Finance Institution’s (DFI)24 financing is
available to a certain extent for utility scale projects that
meet the respective criteria as is indicated by some of the
projects in the licence approval pipeline. However, until
now none of the utility-scale pipeline projects have actually secured DFI financing.
Local semi-commercial finance institutions like The Bank
of Industry and The Infrastructure Bank have expressed
interest, however wish to act mainly as ‘financial arrangers’, meaning they will not provide debt.
On the private financing side, various commercial banks
have indicated a willingness to become involved in renewable energy financing. These may provide debt, but at 15%
interest rate upwards, which makes the return on investment the project would need to generate too high.
GIZ NESP programme
24A development finance institution (DFI) is an alternative financial institution which includes microfinance
institutions, community development financial institution and revolving loan funds.
ON-GRID RENEWABLE ENERGY
None of the banks in question is currently providing seed
financing to cover the development costs for utility scale
projects, which has prevented many investors getting off
the ground.
6.4.2 Tax Incentives
The Nigerian Government has put in place a number of
investment incentives for the stimulation of private sector investment from within and outside the country.
While some of these incentives cover all sectors, others
are limited to some specific sectors. The nature and application of these incentives have been considerably simplified. “Pioneer Projects” is one these incentive schemes
[42]. It grants tax holidays to qualified or (eligible) industries anywhere in the Federation and seven-year tax holiday in respect of industries located in economically disadvantaged local government area of the Federation.
98
MYTO II are paid to the producer, Table 6 – 7 shows the
FIT for hydro, wind, solar and biomass plants.
The application under the NBET’s unsolicited power programme follows six steps until a PPA is effective. Before
negotiations between the applicant and NBET begin
(step 1) a list of information needs to be provided, including property and evacuation information on the project
site, a complete environmental impact assessment as well
as project, partner and licence/permit information. In
the steps 2 – 4 details on the PPA are negotiated, an application for a power generation license is initiated and information on the financial model as well as an energy
yield report need to be presented. In step 5 the developer
is required to initiate three tender processes for 1) engineering, procurement and construction, 2) long term services and 3) operation and maintenance. If both parties
agree on the terms in the PPA, the tariffs and the tender
processes are executed, the PPA can be enforced.
At the moment, there is a list of 71 approved industries
declared pioneer industries, which can benefit from tax
holiday. The Government encourages investors in the fol- The costs for studies and an estimated 18 months minilowing industries related to renewable energy with tax mum to complete the process are an obstacle for compaholiday of 5 – 7 years, which may be granted to:
nies pursuing renewable energy projects. So far no PPA
has been concluded by NBET for either a small hydrocompanies that manufacture transformers, meters, con- power, a wind power, a solar PV or a concentrated solar
trol panels, switchgears, cable and other electrical related power plant. This lack in experience on both sides, appliequipment, which are considered pioneer products/indus- cant as well as NBET, sets another hurdle to investors. In
tries and manufacturers of solar-energy-powered equip- the absence of a PPA template, prospective investors do
ment and appliances biomass, large scale mechanised not yet know in what sort of a financing model they can
farming (wheat, maize, rice and sorghum) energy effi- be active under.
ciency schemes, for manufacturers of oven, cookers, cold
rooms, refrigerators, fridges, freezers, air conditioner util- Furthermore, the payment for electricity from renewable
ity services (independent power generation utilising gas, energies does not guarantee a positive environment for
investments. The maximum feed-in tariffs specified in
coal and renewable energy sources).
Table 6 – 7 are advantageous, even by international com6.4.3
Current Financial Support Mechanisms – parison. However, due to the high tariffs especially for
solar power plants, NBET has never accepted the full PV
Combination of Unsolicited Bids and
tariff and also said it will not do so in future.
Feed-In Tariff Guidelines
Potential suppliers of electricity from renewable energies
can apply to the NBET’s Unsolicited Power Programme. To date, the feed-in tariffs laid down in MYTO II do not
If a project is approved, at maximum feed-in tariffs set by give priority access to electricity for renewable energies.
ON-GRID RENEWABLE ENERGY
99
6.5From Project to Realisation:
Renewable IPPs – The Current
Process
There is no compensation for electricity that is produced
but cannot be sold.
As all DISCOs have been privatised, it can be assumed
that retail prices for embedded generation (connection to
distribution network) will be negotiated between the
generation company and the DISCO directly. The
MYTO does not apply in this case.
Any generation company with plans to sell electricity to
the national grid or to DISCOs will need to apply for a
generation licence with NERC as well as for a Power Purchase Agreement with NBET. The current process, which
TABLE 6 – 7:
MYTO II FEED-IN TARIFFS - WHOLESALE CONTRACT PRICES (N/MWH)
2012
2013
2014
2015
2016
Hydropower plants, small up to 30 MW
23,561
25,433
27,456
29,643
32,006
Land-mounted wind power plants
24,543
26,512
28,641
30,943
33,433
Solar PV plants, ground mounted, fixed
67,917
73,300
79,116
85,401
92,192
Biomass power plants
27,426
29,623
32,000
34,572
37,357
6.4.4 Planned Financial Support Mechanisms
For projects with a capacity of larger than 10 MW, a competitive procurement system is under development. Following international best practice examples such as e.g. in
South Africa, the Nigerian government is in the process
of establishing a competitive procurement system for renewable energy plants larger than 10 MW. Based on
technology-specific MW-targets and ceiling tariffs, private companies will be invited to participate in a bidding
process with the following process steps: 1) non-binding
request for information (RFI), 2) binding expression of
interest (EoI), 3) request for proposal (RFP). Successful
bidders will obtain a long-term PPA with a fixed tariff as
per the submitted proposal. This system is built on the
Regulations on the Procurement of Generation Capacity
(2014), which make a competitive procurement process
for power plants larger than 10 MW mandatory. Details
of the process will be elaborated in the second half of
2015. The RFI is scheduled for the fourth quarter of 2015.
takes at least one year, is detailed below. A more streamlined process can be expected once proper support mechanisms (FIT for small-scale and competitive procurement
for large renewable energy plants, see previous Chapter)
have been introduced.
6.5.1 NERC - Generation Licence
All IPPs (as well as other generation companies) need a
license from NERC to operate in Nigeria. NERC rules
dated February 2014 apply for both renewable and
non-renewable IPPs as regulated under “Regulations for
the Procurement of Generation Capacity 2014”. The
rules apply only to new projects with more than 10 MW
capacity and do not apply to off-grid island applications.
NERC requires the IPP to submit the following documentation as part of the license and tariff approval process:
1. Completed application form
Complementary to the utility-scale bidding system, dis- 2.Certificate of Incorporation and Memorandum
cussions are ongoing to establish a feed-in tariff mechaand Articles of Association, or Deed of Partnership,
nism for small renewable energies based on the current
or Deed of Trust
ON-GRID RENEWABLE ENERGY
3.Registered title deed to site, or sale agreement, or
deed of assignment/gift, or evidence of submission
of a title deed to a relevant land processing agency
4.Tax clearance certificate for immediate past three
(3) years
5.Certified audited financial statements and accounts
for immediate past three (3) years
6.Detailed CVs of managerial and technical staff of
the proposed power plant
7. Location map
8. Single line diagram
9. Power plant design
10. Site plan drawings
11. Ten-year business plan
12. Off-take agreement or arrangement
13.Environmental Impact Assessment (EIA) Approval
Certificate, or proof of submission and acceptance
for processing of the Report on EIA to the Ministry
of Environment, Housing & Urban or Planning,
14.Fuel supply agreement, or a letter from a fuel
supplier and transporter indicating the inclusion of
the fuel needs of the applicant in the supply plans of
the fuel supplier and transporter
15.Agreement with/approval from Ministry of Water
Resources (if applicable)
16. Letter of Intent or a MoU from EPC contractor
17. MoU or Letter of Intent from the technical partner
18.Evidence of confirmation from Transmission
Company of Nigeria and proposed connection
point has capacity to accept the proposed load.
19.Financing agreements or letter to fund the project
from bank(s)
20. Power plant commissioning schedule
Once documents have been submitted, the process takes
the following path, as described in Figure 6 – 5.
FIGURE 6 – 5:
RENEWABLE ENERGY LICENSING PROCESS
Source: GOPA-International Energy Consultants GmbH
100
ON-GRID RENEWABLE ENERGY
101
the IPP developer with the necessary grid input data
6.5.2 NBET - Power Purchase Agreement
for completion of this analysis.
Under the unsolicited bidding process any generation licence must be complemented by a power purchase agreement (PPA). The Nigerian Bulk Electricity Trading Typically an IPP developer has to define costs, equipment specifications, engineering design specifications
Company (NBET) has the central, yet temporary, role in
to connect to the grid for its internal planning and
the economic procurement of new generating capacity
cost estimate purposes. Presently TCN does not have
during the transitional market stage. On this basis, the
a standard application package for interested IPP deIPPs will have to negotiate an individual PPA for their
velopers.
project with NBET.
NBET requires four mandatory submissions from IPP
developers prior to initiating a PPA approval process as
detailed below:
1. Land documents:
–Registered title deed for the project site from Land
Registry or
– Notarised sale agreement of the project site land or
– Deed of assignment / gift of the project site land or
–Evidence of submission of a title deed to a relevant
land processing agency regarding the project site
land.
Power-flow or load-flow studies are important for
planning future expansion of power systems as well as
in determining the best operation of existing systems.
The main information obtained from the power flow
study is the magnitude and phase angle of the voltage
at each bus and the real and reactive power flowing in
each line.
4. Energy source/ fuel supply study
For all renewable generation, NBET requires to see the
resource availability reports and completed studies.
Additional NBET due diligence includes review of:
2.Environmental & Social Assessments •Project partners, sponsors, technical and financial
partners
An Environmental Impact Assessment (EIA) that
meets the Federal Ministry of Environment standards • Status of other required permits
has to be completed. NBET expects to receive the final •Project information, capacity, technology, construction schedule, etc.
and complete EIA for the project and also the approval from the Federal Ministry of Environment.
6.5.3 Embedded Generation
26
Based on the “Regulations for the Procurement of Gener3. Transmission line connection agreement A comprehensive load flow study at the project site ation Capacity 2014” embedded generation means the
must be completed and the project must get a provi- generation of electricity that is directly connected to and
sional approval from the Transmission Company of evacuated through a distribution system which is connectNigeria (TCN). This will provide NBET the comfort ed to a transmission network operated by the licensee vestthat there will be no stranded generation capacity.
ed with system operations functions (cf. Chapter 5.5.4)
[NERC; Jan 2012]. Equally as in the other regulations,
Interested IPP developers must conduct a power flow an embedded generation system is a generator directly
study to confirm that all generated power can be deliv- connected to and evacuated through the distribution
ered to the national transmission grid without creat- grid. Most small and mid-sized renewable energy systems
ing any technical issues. Upon request, TCN supplies are very likely to be connected directly to the distribution
25
25The Federal Ministry of Environment, Environmental Impact Assessment (EIA) Division is responsible for implementing the EIA Act No. 86 of 1992 with the
mandate to register new projects, verify sites, screening/scoping of projects. As regards the negotiation for PPA with NBET, FMENV shall review and approve
the site-specific EIA.
26NBET requires a copy of TCN approved load flow study as part of the PPA application package.
ON-GRID RENEWABLE ENERGY
102
grid, either due to the voltage level or driven by the loca- suggesting that licenses were obtained as negotiating
chips for future sale rather than with the firm committion and connection costs.
ment to build and operate a power plant.
The NERC procurement rules dated February, 2014 state:
1.Generation capacity up to 10 MW is exempt from the
February 2014 published rules
2.Various existing arrangements and applications are
also exempt from the new rules
3.For addition of any generation capacity over 10 MW
a competitive bid is required
4.There are two methods for DISCOS to obtain
additional embedded generation;
a.Request NERC to facilitate a competitive bid
procurement or
b.Individual DISCO to initiate a competitive bid
procurement
6.6Conclusions: Renewable Energy
Market and Potential
Nigeria has immense potential and opportunities for a
large-scale roll-out of utility-scale renewable power plants,
specifically biomass-to-power, waste-to-power, solar PV
projects and small and medium-sized hydropower stations
(on-grid). The viability of wind as a primary energy source
would need further investigation.
For on-grid renewable energy technologies, the manufacturing and industry market in Nigeria is on its step to
gain competence and financial strength for implementation of large-scale projects with the support of internaEnd-user tariff(s) shall be negotiated between the embed- tional partners and financing institutions. Several joint
ded generation provider and the eligible customers and ventures of international and national corporations and
shall be fixed for a specified period. Tariffs are subject to financial institutions are currently engaged in for instance
periodic reviews and approval by NERC.
utility-scale solar IPP projects that are either in the licence
application stage or in solar panel fabrication and instal6.5.4Challenges
lation stage. There are however no sufficient national manBefore a project gets to the licence submission stage, a ufacturing facilities in Nigeria; only some local produclarge quantity of studies need to be completed, meaning tion of PV modules is done.
that the company or investor ‘developing’ the project
must be prepared to incur substantial costs ahead of li- Planned projects
cence approval in the hope to gain such.
To date, no real commercial large-scale project has been
successfully implemented, other than hydropower (and
Investors, international financing institutions and funds small biomass, e.g. ethanol production). Stakeholders
may not want to engage in such an expensive project de- and key players all have programmes to support and imvelopment and make any real commitments until they plement various renewable energy technology projects in
have a license and PPA Letter of Intent in place.
the near future. The FMP for instance has awarded contracts to Nigerian consultants to undertake “consultancy
To date, a large number of such licences have been grant- services for wind, solar and biomass projects in different
ed, for both on- and off-grid independent power produc- locations nationwide”; results are outstanding. FMP in
ers (IPPs). However, the number of the projects that have cooperation with the FMWR will construct at least 16
since progressed to financial close and are buttressed by large, medium and small hydropower plants, increasing
PPAs is limited (in case of renewable energy there is none), the country’s power generation capacity by about 4,000
ON-GRID RENEWABLE ENERGY
103
MW. Private investors and developers have licensed vari- A coherent support mechanism, as e.g. mentioned in Chapous projects with NERC already. However, none of these ter 6.4, is crucial in order to attract first-class reliable genprojects has yet been completed.
eration companies. Otherwise it may be to the detriment
of consumers as it may encourage the introduction of
Renewable energy policy and strategy targets
sub-standard facilities that are not in any way sustainable.
Good foundations in formulating the renewable energy
policy and strategies have been made. In 2015, the Nation- Project realisation, opportunities and challenges
al Policy on Renewable Energy and Energy Efficiency Before a project gets to the licence submission stage, sever(NREEEP) has been approved. However, the lack of a al studies need to be completed ahead of license approval.
structured support mechanism, the variety of actors with A company or investor ‘developing’ the project must hence
partly overlapping mandates and unclear authorisation be prepared to incur costs for these studies.
processes pose significant hurdles to project developers.
In practice, anyone looking to obtain a generation licence
Support mechanism
from NERC is required to obtain a PPA Letter of Intent
Various commercial banks indicate a willingness to be- (“LOI”) from NBET (or from a distribution company for
come involved in RE financing, such as the Bank of In- embedded generation), prior to being licensed. The NBET,
dustry (BoI) and The Infrastructure Bank (TIB). Nigeri- on the other hand, wants to see funding commitments
an banks aim to act merely as “financial arranger”, i.e. prior to the LOI.
without providing own seed financing and/or at high interest rates (15% upwards). The current National Renewable Energy and Energy Efficiency Policy supports the
introduction of financial incentives; but this still needs to
be operationalised.
