The Nigerian Energy Sector an Overview with a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification
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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 fund- ed by the European Union and the German Federal Min- istry 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 grati- tude to all project partners who provided particularly val- uable and interesting insights into ongoing activities dur- ing the course of the project. It was a real pleasure and a great help to exchange ideas and learn from highly expe- rienced management and staff and committed represent- atives 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: Maps: Deutsche Gesellschaft für The geographical maps are for informational purposes Internationale Zusammenarbeit (GIZ) GmbH only and do not constitute recognition of international boundaries or regions; GIZ makes no claims concerning Nigerian Energy Support Programme (NESP) the validity, accuracy or completeness of the maps nor 2 Dr Clement Isong Street, Asokoro does it assume any liability resulting from the use of the Abuja / Nigeria information therein. Contact: Daniel Werner ([email protected]) Phone: + 234 8057601986 Layout: FINE GERMAN DESIGN, Frankfurt / Main Federal Ministry of Power Federal Secretariat Complex Shehu Shagari Way, Maitama Abuja / Nigeria Contact: Engr. Faruk Yusuf Yabo ([email protected]) 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. Executive Summary 15 2. Introduction to Nigeria 18 2.1 Geography, Climate and Political Situation 18 2.1.1 Geography 18 2.1.2 Climate 19 2.1.3 Political Situation 19 2.2 Demography 20 2.3 Economy 21 2.4 Regional Context 22 3. The Nigerian Energy Sector 24 3.1 Energy Resources 24 3.2 Primary Energy Supply 25 3.3 Energy Consumption 27 3.4 Electricity Market Development 29 3.5 Electricity Generation 31 3.5.1 Grid-connected Power Generation 33 3.5.2 Off-grid Power Generation 36 3.6 Electricity Consumption and Demand 37 3.6.1 Electricity Consumption 37 3.6.2 Electricity Demand 39 3.7 Electrification 41 3.8 Energy Prices 43 3.8.1 Fuel Prices 43 3.8.2 On-Grid Electricity Prices 44 3.8.3 Off-Grid Electricity Prices 45 3.9 Transmission and Distribution Sector 46 3.9.1 Transmission 46 3.9.2 Distribution 49 4. Energy Market – Stakeholders and Roles 50 4.1 National Public Institutions 50 4.1.1 Federal Ministry of Power 50 4.1.1.1 Nigerian Electricity Regulatory Commission (NERC) 51 4.1.1.2 Rural Electrification Agency of Nigeria (REA) 51 4.1.1.3 Electricity Management Services Limited (EMSL) of Nigeria 52 4.1.1.4 National Power Training Institute of Nigeria (NAPTIN) 52 5 4.1.2 Federal Ministry of Environment (FMENV) 52 4.1.3 Federal Ministry of Science and Technology (FMST) 52 4.1.3.1 Energy Commission of Nigeria (ECN) 53 4.1.3.2 National Agency for Science and Engineering Infrastructure (NASENI) 53 4.1.4 Federal Ministry of Lands, Housing and Urban Development (FMLHUD) 53 4.1.5 Federal Ministry of Water Resources (FMWR) 54 4.1.6 Federal Ministry of Industry, Trade and Investment (FMITI) 54 4.1.6.1 Standards Organisation of Nigeria (SON) 54 4.1.7 Nigerian Bulk Electricity Trading Plc (NBET) 54 4.1.8 Nigerian National Petroleum Corporation (NNPC) 55 4.1.9 Presidential Task Force on Power (PTFP) 56 4.1.10 Nigerian Governor’s Forum (NGF) 56 4.2 Role and Functions of States and Local Governments 56 4.3 Market Players in Generation, Transmission and Distribution 57 4.3.1 Generation Companies 58 4.3.2 Transmission Company of Nigeria 60 4.3.3 Distribution Companies 60 4.4 Other Non-Governmental Stakeholders 61 4.4.1 Council for Renewable Energy in Nigeria (CREN) 61 4.4.2 Manufacturers Association of Nigeria (MAN) 61 4.4.3 Nigerian Society for Engineers (NSE) 61 4.4.4 Green Building Council of Nigeria (GBCN) 61 4.4.5 Nigerian Institute of Architects (NIA) 61 4.4.6 Nigerian Institute of Building (NIOB) 61 5. Energy Policy 62 5.1 Fuel Market Policy and Strategy 62 5.2 Electricity Market Policy and Strategy 63 5.2.1 Introduction 63 5.2.2 Major Programmes and Initiatives, Policy Mix 64 5.3 Climate Change