The Nigerian Energy Sector

The Nigerian Energy Support Programme (NESP)

The Nigerian Energy Sector - an Overview with a Special Emphasis on Renewable Energy, Energy The NigerianEfficiency Energy and Rural Sector Electrification - an Overview withNovember, a Special 2014 Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification

The Nigerian Energy Sector - an Overview with a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification November, 2014 Implemented by

Implemented by

20141121_Energy Sector Study_NESP Publication draft_v2.docx

The Nigerian Energy Sector - an Overview with a Special Emphasis on Renewable Energy, The Nigerian Energy Sector - an Overview with Energy Efficiency and Rural Electrification a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification

20141121_Energy Sector Study_NESP Publication draft_v2.docx

20141121_Energy Sector Study_NESP Publication draft_v2.docx 2

Acknowledgements

This report on the Nigerian Energy Sector was financed by the German Federal Ministry for Economic Cooper- ation and Development (BMZ) and implemented by the Deutsche Gesellschaft für Internationale Zusammenar- beit (GIZ) GmbH under the Nigerian Energy Support Programme (NESP). The authors would like to thank the GIZ Nigeria team for having entrusted this highly relevant subject to GOPAInternational Energy Consultants GmbH, and for their extensive and dedicated inputs and guidance provided during implementation. The authors express their gratitude to all project partners who provided particularly valuable and interesting insights into ongoing activities during the course of the project. It was a real pleasure and a great help to exchange ideas and learn from highly experienced management and staff and committed repre- sentatives of this programme. 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 Imprint boundaries or regions; GIZ makes no claims concerning The Nigerian Energy Support Programme (NESP) the validity, accuracy or completeness of the maps nor No.Published 2, Dr. by:Clement Isong Street does it assume any liability resulting from the use of the Deutsche Gesellschaft für Abuja/Nigeria information therein. Internationale Zusammenarbeit (GIZ) GmbH Contact: Daniel Werner ([email protected])The Nigerian Energy Support Programme (NESP) Layout: T:No. +234 2, Dr. (0)8057601986 Clement Isong Street FINE GERMAN DESIGN Abuja/Nigeria Frankfurt / Main Contact: Daniel Werner ([email protected]) Federal Ministry of Power T: +234 (0)8057601986 Federal Secretariat Complex ShehuFederal Shagari Ministry Way, of Power Maitama AbujaFederal / NigeriaSecretariat Complex Contact:Shehu Shagari Engr. Way, Faruk Maitama Yusuf Yabo Abuja / Nigeria ([email protected]) Contact: Engr. Faruk Yusuf Yabo ([email protected])

BMZBMZ Berlin StresemannstraßeStresemannstraße 94 94 1096310963 BerlinBerlin / Germany T: +49 (0)30 185350 T: +49 (0)30 185350

Authors / Editors etc. GOPA International Energy Consultants GmbH, Consultant Justus-von-Liebig-Str. 1, 61352 Bad Homburg v.d.H. Germany www.gopa-intec.de AuthorsKarsten Ley / Editors etc. Dr. Jeremy Gaines GOPAAnil Ghatikar International Energy Consultants GmbH, Consultant Justus-von-Liebig-Str.Photo Credits 1, 61352 Bad Homburg v.d.H. Germany www.gopa-intec.de Maps The geographical maps are for informational purposes only and do not constitute recognition of international Karstenboundaries Ley or regions; GIZ makes no claims concerning the validity, accuracy or completeness of the maps nor does Dr.it assume Jeremy any Gaines liability resulting from the use of the information therein. Anil Ghatikar Printed and Distributed by:

Photo Credits

20141121_Energy Sector Study_NESP Publication draft_v2.docx 4

Table of Contents

1. Executive Summary 14 2. Introduction to Nigeria 17 2.1 Geography, Climate and Political Situation 17 2.1.1 Geography 17 2.1.2 Climate 18 2.1.3 Political Situation 23 2.2 Fast Population Growth 24 2.3 The Nigerian Economy 25 2.4 The Energy Sector - A Key Macroeconomic Factor 27 2.5 Regional Context 29

3. The Nigerian Energy Sector 30 3.1 Energy Resources 31 3.2 Primary Energy Supply 31 3.3 Energy Consumption 33 3.4 Electricity Generation 35 3.4.1 Prospective Generating Companies 37 3.4.2 Decentralised Diesel Generator Capacity 38 3.5 Electricity Consumption 38 3.6 Energy Prices 42 3.6.1 Fuel Prices 42 3.6.2 On-Grid Electricity Prices 43 3.6.3 Off-Grid Electricity Prices 44 3.7 Electrification 45 3.7.1 National and State Electrification Rates 45 3.7.2 Off-grid/Captive Generation Technologies 46 3.8 Transmission and Distribution Sector 48

4. Energy Market - Stakeholders and Roles 53 4.1 National Public Institutions 53 4.1.1 Energy Commission of Nigeria (ECN) 53 4.1.2 Federal Ministry of Environment (FMENV) 54 4.1.3 Federal Ministry of Lands Housing and Urban Development (FMLHUD) 55 4.1.4 Federal Ministry of Power (FMP) 55 4.1.5 Federal Ministry of Water Resources (FMWR) 55 4.1.6 National Power Training Institute of Nigeria (NAPTIN) 56 4.1.7 Nigerian Bulk Electricity Trading Plc (NBET) 56 4.1.8 Nigerian Electricity Regulatory Commission (NERC) 57 4.1.9 Nigerian National Petroleum Corporation (NNPC) 58 5

4.1.10 Presidential Task Force on Power 58 4.1.11 Rural Electrification Agency of Nigeria (REA) 58 4.1.12 Standards Organisation of Nigeria (SON) 59 4.2 Role and Functions of States and Local Governments 60 4.3 Market Players in Generation, Transmission and Distribution 60 4.4 Other Relevant Stakeholders 65

5. Energy Policy 66 5.1 Fuel Market Policy and Strategy 66 5.2 Electricity Market Policy and Strategy 67 5.2.1 Introduction 67 5.2.2 Major Programmes and Initiatives, Policy Mix 68 5.3 Climate Change Policy and Strategy 69 5.4 Milestones in National Energy Policy and Laws 71 5.4.1 National Electric Power Policy (NEPP), 2001 71 5.4.2 National Energy Policy (NEP), 2003 71 5.4.3 National Economic Empowerment and Development Strategy (NEEDS), 2004 72 5.4.4 National Power Sector Reform Act (EPSRA), 2005 72 5.4.5 Renewable Electricity Policy Guidelines (REPG), 2006 73 5.4.6 Renewable Electricity Action Programme (REAP), 2006 74 5.4.7 National Biofuel Policy and Incentives (2007) 75 5.4.8 Roadmap for Power Sector Reform, 2010 and 2013 (Update) 76 5.4.9 Relevant Sections of Vision 20:2020, 2010 77 5.4.10 Renewable Energy Master Plan, 2005 and 2012 (Update) 79 5.4.11 National Renewable Energy and Energy Efficiency Policy (NREEEP), 2014 80 5.4.12 Multi-Year Tariff Order (MYTO) 81 5.4.13 Draft Rural Electrification Strategy and Implementation Plan (RESIP), 2014 81 5.5 Key Electricity Market Regulations 82 5.5.1 Regulations on the Procurement of Generation Capacities, 2014 82 5.5.2 Embedded Generation Regulations, 2012 82 5.5.3 Regulations for Independent Electricity Distribution Networks (IEDN) 83 5.5.4 Transmission, Distribution and Metering Codes 83 5.5.4.1 Grid Code 83 5.5.4.2 Distribution Code 84 5.5.4.3 Metering Code 85