The MYTO 2.1, as the framework for determining the
industry pricing structure, is potentially advantageous
for foreign investors. Though, this certainly requires factoring in country risks, logistics, the blurred ministerial
responsibilities as regards the applications processes for
tax relief and customs exemption. In addition, quality
monitoring still needs to be put in place as well as benchmarking to international best practises. From this perspective, Nigeria appears to be a comparatively unregulated market for renewable energy at the moment.
Currently, negotiations on the basis of the MYTO 2.1,
have to be conducted individually between the IPP license-holder (the power generator) and the buyer (to
date NBET) to obtain a power purchase agreement.
7. ENERGY EFFICIENCY
Energy Efficiency simply means using less energy to produce the same service. When dealing with the energy sector, great care must be taken not to mistake energy efficiency for energy conservation which simply means
reducing or going without a service to save energy. For
example, turning off a light is energy conservation but replacing an incandescent lamp with a compact fluorescent
lamp (energy saving bulb which uses less energy to produce the same amount of light) is a measure of energy efficiency. However, both energy conservation and energy
efficiency reduce greenhouse gas (GHG) emissions.
7.1 Energy Efficiency Market
The main factors driving energy efficiency are savings realised from a reduced need for investment in infrastructure (economy level) or savings on fuel expenses (individual entity level) as well as the mitigation of environmental
effects and climate change (global level) by reduction of
GHG emissions.
Any cost-related decision concerning energy efficiency, at
the individual level, is based on a trade-off between an
immediate cost and a future decrease in energy expenses
expected from increased efficiency. The higher the energy
price, observed or expected, the more attractive energy
efficiency becomes. Despite the fact that the key focus in
the energy sector in Nigeria today is on improving power
generation, there is need to formulate and implement energy efficiency programs in the various sectors of the
economy. This will contribute not only to reducing the
power shortage, but will also increase the competitiveness
of the industrial sector through the reduction of energy
intensity 27 per unit product. Moreover, reduced energy
costs would also give policymakers greater latitude for reducing electricity subsidies and freeing up the national
budget. Last but not least, reducing energy use by enhancing efficiency is one method of cutting carbon dioxide
emissions and mitigating climate change.
104
There are two levels at which energy efficiency potentials
can be exploited. The one level is the way energy is generated, transmitted and distributed; the second is the way
energy is consumed in the various sectors of the economy
(e.g. transportation, buildings, and industries).
Table 7 – 1 shows an excerpt of the energy efficiency indicators gathered by the World Energy Council for the years
2010 and 2011. The database gathers the information on
a very high level and may contain some gaps due to missing information but it serves as an indicator for the trend
in energy efficiency.
The potential for investment in energy efficiency by manufacturers/vendors (profiting from machinery/appliance
substitution) shown in Table 7 – 1 and 7 – 2 is vast. The
scope for institutions supporting rural and lower-income
households in reducing their energy consumption is likewise large, as already observed with regard to stoves and
fuel wood consumption [CREDC; 2008].
The table shows remarkable energy efficiency gains that
have been made in industry over the 11 years covered, and
also reveals that CO2 emissions per capita have noticeably fallen over the 11 year period presented in the table.
The population has grown significantly and “final energy
intensity at 2005 GDP structure” has risen. Both are areas where there is further market potential. Moreover, the
table clearly indicates that there is an efficiency shortfall
in the energy generation sector, highlighting the extent of
distribution/transmission losses and the problems with
the fleet of thermal power stations.28
Despite the efficiency gains over the 11 year period shown
above, Table 7 – 2 in Chapter 7.3 also points to significant
further saving potential since Nigeria’s energy intensity
measured as energy consumption per unit of GDP is approx. 40% higher than peer countries like Brazil, Indonesia and Bangladesh.
27Energy Intensity is a measurement of energy conservation, the amount of energy consumption per unit (here GDP). It expresses the consumer behaviour in energy
saving or changes in the industrial sector as an average figure for the whole country
28As a side note: It can already be observed with this well curated data set that the establishment of a consistent data on energy efficiency is a difficult tasks since it
depends on available data and a common method or definition on how to measure efficiency, losses and emissions. This can be exemplified with the rate of
electricity transmission-distribution losses that jump over the years: 39.7 (1990), 39.3 (2000), 24.4 (2005), 6.04 (2009), 17.7 (2010), 17.7 (2011). The jumps in the
series may be caused by the extension of the data gathering to other parts of the system or change of methodology
ENERGY EFFICIENCY
105
TABLE 7 – 1:
ENERGY EFFICIENCY AND CO 2 INDICATORS FOR NIGERIA
Unit
2000
2011*
2000-11 (%/year)*
Key indicators
Primary energy intensity (at purchasing power parities (ppp)
koe/$05p
0.498
0.319
-4.0
Primary energy intensity excluding traditional fuels (ppp)
koe/$05p
0.090
0.052
-4.9
Final energy intensity (at ppp)
koe/$05p
0.457
0.292
-4.0
Final energy intensity at 2005 GDP structure (ppp) [2]
koe/$05p
0.287
0.556
6.8*
CO2 intensity (at ppp) [1]
k CO2/$05p
0.227
0.130
-4.9
t CO2/cap
0.333
0.291
-1.2
Energy intensity of industry (to value added at ppp)
koe/$05p
0.167
0.152
-0.9
Energy intensity of manufacturing (at ppp)
koe/$05p
0.857
0.781
-0.8
CO2 emissions per capita [1]
Industry
Share of electric process in steel production
%
100
100
0.0
k CO2/$05p
n.a.
0.058
n.a.
Average electricity consumption of households per capita
kWh/cap
35.8
80.2
7.6
Average electricity consumption of electrified households
kWh/hh
399
604
3.8
Electricity intensity of service sector (to value added at ppp)
kWh/k$05p
38.1
44.1
1.3
CO2 intensity of service sector (to value added at ppp) [1]
k CO2/$05p
n.a.
0.037
n.a.
%
48.8
45.3
-0.7
CO2 intensity of industry (to value added at ppp) [1]
Households
Services
Transformation sector
Efficiency of total electricity generation
Rate of electricity transmission-distribution losses
%
39.3
17.7
-7.0
Efficiency of thermal power plants
%
37.0
39.7
0.6
Share of renewables in gross electricity consumption
%
38.2
20.7
-5.4
[1] CO2 from fuel combustion – [2] by main sector – * data of 2010 if 2011 data not available
Source: ENERDATA Information Services, [7], units: koe = kilogram oil equivalent, $05p = US$ basis 2005
7.1.1 Existing Energy Efficiency Projects
With the exception of the UNDP/ECN programme described below, measures in the sense of centrally planned
or coordinated programmes are not yet in place, although
some policies exist through ECN, the National Centre
for Energy Efficiency and Conservation (NCEEC) and
FMENV. That said, the National Centre for Energy Efficiency and Conservation (NCEEC) attached to the University of Lagos has been conducting research into energy
efficiency and conservation and under this mandate has
conducted studies into the promotion of energy efficient
appliances and light bulbs (cf. Chapter 7.4 for details on
the organisation). The insights have not yet been fed into
tangible measures.
The Energy Commission of Nigeria (ECN) in partnership with the Cuban government and with support from
ECOWAS has been distributing 1 million Compact Fluorescent Lamps (CFL) in Nigeria free to residents in organised estates across the country.
Under the aegis of Federal Ministry of Environment’s
National Clean Cooking Scheme (NCCS) run by the
Renewable Energy Programme Unit, the Rural Women
ENERGY EFFICIENCY
Energy Security (RUWES) has started production and
distribution nationwide of a purpose designed bio-fuel
stove in partnership with pot-makers Tower and energy
firm Envirofit.29
106
dustries implemented energy audits. This involves identifying in each state all manufacturing hubs and major
areas of industrial production. The estimated energy
needs of all industrial manufacturing hubs will be included in Nigeria’s energy dispatch considerations, and used
in planning the electric power sector. [NIRP; 2014]
The Rural Energy Access Project (REAP) was initiated by
the Federal Ministry of Environment’s Renewable Energy
Programme Unit to address the need to source and deploy The project “Promote Energy Efficiency in Nigeria’s Resialternative and sustainable sources for lighting purposes, dential and Public Sectors” (2011 – 2015) aims to introwhereby energy efficiency spells empowerment as it brings duce energy efficiency policies and measures, including
light to the rural poor who suffer most from a dearth of standards and labels for refrigerators and lights in Nigeria.
electricity. REAP hinges on reducing power consumption Managed by the UNDP, the project is being implemented
by using clean, energy efficient LED bulbs (light-emitting by an Energy Efficiency Unit, which has its head office on
diode) and introducing household stand-alone solar kits the premises of the Energy Commission of Nigeria. It is
to replace incandescent bulbs, single-wick kerosene and going to receive financing in the amount of approximately
oil lamps as well as small diesel generators.
USD 4.8 million for a period of 5 years. [79]
Julius Berger of Nigeria introduces energy efficient buildings to the country. In 2013, the company completed the
office building of the Central Bank of Nigeria in Lagos
and has ongoing projects, like the Rose of Sharon Building, Nestoil Towers, and Akwa Ibom Stadium Complex.
According to its own presentation, the company has the
specialised knowhow needed to construct buildings that
meet the Leadership in Energy and Environmental Design (LEED) standards for certification. However, these
pilot projects are high-cost measures and cannot be regarded as common practice in the building industry.
7.1.2 Planned Energy Efficiency Projects
The Abuja Green City: The Abuja Green City is an initiative of the Renewable Energy Programme of the Federal
Ministry of Environment, together with Green Carbon
Afrique Creation Environmental Services and Integra Integrated Renewable Energy Services. The low-carbon development is using a combination of local electricity generation, improved insulation, and energy efficient devices
for the apartments.
Abuja Centenary City: Being planned by an investor
from the Gulf and designed by Julius Berger InternationThe Energy Efficient Housing Scheme is a partnership be- al, this city will feature an array of sustainable energy
tween the FMENV and Aso Savings And Loans Plc, a measures. [Primetech AS&P; 2014]
leading mortgage bank with the objectives of providing
affordable energy efficient housing for staff of the Minis- With support from the Global Alliance for Clean Cooktry by micro generation mainly from solar and Bio-energy. stoves, the International Centre for Energy, EnvironThe project was recently launched in Kaduna with the ment and Development (ICEED) is establishing the Niprospect of containing 2000 housing units and many gerian Clean Cookstoves Design and Testing Centre at
more are on the pipeline from different states across the Afikpo, Ebonyi State. The centre will provide stove producers and users, and other relevant stakeholders the opnation.
portunity to confidently compare stove performance and
Projects looking at energy efficiency in the industrial sec- safety. In addition, it will provide a common set of termitor are not existent so far. To a limited extent, a few in- nology for wood stoves for easier understanding and
29See also the “Save80 Stoves: Promoting Energy End-Use Efficiency for Sustainable Development” project launched in 2011. The „Efficient Wood Fuel Stoves for
Nigeria Programme“ is a joint initiative of the German NGOs, Atmosfair GmbH and Lernen - Helfen - Leben e.V. (LHL) and a Nigerian NGO, Developmental
Association for Renewable Energies (DARE) to promote dissemination of improved cooking stoves to households in Nigeria. This project has been registered as a
CDM project and is being financed by a Carbon offset company Atmosfair GmbH.
ENERGY EFFICIENCY
communication; give stove producers, marketers and users
assurance of product quality.
107
ing environmental measures such as reduction of noise or
emission is provided.
The fleet of power plants producing base-load capacity in
Nigeria consist of gas turbine power plants in open-cycle
configuration. The efficiency of such power plants is limited by physical laws (Carnot process). Nigeria’s overall
efficiency in base-load could be increased by changing the
technology, for example to combined cycle power plants
(CCPP) or combined heat and power (CHP) technology.
In some cases these more efficient technologies have already been introduced, for example at Afam VI, Alaoji,
GIZ – Nigerian Energy Support Programme: The Euro- Okpai and Olorunshogo power stations.
pean Union and German Government funded Nigerian
Energy Support Programme (NESP) in cooperation with On the other hand, technical losses in power transmisthe FMP, the FMLHUD and the FMITI focuses on en- sion and distribution are as high as 17 – 20% 30 (cf. Chapergy efficiency in the building and industrial sector. Pilot ter 3.9). The potential to increase the stability of power
projects will be implemented for apartment buildings, for transmission and to reduce losses is enormous. Since the
the application of solar water heaters and with regard to privatisation of the DISCOs, the issue will be pursued
energy management systems in selected industries. Expe- from the economic point of view. The companies will
riences are used for up-scaling into policy development and make efforts to increase their sales by minimising their
the development of support mechanisms such as financing system losses.
schemes, introduction of ISO standards and standards
7.2.2 Genset-Based Generation
and labels for household appliances.
The absence of on-grid energy supplies or unreliable power supply from the grid has led consumers from all catego7.2Energy Efficiency:
ries to install their own generation and even distribution
Power Generation
equipment. The majority of these generators use diesel or
petrol as fuel. Replacing old diesel generators with at least
7.2.1Efficiency of On-Grid Generation,
newer more efficient generators can increase the reliabiliTransmission and Distribution
The technical efficiency in the electricity sub-sector is de- ty of the electricity supply and reduce energy costs. Emtermined by efficiency of the generators used in the sys- pirical evidence suggests that over a 30 year life-span a
tem as well as losses in the transmission and distribution. generator’s output falls by half. Accordingly, in the medium to long-term the goal must be to replace such generaAccording to the data on the efficiency of thermal power tors with renewable energy sources wherever possible.
plants in Nigeria provided by the World Energy Council,
the electricity generation efficiency is with an average of In 2008 a study from the University of Chicago estimated
38.3% even slightly above the mean values of similar the life-cycle costs of a diesel genset in Nigeria at US$
economies (e.g. India: 28.6%, Indonesia: 34.6%, South 13,160 per kVA installed capacity (12 years lifetime, 8%
Africa: 35.7%). It is not clear what was considered when discount rate) [Kennedy-Darling, J., Hoyt, N., Murao, K.,
generating these values and also no information on exist- Ross, A.; 2008]. Since then, the prices for genset, diesel
The Nigerian Clean Energy Access Programme – NCEAP:
In line with the quest to reduce the global impact of climate change and as part of the solution to the epileptic
power supply in Nigeria through NCEAP plans to distribute 150 million bulbs over the next five years under
the Clean Development Mechanism (CDM). This is part
of FMENV’s initiative to ensure energy efficiency is private sector driven.
30TCN archive (supported by NIAF)
ENERGY EFFICIENCY
108
and maintenance has risen and it can be assumed that the measured in energy used per unit of commercial floor
life-cycle costs for a diesel genset are much higher today. space or another metric indicative of a sector or process.
The gains to be made from efficient generators are thereA peer group comparison of energy use is quite instrucfore immense in absolute terms.
tive to highlight the situation in Nigeria (cf. Table 7 – 3).
