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Renewable energy market & policy development in nigeria
1. RENEWABLE ENERGY MARKET & POLICY
DEVELOPMENT IN NIGERIA
UGAH GODWIN UNIMKE
COUNCIL FOR RENEWABLE ENERGY IN
NIGERIA
0ct.17 2011
2. Introduction
Nigeria is endowed with significant renewable
energy resources. This is due largely to the fact
that the country lies within a high sunshine belt.
Within the country solar radiation is fairly well
distributed. According to Dr Chris Omeruo the
managing director/ CEO BGL Private Equity Ltd,
‘’ Nigerian Renewable Energy market is
estimated to worth at least US$7.5 billion, with
significant market potential to grow to about
US$10 billion or more’’.
3. Renewable Energy Resources
• Hydro Power
• Solar Energy
• Wind Energy
• Geothermal Energy
• Bio-fuel – Ethanol, Bio-Diesel, Bio-Gas,
Bio-Mass.
5. Renewable Energy Potentials
There exist a vast biomass potential in the form of: bio
crops and wood fuel, biogas input potential, small hydro,
wind and solar energy. For example; the solar potential
at average is put at 3.5Kwhr/m². Enough energy falls on
the average rooftop in one day to run a small household
for a month.The bio-mass potential in this country is
enormous, Potentials abound for wind energy and small
hydro
6. Renewable Energy Master Plan
Targets (MW)
Source 2007 2015 2025
Wind 1 20 40
Solar PV 5 75 500
Solar thermal - 1 5
Small hydro 50 600 2000
Biomass 50 400
Total Renewables 56 746
Total Electricity 7,000 14,000 29,000
% Renewables 0.8 5 10
Source: Renewable Energy Master Plan (ECN)
7. Is the Ret Market Limitless?
The situation that can be observed is quite the opposite:
• Energy supply on all fronts is grossly inadequate at commercial,
domestic and industrial levels. This is especially so at the rural
level where an estimated 70% of Nigerians live.
• A total absence of electric power supply from the national grid in at
least 70% of rural communities, coupled with inadequacy of supply
even in urban and semi urban communities.
• Per capita consumption of energy is well below the expected level
given the resources available.
• Low propagation rate of the RET s on offer and a stiff resistance of
the population in adopting such RETs due to lack of awareness.
• Stagnation in the R&D sector especially in its linkage with the main
theatre of demand: the rural sector.
8. However, efforts have been made before and are still been
made in many fronts to confront these challenges by various
public sector agencies:
•Energy Commission of Nigeria,
•The Federal Ministry of Science and Technology, Others
are ; non-governmental, international donors and private
sector developers .
•Private sector companies and other actors in the market
•International agencies concerned with the environment and
anxious to institute a more sustainable dependence on the
environment.
•Nigerian Electricity Regulatory Commission
9. Success made so far:
The awareness campaign carried out by the Energy Commission of Nigeria has
increased the awareness level of the renewable energy technologies.( to a significant
extent)
•Policy and other institutional framework changes are more favorable to the
deployment of RET as contained in the new Energy policy and the draft master plan
•Several more federal ministries, governmental and non governmental agencies have
come on board the RE train with master plans, pilot and demonstration projects.
•Price of renewable energy equipments i.e. solar panels keep reducing.
•The Federal Ministry of Health and the Federal Ministry of Water Resources have
deployed thousands KWp capacity of Photovoltaic based systems towards water
pumping and vaccine storage.
The industry has grown some what with now much larger number of companies
servicing the industry.
10. Major challenges within the renewable energy industry
•The diffusion of the RET s downwards to the rural level is insignificant
at the domestic and rural economy level where demand is most crucial.
•The preponderance of projects and activities are still unacceptably
skewed towards government sponsored projects or similar high profile
projects.
•Per capita consumption of energy has not improved significantly
•The impact of the renewable energy technologies on the rural energy
consumption pattern is too scanty to be described as successful.
No significant milestone has been recorded in local content especially in
the areas of solar photovoltaic and solar thermal manufacturing industry.
11. Cont.
• Shifting the utilization to the most crucial demand theatre
(The rural areas).
• The rate of failure of projects in the country is too high
which signposts deep underlying problems.