6. On-grid Renewable Energy 86 6.1 A Market in its Infancy 86 6.1.1 The Potentials 86 6.1.2 Existing and Planned Renewable Energy Projects - Current Progress 93 6.2 Renewable Energy Stakeholders 95 6

6.2.1 Public Authorities 95 6.2.2 Key Players in Nigeria’s Emerging RE Market 96 6.3 Renewable Energy Regulations and Policies 101 6.4 Renewable Energy Support Mechanisms, existing and planned 104 6.5 From Project to Realisation: Renewable IPPs - The Process 106 6.5.1 NERC - Generation Licence 106 6.5.2 NBET - Power Purchase Agreement 107 6.5.3 Embedded Generation 108 6.5.4 Challenges 109 6.6 Conclusions: Strong Potential for Renewable Energy 109

7. Energy Efficiency 111 7.1 Energy Efficiency Market 111 7.1.1 Existing Energy Efficiency Projects 112 7.1.2 Planned Efficient Energy Projects 112 7.2 Energy Efficiency: Power Generation 114 7.2.1 Efficiency of On-Grid Generation, Transmission and Distribution 114 7.2.2 Genset-based Generation 114 7.3 Energy Efficiency: Consumption 115 7.4 Energy Efficiency Stakeholders 120 7.4.1 Public Authorities 120 7.4.2 Key Players in Energy Efficiency 121 7.4.3 International Organisations 122 7.5 Energy Efficiency Policy and Strategy targets 122 7.5.1 National Renewable Energy and Energy Efficiency Policy 122 7.5.2 Draft National Energy Efficiency Policy for Nigeria 123 7.5.3 Standards and Labelling 124 7.6 Energy Efficiency Support Mechanisms 125 7.6.1 Price Incentives 125 7.6.2 Tax Relief 125 7.6.3 Financing Mechanisms/Opportunities 126 7.7 Conclusions 126

8. Rural Electrification, Including Off-Grid Renewable Energy 128 8.1 Rural Electrification Market 128 8.1.1 Renewable Energy and Rural Electrification Potentials 130 8.1.2 Existing Rural Electrification Projects 131 8.1.3 Planned Rural Electrification Projects 133 8.2 Rural Electrification Stakeholders 134 8.2.1 Public Authorities and their Roles 134 8.2.2 Rural Electrification Market Players 135 7

8.3 Rural Electrification Policy and Strategy 136 8.3.1 Draft Rural Electrification Strategy and Implementation Plan (RESIP) 136 8.3.2 Tariffs 137 8.3.3 Further Policy Documents 137 8.4 Rural Electrification Support Mechanisms 138 8.4.1 Price Incentives - the Rural Electrification Fund 138 8.4.2 Other Support Programmes 140 8.4.2.1 Solar Sisters 140 8.4.2.2 The International Centre for Energy, Environment and Development (ICEED) 140 8.4.2.3 The Rural Energy Access Project (REAP) 140 8.4.2.4 Operation Light-Up Rural Nigeria 140 8.5 Conclusions 141

9. Recommendation 142 9.1 On-Grid Renewable Energy 142 9.2 Energy Efficiency 145 9.3 Rural Electrification 146

10. Bibliography 149

11. Links Used 152 8

List of Annexes

ANNEX 1 Annual Rainfall in Nigeria (2005 – 2009) TABLE 3 – 11 Developments in Fuel Prices and Fuel ANNEX 2 Investment Opportunities for Small Subsidies, 2006 – 2012 Hydro Power Development in Nigeria TABLE 3 – 12 Electrification Rates in Nigeria (UNIDO, 1980) TABLE 3 – 13 Distribution of Household by Type of ANNEX 3 SON Standards Electricity Supply in %, 2010 ANNEX 4 Additional Information TABLE 4 – 1 Nigerian Power Sector - Key Industry ANNEX 5 Addresses and Contacts of Relevant Participants [28] Stakeholders Interviewed for the Study TABLE 5 – 1 Embedded Generation - Licensing Definitions TABLE 6 – 1 Renewable Energy Potentials List of Tables TABLE 6 – 2 Residues estimate from agricultural crops, 2010 TABLE 2 – 1 Nigeria’s Geopolitical Zones with TABLE 6 – 3 NERC Licensees, Renewable Energy corresponding States and Land Mass TABLE 6 – 4 Hydropower Development by FMP, TABLE 2 – 2 Population Forecast for Nigeria up to 2014 [10] the Year 2035 TABLE 6 – 5 FMWR, Priority Projects to be TABLE 2 – 3 Nigeria Macroeconomic Indicators completed before 2015 [16] before and after Re-basing TABLE 6 – 6 Renewable Energy Stakeholders, Public TABLE 2 – 4 GDP at Current Basic Prices 2010 – 2013 Authorities (million US$, after re-basing) TABLE 6 – 7 REMP: Biomass and Wind Targets TABLE 2 – 5 Budget allocation for Power in Medium- TABLE 6 – 8 REMP: Solar and Hydropower Targets Term Expenditure Framework TABLE 6 – 9 REMP: Renewable Electricity Supply TABLE 3 – 1 Overview of Fossil Fuel Resources Projection in MW TABLE 3 – 2 Energy Balances (ktoe) [46] TABLE 6 – 10 NREEEP: Summary of Renewable TABLE 3 – 3 Energy Consumption by Source Electricity Targets (ktoe, 2012) [46] TABLE 6 – 11 MYTO II Feed-in Tariffs - Wholesale TABLE 3 – 4 Total Energy Consumption by Economic Contract Prices (N/MWh) Sector - Comparison with Peer Countries TABLE 7 – 1 Energy Efficiency and CO2 Indicators for in ktoe (2011) [46] Nigeria TABLE 3 – 5 Existing Nigerian Power Plant Fleet TABLE 7 – 2 Energy Intensity - A Peer-Group TABLE 3 – 6 Historical Progression for Electricity Comparison [68] Generation (2003 – 2009) TABLE 7 – 3 Energy Efficiency and Kitchen Cooling TABLE 3 – 7 Projected Electricity Generation by Appliances - A Comparison of Average Source (in MW) Annual Consumption TABLE 3 – 8 Electricity Consumption for 2001 and TABLE 7 – 4 Potential Areas of Energy Savings Across 2011 in (GWh) Industrial Sub-Sectors TABLE 3 – 9 Historical Progression for Energy TABLE 7 – 5 List of Additional Stakeholders Consumption (2003 – 2009) TABLE 8 – 1 Household Electrification Rate by TABLE 3 – 10 Comparison of Published Figures (MW) State in % 9