In this context, the Standards Organisation of Nigeria
(SON) has the mandate by law to make sure that sub- Compared to other countries, Nigeria shows relatively
standard generators and other industrial goods and spare high energy use per unit of GDP expressed in US$ 1,000.
parts do not come into the country. Reports about sub-­ This can hardly be influenced by a low price of grid elecstandard generators and parts in shops and markets seem tricity, given that electricity supply from the grid is erratic
to indicate that the mandate is not fulfilled resulting in and that the alternative source is a diesel generator, which
unnecessary costs and the waste of energy and resources. as the table shows is comparatively expensive in the counIndeed, there is scope also to introduce a LEME (List of try. The low absolute consumption figure is indicative of
Eligible Equipment and Materials) [5], [6]. Energy effi- the lack of generating capacity. However, the high energy
ciency measures would reduce the demand for generators use is clearly a point where energy efficiency measures
or at least demand for their continuous use [GIZ; 2013]. could pay off.
7.3 Energy Efficiency: Consumption
As an example, the 2010/2011 General Housing Survey
carried out by the National Bureau of Statistics in NigeThere is a specific parameter to measure the consumption ria [NBS; 2010/11], provides data on the distribution of
of energy required for a certain product or unit: energy households by type of main lighting fuels. It has been reintensity. The energy intensity is the ratio of energy con- vealed that more households rely on kerosene as the main
sumption in relation to the reference metric. This is typi- lighting fuel, followed by electricity, battery/dry cell and
cally the national gross domestic product in the case of a firewood respectively. Based on these figures, one can ascountry’s energy intensity, or energy consumption per sume that electricity consumption for lighting will inhousehold for sector-specific intensities but it can also be crease with households connected to electricity supply.
TABLE 7 – 2:
ENERGY INTENSITY – A PEER-GROUP COMPARISON
Base year
Nigeria
Indonesia
Bangladesh
South Africa
Brazil
Energy intensity (kg of oil equivalent)
per US$ 1,000 GDP
(constant 2011 PPP)
2011
137.5
101.6
90.9
231.3
95.9
GDP per unit of energy use (constant
2011 PPP US$ per kg of oil equivalent)
2011
7.3
9.8
11.0
4.3
10.4
Energy use (kg of oil equivalent)
per capita
2011
721
857
205
2,741
1,371
avg.
2009–2013
1.09
0.47
0.76
1.42
1.02
2005
7.7
41.18
8.94
36.97
83.19
Pump price for diesel fuel
(US$ per litre)
Consumption by households
(in billions of kWh)
Source: World Bank, [68]
ENERGY EFFICIENCY
Figure 3 – 2 in Chapter 3.3 shows quite clearly that with
a share of 80% the bulk of energy is consumed in the residential sector. An analysis of the energy saving potentials
conducted in 2013 reveals that hot water heating, cooling
and lighting have the largest saving potential at household level [GIZ; 2013].
On a more global level, buildings would gain or be more
efficient if built according to the climate at the respective
location. Specific energy consumption of a building is dependent on the quality of the building as such, the building orientation and the design and material of the building envelope, just to name a few criteria. Unlike with
traditional housing, modern architecture and also the
clients in the urban areas do not account for bioclimatic
construction. As a result, the study also recommends
top-level policy changes in the building sector such as development of an energy building code, creation of a design catalogue for affordable energy efficient buildings,
introduction of technical and financial support mechanisms, priority for energy efficiency in public procurement as well as awareness raising measures and training
and capacity building.
109
energy wastage, such as the inefficient traditional threestone fuel woodstoves used by 70 – 80% of households
[NBS; 2010], the use of vehicles with low fuel efficiency
(e.g. old vehicle fleets, poor maintenance), the predominant use of incandescent light bulbs, the indiscriminate
use of electricity among urban dwellers in Nigeria such as
leaving appliance on when not in use, and the purchase of
second-hand appliances which have often been rejected
by former users in favour of more efficient appliances.
The FMENV’s Department of Climate Change outlined
how the energy-efficiency potentials offered an option to
mitigate the climate change impact of Nigeria’s energy
system by adoption of the following [FMENV; 2010]:
1.Introduction of compact fluorescent light (CFL)
bulbs at a negative incremental cost of $58/ton
CO2, with 5.155 m ton CO2 reduction capacity;
2.Introduction of improved kerosene stoves in
households, at a cost of $21/ton of CO2 reduced
(6.122 m ton CO2 reduction capacity) ;
3.Fuel-oil to natural gas substitution in the cement
industry at $18/ton (7.49 m ton CO2 reduction
capacity);
Looking at the end-user side, savings of some 26.8% of 4.Improved electrical appliances ($16/ton) and
wood-stoves ($3/ton) in the residential sector
the total energy consumed per household can be achieved
(9.566 m ton CO2 reduction capacity); and
if solar water heaters are introduced (whereby this does
not consider the use of energy to pump the water). Sec- 5.Introduction of efficient motors in industry at
$15/ton (10.738 m ton CO2 reduction capacity).
ondly, estimates reveal that the total energy requirement
can be reduced by a further 6.7% if the average energy
consumed by cooling systems is decreased through shad- Refrigerators
ing, insulation, timer switches, etc. Thirdly, the introduc- Table 7 – 3 compares the average electricity consumption
tion of energy-saving lighting sources will produce net of refrigeration appliances in Nigeria with France, Engenergy savings of around 6% per household. All in all, land and Sweden, which shows that the average consumpmeasures taken in this regard would garner energy con- tion per appliance is as much as double as high (though
sumption reductions of close to 40%.
climatic factors are ignored which certainly would reduce
the gap).
One of the reasons for inefficient use of energy in Nigeria
is the use of old and inefficient equipment and production processes. The other reasons are practices that lead to
ENERGY EFFICIENCY
110
TABLE 7 – 3:
ENERGY EFFICIENCY AND KITCHEN COOLING APPLIANCES – A COMPARISON OF AVERAGE ANNUAL CONSUMPTION
Fridge
Fridge-freezer
Freezer
Expected impact of energy efficiency
measures such as standards and labels
France 2007
253
460
556
36%
Sweden 2007
225
469
470
7%
England 2007
162
427
344.5
38%
Nigeria 2012
420
698
756
n.a.
(kWh/p.a.)
Source: UNDP newsletter / case study
Air Conditioners
Between 2006 and 2014, a total of 24 million air conditioning units (domestic, commercial and industrial) were
imported to Nigeria, the majority for domestic use. The
share of air conditioners in a household’s electricity consumption is substantial. A GIZ report suggests the Nigerian market is far from saturated and the stock of air conditioners will continue to increase. [GIZ; April 2015]
Solar Water Heaters (SWH)
A recent GIZ study concludes that the associated energy
cost savings comparing Solar Water Heaters (SWH) for
domestic application with electric heaters are negligible.
One reason for this is that the market for SWHs is not
yet well developed in Nigeria and hence prices are high.
The second reason could be that the electricity tariffs in
Nigeria are comparatively low (although rising according
to the MYTO 2.1 regulation). The situation is similar in
educational institutions and hospitals. Therefore, incentives, grant, and financing models are needed to make
SWH attractive for potential users. [GIZ; Dec 2013]
On the other hand, the study also reveals that the use of
SWH is profitable in hotels even without subsidies. Results show a theoretical payback period of 3 to 10 years.
However, most hotels have decentralised water heating
systems that make retrofits with SWH systems more difficult.
Energy Efficiency in the Industrial Sector
The industrial sector is probably the segment of the economy where energy efficiency measures would be easy to
identify and to implement. Sustainable energy efficiency
measures would show results quickly in the form of higher productivity through overall optimisation of processes
and savings in feedstock and energy expenses.
An assessment of the industrial energy sector [GIZ; Mar
2015] confirms that the constant power shortages across
the country and the lack of efforts from the government
to respond to the energy demand in the industrial sector
remain the main barriers to a sustainable industrial development in Nigeria. The survey found that on average
48% of total electricity consumed annually in the manufacturing sector is self-generated by using diesel generators which 86% of Nigerian firms own due to electricity
outages. In fact, the total number of outages stood at 197
hours per month, compared to 15 and 39 hours in the
world and Sub-Saharan Africa, respectively. In the manufacturing sector, chemicals & pharmaceuticals, metal
products and plastics are the top three sub-sectors in
terms of concentration of high power-consuming industrial units. They account for about 60% of power consumption in the >100,000 kWh per month category. Lagos area has the maximum concentration of industrial
units (71%) consuming over 100,000 kWh per month.
ENERGY EFFICIENCY
X
X
X
X
X
X
X
X
X
X
X
X
Thermal/Steam
X
X
X
X
Electro-Mechanical
X
X
X
X
X
X
Air-Compressors
X
X
Heat Controllers
X
Water Pumping
X
X
Source: [MAN; 2013]
Table 7 – 4 presents potential areas where energy savings
are feasible across these industrial sub-sectors.
Looking more closely at the industrial processes, opportunities comprise the following [GEF-UNDP; 2011]:
•monitoring and eventual retrofit of better electric
drives,
• changes in the controlling of fans, blowers and pumps,
•optimised dimensioning and failure safe operation of
air compressors,
•optimisation of design and use of heating, ventilating,
and air-conditioning operation via maintenance and
recirculation,
• improvement of lighting concepts and
•last but not least, behaviour changes which would also
optimise the overall manufacturing set-up.
However, inadequately trained personnel and professionals is another factor inhibiting the development of energy
efficiency in Nigeria. Out of the 150 respondents interviewed in the study conducted by Community Research
and Development Centre (CREDC) in 2009, 77% of
them said that no member of their organisations had
been trained on energy management.
Textiles
Metal Products
Lighting
HVAC
Automotive
Plastics
Chemicals/
Pharmaceuticals
Food & Beverage
TABLE 7 – 4:
POTENTIAL AREAS OF ENERGY SAVINGS ACROSS INDUSTRIAL SUB-SECTORS
X
X
X
X
X
X
X
X
X
X
X
111
ENERGY EFFICIENCY
7.4 Energy Efficiency Stakeholders
The significant obstacle for the broader development and
realisation of energy efficiency measures in Nigeria is the
lack of a policy framework and regulations to introduce
and mandate legal energy efficiency requirements. However, voluntary measures and incentives are also important to support the required changes. A sound mix of
both approaches could help to change human behaviour
and send the right signals for market transformation.
112
REA’s activities and SON in order to avoid overlap and
conflict in mandates.
SON has the mandate to set standards and ensure compliance of all energy-related equipment, something it has
started to fulfil by developing standards for certain electric appliances such as lighting and refrigerators. SON
has the chair of the technical committee for regional
standard development.
Although energy efficiency plays a key role in the built environment and building designs, the activities of FML7.4.1 Public Authorities
With regards to energy efficiency, there is no clear public HUD have been relatively silent in the past. This is set to
institution in the lead for coordinating activities. The change with the building code that is currently being reFMENV has been active within the framework of its cli- vised by the Ministry and other professional bodies, as
mate change programmes and initiatives (see initiatives well as with FMLHUD’s decision to set a positive example
described in Chapter 4.1.2). As the energy policy maker by introducing an energy management stem in its main
for the Federal Government, FMP’s role as regards energy office.
efficiency has been limited to electricity/power issues which
it has not fully addressed. Increased energy efficiency is 7.4.2Additional Energy Efficiency
Stakeholders
also linked to NERC’s mandate of ensuring that electricity
is delivered to customers in a cost-effective and sustaina- Table 7 – 5 provides an overview of additional stakeholders
ble manner. Other main stakeholders in energy efficiency active in the Nigerian energy efficiency sector.
include the Energy Commission of Nigeria (ECN) and the
Standards Organisation of Nigeria (SON).
Within the framework of collaboration with UNDP, the
ECN under the FMST are also undertaking impact-oriented initiatives and projects, through research and development in clean energy technologies; the energy efficiency strategy document currently under development
by the ECN may however overlap with FMP’s mandate,
which is why close cooperation is crucial. In maintaining
a hierarchical relationship with FMENV, the National
Environmental Standards and Regulations Enforcement
Agency (NESREA) has remained relatively restrained in
activities until recently. The agency has started to take a
proactive role in promoting energy efficiency by setting
guidelines and standards for energy and ensuring compliance. However, there is need for coordination of NES-
ENERGY EFFICIENCY
113
TABLE 7 – 5:
LIST OF ADDITIONAL ENERGY EFFICIENCY STAKEHOLDERS
Stakeholder
Mandate
Role in Relation to EE
Department of
Climate Change,
FMENV
focal agency on matters relating to climate change in
Nigeria
Designated national authority responsible for
approving Clean Development Mechanism (CDM)
projects
National Ozone Office
(NOO) and Ozone
Project Implementing and Man-agement Unit (OPIAMU),
Department of
Pollution Control,
FMENV
Manages the mandatory phasing out of chlorofluorocarbons (cfc) and hydrochlorofluorocarbons (HCFCs)
implemented under the Montreal Protocol.
A positive side effect of the Chlorofluorocarbon CFC
phase-out is the impetus to develop and invest in a new
generation of energy efficient air-conditioning and
refrigeration equipment.
Nigerian Custom
Service (NCS)
Government agency charged with the responsibility for
controlling all cargo and goods entering, exiting or
transiting through Nigerian territory
The agency could help to enforce EE standards for
appliances. Over 700 NCS officers and other chemical
enforcement officers have been trained by OPIAMU to
empower them to eliminate the importation of the
CFC-based materials.
Nigerian Association
of Refrigeration and
Air Conditioning
Practitioners
(NARAP)
Industry association
Members are strategic partners and most have been
trained by OPIAMU and are sensitised to the banning of
CFC based appliances. Most of these members will be
targeted for training on the benefits of adopting EE
appliances.
Manufacturer's
Association of
Nigeria (MAN)
Represents the manufacturing industry; strong
industry network spread over Nigeria with 10 sectors
MAN will continue to be a key partner in incentivising
their member companies to apply energy efficiency
measures and to introduce energy management
systems.
National Centre for
Energy Efficiency and
Conservation
(NCEEC)
Responsible for research in energy efficiency and
conservation
Working in close collaboration with SON, NCEEC is a
potential centre for establishing an independent testing
centre for appliances.
Climate Change Desk
of the Federal
Ministry of Science
and Technology
Consultation forum for desk officers from other
parastatals in order to provide links to these parastatals.
The Ministry has set up 11 centres of excellence
intended to conduct R&D on RE and other issues
related to climate change and also ensures that
findings are developed into sustainable commercial
projects.
National Association
of Chambers of
Commerce, Industry,
Mines and Agriculture (NACCIMA)
Industry association
NACCIMA members (from the power and industrial
sectors) will be critical in the successful promotion and
mainstreaming of energy efficiency measures and
appliances.
Importer of
Electrical Appliances
Commerce
Appliance manufacturers and importers will be critical
partners for any labelling programme. Appliance
manufacturers, once they have been established
locally, will need to ensure proper testing of all new
models according to internationally recognised testing
procedures.
Community Research
and Development
Centre (CREDC)
Carries out activities that promote RE and EE in
Nigeria.
Works closely with the DCC and other organisations.
CREDC published a report of an EE baseline survey in
Nigeria. With a high level of expertise in EE and
advocacy, CREDC will be instrumental in carrying out
public outreaches and training of professional. [CREDC;
2009]
IPP owners, DISCOs,
TCN
Principle power sector players
Given the severe generation, transmission and
distribution losses, these corporations and TCN stand
to gain substantially from more energy efficient
measures.
ENERGY EFFICIENCY
114
7.4.3 International Organisations
An increasing number of international organisations are
already active or planning to get involved in supporting
the energy efficiency sector in Nigeria.
the exchange of experience, trainings, and the development
of standards. Currently, ECREEE is actively supporting
Nigeria in the development of the National Energy Efficiency Action Plan (NEEAP).