Policy and Strategy 65 5.4 Milestones in National Energy Policy and Laws 66 5.4.1 National Electric Power Policy (NEPP), 2001 67 5.4.2 National Energy Policy (NEP), 2003 67 5.4.3 National Economic Empowerment and Development Strategy (NEEDS), 2004 68 5.4.4 National Power Sector Reform Act (EPSRA), 2005 68 5.4.5 Renewable Electricity Policy Guidelines (REPG), 2006 69 5.4.6 Renewable Electricity Action Programme (REAP), 2006 70 5.4.7 National Biofuel Policy and Incentives (2007) 70 5.4.8 Roadmap for Power Sector Reform, 2010 and 2013 (Update) 71 6 5.4.9 Vision 20:2020, 2010 72 5.4.10 Renewable Energy Master Plan, 2005 and 2012 (Update) 75 5.4.11 National Renewable Energy and Energy Efficiency Policy (NREEEP), 2015 75 5.4.12 Multi-Year Tariff Order (MYTO) 76 5.4.13 Draft Rural Electrification Strategy and Plan (RESP), 2015 77 5.5 Key Electricity Market Regulations 77 5.5.1 Transmission, Distribution and Metering Codes 77 5.5.1.1 Transmission Code 77 5.5.1.2 Distribution Code 78 5.5.1.3 Metering Code 79 5.5.2 Embedded Generation Regulations, 2012 79 5.5.3 Regulations for Independent Electricity Distribution Networks (IEDN), 2012 79 5.5.4 Regulations for the Procurement of Generation Capacity, 2014 80 5.5.5 Regulations on National Content Development, 2014 80 6. On-Grid Renewable Energy 81 6.1 On-grid Renewable Energy Market 81 6.1.1 The Potentials 81 6.1.1.1 Bioenergy / Biomass / Biofuel 82 6.1.1.2 Hydropower 84 6.1.1.3 Solar Energy 85 6.1.1.4 Wind Energy 87 6.1.1.5 Other Resources 88 6.1.2 Existing and Planned Renewable Energy Projects 89 6.1.2.1 NERC Licensees 89 6.1.2.2 Projects of the Federal Ministry of Environment 90 6.1.2.3 Projects of the Federal Ministry of Power 90 6.1.2.4 Projects of the Federal Ministry of Water Resources (FMWR) 91 6.2 Renewable Energy Stakeholders 92 6.2.1 Public Authorities 92 6.2.2 Non-governmental Players 94 6.2.3 Foreign Development Cooperation Organisations 94 6.2.4 Key Players in Research, Capacity Development and Training 95 6.3 Renewable Energy Policies and Regulations 95 6.4 Renewable Energy Support Mechanisms, existing and planned 97 6.4.1 Financing from Development and Private Banks 97 6.4.2 Tax Incentives 98 6.4.3 Current Financial Support Mechanisms – Combination of Unsolicited Bids and Feed-In Tariff Guidelines 98 6.4.4 Planned Financial Support Mechanisms 99 7 6.5 From Project to Realisation: Renewable IPPs - The Current Process 99 6.5.1 NERC - Generation Licence 99 6.5.2 NBET - Power Purchase Agreement 101 6.5.3 Embedded Generation 101 6.5.4 Challenges 102 6.6 Conclusions: Renewable Energy 102 7. Energy Efficiency 104 7.1 Energy Efficiency Market 104 7.1.1 Existing Energy Efficiency Projects 105 7.1.2 Planned Energy Efficiency Projects 106 7.2 Energy Efficiency: Power Generation 107 7.2.1 Efficiency of On-Grid Generation, Transmission and Distribution 107 7.2.2 Genset-Based Generation 107 7.3 Energy Efficiency: Consumption 108 7.4 Energy Efficiency Stakeholders 112 7.4.1 Public Authorities 112 7.4.2 Additional Energy Efficiency Stakeholders 112 7.4.3 International Organisations 114 7.5 Energy Efficiency Policy and Strategy 114 7.5.1 National Renewable Energy and Energy Efficiency Policy 114 7.5.2 Draft ationalN Energy Efficiency Policy for Nigeria 115 7.5.3 Standards and Labelling 116 7.6 Energy Efficiency Support Mechanisms 116 7.6.1 Price Incentives 116 7.6.2 Tax Relief 116 7.6.3 Financing Mechanisms / Opportunities 116 7.7 Conclusions 116 8. Rural Electrification, Including Off-Grid Renewable Energy 118 8.1 Rural Electrification Market 118 8.1.1 Renewable Energy and Rural Electrification Potentials 120 8.1.2 Existing Rural Electrification Projects 122 8.1.3 Planned Rural Electrification Projects 123 8.2 Rural Electrification Stakeholders 123 8.2.1 Public Authorities and Their Roles 123 8.2.2 Rural Electrification Market Players 125 8.3 Rural Electrification Policy and Strategy 125 8.3.1 Draft Rural Electrification Strategy and Plan (RESP) 125 8.3.2 Tariffs 126 8.3.3 Further Policy Documents 127 8 8.4 Rural Electrification Support Mechanisms and Price Incentives 127 8.5 Conclusions 128 9.