TABLE A – 1 Main Sources of Fuel for Cooking FIGURE 3 – 6 Projected Grid and Off-Grid TABLE A – 2 Electricity Production and Consumption Electricity Demand in TWh for 2001 and 2011 in GWh FIGURE 3 – 7 Off-Grid Electricity Prices TABLE A – 3 Generation Profile [31] FIGURE 3 – 8 Existing 330 kV Radial Grid, 2013 TABLE A – 4 Licensees of the NERC, January 2014 FIGURE 3 – 9 330 kV Transmission Grid for TABLE A – 5 NERC Licensees for Off-Grid Power Wheeling 10,000 MW, End of 201431 Generation FIGURE 3 – 10 330 kV Transmission Grid for TABLE A – 6 NERC Classification for DISCO Pricing Wheeling 16,000 MW, End of 201731 TABLE A – 7 Energy Consumption by Source FIGURE 3 – 11 The distribution companies (ktoe, 2011). markets [53] TABLE A – 8 MYTO II, Wholsale Generation Prices FIGURE 4 – 1 NBET, Transitional Market Trading Arrangement FIGURE 4 – 2 Structure of the Power Sector List of Figures Post-Privatisation FIGURE 4 – 3 The Transmission Company of Nigeria FIGURE 2 – 1 Map of Nigeria FIGURE 5 – 1 Overview on Principal FIGURE 2 – 2 Federal States of Nigeria Policies andLaws FIGURE 2 – 3 Climate Zones of Nigeria FIGURE 6 – 1 Location of Major Dams in Nigeria FIGURE 2 – 4 Climate Charts for Kano (BSh) [4] FIGURE 6 – 2 Solar Irradiation Levels, GHI FIGURE 2 – 5 Climate Charts for Minna (Aw) [4] FIGURE 6 – 3 3-D Wind Map of Nigeria in 80 m FIGURE 2 – 6 Climate Charts for Lagos (Am) [4] above Ground FIGURE 2 – 7 Population Density in Nigeria in 2006 FIGURE 6 – 4 Licencing Submission Process FIGURE 3 – 1 Historical Total Primary Energy FIGURE 8 – 1 Small Hydro Power Sites in Nigeria Supply (Mtoe) 1971 – 2011 [46] FIGURE 8 – 2 Nigerian Energy Support Programme FIGURE 3 – 2 Total Energy Consumption by (NESP) Economic Sector in 2012 (ktoe) [46] FIGURE 8 – 3 Transparent Selection of Projects FIGURE 3 – 3 Electricity Production (GWh) in FIGURE 8 – 4 Examples for Project Funding Nigeria and Peer Countries since 1981 FIGURE A – 1 Nigeria Electrical Energy Production FIGURE 3 – 4 Nigerian Electricity Consumption (in million kWh) (million kWh) FIGURE A – 2 Fuel Prices in Nigeria FIGURE 3 – 5 Electric Power Consumption in Nigeria and Peer Countries (kWh per capita) 10

List of Abbreviations

Acronym Definition ECN Energy Commission of Nigeria AADL Allied Atlantic Distilleries Ltd. ECOWAS Economic Community of AC Alternating Current West African States AFD Agence Française de Développement EE Energy Efficiency (French Development Agency) EEB Energy Efficiency in Buildings ANSEP Association of Nigerian Solar Energy EG Embedded generation Promoters EIA Energy Information Agency APC All Progressives Congress EIA Environmental Impact Assessment ARECON Association of Rural Electrification EIS Electrical Inspectorate Services Contractors of Nigeria (Department of FMP) ATC&C Aggregate Technical, Commercial ELPS Escravos Lagos Pipeline Systems and Collection EMAS Eco-Management and Audit Scheme BMZ Bundesministerium für wirtschaftliche EMIS Energy Management and Zusammenarbeit und Entwicklung Information Systems (German Federal Ministry for Eco- EMS Electricity Management nomic Cooperation and Development) Services Limited BP British Petroleum EPC Engineering, Procurement and BPE Bureau of Public Enterprise Construction BPP Bureau of Public Procurement EPIC Electrical Power Implementation CCGT Combined Cycle Gas Turbine Committee CCN Climate Change Network EPSR Electricity Power Sector Reform CCTV Closed Circuit Television EPSRA Electricity Power Sector Reform Act CDM Clean Development Mechanism ESIA Environmental and Social Impact CEO Chief Executing Officer Assessment CFC Chlorofluorocarbon ESMAP Energy Sector Management CFL Compact Fluorescent Lamp Assistance Program CNG Compressed Natural Gas FCT Federal Capital Territory (Abuja) CREDC Community Research and FEC Federal Executive Council Development Centre FGN Federal Government of Nigeria CREN Council for Renewable Energy FHA Federal Housing Authority CSP Concentrated Solar Power FIPA Foreign Investment Forum Promotion DC Direct Current and Protection Agreement DFI Development Financing Institution FIT Feed-in Tariff DFID Department for International FMARD Federal Ministry of Agriculture and Development (international Rural Development organisation based in UK) FMBN Federal Mortgage Bank of Nigeria DISCO Distribution Company FMENV Federal Ministry of Environment DNI Direct Normal Irradiation FMLHUD Federal Ministry of Land, Housing DPR Detailed Project Report and Urban Development 11

FMP Federal Ministry of Power IEDN Independent Electricity FMST Federal Ministry of Science and Distribution Networks Technolog y IFC International Finance Corporation FMTI Federal Ministry of Industry, IMF International Monetary Fund Trade and Investment IOC International Oil Companies FMWR Federal Ministry of Water Resources IPP Independent Power Producer FOB Free On Board IRR Internal Rate of Return GACN Gas Aggregation Company of Nigeria ISO International Organisation for GBCN Green Building Council of Nigeria Standardization GDP Gross Domestic Product JICA Japan International GE General Electric Cooperation Agency GEF Global Environmental Fund KSPP Karshi Solar Panel Plant GENCO Generation Company LCOE Levelised Cost of Energy GHI Global Horizontal Irradiation LED Light-emitting Diode GIZ Deutsche Gesellschaft für Inter- LEED Leadership in Energy and nationale Zusammenarbeit GmbH Environmental Design (German Agency for International LEME List of Eligible Equipment Cooperation) and Materials GOPA-intec GOPA-International Energy LGA Local Government Area Consultants GmbH LHP Large Hydropower GTI Global Tilted Irradiation LNG Liquefied Natural Gas HCFC Hydrochlorofluorocarbon LOI Letter of Intent hh households LV Low Voltage hhK household kerosene MAN Manufacturers Association HV High Voltage of Nigeria HVAC Heating, Ventilation and Air MEPS Minimum Energy Conditioning Performance Standard IBRD International Bank for Reconstruction MFI Main Financial Institution and Development MIGA Multilateral Investment ICEED International Centre for Energy, Guarantee Agency Environment and Development MO Market Operator ICRC Infrastructure Concession and MRC Mortgage Re-financing Company Regulatory Commission MSW Municipal Solid Waste ICREEE Inter-Ministerial Committee on MYTO Multi Year Tariff Order Renewable Energy and Energy NACCIMA National Association of Chambers of Efficiency Commerce, Industry, Mines and IDA International Development Association Agriculture IEA International Energy Agency NAE Nigeria Alternative Energy IEC International Electrotechnical NAPTIN National Power Training Commission Institute of Nigeria 12