The EU and German Government funded Nigerian Energy Support Programme of GIZ in cooperation with the
FMP, FMLHUD and the FMITI focuses on energy efficiency in the building and industrial sector (cf. Chapter
7.1.2). Pilot projects, the introduction of standards and
support mechanisms are paired with strategy development for the upscaling of energy efficiency into policies
and regulation.
7.5Energy Efficiency Policy
and Strategy
To date, there have been a number of barriers impeding
the introduction of energy efficiency measures in Nigeria
[Oyedepo, S.; Aug 2012]. First and foremost, there has
been a dearth in policies promoting and incentivise energy
efficiency. However, this is set to change with the approval of the National Renewable Energy and Energy Efficiency
The UNDP-GEF Energy Efficiency Project looks at im- Policy developed by the FMP.
proving energy efficiency of household appliances (refrigeration, lamps, electric motors, fans etc.). The project is 7.5.1National Renewable Energy and
working closely with the FMENV, the ECN, SON and
Energy Efficiency Policy
the NCEEC on the development and introduction of en- The National Renewable Energy and Energy Efficiency
ergy performance standards, including MRV schemes Policy (NREEEP) is summarised in Chapter 5.4.11. In
and political outreach campaigns.
relation to energy efficiency, the document identifies as
objectives the need to the prudent exploitation of the naUSAID’s Renewable Energy and Energy Efficiency Pro- tion’s energy resources, the enhancement of the energy
ject (REEEP) aims to facilitate the financing of energy security and self-reliance, the reduction of production
efficiency measures e.g. by offering partial risk guarantees cost of energy-dependent goods and services, and finally
to banks that fund energy efficiency projects.
the protection of the environment. The goals show that
the policy is led by the provision of basic services (security
The French Agency for Development is planning to estab- of supply) and good conditions to market participants
lish a credit line for energy efficiency measures providing while targets for the wider public receive a subordinate
interest-reduced loans.
ranking. For the first time, energy efficiency is seen as a
source of energy (“NegaWatt”) that can be traded and
In the building sector, UN-HABITAT supports (in co- marketed: “Energy efficiency is a source of energy since it
operation with GIZ) FMLHUD in revising the current would reduce inefficient consumption, thereby providing
Nigerian building code by introducing resource efficien- greater access to electricity consumers.”
cy and energy conservation aspects.
The document proposes policy measures to achieve these
On a regional level the ECOWAS Centre for Renewable objectives. Among these are:
Energy and Energy Efficiency aims to overcome the technical, financial and capacity related barriers that hinder •The promotion of energy-saving appliances and devices
the implementation of cost effective energy efficiency
through a nationwide energy campaign and training
measures and systems. Main activities are among others
sessions;
ENERGY EFFICIENCY
•The implementation of incentives for consumer
adoption of energy saving technologies;
•Establishment of incentives for retailers and importers
of energy efficient products and promote local
manufacturing of such products;
•Changes in public procurement and active replacement of inefficient devices;
•Accounting measures for energy efficiency and saving
in electricity tariffs and contracting models;
•Development of energy efficiency building codes
(mandating the deployment of energy saving light
fixtures in federal government offices and facilities
and requiring every new house designed in Nigeria to
incorporate energy saving measures);
•Import of more energy-efficient equipment and
machinery and fostering of research and development
activities in energy conservation and efficiency;
•Promotion of public awareness about the benefits of
improved energy efficiency.
The policy sets the following targets:
•Production of guidelines on all the key components of
energy efficiency by 2020;
•Enactment of all relevant legislation required for
policy implementation by 2020;
•Attain replacement of 40% (by 2020) of old and
inefficient appliances in Nigeria with energy efficient
appliances;
•Sustain best energy efficiency practices beyond 2030
115
7.5.2Draft National Energy Efficiency
Policy for Nigeria
ECN with support from UNDP/GEF has prepared a
“Draft National Energy Efficiency Policy for Nigeria” (status 2013). The document highlights the need to develop a
policy comparable with international best practice. It
highlights key barriers to energy efficiency and conservation in Nigeria and provides recommendations as to how
these barriers can be removed. In order to ensure consistency with the NREEEP (cf. Chapter 5.4.11) developed
by the FMP, a name change into “Operational Framework for Energy Efficiency” was discussed, but not concluded. The draft document sets out the objectives aiming
at a situation where energy is efficiently utilised, non-energy efficient products are being phased out of the market
in favour of energy saving domestic and industrial electrical appliances, energy efficient technologies for buildings,
homes and industry are promoted, mandatory labelling
of home and office electrical appliances is enforced and
energy management is widely institutionalised in the
country.
The document sets the following short and long term targets:
•Produce guidelines on all the key components of
energy efficiency by 2015;
•enact all relevant legislation required for policy
implementation by 2015;
•Nigeria to attain 60% consumption of energy-efficient
lighting, refrigerators, freezers and air conditioners by
In order to facilitate the implementation of the targets,
2016 and 100% by 2020;
the Federal Ministry of Power is currently preparing a •Achieve replacement of 40% (by 2016) and 100% (by
2025) of old non-energy efficient appliances in Nigeria
National Energy Efficiency Action Plan (NEEAP), which
with energy efficient appliances;
shall provide detailed baseline information on the topic
and propose concrete measures to promote energy effi- •Review and improve on the recommended energy
efficiency practices by 2016;
ciency. This is part of a regional initiative driven by the
ECOWAS Centre for Renewable Energy and Energy Ef- • Sustain best energy efficiency practices beyond 2025.
ficiency (ECREEE).
ENERGY EFFICIENCY
While the document is well-drafted and its intentions
laudable, implementation and due financial resources are
imperative before its quality can be assessed meaningfully, as no measures or mechanisms are yet in place destined
to enable its targets to be achieved [Oyedepo, S.; Aug
2012]. Similar wording of the targets shows an alignment
with NREEEP; however, further efforts have to be made
in order to avoid incoherent policy signals.
7.5.3 Standards and Labelling
The concept of Energy Efficiency was not introduced in
Nigeria until 2009. So energy efficiency, standards and
labelling and Minimum Energy Performance (MEP) are
still relatively new in the country. The legislation required
to promote and enforce such concepts has not yet been
adequately created.
116
fication rate this is not a given as many consumers will
rely on diesel generators. That said, subsidies either provided by governmental institutions or NGOs as part of
the regime foreseen by the National Policy on Renewable
Energy and Energy Efficiency could encourage target
groups to invest in energy efficiency activities, to overcome the high up-front costs of introducing such technologies. This would be necessary to expedite the spread
of solar water heaters, improved kerosene cooking stoves
and subsidies for CFL bulbs.
7.6.2 Tax Relief
The FMENV is trying to obtain a tax relief on importation of energy efficient light bulbs.
7.6.3 Financing Mechanisms / Opportunities
USAID has initiated a credit line with Eko Bank that
So far, the Standards Organisation of Nigeria (SON) provides partial risk guarantees to the bank, thereby
published standards related to energy efficiency, such as a bringing down the interest rate and collateral requirecode of practice for the deployment of outdoor solar ments for loans. Other lenders from the financial cooperlighting systems, and standards for self-ballasted lamps, ation sector, such as KfW and AFD, are planning interelectrical installations of buildings and for safety and est-reduced credit lines for Nigerian banks.
performance of CFLs. A list of SON Standards is included in Annex 4, A – 11. Standards for refrigerators, air con- 7.7 Conclusions
ditioners, energy management in industry (ISO 50001)
and an energy building code are under development, sup- Energy Efficiency Potentials
ported by GIZ, UNDP and UN Habitat.
Understandably given the shortfall in generating capacity
and, as will be seen in Chapter 8, the lack of access to
electricity in many parts of the country, the focus among
7.6Energy Efficiency Support
policymakers has to date been more on energy generation
Mechanisms
and renewable energy. However, the potential for energy
Given the fact that the energy efficiency sector in Nigeria efficiency is to be found at both the generating and the
is still in its infancy, the range of support mechanisms is consuming ends of the energy market.
still limited.
Similar to the public sector, the Nigerian industrial and
7.6.1 Price Incentives
manufacturing sectors present attractive opportunities for
There are currently no price incentives in place. While an the energy efficiency industry. Promising potentials to genelimination of the subsidy on electricity may encourage erate energy savings via improved load and energy managemore energy-efficient behaviour by those who rely on ment exist in particular in chemicals & pharmaceuticals,
grid-sourced energy, it bears remembering that given the metal products, plastics, textiles and cement.
sporadic nature of electricity supplies and the low electri-
ENERGY EFFICIENCY
Planned Energy Efficiency Projects
Several projects with reference to energy efficiency are in
the pipeline. They are supported by Ministries (FMP,
FMENV, etc.) and international development cooperation organisations (e.g. UNDP, GIZ, USAID). Except
GIZ vie its European Union and German Government
funded Nigerian Energy Support Programme, no other
institution is following energy efficiency projects in the
industrial sector.
Policy and Strategy Targets
Barriers that are impeding the introduction of energy efficiency measures in Nigeria are the lack of harmonised
and operationalised policies to actively promote and incentivise energy efficiency. There are no codes and regulations that cater to energy efficiency programs. These challenges are further hampered while there is no clear public
institution in the lead for coordinating policies and strategies. This is set to change with the adoption of the National Renewable Energy and Energy Efficiency Policy in
May 2015 and a consequent strive of the FMP to take the
lead in promoting energy efficiency in Nigeria.
Support mechanisms
The key to unlocking the vast potential for energy efficiency in Nigeria today would be a coordinated introduction of support mechanisms. Thus far, the lack of operationalised policies does not provide for existent support
mechanisms. The recently approved NREEEP demands
price and tax incentives, but those are neither fleshed-out
in detail nor put into effect.
117
8. RURAL ELECTRIFICATION, INCLUDING
OFF-GRID RENEWABLE ENERGY
The Draft Rural Electrification Strategy and Plan (RESP,
April 2015) prepared by the FMP clearly stipulates targets
for rural electrification on the part of the Federal government: “In the National Electric Power Policy and the more
recent Rural Electrification Policy, the FGN has set an ambitious target: to make reliable electricity available to 75%
and 90 % of the population (rural or urban) by 2020 and
2030 and at least 10% of renewable energy mix by 2025.”
118
• standalone systems like Solar Home Systems (SHS).
This chapter will focus on the latter two options.
With the emergence of renewable energy sources the opportunities to achieve rural electrification using standalone
and off-grid systems have improved markedly. For this
reason alone, the sector is being revisited by the government, in line with its commitment to “facilitate the extenIn order to gauge the plans for roll-out of rural electrifica- sion of electricity services to all Nigerians, irrespective of
tion schemes, the magnitude of the challenge must be where they live and work.” [FMP; 2015]
considered. At present, the FMP estimates that perhaps as
many as 70,000,000 Nigerians in rural areas lack access to The electrification rate calculated by the World Bank for
reliable electricity supply. The FMP puts this in the con- 2011 was 48.0% [67]. According to UNESCO and IEA,
text of its overall electrification targets and suggests that the electrification rate in Nigeria in 2009 was 50.6%, while
“only if by 2020 urban electrification reaches 95% and rural triangulation of available data suggests that total grid acelectrification reaches 60%” will it prove possible to reach cess to electricity hovers around 35 – 40 % [NIAF, 2014].
the national target of 75% electrification. It goes on to say The differing data show the difficulty to define and calcuthat “this will only happen by connecting more than late the access rate, but the tendency is in the same range.
10,000,000 additional rural households. The new generat- However, it bares noting that many more households
ing capacity required serving the additional domestic and might be technically connected to the grid (state governnon-domestic rural demand is around 6,000 MW. This is ment officials regularly mention figures of 80% of grid
more than the current capacity of the entire Nigerian power coverage), which however don’t receive or only get a very
system. Achieving this would take the rural electrification limited amount of electricity – hence it has to be kept in
rate to 60%.” [FMP; 2015] The electrification rate calcu- mind that access to electricity and grid coverage are two
lated by the World Bank for 2011 was 48.0% [67]. The different issues in Nigeria.
enormity of the task of rural electrification at hand is thus
adequately described. Plans based on this will entail huge However, data reflect the considerable extent of self-provicosts that would place strain on the national budget.
sion and backup generation of electricity in Nigeria; in
form of large generators in industry and by many big commercial establishments. At the other end of the spectrum
8.1 Rural Electrification Market
there are the ubiquitous small portable generators used by
The process of rural electrification has long been a focus of households and shops to supply electricity at very high
Nigerian policymakers. However, the sheer scale of the un- unit cost. The extent of self-provision is a function of the
dertaking and the attendant impact on budgets has prevent- sector’s inefficient performance in delivery of affordable
ed successive administrations from fielding decisive solutions and reliable access.
to meet the target of electrifying 75% of the population
(Vision 20:2020). In general this can be achieved by:
Table 8 – 1 displays the household electrification rate by
geopolitical zone and federal states, whereby according to
this data set (National Bureau of Statistics), the electrifi• expanding the national electricity grid to rural areas
cation rate sits at 55.6%.
• using mini- or off-grid systems
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
119
TABLE 8 – 1:
HOUSEHOLD ELECTRIFICATION RATE BY STATE IN %
State of Residence
Have Electricity
No Electricity
Missing
Number of hh surveyed
48.7
51.2
0.1
5,942
FCT-Abuja
77.7
22.0
0.3
361
Benue
22.1
77.9
0.0
1,365
876
North Central
Kogi
62.9
37.1
0.0
Kwara
90.6
9.1
0.3
617
Nasarawa
33.2
66.5
0.3
550
Niger
51.7
48.2
0.1
1,504
Plateau
36.3
63.7
0.0
669
North East
29.3
70.4
0.3
5,115
Adamawa
37.6
62.2
0.2
726
Bauchi
29.3
70.3
0.4
932
Borno
33.0
66.5
0.5
1,560
Gombe
48.1
51.8
0.1
464
Taraba
10.9
88.8
0.3
634
Yobe
18.1
81.7
0.2
799
42.2
57.7
0.1
9,992
North West
Jigawa
26.0
74.0
0.0
1,152
Kaduna
53.5
46.2
0.3
1,915
Kano
52.1
47.9
0.0
2,606
Katsina
31.3
68.5
0.2
1,257
Kebbi
44.4
55.6
0.0
1,069
Sokoto
38.9
60.9
0.2
898
Zamfara
29.1
70.6
0.3
1,096
South East
4,687
66.4
33.6
0.0
Abia
81.7
18.3
0.0
644
Anambra
88.1
11.8
0.1
1,050
Ebonyi
39.2
60.7
0.1
978
Enugu
55.4
44.6
0.0
920
69.9
30.1
0.0
1,096
South South
Imo
68.3
31.3
0.4
5,239
Akwa Ibom
68.0
31.8
0.2
892
Bayelsa
52.5
47.3
0.2
322
Cross River
57.4
41.4
1.2
848
Delta
78.3
21.6
0.1
946
Edo
82.4
17.5
0.1
702
Rivers
65.1
34.5
0.4
1,529
81.1
18.8
0.1
7,546
92.7
7.3
0.0
376
South West
Ekiti
Lagos
99.3
0.5
0.2
2,240
Ogun
72.0
27.9
0.1
1,355
Ondo
66.3
33.7
0.0
920
Osun
89.4
10.6
0.0
853
Oyo
66.6
33.3
0.1
1,802
Total
55.6
44.2
0.2
38,522
Source: [NBS; 2014]
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
8.1.1Renewable Energy and Rural
Electrification Potentials
This chapter refers to renewable energy as means of rural
electrification, i.e. small-scale “off-grid” systems opposed
to grid-connected renewable energy (cf. chapter 6).
