18 January 2016

Nigeria Needs Investment to Increase Its Renewable Energy Output

analysis

Energy remains one of the main constraints for economic growth in Nigeria. The lack of reliable access and irregular power supply is a persistent problem affecting businesses across the country. It also discourages foreign investors.

Nigeria sits at the bottom of the table when it comes to delivering power. It ranks 187 out of 189 countries in the world, according to a World Bank business report.

The current output of renewable energy as a percentage of the overall energy mix in the country is very low. The energy mix is largely dominated by oil which makes up 57% and natural gas 36%. Solar power and hydropower represent 13% and 7%, respectively.

The vast majority of Nigerian population still depends on burning of fuel wood for energy purposes. This represents 80% of the energy mix. Burning fuel wood has serious health implications causing lung and heart diseases. The report shows that 43% and 32% of post-neonatal and child deaths respectively have been attributed to use of wood fuel in the country.

According to another report, it causes deforestation and increases carbon emission into the atmosphere.

Most people also lack access to the grid. This intensifies the need to use clean energy that is cost-effective, readily accessible and technically efficient. Clean energy, which - like biomass - is biological material that comes from living, or recently living organisms like plants, serves both on-grid and off-grid households. It is especially helpful in the rural areas.

But how can Nigeria's energy policy drive industrialisation and rural electrification in a sustainable manner? The answer lies in the new government's ability to prioritise and implement renewable energy.

Nigeria must increase research and development

Nigeria has great potential for renewable energy - especially solar, biomass and hydropower. But the country has invested little or nothing in research and development to expand these industries.

In the past three decades, countries like China and Brazil have invested in energy production and supply to boost industrialisation. In stark contrast, Nigeria's investment in energy production and maintenance has reduced remarkably over this period of time. This has left Nigeria behind in the industrial revolution.

China is a global leader, with significant research and development in renewable energy technologies. It invested a total of $56.3 billion on renewable projects in 2013 with a special focus on solar. The solar photovoltaic industry alone created 1.6 million jobs.

Brazil invests roughly $30 billion a year on the sugar cane industry with 60% on biofuel production funded by the government. Brazil has had much success in the biofuel industry, through partnerships with the universities and enterprise. This has had a positive effect on the economy. The 2015 biofuel output is estimated at approximately 27 billion litres, with numerous jobs created in rural communities.

Nigeria can emulate both countries. A wide range of biomass resources exist in Nigeria and can be used for biofuel production. But large-scale production is yet to be prioritised by the government, partly due to lack of research and development, limited expertise and poor funding.

What current government can do

Nigeria's existing energy plan, which was drafted more than a decade ago is yet to be signed off into law by the Nigerian government. It does not set attainable renewable energy targets nor does it have a framework that will drive energy supply for most of the Nigerian people. Without a robust strategy and adequate policy implementation, sustainable energy production cannot be achieved in the country.

There must be a body across all relevant ministries with a mandate to revamp renewable energy projects. The Ministry of Environment must a take lead role and synergise efforts among the key ministries. This especially includes the power, transport, science and technology and agriculture sectors.

A transparent regulatory and institutional framework must be introduced. It must encourage incentives, public-private partnership, bilateral and multilateral initiatives, research and development and capacity building.

Robust indicators must be set up to monitor the performance and to evaluate the progress of renewable energy projects. The projects must account for the social, economic and environmental dimensions of the Sustainable Development Goals.

Many parts of Nigeria have geographic advantage to encourage renewable projects. In addition, Nigeria has human resources and capacity to lead one of the best renewable industries in the world. But to do that it must overhaul its energy policy and increase investment in research and development.

Nigeria can attract international investors that will benefit from finance, technologies and knowledge transfer. This approach can help transition toward low-carbon emissions and put the country in a better position to achieve the Sustainable Development Goal targets.

Disclosure statement

Ademola Adenle does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

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