NARAP Nigerian Association of Refrigeration NIOB Nigerian Institute of Building and Air Conditioning Practitioners NIPC Nigerian Investment Promotion NASENI National Agency for Science and Commission Engineering Infrastructure NIPP National Integrated Power Project NASPA-CCN National Adaptation Strategy and NIS Nigerian Industrial Standard Plan of Action for Climate Change NIYAMCO Nigerian Yeast and Alcoholic in Nigeria Manufacturers NBET Nigerian Bulk Electricity Trading Plc NNPC Nigerian National Petroleum NCCS National Clean Cooking Scheme Corporation NCEAP Nigerian Clean Energy Access Program NOO National Ozone Office NCEEC National Centre for Energy Efficiency NORAD Norwegian Agency for and Conservation Development Cooperation NCERD National Centre for Energy NPC National Planning Commission Research and Development NPCC National Policy on Climate Change NCHRD National Centre for Hydropower NPREEE National Policy on Renewable Energy Research and Development and Energy Efficiency NCPRD National Centre for Petroleum NPTI National Power Training Institute Research and Development NPV Net Present Value NCS Nigerian Custom Service NREEEP National Renewable Energy and NDPHC Niger Delta Power Holding Company Energy Efficiency Policy NEEDS National Environmental, Economic NSE Nigerian Society for Engineers and Development Study NUMCO Nigerian Uranium Mining Company NEEP National Energy Efficiency Policy ONEM Operator of the Nigerian Electricity NEMP National Energy Master Plan Market NEP National Energy Policy OPEC Organisation of the Petroleum NEPA National Electric Power Authority Exporting Countries NEPP National Electric Power Policy OPIAMU Ozone Project Implementing and NERC Nigerian Electricity Regulatory Management Unit Commission PACP Presidential Action NESI Nigeria Electricity Supply Industry Committee on Power NESP Nigerian Energy Support Programme PCHN Power Holding Company of Nigeria NESREA National Environmental Standard and PDF Premium motor spirit Regulatory Agency PDP People’s Democratic Party NGC Nigerian Gas Company Limited PHCN Power Holding Company of Nigeria NGEP Nigerian German Energy Partnership PIB Petroleum Industry Bill NGN Nigerian Naira (Currency) PMS Premium Motor Spirit NIA Nigerian Institute of Architects PPA Power Purchasing Agreement NIAF Nigeria Infrastructure PPP Public Private Partnership Advisory Facility PSF Petroleum Support Fund NIHSA Nigerian Hydrological Services Agency PSRA Power Sector Reform Act 13

PTFP Presidential Task Force on Power TPES Total Primary Energy Supply PV Photovoltaic TSP Transmission Service Provider PVES Photovoltaic Energy Systems UK United Kingdom QIPP Qua Iboe IPP UN United Nations RE Renewable Energy UNDP United Nations REA Rural Electrification Agency Development Programme REAP Renewable Electricity UNESCO United Nations Educational, Scientific Action Programme and Cultural Organization REEP Renewable Energy and Energy UN-HABITAT United Nations Human Efficiency Program Settlement Programme REF Rural Electrification Fund UNHCR United Nations High REMP Renewable Energy Master Plan Commissioner for Refugees REP Rural Electrification Policy UNICAL University of Calabar REPG Renewable Electricity UNIDO United Nations International Policy Guidelines Development Organisation REPP Rural Electrification Policy Paper UNOPS United Nations REPS Renewable Energy Power Systems Office for Project Services RESIP Rural Electrification Strategy and US$ United States Dollar (Currency) Implementation Plan USA United States of America RET Renewable energy technologies USAID United States Agency for RRE Rural Electrification International Development RUWES Rural Women Energy Security WB World Bank SCADA Substation Control and WEM Wholesale Electricity Market Data Acquisition WIS Wind Information System SCCU Special Climate Change Unit SERC Sokoto Energy Research Centre Units of Measurement SHP Small Hydro Power SHS Solar Home Systems Unit Description SME Small- and Medium-Scale Enterprises Btu British thermal units SO System Operator GW Gigawatt SOE State-Owned Entity GWh Gigawatt hours SON Standards Organisation of Nigeria kV Kilovolt SONCAP SON Conformity Assessment kW Kilowatt Programme for Exports kWh Kilowatt hours SURE-P Subsidy Reinvestment and ML Million Litres Empowerment Programme MW Megawatt SWH Solar Water Heaters toe Tons of oil equivalent TCN Transmission Company of Nigeria TEM Transitional electricity market TIB The Infrastructure Bank, Nigeria 1. EXECUTIVE SUMMARY 14

The Nigerian energy sector has changed fundamentally dards Organisation of Nigeria (SON), the National in recent years. The Nigerian Government has made it Power Training Institute of Nigeria (NAPTIN) and clear that it seeks to deregulate and restructure the sector, state governments., and was set to support Nigeria in this with the goal being to completely unbundle the oil and regard. gas sector and to privatise the power sector. An indication of this approach was the withdrawal of a large per- The Study purpose centage of the subsidy on petrol at the pump in January The study seeks to outline the current status of the Nige- 2012, following on from the summer 2009 deregulation rian energy sector and to analyse which opportunities of diesel, in an effort to free up revenue for infrastructure this spells for the subsectors of on-grid renewable energy, investments. energy efficiency and off-grid rural electrification. This study provides national stakeholders and interna- While the government benefits from an upward trend in tional development partners with an overview and sup- the price of both oil and gas, the recent increase in the plementary baseline information in order to initiate and price of petrol and the rise in the cost of diesel are forc- facilitate the flow of private and public investments into ing consumers to rethink their habits. At the same time, the fields of renewable energy and energy efficiency. The industry, commerce and private households are suffering study is based on data gathered from existing databases from a severe shortfall in electricity generation. With and a series of interviews conducted in the country from the intention of incentivising private-sector investment January till October 2014. in the power sector, the government has privatised the generation and distribution sections in two waves. The Any such study is beset by the challenge of identifying proceeds are sensibly being dedicated to infrastructure reliable data. In the absence of a central electronic data expansion and, in the case of the second wave, a large part gathering unit in the power sector, and conflicting state- or the revenue has been earmarked for expansion of the ments made in the context of political agenda setting, country’s array of hydropower plants. data verification by comparison with at least one other data set has been difficult. However, up to the present date the process of privatisation has not been smooth and is not yet completed. At Moreover, sources are not always given in studies or pa- present it is impossible to say with any certainty whether pers that offer statistics, meaning citation of such sources the independent power producers who now form the is potentially problematic, especially if they are the only backbone of the Nigerian power sector will be commer- source. For the purposes of this study we have consulted cially viable operations. As part of the process, however, national and international data sets for each case. the government has started to encourage investment in both renewable energy and energy efficiency. Structure of the Study This study is elaborated under the framework of the Nige- Chapters 2 (Introduction to Nigeria) and 3 (The Nige- rian Energy Support Programme (NESP), financed by rian Energy Sector) give an introduction to the Nigeri- the German Federal Ministry for Economic Coopera- an context, the economy and current status of the energy tion and Development (BMZ) and administered by the sector. The latter chapter further deliberates on the cur- Deutsche Gesellschaft für Internationale Zusammenar- rent status of ongoing privatisation in the energy sector. beit (GIZ), in cooperation with the Federal Ministry of Chapter 4 (Energy Market - Stakeholders and Roles) ex- Power, the National Electricity Regulatory Commission plains the energy market, its stakeholders and their main (NERC), Rural Electrification Agency (REA), Stan- roles and functions. EXECUTIVE SUMMARY 15