120
The ECOWAS Small Scale Hydropower Programme [72]
estimates the small scale hydropower potential at about
414 MW in 97 sites, whereby only sites with a potential
below 30 MW are counted. The ECN in its Renewable
Energy Master Plan sees the potential even at 3 500 MW.
[Vincent-Akpu, I.; 2012] a total of 70 micro dams, 126
Reporting current off-grid capacity and generation is un- mini dam and 86 small sites have been identified.
doubtedly challenging. Even when generators of 1 MW
or more must be registered with the Federal Ministry of However, the actual potential has to be carefully studied
Power (FMP) only limited actual data is available. There for each individual site, since a huge seasonal difference
is an estimated installed capacity of 8 – 14 GW off-grid in the water flow may render sites that look promising in
diesel and gasoline generators the majority of which is in- the rainy season economically and technically inviable in
stalled by individual people in urban areas to cover power the dry season (cf. Chapter 6.1.1.2).
outages from the national grid. Households in rural areas
usually cannot afford to buy and operate gensets.
For renewable energy sources, there is no difference in
principle between the potential for rural projects than
those for grid-connected utility-scale projects, other than
the fact that economies of scale may make the rural projects more expensive. However, off-grid renewable energies are economically more interesting in case of remote
areas with poor accessibility and hence high alternative
fuel costs.
Chapter 6.1.1 refers to the general potential of renewable
energies in Nigeria (including solar and wind).
Below, an attempt is made to assess the potential for the
site-specific small hydro and biomass plants. The general
solar energy potential is shown in Chapter 6.1.1.3; since
solar plants can basically be set-up anywhere, no rural
electrification specific analysis is provided.
Mini, Micro and Small-Hydro
In 1980, UNIDO listed a set of project opportunities for
small hydro power development in Nigeria. This list is
certainly outdated, however it gives an overview of what
potential is available for rural electrification by small hydro
power projects. The list is included in Annex 4, Table A – 15.
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
FIGURE 8 – 1:
SMALL HYDRO POWER SITES IN NIGERIA
Source: UNIDO
Biomass/Biogas
As shown in Chapter 6.1.1, Nigeria has a wide range of
biomass resources usable decentralised and off-grid.
Apart from municipal solid waste for large scale grid-connected energy production, it has been estimated that Nigeria produces about 227,500 tons of fresh animal waste
daily. Since 1 kg of fresh animal waste generates about
0.03 m3 biogas, then Nigeria can potentially produce
about 6.8 million m3 of biogas every day from animal
waste only. Assuming an electricity production of 5 to 7,5
kWh/m3 biogas, this amount of biogas is sufficient to
generate yearly 12,400 – 17,400 GWh. Nevertheless, the
total potential of biomass for off-grid generation has still
to be quantified.
121
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
8.1.2 Existing Rural Electrification Projects
According to the Rural Electrification Agency (REA),
more than 1000 projects have been completed. Limited
details are available on capacity, energy produced, or consumers supplied. Likewise, no details are available on
technology; however, the bulk of it can be assumed to be
grid extension. [REA; 2013]
TABLE 8 – 2:
REA, SUMMARY OF PROJECTS / PROGRAMMES
Total no. of
projects
Total no. of
projects completed
On-going
2499
1,008
1,491
Geographically speaking, the projects are said to be distributed evenly across the country’s geopolitical zones. The
Association of Rural Electrification Contractors of Nigeria (ARECON) has said that 50 of the 280 contracts
awarded to its members by the Rural Electrification
Agency (REA) in 2013 are presently ready for commissioning, but project details are not available. The REA
faces the difficulty that all its projects are too small for
the main backbone of 33 kV lines. Hybrid systems that
switch between diesel and solar PV power generation
have yet to be deployed but would definitely make sense
in many areas as they would ensure cost-efficient delivery
of power around the clock, and thus could be used to
power critical infrastructure and agricultural equipment,
such as water pumps.
122
have also been built in grid-connected areas as backup
systems. Most of the projects were financed with grants
from international donors or the federal, state and local
government.
In 2014, the FMP launched a new national programme
called “Operation Light-Up Rural Nigeria” [49], [50].
The project intends to install three solar-powered mini-grids in each of the 36 federal states. In early 2014, the
first pilot solar-driven system under the scheme was installed by a French company in Durumi, Bwari Area Council of Abuja, using a 3.5 kVA standalone system; three
further systems have since been installed in the surroundings of Abuja.
The Rural Energy Access Project (REAP) was launched by
the FMENV’s Renewable Energy Programme to create
alternative and sustainable clean and renewable energy
sources for lighting purposes. REAP is proposing a reduction in power consumption (by using clean, energy
efficient LED bulbs) and introducing household standalone solar kits to replace incandescent bulbs, single-wick
kerosene and oil lamps and small diesel generators. The
goal of the project is to ensure affordable and sustainable
clean energy access to the rural poor and reduce black
carbon.
The Sokoto Energy Research Centre (SERC), together
with the World Bank, the Energy Commission of Nigeria
and the Sokoto Government, installed a hybrid mini-grid
Solar Projects
combining 10 kW solar and 2 kW wind power in DanjaIn 2011, NERC listed 58 solar-based rural electrification wa Village, Sokoto. Other technologies such as off-grid
projects across the country.
photovoltaic street lighting have also been tested in Danjawa and other parts of the country. Another PV/wind
From a survey including 53 companies carried out by the hybrid plant with 10 kW of solar PV and three wind turNigerian Energy Support Programme (NESP) in 2015, bines with a combined capacity of 15 kW has recently
in total these companies had installed 115 MW of off- been inaugurated at the NAPTIN Regional Training
grid photovoltaic combining mini-grids and stand-alone Centre in Kainji. This project was funded by the German
systems. Most of them have been installed for residential Federal Foreign Office and implemented by GIZ.
or commercial purposes in un-electrified rural areas. Some
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
The NGO Solar Sisters combines the potential of solar and
clean cooking technology with a deliberately woman-centred direct sales network to bring light and opportunity
to remote communities in rural Nigeria and other countries in Africa. Solar Sisters provide the women with a
“business in a bag”, a start-up kit of inventory, training and
marketing support. In 2014 about 1000 entrepreneurs
achieved that about 180,000 people are benefitting from
solar light in 3 countries (Nigeria, Ruanda and Tanzania)
[54].
Biomass Projects
•Global Biofuels Ltd is developing a biofuel production
Complex at Ilemeso in the northern part of Ekiti state
of Nigeria. Similar plants are planned in other states.
•Renewable Energy Programme office, Adamawa State
Government and Green Carbon Afrique is developing
sugarcane based biofuel plants covering 2,000 hectares
plantation. This integrated project should be replicated in ten states of the country.
• Carbon Quest and Adamawa State is establishing an
integrated rice processing and power generating facilitator as a source of self-generated power from rice-husk
and of power for urban and rural communities.
8.1.3 Planned Rural Electrification Projects
In July 2014, the Rural Electrification Agency (REA)
tendered the 2nd batch of rural electrification projects
under 2014 FGN capital appropriation comprising 175
projects in three categories:
•extension or the completion of extensions of electricity
lines including e.g. 300 or 500 kVA transformers at
33 kV / 0.415 kV level, 11 kV control rooms
• rural electrification projects at various locations
•provision and installation of solar street light at
various locations
Several kilometres of solar street lighting were deployed
by the state and local government councils.
123
The activities under the Nigerian Energy Support Programme are structured as indicated in Figure 8 – 2. Under
its component 3 “Rural Electrification and Sustainable
Energy Access”, the electrification of 10 villages, municipal institutions and/or commercial production sites using
renewable energy is under development. The pilot projects
shall demonstrate the viability of renewable energy technologies for rural electrification and provide sustainable
private-sector driven business models for their large scale
replication across the country. Community-based approaches, productive use application and women empowerment will be included as main aspects of the pilot projects. NESP is implemented by GIZ and funded by the
European Union and the German Government.
FIGURE 8 – 2:
NIGERIAN ENERGY SUPPORT PROGRAMME (NESP)
8.2Rural Electrification
Stakeholders
Due to the limited coverage of grid infrastructure in rural
and semi-urban areas of the country, REA has a remarkable role to support standalone and off-grid renewable energy systems while NERC covers the grid extension regulation. Close coordination between REA and NERC is
therefore equally important, as detailed in Chapter 4.
8.2.1 Public Authorities and Their Roles
A detailed overview of the “institutional and policy mapping of the renewable energy, energy efficiency and rural
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
124
electrification subsectors in Nigeria” is given in the epon- The Federal Ministry of Environment (FMENV) has
launched a Renewable Energy Access Project (REAP, see
ymous publication [GIZ; Oct 2013].
Chapters 4.1.2 and 8.1.3).
In general, energy is a concurrent competency between
the federal government and the states of Nigeria. The fed- The Federal Ministry of Science and Technology
eral government regulates power generation and transmis- (FMST) is involved in numerous renewable energy, enersion on national grid level, while the federal states have a gy efficiency and rural electrification activities. The remandate for off-grid areas. States may install new gener- newable energy, bio-fuel and biomass section of one of its
ating capacities within their boundaries and operate In- departments coordinates research activities in renewable
dependent Electricity Distribution Networks (IEDNs, energy (wind, solar, biomass etc.) especially in terms of
i.e. networks not connected to the distribution grid. In electricity generation and supply to rural areas where grid
practice, states also engage in grid extension, although connection is unavailable. Through the National Agency
this is under the privatized market order the prerogative for Science and Engineering Infrastructure (NASENI),
of the DISCOs Even state managed power generating FMST has completed a 7.5 MW solar panel manufacturcompanies have been funded. Many states have a State ing plant in Abuja and a 10 kW hydro power plant at KetRural Electrification Board or a State Electrification ti Site in Abuja. [Haruna, M.S.] (cf. Chapter 4.1.3)
Agency, and these are developing i.e. energy strategies at
the state level. According to the EPSR Act 2005, they are The Nigerian Electricity Regulatory Commission
coordinated by the Rural Electrification Agency (REA), (NERC)’s role is the establishment of rules and regulations for extending the grid to rural customers. This inwhich however in reality is only rarely the case.
volves setting of the tariffs and ensuring that all utilities
The Rural Electrification Agency (REA) is a public au- and distribution companies comply strictly with the law
thority, based in Abuja, charged with the responsibility regarding feeding electricity generated from renewable
coordinating rural electrification activities (see also Chap- energy into the grid. Regulatory policy with regards to
ter 4.1.1.2). The agency shall manage the Rural Electrifi- relevant renewable energy schemes shall also be developed
cation Fund (not operational yet) and has a key role to by NERC in consultation with stakeholders. While acplay in ensuring that standalone and off-grid renewable cording to the EPSR Act NERC’s main mandate rests on
energy systems are equally promoted a. The legal frame- regulating generation capacities above 1 MW and or diswork for the REA is outlined in the EPSR Act 2005. The tribution capacities above 100 kW, the draft Rural ElectriREA was established as an agency affiliated to the FMP fication Strategy and Plan (RESP) enables NERC to develand has offices in the six geopolitical zones.
op a regulatory framework for installations below this
framework. Against this background, NERC has started
The Federal Ministry of Power (FMP) is responsible for working on a light-handed regulation for mini-grid based
policy development on increasing access to electricity and rural electrification with generation capacities less than 1
will thus set and revise targets as required. FMP currently MW. (cf. Chapter 4.1.1.3)
leads the ICREEE and is actively involved in ensuring
that power/electricity is available to the citizens from all The Energy Commission of Nigeria (ECN) has the
forms of energy. (cf. Chapter 4.1.1)
overall lead in promoting all forms of energy by gathering
and disseminating information of same as well as leading
research and development of the sector in the country.
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
125
ECN has supported some pilot projects, such as a PV-wind electricity bills. That is why a real market for rural electrihybrid plant in a village close to the Sokoto Energy Re- fication does not exist. State governments note this problem and support rural electrification programs.
search Centre (the centre). (cf. Chapter 4.1.3.1)
8.2.2 Rural Electrification Market Players
Distribution Companies have the mandate – and obligation – to extend the grid to previously un-electrified regions. However, given the huge investment requirements
to upgrade the existing network infrastructure, DISCOs
will focus on consolidating the existing customer base
and extend the grid to the most profitable areas. Since
DISCOs are not mandated to establish and operate generation capacities, their role in off-grid electrification is
limited to operating independent distribution networks,
which under the present conditions is not a priority.
8.3Rural Electrification Policy
and Strategy
8.3.1Draft Rural Electrification Strategy
and Plan (RESP)
The draft Rural Electrification Strategy and Plan (RESP)
is a key document as it brings the strands of policy making into a coherent form. However, in its version of April
2015 it still remains a draft and has not yet been enacted
by government. It states quite unequivocally that rural
electrification is a federal matter: “1. The FGN shall facilitate the provision of steady and reliable electric power supply at all times, at economic rates, for residential, commercial, industrial, and social activities in the country.” In
terms of actual coordination of activities, it falls to the
REA, the sole bearer of a mandate, to implement the legislation and act as the intermediary between central government, the states and local government areas; while
NERC is given the responsibility to develop a light-handed regulation for the sector. The REA delegates financing
issues to the Rural Electrification Fund (REF).
In the absence of a meaningful market, there is only a
limited number of private actors in the renewable energy-­
based rural electrification sector. In order to lay the basis
for entering a future market, various component and system suppliers have implemented demonstration projects
(solar panels, battery packs, etc. that provide lighting),
but no long-term sustainable solution has yet been devised.
International companies are the major drivers behind the
“Operation Light Up Rural Nigeria” project (cf. Chapter
8.1.2) and have provided, at no cost, installations for pilot
projects in order to stimulate a market in rural electrifica- The policy document places an important emphasis on
the role of various forms of renewable energy technolotion. [13]
gies in helping to meet the electricity needs of the rural
However, once policy and an investor-friendly regulatory areas of the country at a cost-effective and affordable
framework is in place, and once it becomes clear which price. Thus, as one of the guiding principles of the Nigeriapplication track is required for accessing subsidies for an rural electrification strategy, the RESP states that the
capital costs, project developers may find that there is lat- FGN shall facilitate the promotion of private sector participation in rural electrification (on- and off-grid) in the
itude for engagement.
development of the nation’s abundant renewable energy
After privatisation of the distribution companies, they resources by creating an enabling environment, while enare obliged to provide the inhabitants of the region with suring that governmental agencies, cooperatives and comsufficient electricity. However, private companies tend to munities, have adequate room to participate in enhanced
operate at low cost and high margins to be profitable. electricity service delivery. Various rural electricity proPeople in remote areas are usually not able to pay high jects will be carried out through three main processes:
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
grid extension, mini-grid systems and standalone systems.
Renewable energy sources have the capacity to support all
of these systems and help to provide reliable and affordable electricity supply which enables rural households to
devote less of their time and income to procuring energy
supplies, freeing them up for productive use. It could also
help ensure that energy is used efficiently and sustainably.
[FMP; 2015]
The RESP itself, while acknowledging the need for coordination, seeks to place the implementation of rural electrification squarely on the shoulders of the private sector.
RESP declares unequivocally that “in recognition of the
advantages of a bottom-up approach, the FGN will promote a centrally coordinated but demand-driven approach,
that is, market-oriented approach to rural electrification.