• Not much success has been recorded in import tariff
reduction and other incentives in general
• Energy tariffs are still unfavorably tilted against RET
generated electricity while other forms of energy and
electricity enjoy hidden subsidies
• Innovative approach to energy financing is still missing
12. Policy and Regulatory Overview
• Electric Power Sector Reform Act 2005
• Petroleum Act / Petroleum Refining Regulations (Favors Ethanol
production)
• Public Enterprises (Privatization and Commercialization) Act
• Kyoto Protocol
• Environmental Impact Assessment Act
• National Office of Technology Acquisition and Promotion Act
• Standards Organization of Nigeria
13. Policy Statements
• National Energy Policy
• Renewable Energy Master Plan (REMP)
• Renewable Electricity Action Program
• National Biofuel Policy.
There also exist policies at the state level such as:
• Cross River state-Draft alternative energy policy.
• Ebonyi State: -Draft alternative energy policy.
14. Electricity Law
•National Electric Power Sector Reform Act (EPSRA)
•Independent Power Producers
•Wholesale Competitive Electricity Market
•Licensing requirements for generation over 1MW
(except captive generation)
•Licensee authorized to construct, own, operate and
maintain a generation station for purposes of
generation and supply of electricity in accordance with
EPSRA
•Tariff Regulation – Multi-Year Tariff Order (MYTO)
•Regulation by NERC
15. Petroleum Law
•Renewable Energy Forms, Bio-fuels: Ethanol,
Bio-Gas
•Ethanol as additive to petrol (PMS)
•Bio-Gas as Liquefied Petroleum Gas (LPG)
•Ethanol-PMS blending as refining activity
under Petroleum Act / Petroleum Refining
Regulations
•Downstream Gas Bill
16. Incentive Regime
There is no specific incentives for renewable energy but
there are generally applicable incentives:
• Pioneer Status – Industrial Development (Income Tax)
Act
• 10% Investment Allowance on plant and machinery
• 10% of total profit deductible for R&D
• Agricultural Incentives
• Zero duty on agricultural machinery .
17. Recommendations
Awareness
• Setting up of renewable energy awareness programs (including solar
villages in each state)
• Building up partnerships between government, private sector and civil
society.
Technology Research and Development
• Intensifying R & D in renewable energy science and technology as
well as policy analysis and market research.
• Carrying out manpower development for the design, production,
installation and maintenance of renewable energy technology
• Developing and implementing national standards on renewable
energy devices and systems
• Establishing an enabling regulatory framework for the renewable
energy industry and renewable energy based power
18. Economics and Financing
• Establishment of public and private sector partnerships to
mobilize financial resources for the development of the
renewable energy industry
• Developing and making available a road map to guide project
developers in their efforts to access financial resources
• Promoting an energy pricing structure which is market-based
and which reflects long term benefits and environmental
costs
• Removing all tariffs on imported renewable energy
technologies and systems
• Establishing a renewable energy development fund and a
mechanism for operating the fund.
19. Recommendation contd.
Institutional Reforms
• Providing institutional linkages between public and private
sector institutions and renewable energy end users with
regards to funding and information exchanges
• Strengthening the capacity of various renewable energy
institutions.
Policies
• Implementation of an integrated national energy policy
• Implementation of an enabling renewable energy policy
20. INVESTMENT SUPPORT
• Establishment of a renewable energy development fund
• Development of a road map for accessing investment and
support funds (sources of funds, types of funds and how
to access them) for renewable energy projects
• Putting in place policy incentives to make renewable
energy technologies economically competitive.
21. Conclusion
The growing market trends for renewable energy can be
increased and sustained as experience with renewable
energy policies around the world is still emerging and
more understanding is needed of the impacts of various
policies. Thus, many policies could still be considered
“experimental” in nature.
Of all the policies surveyed so far, the ones that appear to
have contributed the most to renewable energy
development during the 1990s and early 2000s are:
22. (a) directct equipment subsidies and rebates, net metering
laws, and technical interconnection standards in the case
of solar PV.
(b) investment tax credits, production tax credits,
electricity feed-in laws
c) grid-access and wheeling policies supporting
independent power producers and third-party sales in the
case of biomass and small hydro power.
23. There is no gain saying that the Market for
renewable energy is huge , and the benefits out
weighs its conventional counterpart, and so, this
calls for continuos collaborations which will
enhance knowledge sharing, technological
transfer and market propagation , in order to
achieve a green and safe planet which has the
potental to cater for the need of the present and
the future generation.
Water channeled through basin to remove sediment Directed downhill through pipe drives turbine at the bottom can be used for mechanical power or connected up to a generator to produce electricity Generator provides AC power frequency dependent on turbine