Policies and strategies in the fuel and electricity market thus helping limit conflicts and further support the are outlined in Chapter 5 (Energy Policy). This chapter nation’s current electricity delivery system gives a fundamental overview of the laws, regulations, 5. to strengthen key stakeholders in order to ensure policies and programmes currently enacted or under dis- the delivery of the policy targets and to monitor cussion. and evaluate its results based on sound data and rel- Chapter 6 (On-Grid Renewable Energy) identifies the evant statistics records immense potential for private investment in renewables 6. to develop financial and investment instruments today and highlights the role this could play in signifi- including PPPs and promote the contribution of cantly boosting the national generating capacity. As re- private banks and IFIs gards energy efficiency, in Chapter 7 (Energy Efficiency) the study identifies high potential for energy efficiency Energy Efficiency gains. The energy efficiency market is a start-up market. As part of the process, government has started to draft mech- In Chapter 8 (Rural Electrification, Including Off-Grid anisms to encourage investment in energy efficiency Renewable Energy), the study explores the status of ru- through policy, strategies and support mechanisms. Nei- ral electrification in Nigeria today and the policies put ther is there any real experience yet nor is historical data in place to ameliorate the situation. Recommendations available. At the same time, it is now well understood and conclusions are proposed in Chapter 9 (Recommen- that energy efficiency is a source of energy. dation). The study’s main recommendations are: Main study findings and recommendations 1. for industry to focus primarily on energy efficiency financing facility designed to SMEs On-Grid Renewable Energy 2. for buildings (with a primary focus on public build- The case for on-grid renewables is strong. On one hand, ings) to develop and implement energy building power plants overcome geographical grid challenges and codes on the other hand, renewable energies offer fast-delivery 3. for household appliances to introduce energy effi- solutions and are cost-effective especially when replacing ciency standards as a first priority conventional generation capacity. At the same time, nu- 4. to create a greater government and public awareness merous areas of policy overlap and shortfall are pinpoint- in two areas; the use of efficient diesel generators ed precisely in what could be a key pioneering area. and in the introduction of standards and labels 5. to finalise, approve and operationalise the National The study’s main recommendations are: Energy Efficiency Policy (NEEP) including the mix 1. to focus efforts on developments in solar PV farms of regulatory policy and public financing mecha- and small hydropower plants (quick wins primary nisms in order to give to investors a clear basis for focus) decision making 2. to link biomass vast potential to rural electrifica- 6. to strengthen institutions in order to familiarise tion schemes them with the concepts of energy efficiency and 3. to pin-point the wind potential through detailed energy management and to familiarise them with mapping and the identification of development cor- the implementation of the NEEP including its ridors monitoring, reporting and enhancement based on 4. to align policies between governmental institutions, sound data and relevant statistics records EXECUTIVE SUMMARY 16

7. to develop financial and investment instruments household and microsystems water irrigation adapted to each energy efficiency market segment pumps (for example for industry/buildings: ‘incentivi- 2. for micro-hydro scheme to first evaluate the cost/ sation’ through savings from a better conversion benefits of run-of-the-river micro systems and of rate and for the private household segment: converting micro-dams into hydropower systems microfinance schemes; non-bank financial insti- 3. for wind, to encourage stand-alone microsystems tutions; bank consumer loans for appliances; leas- water irrigation pumps (backed up by instructions ing provisions; donor lending programmes) schemes on O&M) 4. for biomass, to assess first the prospects of small Off-Grid Rural Electrification biodigesters in line with the biomass resource po- The study determines that there is great potential for ru- tential ral electrification and that some of this could be account- 5. to finalise, approve and operationalise the Rural ed for from renewable sources. However, the government Electrification Strategy and Investment Plan will need to address the issue of sourcing of investments. (RESIP) incl. the mix of regulatory policy and pub- Potentially, this third subsector is the one where govern- lic financing mechanisms, in order to give to the ment and international donor agencies will need to join Rural Electrification Fund (REF) and IFIs a clear forces. basis for decision making 6. to strengthen institutions to ensure the delivery of The study’s main recommendations are: the RESIP targets including its monitoring and 1. for solar PV, to encourage the provision of solar evaluation based on sound data and relevant statis- packs (incl. panels and battery storage systems tics records backed up by instructions schemes on O&M) for 2. INTRODUCTION TO NIGERIA 17

2.1 Geography, Climate and and Niger in the north. Its Atlantic coast runs along the Political Situation Gulf of Guinea, in the south. The capital city has been Abuja since 1991. The capital was moved from Lagos to 2.1.1 Geography Abuja to symbolise equal access to political power for both parts of the country, the Muslim-dominated North The Federal Republic of Nigeria is a federal constitu- and the Christian South. At its widest, Nigeria measures tional republic comprising thirty-six states and the Fed-- 5 about- 1,200 km from east to west and about 1,050 km eral Capital Territory, Abuja. The country is located in from north to south. The country’s topography ranges West Africa and shares land borders with the Republic from lowlands along the coast and in the lower Niger of Benin in the west, Chad and Cameroon in the east, Valley to high plateaus in the north and mountains along

Figure 2-1: Map of Nigeria FIGURE 2 – 1: MAP OF NIGERIA

(Prepared by GOPA-International Energy(Prepared Consultants by GOPA GmbH)-International Energy Consultants GmbH)

The states of Nigeria are divided into six geopolitical zones. Table 2-1 shows the geopolitical zones, their corresponding states and land mass. Figure 2-2 shows the federal states and the Federal Capital Territory, Abuja.

Table 2-1: Nigeria's Geopolitical Zones with Corresponding States and Land Mass1

Geopolitical Zones States Land Area in km²

North-Central Abuja-FCT 7,607 Benue 30,800 Kogi 27,747 Kwara 35,705 Nasarawa 28,735 Niger 76,469 Plateau 27,147 North-East Adamawa 38,700 Bauchi 49,119 Borno 72,609

1 Adapted from the National Bureau of Statistics - Annual Abstract of Statistics (2011) [NBS; 2011]

20141121_Energy Sector Study_NESP Publication draft_v2.docx INTRODUCTION TO NIGERIA 18

the eastern border. The country is bifurcated by two main The states of Nigeria are divided into six geopolitical rivers, the Niger and the Benue, and the ecology varies zones. Table 2 – 1 shows the geopolitical zones, their cor- from tropical forest in the south through savannah to the responding states and land mass. Figure 2 2 shows the sub-Sahel zone in the far north. Figure 2 – 1 shows a map federal states and the Federal Capital Territory, Abuja. of Nigeria.

TABLE 2 – 1: NIGERIA’S GEOPOLITICAL ZONES WITH 2.1.2 Climate CORRESPONDING STATES AND LAND MASS1 Geopolitical Zones States Land Area in km² North-Central Abuja-FCT 7,607 Temperatures across the country are relatively high, with Benue 30,800 very narrow variation in seasonal and diurnal ranges, and Kogi 27,747 wide regional differences. There are two main seasons: Kwara 35,705 the wet season (usually April to October); and the dry Nasarawa 28,735 season (November till March). The dry season commenc- Niger 76,469 Plateau 27,147 es with Harmattan winds, a dry chilly spell that lasts till North-East Adamawa 38,700 February and is associated with lower temperatures and Bauchi 49,119 dust brought by the winds blowing from the Arabian Borno 72,609 Peninsula across the Sahara. The second half of the dry Gombe 17,100 season, namely February till March, is the hottest period Taraba 56,282 of the year (temperatures range from 332 – 138°C and Yobe 46,609 North-West Kaduna 42,481 are at their highest, as is aridity in the north). Given this Kano 20,280 climatological cycle and the size of the country, there is a Katsina 23,561 considerable variation in total annual rainfall across the Kebbi 36,985 country, both from south to north and, in some regions, Jigawa 23,287 from east to west. The maximum total precipitation is Sokoto 27,825 generally in the southeast, along the coastal area of Bon- Zamfara 37,931 South-East Abia 4,900 ny and east of Calabar, where mean annual rainfall is Anambra 4,865 more than 4,000 millimetres. A table of annual rainfall Ebonyi 6,400 by state is included in Annex 1. Enugu 7,534 Imo 5,288 Köppen-Geiger classified the world into climate zones. South-South Akwa-Ibom 6,900 Bayelsa 9,059 A world map of climate zones has been updated by [Peel, Cross-River 21,787 M. C., Finlayson, B. L., and McMahon, T. A; 2007]. Ac- Edo 19,187 cording to this world map, Nigeria has five climatic zones, Delta 17,108 between tropical rainforest climate in the south and dry Rivers 10,575 desert climate in the north (cf. Figure 2–3). South-West Ekiti 5,435 Lagos 3,671 Ogun 16,400 Ondo 15,820 Osun 9,026 Oyo 26,500 TOTAL km² 917,434