While the REA will still provide overall coordination of rural electrification activities centrally, the development of
projects themselves will come from the communities, operators and promoters that identify a particular need. Public-private partnerships will be encouraged, whereby the
private sector and community-based organisations will be
increasingly responsible for much of the service delivery with
the minimum necessary financial support from the public
sector.” [FMP; 2015].
126
for rural electricity service will be cost-reflective. They
shall account for the average annual cost of fuel, operation,
maintenance, safety, generation, distribution, revenue collection, spares, equipment and operator fees, expected
sales of electricity, generator capacity, number of connections, volume of consumption, and level of service (…)
Tariffs will be calculated using appropriate formulae/
methodology to be developed by NERC in consultation
with project developers and customers.” [FMP; 2015]
In relation to projects that fall within the NERC licensing requirements, tariffs will be regulated. In order to
ensure light-handed regulation for rural electrification
the approach taken will be more gentle. The document
also indicates that tariffs should also be prepared taking
into consideration the specific context of rural areas in
which operators have to face higher risks and uncertainties. A second approach for tariff setting mechanism for
new projects is also mentioned allowing project developers to set the tariffs outside of the tariff model provided
that prospective consumers for at least 60% of the proposed output have signed acknowledgements that they
are willing to pay this tariff. The RESP also mentions
that controls, reviews and oversight will be less stringent
and burdensome on operators. Tariffs will be reviewed
annually and recorded in the Electricity Supply Contract
The overarching target of the strategy is to achieve 75% between consumers and RE service providers after obelectrification by 2020, 90% by 2030 and 100% by 2040. taining NERC approval. In case of capacity stipulated in
The RESP further outlines what the cost of such a policy the EPSR Act 2005, NERC will retain responsibility for
is, saying that “achieving the 2020 target of 75% electrifi- monitoring and enforcing agreed-upon tariffs.
cation will require between NGN 317.8 and NGN 525.8
billion (US$ 1.9 – 3.3 billion) for administration and pro- This is without doubt a laudable and viable structure, asject costs combined.” [FMP; 20154] Further, the RESP suming rural communities have the financial means to
states that a rural electrification implementation plan pay the cost of electricity generation and distribution;
shall be financed via an independent Rural Electrifica- whereby it bears stating that this is presumably an ideal-typical scenario. However, it in effect introduces an
tion Fund operated by the Rural Electrification Agency.
asymmetric relationship between urban and rural areas.
Given that urban environments at present benefit from
8.3.2Tariffs
Tariffs are set out in the RESP as follows: “In accordance electricity subsidies, they currently do not pay a cost-rewith the RE Policy and international best practice, tariffs flective price.
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
127
8.3.3 Further Policy Documents
8.4Rural Electrification Support
A whole host of acts and by-laws cover rural electrification
Mechanisms and Price Incentives
as further detailed in Chapter 5. They include the following:
The (not yet operational) Rural Electrification Fund
(REF) so far is the only government-led structured funding mechanism. The incentives are designated to be infra• National Electric Power Policy (NEPP, 2001)
• National Energy Policy (2003)
structure based (incentives to reduce the installation costs)
• Electricity Power Sector Reform Act (EPSRA, 2005)
and not electricity-production based (incentives to reduce
• Rural Electrification Policy (2006)
the consumption costs). The REF will function as a “chal•Rural Electrification Strategy and Implementation
lenge fund”, i.e. interested parties are expected to submit
Plan of the Federal Republic of Nigeria (RESIP, 2006) applications in consecutive rounds of competition, where• Rural Electrification Policy Paper (REPP, 2009)
by projects will be selected according to a transparent set
•Regulations for Independent Electricity Distribution
of criteria (see Figure 8 – 3):
Networks (IEDN, 2012)
•Draft Rural Electrification Strategy and Plan
•Economic and financial viability, with the initial
of the Federal Republic of Nigeria (RESP)
capital subsidy;
(FMP, April 2015)
• Promotion of social and economic objectives;
•Draft NERC Mini-Grid Regulations
•The choice of technology to be used
(NERC, June 2015)
(e.g., preferential scoring of RE projects);
•Cost-effectiveness;
NERC is currently preparing with the assistance of GIZ • Nature and extent of community support; and
a regulatory framework for mini grids. The regulations • Investor commitment.
will distinguish between mini-grids of up to 100 kW
(“regulatory guidelines”) and mini-grids larger than 100 The REF will only “supply some proportion of the total
kW and smaller than 1 MW (“light-handed regulation”). funding so that other parties (distribution companies,
The regulations shall ensure investment security by inter local communities, business groups, etc.) would have to
alia establishing a tariff setting mechanism and deter- provide the rest.” [FMP; 2015].
mining a protocol for handover of assets and compensation mechanisms in case the mini-grid gets inter-con- FIGURE 8 – 3:
REF SELECTION PROCESS
nected to the main grid. At the same time, the regulation
will ensure the protection of consumers and the environment.
The Regulations for Independent Electricity Distribution
Networks (IEDN) creates the framework for distribution networks not connected to the distribution or transmission system.
Source: [FMP; 2015]
RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY
Source of Funds
The fund will consist in accordance to the EPSR Act 2005
of fines obtained by NERC, donations, gifts or loans made
by international agencies, state governments, the federal
government, local communities, businesses or any other
entity. Finally, rural electrification developers, including
the DISCOs, shall be engaged in a public private partnership by the REA. [FMP; 2015]
Co-funding of individual projects with other sources of
funds multiplies the benefits delivered by the REF. Co-­
funded projects are expected to be the most successful in
competing for REF funding. The REF has initially been
equipped with a seed funding of 2 billion Naira by the
Federal Government; however, pending the approval of
the RESP, it has not been operationalized so far. Figure
8 – 4 shows possible REF funding scenarios, whereby the
second example is clearly the preferred funding arrangement.
FIGURE 8 – 4:
EXAMPLES FOR REF PROJECT FUNDING
128
8.5 Conclusions
Rural Electrification Market and Potentials
The market potential for rural electrification is huge,
since the current electrification rate in Nigeria is just
around 50 %. It could be worth pursuing small solar PV
installations, mini or small hydropower plants and larger
hybrid systems to provide electricity to rural communities. Even small decentralised biogas projects offer vast
potential.
Off-grid generation is undoubtedly challenging. However, the REA has about 600 projects ongoing, mainly in
the field of solar energy and energy efficiency. Other small
projects are being pursued by various institutions and
companies.
Strategy, Stakeholders and Support Mechanism
The draft Rural Electrification Strategy and Plan (RESP)
sets a target of 75% electrification by 2020 which shall be
achieved in a private-sector driven approach. Since the
operationalization of the Rural Electrification Fund –
the only public funding vehicle – depends on the enactment of the RESP, urgent action is needed.
FMP, REA, NERC, state governments and DISCOs are
the main players in Nigeria’s rural electrification sector.
Efforts to embark on a coordinated approach are visible,
however still need to be improved. The preparation of
electrification plans at national, regional and/or state-level would be an important tool to coordinate the different
stakeholder interests and embark on a structured largescale roll-out of electrification projects. The World Bank
and GIZ have initiated support activities in this regard.
9. CONCLUDING REMARKS
While Nigeria has overtaken South Africa as the biggest
economy on the continent, the electricity sector as the
backbone of the economy significantly lacks behind.
Power outages are a daily routine, and so are the cues in
front of the petrol stations.
However, Nigeria has made remarkable efforts in the last
two years to address this situation:
The privatization of the power sector in November 2013
is the basis for a transition into a rule-based, efficient and
reliable electricity market.
Under the umbrella of the Electric Power Sector Reform
Act, new institutions have been established and policies
have been designed which shall mainstream these new
principles into the different sub-sectors.
The approval of the National Renewable Energy and Energy Efficiency Policy is a clear sign that the potential of
clean energy technologies for the promotion of a reliable
and sustainable electricity sector has been recognized.
Further, it is an important step towards harmonizing the
previously scattered policy landscape in the clean energy
sector.
Going forward it is imperative that an equally concerted
effort is being made to turn the policy goals into practice.
For on-grid renewable energy this means that a structured support mechanism has to be devised which on the
one hand creates an attractive investment climate for independent power producers, and on the other hand ensures a prudent use of government funds. In line with the
current market order, a competitive procurement system
for utility-scale and a feed-in tariff for small-scale renewable energy seem to be the best approach.
The rural electrification sector still awaits the approval of
the Rural Electrification Strategy and Plan. Operationalization of the Rural Electrification Fund is as important
129
as a coherent planning and regulatory framework in order
to promote investments and streamline the actions of federal, state and private actors towards a mass roll-out of
electrification projects across the country.
Energy efficiency still needs to be embraced by stakeholders and the population at large as a cost-effective tool to
save electricity and to improve the reliability of the power
system. Awareness creation measures are as important as
mandatory standards and voluntary pilot projects in order to demonstrate the viability of this approach.
Conducting this study has also shown that the availability
of data is a major challenge. However, it is hoped that this
publication alleviates this situation to a certain extent.
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Nigeria, 2013 Demographic and Health Survey, Key Findings
[26]
Niger Delta Power Holding Company
Limited
www.nipptransactions.com
[27]
Niger Delta Power Holding Company
Limited
www.nipptransactions.com/background/purpose/
[28]
Niger Delta Power Holding Company
Limited
www.nipptransactions.com/wp-content/uploads/downloads/2013/07/1.-CPCS-NIPPRoadshow-Presentation.pdf Privatisation of Niger Delta Power Holding Company
Limited Generation Companies, 2013
LINKS USED
REF.
Owner
Link / Document Title
[29]
Niger Delta Power Holding Company
Limited
www.nipptransactions.com/wp-content/uploads/downloads/2013/09/TransmissionDevelopment-TCN.pdf
Transmission Plans (2013–2017), 2013
[30]
Nigeria Electricity Privatisation
(PHCN)
www.nigeriaelectricityprivatisation.com
[31]
Nigeria Electricity Privatisation
(PHCN)
www.nigeriaelectricityprivatisation.com/wp-content/plugins/download-monitor/
download.php?id=69
The System Operator
[32]
Nigeria Energy Consortium
www.nigeriaalternativeenergy.org
[33]
Nigeria High Commission London,
UK
www.nigeriahc.org.uk/about-nigeria
Nigeria, key data
[34]
Nigerian Electricity Regulatory
Commission
www.nercng.org/index.php/document-library/func-startdown/27/
The Grid Code for the Nigerian Electricity Transmission System, Version 01
[35]
Nigerian Electricity Regulatory
Commission
www.nercng.org/index.php/industry-operators/codes-standards-and-manuals
Codes, Standards and Manuals
[36]
Nigerian Electricity Regulatory
Commission
www.nercng.org/index.php/industry-operators/licensing-procedures/licencees
?limitstart=0
Licensees
[37]
Nigerian Electricity Regulatory
Commission
www.nercng.org/index.php/nerc-documents/Regulations/orderby,3/
Regulations
[38]
Nigerian Electricity Regulatory
Commission
www.nercng.org/industry-operators/licensing-procedures/licencees
[39]
Nigerian Electricity Regulatory
Commission
www.nercng.org/nercdocs/Regulation-for-the-Application-for-Licence.pdf
Regulation No: NERC - R - 01 10 A
[40]
Nigerian Electricity Regulatory
Commission
http://www.nercng.org/index.php/document-library/func-startdown/26/
The Distribution Code for the Nigeria Electricity Distribution System, Version 01,
135
[41]
Nigerian Institute of Building
www.niobng.org
[42]
Nigerian Investment Promotion
Commission
www.nipc.gov.ng/investment.html
Investment Incentives
[43]
Nigerian Society of Engineers
www.nse.org.ng
[44]
Nigerianisch-Deutsche Energiepartnerschaft
www.ngenergypartnership.de/
[45]
NOI-Polls
www.noi-polls.com
[46]
OECD/IEA
www.iea.org/statistics/topics/Electricity/
Electricity Statistics
[47]
Organisation of the Petroleum
Exporting Countries
www.opec.org
[48]
Presidential Task Force on Power
www.nigeriapowerreform.org/index.php?option=com_content&view=article&id=1195%
3Ainvesting-in-nigeria-s-renewable-energy-sector&catid=36&Itemid=336
Article: “Investing in Nigeria\’s Renewable Energy Sector”
[49]
Project Light-Up Nigeria
www.projectlightupnigeria.com/rural-electrification-projects.html
Rural Electrification Projects
[50]
Project Light-Up Nigeria
www.projectlightupnigeria.com/the-project.html
About us
[51]
Renewable Energy Programme
Office; Federal Ministry of Environment
renewableenergy.gov.ng/cross-river-farm-to-produce-biodiesel/
Cross River farm to produce biodiesel
[52]
Renewable Energy Programme
Office; Federal Ministry of Environment
renewableenergy.gov.ng/projects/
Projects
[53]
Securities & Exchange Commission,
Nigeria
www.sec.gov.ng/files/Prof%20Nnaji%20Presentation.pdf
Power Sector Outlook in Nigeria: Governments Renewed Priorities, 2011
[54]
Solarsister
www.solarsister.org
[55]
Standards Organisation of Nigeria
www.son.gov.ng
[56]
Statehouse office of the President,
Federal Republic of Nigeria
www.statehouse.gov.ng/
[57]
Subsidy Reinvestment and Empowerment Programme Committee
www.sure-p.gov.ng
LINKS USED
136
REF.
