Nigeria, with its large and growing population of over 230 million, faces significant challenges in its electricity sector, leading to frequent power outages and hindering economic growth and citizens’ daily lives. 

To address these issues, the Nigerian under the leadership of President Bola Ahmed Tinubu passed the Electricity Act 2023, aiming to reform and enhance the efficiency and reliability of the electricity sector. 

The Act also includes provisions to promote the development of renewable energy sources in Nigeria. 

This article examines the benefits of the 2023 Electricity Act for the renewable energy sector, assesses its potential impacts on renewable energy adoption, and discusses the viability of Nigeria’s electricity bill in meeting the goals of the Paris Agreement.

 Current State of Renewable Energy in Nigeria:

To understand the potential impact of the 2023 Electricity Act, it is crucial to assess the current state of renewable energy in Nigeria. 

As of 2022, Nigeria’s total installed electricity generation capacity is 10,396 megawatts (MW). Of this, 2,062 MW is from hydropower, 11,972 MW is from gas, 10 MW is from wind, 7 MW is from solar, and 2,333 MW is from other sources such as diesel and heavy fuel oil.

The renewable energy sources, namely hydropower, wind, and solar, contributed a total of 2,141 MW, or 20.7% of the total installed capacity.

However, the actual amount of electricity generated from renewable sources is much lower than the installed capacity. In 2022, the average available generation capacity from renewable sources was only 378 MW or 3.6% of the total available generation capacity.

Several factors can be responsible for these down-performances and it includes the intermittent nature of renewable energy sources, the lack of investment in renewable energy infrastructure, and the poor state of the transmission and distribution networks. 

The Nigerian government has set a target of generating 30% of its electricity from renewable sources by 2030. 

However, it is unclear whether this target will be met, given the current challenges facing the renewable energy sector in Nigeria.

As seen above, the dominant sources of electricity generation in Nigeria are fossil fuels, primarily gas and oil, which are susceptible to price fluctuations and supply chain disruptions.

What is the 2023 Electricity Act for the Renewable Energy Sector

a. Renewable Energy Generation Obligations:

The Act mandates that electricity generation licensees meet specific renewable energy generation obligations. This provision creates a market for renewable energy projects and incentivizes electricity generation companies to diversify their energy sources. By sourcing a certain percentage of its electricity from renewable sources, Nigeria can reduce its reliance on fossil fuels and decrease greenhouse gas emissions.

b. Feed-in Tariff Scheme:

The Act establishes a feed-in tariff scheme, that offers financial incentives to renewable energy projects. 

This scheme guarantees a fixed price for renewable energy generation, making such projects economically viable and attractive to investors. 

The feed-in tariff scheme can accelerate the development of renewable energy infrastructure by providing stable revenue streams for project developers.

c. Renewable Energy Fund:

Another critical provision of the Act is the establishment of a Renewable Energy Fund. This fund will provide grants and loans to support the development of renewable energy projects in Nigeria. 

It will also contribute to research and development initiatives within the renewable energy sector. By facilitating access to financing and promoting innovation, the fund can spur the growth of renewable energy technologies and enhance their competitiveness.

Expected Impacts of the 2023 Electricity Act on the Renewable Energy Sector:

a. Increase in Renewable Energy Projects:

The 2023 Electricity Act is expected to stimulate the development of renewable energy projects in Nigeria. The renewable energy generation obligations imposed on electricity generation licensees create a market demand for renewable energy sources. This increased demand, coupled with the financial incentives provided by the feed-in tariff scheme, encourages investment in renewable energy infrastructure.

b. Cost Reduction of Renewable Energy:

As the renewable energy sector in Nigeria expands, economies of scale and technological advancements are likely to drive down the cost of renewable energy. The predictable revenue streams from the feed-in tariff scheme reduce the financial risks associated with renewable energy projects, making them more affordable for both investors and end consumers. Lower costs will enhance the competitiveness of renewable energy sources, making them increasingly attractive compared to fossil fuels.

c. Improved Electricity Supply Reliability:

Renewable energy sources such as solar and wind power are inherently more reliable than fossil fuel-based sources. They are not vulnerable to price fluctuations or supply chain disruptions, as they depend on abundant and freely available resources. By integrating more renewable energy into the electricity grid, Nigeria can enhance the reliability of its power supply, reducing the frequency and duration of power outages.

Nigeria’s Electricity Bill and the Paris Agreement:

The 2023 Electricity Act represents Nigeria’s commitment to transitioning to a more sustainable energy future, aligning with the goals of the Paris Agreement. The Paris Agreement aims to limit global warming to well below 2 degrees Celsius above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 degrees Celsius. To achieve these goals, countries must significantly reduce their greenhouse gas emissions, including those from the electricity sector.

By promoting renewable energy adoption, the 2023 Electricity Act helps Nigeria contribute to the global efforts outlined in the Paris Agreement. Shifting from fossil fuels to renewable energy sources reduces carbon dioxide emissions and mitigates the country’s environmental impact. The Act’s renewable energy generation obligations and the financial incentives provided by the feed-in tariff scheme are essential drivers for Nigeria to meet its commitments under the Paris Agreement.

Conclusion:

The 2023 Electricity Act in Nigeria represents a significant step toward transforming the electricity sector and promoting renewable energy adoption. By incorporating provisions such as renewable energy generation obligations, a feed-in tariff scheme, and the establishment of a Renewable Energy Fund, the Act encourages investment in renewable energy projects, drives down costs, and enhances the reliability of Nigeria’s electricity supply.

The Act’s promotion of renewable energy aligns with Nigeria’s commitments under the Paris Agreement, ensuring a more sustainable and environmentally friendly energy future. As Nigeria continues to implement the Act and further develop its renewable energy sector, the country can reap the benefits of reduced emissions, increased energy security, and economic growth through the creation of jobs and the attraction of investments in clean energy technologies.