1 Adapted from the National Bureau of Statistics - Annual Abstract of Statistics (2011) [NBS; 2011]

- 7 -

INTRODUCTION TO NIGERIA 19

Figure 2-2: Federal States of Nigeria FIGURE 2 – 2: FEDERAL STATES OF NIGERIA

(Prepared by GOPA-International(Prepared Energy byConsultants GOPA GmbH)-International Energy Consultants GmbH)

2.1.2 Climate

Temperatures across the country are relatively high, with very narrow variation in seasonal and diurnal ranges, and wide regional differences. There are two main seasons: the wet season (usually April to October); and the dry season (November till March). The dry season commences with Harmattan winds, a dry chilly spell that lasts till February and is associated with lower temperatures and dust brought by the winds blowing from the Arabian Peninsula across the Sahara. The second half of the dry season, namely February till March, is the hottest period of the year (temperatures range from 33-38°C and are at their highest, as is aridity in the north). Given this climatological cycle and the size of the country, there is a considerable variation in total annual rainfall across the country, both from south to north and, in some regions, from east to west. The maximum total precipitation is generally in the southeast, along the coastal area of Bonny and east of Calabar, where mean annual rainfall is more than 4,000 millimetres. A table of annual rainfall by state is included in Annex 1.

Köppen-Geiger classified the world into climate zones. A world map of climate zones has been updated by [Peel, M. C., Finlayson, B. L., and McMahon, T. A; 2007]. According to this world map, Nigeria has five climatic zones, between tropical rainforest climate in the south and dry desert climate in the north (cf. Figure 2-3).

20141121_Energy Sector Study_NESP Publication draft_v2.docx - 8 -

INTRODUCTION TO NIGERIA 20

Figure 2-3: Climate Zones of Nigeria FIGURE 2 – 3: CLIMATE ZONES OF NIGERIA

(Prepared by GOPA-International(Prepared Energy by Consultants GOPA GmbH)-International Energy Consultants GmbH)

The following figures show examples of climate charts The followingfor different figures locations show examples across Nigeria, of climate namely charts for Kano, for different locations across Nigeria, namely for Kano, Minna and Lagos.Minna and Lagos.

20141121_Energy Sector Study_NESP Publication draft_v2.docx - 9 -

INTRODUCTION TO NIGERIA 21

Figure 2-4: FIGUREClimate 2 – 4: Charts for Kano (BSh) [4] CLIMATE CHARTS FOR KANO (BSH) [4]

Figure 2-5: Climate Charts for Minna (Aw) [4]

20141121_Energy Sector Study_NESP Publication draft_v2.docx - 9 -

Figure 2-4: Climate Charts for Kano (BSh) [4]

INTRODUCTION TO NIGERIA 22

FIGURE 2 – 5: Figure 2-5: CLIMATEClimate CHARTS Charts FOR MINNA for (AW) Minna [4] (Aw) [4]

20141121_Energy Sector Study_NESP Publication draft_v2.docx - 10 -

INTRODUCTION TO NIGERIA 23

Figure 2-6: FIGUREClimate 2 – 6: Charts for Lagos (Am) [4] CLIMATE CHARTS FOR LAGOS (AM) [4]

2.1.3 Political Situation 2.1.3 Political Situation The political scene has gone through a transformation After decades characterised by intermittent civilian ruleprocess and where military the once Peoplesleadership, Democratic Nigeria Party (PDP) has been ruled democraticallyAfter since decades 1999; characterised the political by intermittent system is civilian a presidential rule has relinquished system with much parliamentary political power and responsibility faces a strong distributed across a bicameraland militarysystem leadership,of a senate Nigeria and hasa house been ruled of represent demo- oppositionatives. party. In February 2013, the All Progressives cratically since 1999; the political system is a presiden- Congress (APC) arose as the result of a merger by Nige- The political scenetial system has with gone parliamentary through aresponsibility transformation distributed process ria’s wherefour biggest the oppositiononce Peoples parties. Democratic However, achieve Party- (PDP) has across a bicameral system of a senate and a house of rep- ments under the current administration, particularly the relinquished much political power and faces a strong opposition party. In February 2013, the All Progressives resentatives. stabilisation of the economy, the halving of the petrol Congress (APC) arose as the result of a merger by Nigeria’ssubsidy, four biggestthe introduction opposition of key parties.reforms inHowever, agriculture achievements under the current administration, particularly the stabilisation of the economy, the halving of the petrol subsidy, the introduction of key reforms in agriculture (e.g. privatisation of the fertilizer market), the rehabilitation of the main north-south railway line, and the power-sector privatisation process could be emphasised more prominently.

20141121_Energy Sector Study_NESP Publication draft_v2.docx - 11 -

2.2 Fast Population Growth

Nigeria is the most populous country in Africa and the eighth most populous country in the world, with a population of over 170 million; according to the United Nations, one in six Africans are Nigerians. It is a regional power, is listed among the “Next Eleven” economies, and is a member of the Commonwealth of Nations. The current population in Nigeria is shared asymmetrically among the states. In general the northern states are less populated than the southern states. There is only one state with more than 1,000 inhabitants per square kilometre, namely the megacity of Lagos with a population rate of 2,695 persons/km² and a total population of 9,113,605 in 2006 [NBS; 2011] (cf. Figure 2-7). [25], [60]

Figure 2-7: Population Density in Nigeria in 2006 INTRODUCTION TO NIGERIA 24

FIGURE 2 – 7: POPULATION DENSITY IN NIGERIA IN 2006

(Prepared by GOPA-International(Prepared Energy by Consultants GOPA GmbH)-International Energy Consultants GmbH)

The population growth rate is projected to be between 2.5 and 2.7% per annum in the next 20 years. The (e.g. privatisation of the fertilizer market), the rehabilita- power, is listed among the “Next Eleven” economies, population of Nigeria is therefore forecast to potentially grow to 310 million by 2035 (cf. Table 2-2). tion of the main north-south railway line, and the power- and is a member of the Commonwealth of Nations. The

sector privatisation process could be emphasised more current population in Nigeria is shared asymmetrically A total of 54.4% of the population were living below the international poverty line of US$1.25 per day in 2011 prominently. among the states. In general the northern states are less according to the World Bank [25], [60]. Moreover, 46% of the population live below the national poverty line.2 A populated than the southern states. There is only one state middle class has been fast emerging in recent years, especially in the cities. with more than 1,000 inhabitants per square kilometre, 2.2 F ast Population Growth namely the megacity of Lagos with a population rate of 2 The national poverty rate is the percentage of the population living below the national poverty line. National estimates are based on population-weighted subgroup estimates from household surveys. World2,695 Bank, persons/km² Global Poverty and a Workingtotal population Group. Data of 9,113,605 are based on World BankNigeria’s country is the poverty most assessmentspopulous countryand country in Africa Poverty and Reduction the inStrategies. 2006 [NBS; [66] 2011] (cf. Figure 2–7). [25], [60] eighth most populous country in the world, with a population of over 170 million; according to the United Na- The population growth rate is projected to be between 2.5 tions, one in six Africans are Nigerians. It is a regional and 2.7% per annum in the next 20 years. The population