Owner
Link / Document Title
[58]
The Association of Nigerian Solar
Energy Promoters
www.ansep.org
[59]
The Federal Ministry Of Information
www.nigeria.gov.ng/2012-10-29-11-05-46
About Nigeria
[60]
The Nigerian Institute of Architects
(NIA)
www.nigerianinstituteofarchitects.org
[61]
UNICEF
www.unicef.org/infobycountry/nigeria_statistics.html#99
At a glance: Nigeria
[62]
United Nations
unstats.un.org/unsd/energy/edbase.htm
Energy Statistics Database
[63]
US DOE, U.S. Energy Information
Administration
www.eia.gov/countries/
Countries
[64]
US DOE, U.S. Energy Information
Administration
www.eia.gov/countries/cab.cfm?fips=NI
Nigeria
[65]
Vanguard Media Limited, Nigeria
www.vanguardngr.com/2013/01/nigeria-spends-n3-5trn-annually-on-power-generators
/#sthash.1V0cklN3.dpuf
Article: “Nigeria spends N3.5trn annually on power generators”, January 16, 2013
[66]
World Bank Group
data.worldbank.org/country/nigeria
Data Nigeria
[67]
World Bank Group
data.worldbank.org/indicator/EG.ELC.ACCS.ZS
Data Access to electricity (% of population)
[68]
World Bank Group
data.worldbank.org/indicator/EG.USE.COMM.GD.PP.KD
Energy use (kg of oil equivalent) per $1,000 GDP (constant 2011 PPP)
[69]
World Bank Group
www.doingbusiness.org/data/exploreeconomies/nigeria
Nigeria
[70]
World Energy Council
http://89.206.150.89/documents/congresspapers/57.pdf
Energy Efficiency and Barriers towards Meeting Energy Demand in Industries in Nigeria
[71]
World Green Building Council
www.worldgbc.org/worldgbc/members/
Member List
[72]
ECOWAS Center for Renewable
Energy and Energy Efficient
(ECREEE)
http://www.ecreee.org/page/ecowas-small-scale-hydro-power-program-sshp
ECOWAS Small Scale Hydro Power Programme (SSHP)
[73]
Nigerian Electricity Regulatory
Commission
www.nercng.org/index.php/document-library/func-download/312/chk,d6b1bfbe4d840a2d18d6206c31798caa/no_html,1/
Market rules - For Transitional and Medium Term Stages of the Nigerian Electricity
Supply Industry
[74]
Nigerian Electricity Regulatory
Commission
www.nercng.org/index.php/document-library/func-download/357/
chk,2c9858907b79e483b74cb5ae57aaf3a0/no_html,1/
Rules for the interim period between completion of privatisation and the start of the
transitional electricity market (TEM) 2013
[75]
Detail Commercial Solutions
http://www.detailsolicitors.com/?section=news&cmd=details&newsid=49
The declaration of the Transitional Electricity Market (TEM) and stakeholder expectations for the Nigerian Electricity Supply Industry (NESI)
[76]
This Day
http://allafrica.com/stories/201503022303.html
Nigeria: Revenue shrinks by 28 % amid oil price slump
[77]
International Energy Agency
http://www.iea.org/statistics/statisticssearch/report/?country=NIGERIA&product=electricityandheat&year=2012
[78]
This Day
http://www.thisdaylive.com/articles/relief-as-fuel-subsidy-claims-drop-to-90-koboper-litre/198484/
Relief as Fuel Subsidy Claims Drop to 90 kobo per Litre
[79]
UNDP
http://www.ng.undp.org/content/nigeria/en/home/operations/projects/environment_
and_energy/promoting-energy-efficiency-in-residential-and-public-sector-in-.html
Promoting Energy Efficiency in Residential and Public Sector in Nigeria
[80]
African Development Bank
http://nigeria.opendataforafrica.org/
12.ANNEXES
12.1Supplementary Climate and Socio-Economic Data FIGURE A – 1:
CLIMATE ZONES OF NIGERIA
(Prepared by GOPA-International Energy Consultants GmbH)
ANNEX 1
137
ANNEX 1
FIGURE A – 2:
CLIMATE CHARTS FOR KANO (BSH)
Source: Climatemps, [4]
FIGURE A – 3:
CLIMATE CHARTS FOR MINNA (AW)
Source: Climatemps, [4]
138
ANNEX 1
FIGURE A – 4:
CLIMATE CHARTS FOR LAGOS (AM)
Source: Climatemps, [4]
139
ANNEX 1
140
TABLE A – 1:
ANNUAL RAINFALL IN NIGERIA BY STATE, 2005 – 2009 (MILLIMETRE)
States and Capitals
2005
Abia (Umuahia)
125.3
171.7
135.5
144.2
1,980.1
Adamawa (Yola)
865.7
1,057.3
827.4
468.5
718.1
Akwa Ibom (Uyo)
2,711.8
2,558.7
2,532.2
2,106.2
1,911.7
Anambra (Awka)
159.7
1,910.3
2,026.8
2,056.7
2,273.4
1,104.5
1,017.9
1,136.9
1,133.1
1,621.3
–
–
–
–
–
Benue (Makurdi)
871.3
1,343.0
1,339.9
1,050.7
1,401.5
Borno (Maiduguri)
917.3
553.7
1,076.3
600.9
587.5
Cross River (Calabar)
3,862.1
2,896.8
3,427.9
3,060.8
2,521.8
Delta (Asaba)
1,756.4
1,906.4
1,802.4
1,765.1
1,765.8
–
–
–
–
–
2,014.0
2,358.5
2,647.8
2,670.0
2,122.6
114.6
109.7
–
–
–
1,697.4
2,096.3
1,911.2
1,738.4
1,757.2
975.5
955.4
833.6
985.9
857.4
2,247.2
2,350.2
2,362.1
2,818.0
2,738.0
–
–
–
–
–
Bauchi (Bauchi)
Bayelsa (Yenagoa)
Ebonyi (Abakiliki)
Edo (Benin)
Ekiti (Ado-Ekiti)
Enugu (Enugu)
Gombe (Gombe)
Imo (Owerri)
Jigawa (Dutse)
2006
2007
2008
2009
Kaduna (Kaduna)
994.2
88.7
865.0
827.9
1,267.9
Kano (Kano)
114.7
109.1
113.1
109.0
–
Katsina (Katsina)
Kebbi (Birnin-Kebbi)
Kogi (Lokoja)
750.6
726.5
704.1
557.1
473.8
1,055.0
959.2
886.9
1,223.0
1,196.0
939.4
1,681.9
1,531.4
1,259.7
1,631.5
Kwara (Ilorin)
1,234.9
1,303.8
1,308.8
1,468.5
1,352.3
Lagos (Ikeja)
1,484.9
1,675.2
1,649.1
1,816.0
1,391.7
Nassarawa (Lafia)
1,290.7
1,320.1
1,569.6
10,718.8
1,566.0
Niger (Minna)
1,108.7
1,423.2
1,423.3
1,269.2
1,421.6
Ogun (Abeokuta)
Ondo (Akure)
924.2
1,142.1
876.2
1,371.7
1,465.5
1,317.1
1,381.0
1,405.7
1,466.1
1,309.6
Osun (Oshogbo)
1,130.2
1,469.7
1,421.7
1,597.6
1,277.7
Oyo (Ibadan)
1,192.0
1,260.2
1,218.8
889.4
1,702.1
Plateau (Jos)
1,203.5
1,248.4
1,357.2
1,259.8
1,236.9
Rivers (Port Harcourt)
2,055.2
2,868.6
2,865.2
1,606.6
2,601.6
635.1
745.5
636.4
514.6
603.0
Taraba (Jalingo)
872.0
923.6
1,070.6
1,038.4
1,569.1
Yobe (Damaturu)
448.6
409.5
483.1
320.3
366.5
Sokoto (Sokoto)
Zamfara (Gusau)
FCT, Abuja
920.3
961.8
615.8
954.0
1,006.0
1,471.8
1,311.6
1,388.9
1,174.7
1,444.6
Source: Nigerian Meteorological Agency [NBS; 2011]
ANNEX 1
141
TABLE A – 2:
POPULATION FORECAST FOR NIGERIA UP TO THE YEAR 2035
Year
Population (millions)
1980
74
1985
84
Population Growth Rate (%)
Median Age
18.0
2.6
17.5
1990
96
2.6
17.5
1995
108
2.5
17.7
2000
123
2.5
18.0
2005
140
2.6
18.0
2010
160
2.7
17.9
2015
184
2.8
17.7
2020
210
2.7
17.8
2025
240
2.7
18.1
2030
273
2.6
18.6
2035
310
2.5
19.2
Source: [UN; 2012]
TABLE A – 3:
ECONOMIC GROWTH (AFTER RE-BASING)
%
2014a
2015b
2016b
2017b
2018b
2019b
6.2
5.6
6.5
6.9
7.3
6.8
Government consumption
9.0
10.0
7.0
6.5
7.0
7.5
Services
8.0
7.6
8.5
9.0
9.2
8.8
Private consumption
7.7
6.2
7.1
7.6
8.0
7.3
GDP
Domestic demand
7.3
6.3
6.8
7.2
7.7
7.2
Gross fixed investment
6.0
4.0
5.0
5.4
6.0
5.5
Industry
4.3
3.4
4.1
4.7
5.2
4.9
Agriculture
4.1
3.5
4.2
3.9
4.4
3.6
Imports of goods & services
2.7
3.4
3.5
5.2
6.4
6.5
Exports of goods & services
-3.1
-0.7
1.4
2.2
2.8
3.4
a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts.
Source: [EIU; 2014]
ANNEX 2
12.2Supplementary Information on the Energy Sector
FIGURE A – 5:
FUEL PRICES IN NIGERIA
* benchmark lines: green=US price; grey=price in Spain; red=price of Crude Oil
Source: Energypedia
142
ANNEX 2
143
TABLE A – 4:
ENERGY CONSUMPTION BY SOURCE (KTOE, 2011)
Primary
Energy
Supply
Final
Consumption
Energy
source
Nigeria
Coal
20
Primary
Energy
Supply
Final
Consumption
Primary
Energy
Supply
Bangladesh
20
912
Final
Consumption
Brazil
698
Primary
Energy
Supply
Final
Consumption
Indonesia
15,431
8,296
31,476
Primary
Energy
Supply
Final
Consumption
South Africa
11214
98,477
16,676
Crude Oil
6,012
0
1,534
0
97,992
0
49,807
1704
20,489
0
Oil Products
6,525
10,858
3,324
3,964
11,035
1,000,209
22,786
62720
572
24,321
Natural Gas
8,027
1,351
16,614
6,890
22,887
12,744
34,761
16650
3,794
1,631
Nuclear
0
0
0
0
4,081
0
0
0
3,519
0
486
0
76
0
36,837
0
1,068
0
177
0
Geothermal,
solar, etc.
0
0
0
0
653
420
16,112
0
82
72
Biofuels and
Waste
97,255
94,682
8,836
8,836
77,912
56,939
52,998
52266
14,526
10,638
0
2,036
0
3,194
3,086
39,280
0
13749
-264
17,790
118,325
108,947
31,294
23,581
270,028
217,889
209,009
158301
141,372
71,127
0.73
0.67
0.21
0.16
1.37
1.11
0.86
0.65
2.79
1.41
Hydro
Electricity
Total
toe per
capita
TABLE A – 5:
MAIN SOURCES OF FUEL FOR COOKING
Source
Percentage
Fuel wood
69.8
Kerosene
26.6
Gas
1.11
Charcoal
0.84
Electricity
0.52
Crop residues/sawdust
0.09
Animal waste
0.07
Others
0.84
Source: Federal Ministry of Environment 2014 brochure on Scaling-up Renewable Energy Development 9n Nigeria, quoted from National
Bureau of Statistics
ANNEX 3
144
12.3Supplementary Information on the Power Sector
FIGURE A – 6:
NIGERIA ELECTRICAL ENERGY PRODUCTION (IN MILLION KWH)
Source: UN data base [62]
TABLE A – 6:
ELECTRICITY PRODUCTION AND CONSUMPTION FOR 2001 AND 2011 IN GWH
Nigeria
Production from
Coal
Bangladesh
Brazil
Indonesia
2001
2011
2001
2011
2001
2011
2001
2011
0
0
0
780
11163
12379
37713
81000
Oil
1099
4271
1172
2101
15818
14796
19627
42305
Gas
8455
17113
15227
40308
9921
25095
26220
37090
0
0
0
0
8980
32235
8
198
Biofuels
Waste
0
0
0
0
0
0
0
0
Nuclear
0
0
0
0
14279
15659
0
0
5909
5650
993
872
267876
428333
11655
12419
9371
Hydro
Geothermal
0
0
0
0
0
0
6031
Solar PV
0
0
0
0
0
0
0
1
Solar thermal
0
0
0
0
0
0
0
0
Wind
0
0
0
0
35
2705
0
0
Tide
0
0
0
0
0
0
0
0
Other sources
0
0
0
436
556
0
0
Total
Imports
Exports
Domestic supply
Energy industry own use
15463
27034
17392
44061
328508
531758
101254
182384
0
0
0
0
37854
38430
0
0
0
0
0
0
-6
-2544
0
0
15643
27034
17393
44061
366356
567644
101254
182384
442
774
977
2476
11154
2333
3710
6882
Losses
5987
2581
2413
4528
56628
8752
13024
16672
Final consumption
9034
23679
14002
37136
298575
456748
84520
159867
Industry
1987
3931
6017
21096
139406
209390
35593
53575
Transport
0
0
0
0
1200
2700
33340
0
Residential
4608
13568
6186
11956
73770
111971
33340
65884
Commercial and public services
2439
6180
1174
2474
71804
112227
15587
38608
Agriculture / forestry
0
0
392
1133
12395
21460
0
0
Fishing
0
0
0
3
0
0
0
0
Other non-specified
0
0
0
474
0
0
0
0
Source: [IEA; 2013]
ANNEX 3
145
TABLE A – 7:
LICENSEES OF THE NERC, APRIL 2015
Island Power LImited
Type
Embedded
Generation
Name
Ikorodu Industrial Power Ltd
Place
MW
Ikorodu, Lagos State
39.0
Marina,Lagos State
10.0
Kudenda Ind.Area, Kaduna
84.0
African Oxygen & Industrial Gases Limited
Ikorodu, Lagos State
19.0
Akute Power Limited
Lagos Water Corporation
13.0
CET Power Projects (Ewekoro)
Wapco Ewekoro, Ogun State
CET Power Projects Ltd.
Tinapa, Cross River State
CET Power Projects Ltd.
Nigerian Breweries Limited, Iganmu, Lagos
CET Power Projects(Sagamu)
WAPCO Sagamu, Ogun State
ContourGlobal Solutions (Nig) Ltd
NBC Bottling Plant, Ikeja
10.0
ContourGlobal Solutions (Nig) Ltd
NBC Bottling plant, Apapa
4.0
ContourGlobal Solutions (Nig) Ltd
NBC Bottling Plant, Benin
Coronation Power and Gas Limited
Sango Otta
DIL Power Limited
Cement factory, Ogun State
Energy Company of Nigeria Limited
Nestle,Agbara, Ogun State
Ewekoro Power Ltd
Ewekoro, Ogun State
Ilupeju Power Limited
Academy Press,Ilupeju
Income Electrix Limited
NPA, PH, Rivers State
6.0
PZ Power Company Limited
PZ Cussons Aba Factory, Abia State
4.0
Kaduna Power Supply Company Limited
6.0
20.0
5.0
7.0
7.0
20.0
114.0
3.0
12.5
2.0
Lafarge Wapco, Sagamu, Ogun
Abeokuta, Ogun State
20.0
Tower Power Utility Limited
Ota Industrial Estate, Ota, Ogun State
20.0
Unipower Agbara Limited
Wedotebary Nigeria Limited
AES Nigeria Barge Limited
Afam Power Plc
Agbara Shoreline Power Limited
Generation off-grid
Shoreline Power Company Limited
Tower Power Abeokuta Limited
9.0
Unilever, Agbara, Ogun St.
6.0
Kuru, Jos
5.0
270.0
Afam, Rivers State
987.2
Agbara, Ogun
100.0
Alaoji Generation Co. Ltd (NIPP)
Alaoji, Abia State
1,074.0
Anita Energy Limited
Agbara, Lagos State
Azura Power West AFrica Limited
Ihovbor Benin, Edo State
450.0
Benin Generation Company Limited
Ihonvbor, Edo State
450.0
Calabar Generation Company Limited
Calabar, Cross Rivers State
561.0
Century Power Generation Limited
Okija, Anambra State
495.0
Delta Electric Power Limited
Oghareki, Etiope West LGA
116.0
DIL Power Plc
Obajana, Kogi State
135.0
Egbema Generation Company Limited
Egbema Imo State
338.0
Egbin Power Plc
Egbin, Lagos State
1,320.0
Eleme Petrochemical Company Limited
Eleme Complex,P.H Rivers
135.0
Energy Company of Nigeria (NEGRIS)
Ikorodu, Lagos State
140.0
Enersys Nigeria Limited
Ado-Ekiti, Ekiti State
10.0
Ethiope Energy Limited
Ogorode, Sapele, Delta State
Farm Electric Supply Ltd
Ota, Ogun State
90.0
2,800.0
150.0
First Independent Power Co. Ltd
Omoku, Rivers State
150.0
First Independent Power Co. Ltd
Trans-Amadi, Rivers State
136.0
First Independent Power Co. Ltd
Eleme, Rivers State
Fortune Electric Power Co. Ltd
Odukpani, Cross River State
95.0
500.0
ANNEX 3
Name
Type
Place
Gbarain Generation Company Limited
Gbarain, Bayelsa State
146
MW
225.0
Geometric Power Ltd
Aba, Abia State
140.0
Geregu Generation Company Limited
Geregu II, Kogi State
434.0
Geregu Power Plc (BPE)
Geregu, Kogi State
414.0
Warawa, Ogun State
150.0
Ibafo, Ogun State
200.0
Ibom Power Ltd
Ikot Abasi, Akwa Ibom State.
