Imagine a country with abundant solar energy potential, averaging 4.8–5.4 kWh/m2 of solar radiation daily.
Some estimates say the country could generate over 1,000 GW of solar power, while others say it could generate 427,000 MW.
As of October 2023, Nigeria’s electricity generation capacity for the national grid was almost 14,000 megawatts (MW); however, the actual power generation as reported in May 2024 was less than 5,000 MW, which is far lower compared to the country’s population of over 200 million people.
So, even as a country with rich oil and gas reserves, a powerhouse on the African continent, Nigeria, with millions of its citizens is plunged into darkness. This is the paradox that defines Nigeria’s current energy landscape.
According to the International Energy Agency, over 140 million Nigerians, a staggering 71% of the population, lack access to modern energy services.
This is not just the absence of light bulbs; it is the inability to access the foundations of a healthy and prosperous life – electricity, clean cooking facilities, and modern fuels.
The consequences of this energy poverty are far-reaching. Without electricity, children struggle to study at night, healthcare facilities face crippling limitations, and businesses operate at a fraction of their potential.
Furthermore, the reliance on traditional fuels like firewood for cooking poses serious health risks, particularly for women and children exposed to harmful indoor air pollution.
This situation is even more perplexing when considering Nigeria’s economic might. As Africa’s largest economy, the country boasts vast natural resources, including its position as a leading global oil producer. This economic engine continues to rev, propelling a growing energy demand.
The Minister’s Argument
On April 29, Adebayo Adelabu, Nigeria’s power minister, warned of a nationwide blackout in three months if a proposed electricity price increase is not implemented.
“The entire sector will be grounded if we don’t increase the tariff. With what we have now in the next three months, the whole country will be in darkness if we don’t increase tariffs.”
The minister said this in Abuja on Monday, April 29, when he appeared before the Senate Committee on Power at an investigative hearing over the recent electricity tariff hike by the Nigerian Electricity Regulatory Commission (NERC).
“The increment will catapult us to the next level. We are also Nigerians, and we are also feeling the impact. For this sector to be revived, the government needs to spend nothing less than 10 billion dollars annually in the next 10 years.
This is because of the infrastructure requirement for the stability of the sector. But the government cannot afford that. And so we must make this sector attractive to investors and lenders.
He says the hike is needed to attract investment to improve the power grid, which the government cannot afford.
“For us to attract investors and investment, we must make the sector attractive, and the only way it can be made attractive is that there must be commercial pricing.
“If the value is still at N66 and the government is not paying subsidy, the investors will not come. But now that we have increased the tariff for A Band, interests are being shown by investors.”
With the energy sector sputtering with insufficient power generation, crumbling infrastructure, and a deeply entrenched energy poverty crisis, Nigerians stand at a crossroad. Will they continue to grapple with this paradox, or will they seize the opportunity to unlock their true energy potential? The answer lies in a multi-pronged approach that addresses the existing challenges head-on.
The New Challenge of Renewables
Investing in renewable energy sources like solar and wind power can lessen dependence on fossil fuels and provide cleaner, more sustainable solutions for remote communities. However, this path is not an easy one.
The vision of an equitable energy landscape comes at a cost—a significant one. According to UNCTAD, an estimated $5.8 trillion has to be invested annually for the 48 developing economies (including Nigeria), to surmount the new challenge of renewables.
The sum translates to over $120 billion per country and represents nearly a fifth (19%) of their GDP from 2023 to 2030. That further translates to roughly $1,271 per person every year.
Nigeria’s transition to renewable energy presents a unique challenge. The exact cost is difficult to pinpoint due to factors like current infrastructure, energy sources, and geography.
Estimates range widely, from tens to hundreds of billions of dollars, depending on the desired pace and scale of the shift.
Should Nigeria see this as a down payment on a brighter future or take up the even less challenging recommendation of the Minister, overlooking the chance for a more sustainable energy future?
The challenging economic factors preventing this energy shift have been discussed over time. Converting Nigerian currency for essential technology imports can be a bureaucratic hurdle.
Traditional financing structures might not be well-suited for the unique needs of this emerging sector. Finding the right technology and the skilled people to implement it can be another hurdle.
Leveraging for Success
The good news? These challenges are not insurmountable. By developing innovative financial tools and technical assistance programs, Nigeria can unlock the immense potential of renewables.
Streamlining currency exchange for renewable energy projects, or creating loan and grant programs specifically designed for this sector can become effective strategies.
By tackling these financial and technical obstacles, Nigeria can pave the way for a vibrant renewable energy sector. It is an investment in a cleaner, more sustainable future for the nation.
Furthermore, the cost of clean energy sources like solar and wind is falling– solar by 13% annually and wind by 9%. This is not a temporary dip; it is a long-term trend that is being fueled by advancements in technology and infrastructure.
With solar panels going on sale every year and becoming more accessible for homes and businesses alike according to the Center for Climate and Energy Solutions (C2ES), the infrastructure to support these clean sources expands, and the costs continue to tumble.
It is a virtuous cycle – more investment leads to lower costs, which in turn unlock even greater investment.
Nigeria faces a double challenge: a booming population and a growing thirst for energy. As millions more Nigerians join the grid, the electricity demand will surge.
Nigeria can either embrace a clean energy transition or grapple with the consequences of an outdated system.
However, if the transition proves too costly in the short term, Nigeria must still find ways to become more energy efficient.
Think of it as tightening the belt while still aiming for a sustainable future.
One approach is to reduce dependence on non-renewable sources. This could involve promoting energy-saving appliances, encouraging responsible energy consumption habits, and exploring alternative energy sources like biogas.
Additionally, strengthening the entire energy sector is crucial. This means investing in grid improvements to minimize energy loss during transmission and distribution.
By adopting these strategies, Nigeria can buy crucial time while it works towards a more sustainable long-term solution.