20141121_Energy Sector Study_NESP Publication draft_v2.docx INTRODUCTION TO NIGERIA 25

of Nigeria is therefore forecast to potentially grow to 310 2.3 The Nigerian Economy million by 2035 (cf. Table 2 – 2). Nigeria’s Gross Domestic Product (GDP) was revised A total of 54.4% of the population were living below the in 2013. GDP is typically measured by reference to the international poverty line of US$1.25 per day in 2011 shape of the economy in a “base” year. Statisticians sam- according to the World Bank [25], [60]. Moreover, 46% ple businesses in different industries to see how fast they of the population live below the national poverty line.2 A are growing. The weight they give to each sector depends middle class has been fast emerging in recent years, espe- on its importance to the economy in the base year. Natu- cially in the cities. rally, these figures become less and less accurate over time. Nigeria’s old GDP data relied on an outdated snapshot of its economy in 1990. The new figures (which have 2010 as the base year) give due weight to fast-growing

TABLE 2 – 2: POPULATION FORECAST FOR NIGERIA UP TO THE YEAR 20353 Year Population (millions) Population Growth Rate (%) Median Age 1980 74 18.0 1985 84 2.6 17.5 1990 96 2.6 17.5 1995 108 2.5 17.7 2000 123 2.5 18.0 2005 140 2.6 18.0 2010 160 2.7 17.9 2015 184 2.8 17.7 2020 210 2.7 17.8 2025 240 2.7 18.1 2030 273 2.6 18.6 2035 310 2.5 19.2

TABLE 2 – 3: NIGERIA MACROECONOMIC INDICATORS BEFORE4 AND AFTER RE-BASING5 Year 1980* 1985 1990 1995 2000 2005 2010 2011 2012 GDP, current prices, US$ 60.6 26.0 31.5 36.9 46.4 112.2 341.37 393.63 448.21 billion GDP nominal growth, (%) -57.1 21.2 17.4 25.6 142.0 15.32 13.87 11.68 GDP per capita, current 885 331 348 356 390 824 prices, US$ Year 2013 GDP, current prices, US$ billion 500.58

GDP nominal growth, (%)

GDP per capita, current prices,

US$

* 1980 – 2005 figures: before rebasing (italics); figures for 2010 onwards after rebasing

2 The ationaln poverty rate is the percentage of the population living below the 3 Source: [UN; 2012] national poverty line. National estimates are based on population-weighted 4 Source: [IMF; Oct 2013] subgroup estimates from household surveys. World Bank, Global Poverty 5 Source: [NBS; GDP 2014] Working Group. Data are based on World Bank’s country poverty assessments and country Poverty Reduction Strategies. [66] INTRODUCTION TO NIGERIA 26

TABLE 2 – 4: GDP AT CURRENT BASIC PRICES 2010 – 2013 (US$ MILLION, AFTER RE-BASING)6 2010 2011 2012 2013 %, 2013 Agriculture 81,555.58 87,736.41 98,849.98 105,103.46 21.00% Trade 56,204.06 64,534.78 74,022.06 85,642.72 17.11%

Mining and quarrying (incl. crude oil)7 52,840.96 69,368.61 71,165.77 64,881.07 12.96% Information and communications 37,219.12 39,872.25 45,417.02 52,246.29 10.44% Manufacturing 22,366.51 28,296.53 34,930.14 45,208.27 9.03% Real estate 25,799.93 28,656.03 34,656.23 41,731.86 8.34% Professional, scientific and technical services 10,698.11 13,598.33 16,452.10 18,461.37 3.69% Construction 9,818.58 11,909.84 13,679.49 16,726.78 3.34% Financial and insurance 11,930.03 9,335.89 12,679.76 14,944.79 2.99% Public administration 12,490.44 15,445.24 13,812.79 14,905.65 2.98% Other services 5,625.14 6,256.06 10,528.00 12,645.44 2.53% Education 5,166.70 6,942.01 7,829.51 9,687.09 1.94% Transportation and storage 4,342.32 4,870.96 5,733.22 6,570.13 1.31% Accommodation and food services 1,536.00 1,771.10 2,207.64 4,052.45 0.81% Human health and social services 2,068.52 2,419.97 2,768.37 3,242.10 0.65% Electricity, gas ,steam and air conditioning supply 1,121.70 1,724.08 2,349.03 3,079.22 0.62% Arts, entertainment and recreation 193.34 513.95 731.73 896.82 0.18% Water supply, sewerage, waste management 267.45 282.89 298.84 441.20 0.09%

& remediation Administrative & support services 82.13 92.54 100.44 111.82 0.02% TOTAL 341,326.65 393,627.48 448,212.09 500,578.52 100.00% industries such as mobile telecoms and film-making that -0.35% for the oil and gas sector [IMF; Oct 2013]. High have sprung up since then. Moreover, Nigeria’s statisti- consumer demand was the main force behind non-oil cians have improved the gathering of data. For instance, sector growth. the old GDP figures were based solely on estimates of output. The new ones are now being reconciled with sep- The Nigerian economy still suffers from inadequate diver- arate surveys of spending and income. sification in the wake of first commercial oil production in the late 1950s and the collapse of the nascent manufac- As a consequence of the re-basing, the estimate for Nige- turing sector from the mid-1980s onwards; for example, ria’s GDP in 2013 was revised upward from 42.4 trillion since that time car assembly in Nigeria has ceased and the Naira to 80.2 trillion Naira ($500 billion), an 89% in- tire industry has collapsed. crease (cf. Table 2 – 3). The manufacturing base has not recovered, and has in fact The nominal GDP growth rate was 11.68% in 2012. Cur- suffered consistently from the impact of a lack of or spo- rently, no further outlook on GDP prices and growth af- radic availability of electricity, leading to factories closing ter re-basing is available. down given the uncompetitive cost to market of manufacturing using production based on diesel generator sets. Based on old data (i.e. before rebasing) it could be con- The World Bank in its current “Doing Business 2015” cluded that the non-oil sector drove the economy, with Report ranks Nigeria 170 out of 189 surveyed countries. average growth of about 10% in 2012, compared to It shows that Nigeria has improved five places compared

6 [NBS; GDP 2014] Revised and final GDP rebasing results by output approach, original data in NGN, exchange rate to 1 US$ = 160 NGN 7 Mining includes the quantity of crude petroleum produced (barrels) and natural gas in million cubic feet (mcf ) multiplied by the average price in domestic currency (equivalent of the price in dollar during the accounting period); see: National Bureau of Statistics INTRODUCTION TO NIGERIA 27