190.0
ICS Power Ltd
Alaoji, Abia State
624.0
Isolo Power Generation Limited
Isolo Lagos State
JBS Wind Power Limited
Maranban Pushit, Mangu, Plateau State
100.0
Kainji Hydro Electric Plc (Jebba Station)
Jebba, Niger State
570.0
Kainji Hydro Electric Plc (Kainji Station)
Kainji, Niger State
Knox J&L Energy Solutions Limited
Ajaokuta, Kogi State
Lotus & Bresson Nigeria Limited
Magboro, Ogun State
Mabon Ltd
Dadinkowa, Gombe State
MBH Power Limited
Ikorodu, Lagos State
Minaj Holdings Ltd
Agu-Amorji Nike, Enugu East LGA, Enugu State
115.0
Okpai, Delta State
480.0
Nigerian Agip Oil Co. Ltd
Nigerian Electricity Supply Corporation
(Nigeria) Limited (NESCO)
Notore Power Ltd
Ogorode Generation Co. Ltd (NIPP)
Generation off-grid
Hudson Power Limited
Ibafo Power Station Limited
Bukuru, Plateau State
Onne, Rivers State
Ogorode,Delta State
20.0
760.0
1,000.0
60.0
39.0
300.0
30.0
50.0
450.0
Olorunshogo Generation Co. Ltd (NIPP)
Oluronshogo, Ogun State
750.0
Olorunsogo Power Plc (BPE)
Olorunsogo, Ogun State
335.0
Omoku Generation Company Limited
Omoku, Rivers State
250.0
Omotosho Generation Company Limited
Omotosho II, Ondo State
500.0
Omotosho Power Plc (BPE)
Omotosho, Ogun State
335.0
Paras Energy & Natural Resources
Development Limited
Ogijo, Ogun State
Sapele Power Plc
Sapele, Delta State
Shell Petroleum Dev. Co. Ltd
Afam VI,
Shiroro Hydro Electricity Plc
Shiroro, Niger State
600.0
Supertek Electric Limited
Ajaokuta, Kogi State
500.0
Supertek Nig. Ltd
Akwete, Abia State
Ughelli Power Plc
Ughelli, Delta State
Westcom Technologies & Energy
Services Ltd.
Sagamu, Ogun State
Zuma Energy Nigeria Ltd (Gas Plant)
Ohaji Egbema, Owerri, Imo
Zuma Energy Nigeria Ltd(Coal Plant)
Itobe, Kogi State
Total
Source: NERC, [36]
96.0
1,020.0
642.0
1,000.0
942.0
1,000.0
400.0
1,200.0
26,868.7
ANNEX 3
147
TABLE A – 8:
EXISTING NIGERIAN POWER PLANT FLEET, 2015
Name
Fuel Type
Year Completed
Installed
Capacity (MW)
Installed Available
Capacity (MW)
Actual Generation
Capacity (MW)
as of May 2015*
0
AES
Gas
2001
270
267
AFAM IV-V
Gas
1982
580
98
0
AFAM VI
Gas
2009
980
559
523
ALAOJI NIPP
Gas
2015
335
127
110
DELTA
Gas
1990
740
453
300
EGBIN
Gas
1985
1320
931
502
GEREGU
Gas
2007
414
282
138
GEREGU NIPP
Gas
2012
434
424
90
IBOM POWER
Gas
2009
142
115
92
Gas
2012
450
327
225
JEBBA
IHOVBOR NIPP
Hydro
1986
570
427
255
KAINJI
Hydro
1968
760
180
181
OKPAI
Gas
2005
480
424
391
OLORUNSOGO
Gas
2007
335
244
232
OLORUNSOGO NIPP
Gas
2012
675
356
87
OMOKU
Gas
2005
150
0
0
OMOTOSHO
Gas
2005
335
242
178
OMOTOSHO NIPP
Gas
2012
450
318
90
RIVERS IPP
Gas
2009
136
166
0
SAPELE
Gas
1978
900
145
81
SAPELE NIPP
Gas
2012
450
205
116
Hydro
1989
600
480
350
Gas
2013
561
70
0
12,067
6,840
3,941
SHIRORO
ODUKPANI
Total
Source: NERC
* Discrepancy to installed available capacity mainly due to gas shortage
172
GENERATION 171
FIGURE A – 7: AVERAGE AVAILABLE
AND MAXIMUM PEAK GENERATION (2007 – 2014)
7.000
FIGURE A – 8: VARIATIONS IN PEAK MW AND
MWH GENERATION (YEAR-ON-YEAR)
40,00%
6.000
30,00%
5.000
20,00%
MW
4.000
Ave. Available GEN (MW)
3.000
Max. Peak GEN (MW)
2.000
10,00%
Escalation Rate Peak MW
Escalation Rate MWh (GEN)
0,00%
2007
1.000
2008
2009
2010
2011
2012
2013
-10,00%
0
2007 2008 2009 2010 2011 2012 2013 2014
Year
Source:
Source:
NERCNERC
Archive
Archive
-20,00%
-30,00%
Source: Own calculations based on NERC Archive
Source: Own calculations based on NERC Archive
Table A- 9:
Figure A-8: Variations in Peak MW and MWh Generation (year-on-year)
NERC Classification for DISCO Pricing
ANNEX 3
148
TABLE A – 9:
NERC CLASSIFICATION FOR DISCO PRICING
Customer Classification
Description
Remarks
R1
Life-Line (50 kWh)
A consumer who uses his premises excl. as a
residence
R2
Single and 3-phase
R3
LV Maximum Demand
R4
HV Maximum Demand (11/33 KV)
Commercial
A consumer who uses his premises for any purpose other than exclusively as a residence or
as a factory for manufacturing goods
C1
Single and 3-phase
C2
LV Maximum Demand
Residential
C3
HV Maximum Demand (11/33 KV)
Industrial
A consumer who uses his premises for manufacturing goods including welding and ironmongery
D1
Single and 3-phase
D2
LV Maximum Demand
D3
HV Maximum Demand (11/33 KV)
Special
Customers such as agriculture and agro-allied industries, water boards, religious houses, government
and teaching hospitals, government research institutes and educational establishments.
A1
Single and 3-phase
A2
LV Maximum Demand
A3
HV Maximum Demand (11/33 KV)
Street lighting
S1
Single and 3-phase
TABLE A – 10:
NERC: DISCO PRICING ACCORDING TO MYTO 2.1, UPDATED TARIFFS – SELECTED DISCOS (2015)
Customer Classification
Abuja DISCO – Naira/KWh
Jos DISCO – Naira/KWh
4.00
4.00
Residential
R1
R2
19.96
20.18
R3
32.25
35.70
R4
32.25
35.70
23.61
25.94
C2
29.98
33.18
C3
29.98
33.18
D1
24.19
25.94
D2
31.43
34.78
D3
31.43
34.78
A1
23.16
25.63
A2
23.16
25.63
A3
23.16
25.63
19.11
24.70
Commercial
C1
Industrial
Special
Street lighting
S1
ANNEX 4
149
12.4Supplementary Information on Renewable Energy, Energy Efficiency
and Rural Electrification
TABLE A – 11:
COMPONENTS STANDARDS ELABORATED / ADAPTED / ADOPTED BY SON
Code
Description
NCP 031:2010ET:
Code of practice for the deployment of outdoor solar lighting systems
NIS IEC 60061:
Lamp caps and holders together with gauges for the control of interchangeability and safety
NIS IEC 60061-1:
Lamp caps and holders together with gauges for the control of interchangeability and safety –
Part 1: Lamp caps
NIS IEC 60061-3:
Lamp caps and holders together with gauges for the control of interchangeability and safety – Part 3: Gauges
NIS IEC 60081:1984
Tubular fluorescent lamps for general lighting services
NIS IEC 60238
Edison screw lamp holders
NIS IEC 60360
Standard method of measurement of lamp cap temperature rise
NIS IEC 60364-7-712:
Electrical installations of buildings – Part 7 – 712: Requirements for special installations or locations –
Solar photovoltaic (PV) power supply systems
NIS IEC 60695-2-10:2000
Fire hazard testing – Part 2 – 10: Glowing/hot-wire based test methods – Glow-wire apparatus and
common test procedure
NIS IEC 60695-2-11:2000
Fire hazard testing – Part 2 – 11: Glowing/hot-wire based test methods – Glow-wire flammability test method
for end products D NIS 748:2012
NIS IEC 60695-2-12:2010
Fire hazard testing – Part 2-12: Glowing/hot-wire based test methods – Glow-wire flammability test method
for materials
NIS IEC 60695-2-13:2010
Fire hazard testing – Part 2 –13: Glowing/hot-wire based test methods – Glow-wire ignitability test method
for materials
NIS IEC 60901
Single-capped fluorescent lamps – Performance specifications
NIS IEC 60968:1988
Self-ballasted lamps for general lighting services – Safety requirements
NIS IEC 61215:2005
Crystalline Silicon Terrestrial Photovoltaic (PV) Modules – Design Qualification and Type Approval
NIS IEC 61427:2005
Secondary cells and batteries for Photovoltaic Energy Systems (PVES) – General requirements
and methods of test
NIS IEC 61646:2008
Thin-film Terrestrial Photovoltaic (PV) Modules – Design Qualification and Type Approval
NIS IEC 61683:1999
Photovoltaic systems – Power conditioners – Procedure for measuring efficiency Standards for safety
and performance of CFLs
NIS IEC 61730 2004-1:
Photovoltaic (PV) module safety qualification – Part 1: Requirements for construction
NIS IEC 61730 2004-2:
Photovoltaic (PV) module safety qualification – Part 2: Requirements for testing
NIS IEC 62109:2010
Safety of Power Converters for use in Photovoltaic Power Systems – Part 1: General Requirements
NIS IEC 62109:2010
Safety of Power Converters for use in Photovoltaic Power Systems – Part 2: Particular requirements
for inverters
ANNEX 4
150
TABLE A – 12:
NREEEP BIOMASS AND WIND TARGETS
Timeline / Quantity
Short Term (2015)
Medium Term (2020)
Long Term (2030)
5
57
292
Biofuel (ML/day)
• Bio ethanol (B10)
• Biodiesel (B20)
5.3
2.0
9.7
3.4
24.2
11.7
Wind electricity (MW)
55
631
3,211
Windmill water pumping systems (no.)
20
100
200
Short Term (2015)
Medium Term (2020)
Long Term (2030)
117
1,343
6,831
Large hydropower (MW)
2,121
4,549
4,627
Small hydropower (MW)
140
1,607
8,174
Activity / Item
Biomass electricity (MW)
Source: NREEEP
TABLE A – 13:
NREEEP SOLAR AND HYDROPOWER TARGETS
Timeline / Quantity
Activity / Item
Solar – All PV and Solar Thermal (MW)
Source: NREEEP
TABLE A – 14:
NREEEP RENEWABLE ELECTRICITY SUPPLY PROJECTION IN MW
Resource
All renewables plus LHP
All energy resources
to date
Short Term*
Medium Term*
Long Term*
1,985.18
2,438
8,188
23,135
21,200
24,380
45,490
115,674
% of Renewables
23%
10%
18%
20%
% RE Less large Hydropower (LHP)
0.8%
1.3%
8%
16%
* CBN, NPC: Short Term: 2013 – 2015; Medium Term: 2016 – 2020; Long Term: 2021 – 2030
From supply projections based on 13% GDP growth
Source: NREEEP
UNICAL SHP
Balanga Dam SHP
Tunga Dam SHP
10.
11.
12.
Amoke / Ugbokpo
SHP project.
6.
Zobe Dam, SHP
Doma Dam SHP
project
5.
9.
Ikeji-Ile Ijesa SHP
project
4.
Kabomo River Valley
SHP as Mini Grid
Base R.E to support
Rural Electrification
Okinni Dam SHP
project
3.
8.
Erin Ijesa Small
Hydro Power project
2.
Pico-Hydro power
(OOPL Complex) SHP
Eficghim Waterfall
Small Hydro Power
project
1.
7.
Project Name
No.
Source: UNIDO, 1980
Kakara /
Mambilla,
Taraba
Balanga /
Balanga /
Gombe
UNICAL /
Calabar,
Cross River
Dutsin-Ma /
Katsina
Kabomo /
Bakori /
Katsina
Abeokuta /
Abk South /
Ogun
Amoke-Ugbokpo /
Apa /
Benue
Doma /
Doma /
Nasarawa
Ikeji Ile Ijesa /
Oriade /
Osun
Okinni /
Egbedore /
Osun
Erin Ijesa /
Oriade /
Osun
Ajassor / Etung /
Cross River
Project Location:
Town /
L.G.A. /
State
90.0
8.0
2.7
5.53
2.6
7.0
27.0
32.0
20.0
75.88
11.98
Head [m]
400.0
720.0
6,500.0
291.0
370
17.0
1,225
450
78.94
1,900
764.59
200
Design
Potential
[KW]
2006
Sept. 2011
June, 2011
July 2011
Jan. 2010
Nov. 2009
July, 2009
Feb. 2008
Aug. 2008
March 2008
Aug. 2008
Aug. 2007
Date of
Detailed
Project
Report (DPR*)
26,595,220.6
149,103,942.36
2,602,036,882.0
60,652,930.0
194,818,566
13,477,193.9
486,918,913.43 89,077,549.14
76,688,515.76
228,810,443.00
151,352,394.10
98,950,820.58
NGN
177,301.47
994,026.28
17,346,912.55
404,352.87
1,298,790
89,847.95
3,246,126.09
593,850.33
511,256.76
1,525,402.90
1,009,015.96
659,672.14
US$
Project Design Cost
(Implementation Cost)
Benefiting
Communities
UNHCR and UNIDO
Gombe State Government
UNICAL
Fed. Govt. of Nigeria
UNIDO-GEF
UNIDO Country Office
1. UNIDO Country Office
2. Benue State Government
3. Fed Government
Nigeria
Ministry of Water Resources
and Rural development.
Min. of Water Resources &
Rural Development
Min. of Water Resources
and Rural Development
Ministry of Work and
Transport
UNHCR and UNIDO
Balanga;
Rural
population
UNICAL;
Peri-urban
population
Dutsin – Ma;
Rural population
Ungwan Dogo,
Galadima, Dindile,
Tudunwada and
Kabomo –
peri-urban
population
Olusegun Obasanjo
Pres. Library
Complex –
Urban population
Ugbokpo and
Amoke – peri-urban
population
Eza, Amaku, Alage
and Yelwa –
peri-urban
population
Ikeji Ile - Ijesa,
Ira – peri-urban
population
Okinni – peri-urban
population
Erin Ijesa,
Erin Oke – peri-urban population
Rural Electrification Agency, Ajassor –
Nigeria
Rural Population
Funding Source of DPR
ANNEX 4
151
TABLE A – 15: INVESTMENT OPPORTUNITIES FOR SMALL HYDRO POWER DEVELOPMENT IN NIGERIA
Implemented by
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