to the 2013 survey. In terms of ease of getting electricity, food to meet domestic demand, with the import bill for Nigeria is ranked 187, whereby the placing has deterio- wheat, rice, sugar and fish estimated at NGN 1 trillion rated compared to 2013. As an example, for a business (US$ 6.4 billion) per annum. Agriculture sources some to obtain a permanent electricity connection and supply 20% of GDP and employs about 70.0% of the work force. (getting electricity) for a standardised warehouse in La- [1] gos, nine steps are required in Nigeria, procedures that take 260 days and cost 478% of income per capita [69]. 2.4 The Energy Sector – However, once connected to the electricity provider, A Key Macroeconomic Factor Nigerian businesses’ biggest reported problem is the erratic power supply. About 83% of all managers surveyed The in part declining power sector is seen by many as the considered electricity outages to be a serious problem – key constraint on economic development. Investment in more than any other constraint. Firms of all sizes, in all the nationalised power sector had seriously diminished states and sectors, report average power outages equiv- by the early 1990s, with maintenance budgets greatly re- alent to eight hours per day. The average firm reported duced and no new capacity added. This statement applies that outages lost them money equivalent to more than 4 to both the national grid and the fleet of power stations. percent of sales. No peer country experiences such severe The gap between the latters’ nameplate capacity and ac- business losses related to the power supply. [WB; 2011] tual generation capacity widened constantly by the end of the century and is still the main barrier to stable and Table 2–4 below summarises GDP after rebasing at cur- reliable energy supplies to the Nigerian people (as further rent basic prices in million US$ per sector. The table is detailed in Chapter 3.4). Reforms in the electric power structured from the top by the highest percentage stated sector began with the National Electric Power Policy of in the last column. 2001, and this led the way for other reforms in the sector. The first incoming civilian government set about address- As can be seen, the top five drivers of the economy are ing the related issues, with the relevant insights being the following sectors: agriculture, trade, mining, infor- bundled in the 2005 National Power Sector Reform Act mation and communications, and manufacturing. These (EPSRA), which envisaged wide-ranging privatisation of top five sectors represent more than 70% of total GDP. the sector. During this period the Federal Government The main businesses are cement, light industry (alumini- incorporated the Niger Delta Power Holding Company um processing, paints), food and beverage packaging, as Limited (NDPHC) to serve as the legal vehicle to con- well as subsectors supplying the oil and gas industry. The tract for, hold, manage and operate the assets developed latter are increasingly indigenous operations. and built under the National Integrated Power Project These main drivers of economic growth do not require (NIPP) using private sector best practices. The NIPP (as large amounts of labour and thus fail to absorb the 1.8 further detailed in Chapter 4.3) was established as an in- million new annual entrants into the labour force. De- tegral part of Federal Government’s efforts to combat the spite the country’s agricultural potential, less than 50% power shortages in the country and to help boost capacity of the total farmland in Nigeria is cultivated, and agri- while advancing the privatisation process. [27] cultural productivity is low because of the lack of mod- ernisation. The country has about 70 million hectares The time line below shows the process that eventually cul- of farmland, primarily located in the Middle Belt, with minated in full privatisation of the generation and distri- areas in the sub-Sahel zone largely untouched to date ow- bution sectors: ing to a lack of irrigation capacity. Nigeria today imports INTRODUCTION TO NIGERIA 28

• 2001 – adoption of the National Electric Power than 8% of globally traded liquefied natural gas (LNG Policy from associated petroleum gas) in 2012, making Nigeria • 2005 – enactment of the Electric Power Sector the world’s fourth largest LNG exporter. [63] Nigeria is Reform Act (EPSRA) among the leading exporters of crude oil in the world, but • 2005 to 2007 – establishment of NERC; formation it imports about 85% of its refined petroleum products of PHCN; unbundling of the PHCN into 18 inde- due to low capacity utilisation of its oil refineries (around pendent companies 30%) and frequent refinery closures for maintenance. • 2008 to 2009 – publication of MYTO; the Power While the price of petrol at the pump is still subsidised, Sector Reform Committee was formed the diesel price was deregulated in 2009, which signifi- • 2010 to 2012 – the Nigeria Vision 20:2020 was cantly increased the cost of private electricity generation. launched; the PACP and the PTFP were established; the Roadmap for Power Sector Reform was released; The 2011 – 2013 fiscal strategy was set against the back- the Bulk Trader was established; drop of recovery from the global economic recession. The • 2012 – MYTO II was approved and released; crisis impacted the Nigerian economy mainly through • 2013 – full privatisation of the generation and dis- the international market for oil, the domestic capital tribution subsectors; the transmission subsector was market, FDI and remittances. The crisis in the Nigerian retained by Government but its management is cur- banking sector also resulted in a credit squeeze which rently under concession. made it difficult for banks to lend. In response to the crisis, the Government utilised the monetary and fiscal pol- The Nigerian economy centres on two primary products: icy tools at its disposal to encourage lending by deposit agricultural produce and mining and quarrying (i.e. the money banks and provide a fiscal stimulus to the econo- extraction of crude oil). According to the Organisation my. Over the 2011–2013 period and beyond, the Federal of the Petroleum Exporting Countries (OPEC), Nigeria Government has encouraged economic growth driven by has about 37 billion barrels of proven oil reserves and 187 active private sector participation. trillion cubic feet of proven natural gas reserves. With an average production of approx. 1,800,000 to 2,100,000 The power sector received a good portion of the funds al- barrels of oil per day, Nigeria ranked seventh largest located, as can be seen in Table 2–5. However it should be OPEC crude oil producer (based on secondary sources) noted that monies not spent will result in a lower budget between 2009 and 2013. [47] To date, there has been no allocation in the forthcoming years. This particularly ap- dedicated gas exploration, and the gas reserves consist plies to the power sector, for various main investments solely of associated petroleum gas. While the natural are pending approval and monies cannot be spent. gas reserves remain untapped, Nigeria exported more

TABLE 2 – 5: BUDGET ALLOCATION FOR POWER IN MEDIUM-TERM EXPENDITURE FRAMEWORK FEDERAL GOVERNMENT OF NIGERIA 2009 (BUDGET) 2010 (EXEC.) 2011 (PROJ.) 2012 (PROJ.) 2013 (PROJ.) Power (in bln Naira) 94.6 175.8 115.8 125.7 136.4 Power (in million USD) 591 1,099 724 786 853

Source: Medium-Term Expenditure Framework & Fiscal Strategy Paper, 2011-2013 [2] INTRODUCTION TO NIGERIA 29

2.5 Regional Context

Nigeria is West Africa’s powerhouse in terms of GDP (it represents 55% of West Africa’s GDP) and population; the GDP of Lagos, for example, is greater than that of Ghana as a whole. Nigeria’s revised Gross Domestic Product (GDP) for 2013 is now Naira 80.2 trillion (or US$ 500 billion). The new GDP figures are based on measuring Nigeria’s economic activity better than before. The new results were validated by a panel of local academic experts and by statisticians from the IMF, the World Bank, and the Africa Development Bank. As a result of the rebased GDP estimates, Nigeria is now ranked as the largest economy in Africa and the 26th largest economy in the world.

Indeed, Nigeria is likewise a driving force through its strategic and financial leadership in the Economic Com- munity of West African States (ECOWAS). Nigeria has been home to the ECOWAS headquarters since the organisation was founded in 1975. Conversely, Nigeria’s internal problems dog the sub-region, and commentators have suggested this has led to the political and economic integration of ECOWAS stalling. At the same time, Ni- geria provided the African Union contingent in Mali and is driving economic growth in the region, with Nigerian companies investing in other West African countries. 3. THE NIGERIAN ENERGY SECTOR 30

Prior to the enactment of the Electricity Power Sector The transmission lines and generators are interconnected Reform Act (EPSRA, 2005), the Federal Government in a common grid, with a single control centre at Oshog- of Nigeria (FGN) was responsible for policy formulation, bo (cf. Chapter 4.3). regulation, operation, and investment in the Nigerian power sector. Regulation of the sector was conducted As a second step, the FGN founded a regulator (NERC) by the Federal Ministry of Power (FMP) with opera- and a bulk trader (NBET), whereby the latter shall only tions handled by the National Electric Power Authority exist until such a time as the electricity market is fully pri- (NEPA), a wholly owned SOE responsible for power gen- vatised, after which the power purchase agreements it has eration, transmission and distribution. From 1972 to signed will be passed on to the distribution companies 2005, NEPA, the state-owned, vertically-integrated mo- (DISCOs). It also established the Operator of the Nigeri- nopoly, controlled about 94% of the generation capacity an Electricity Market (ONEM) which acts as wholesale and 100% of the transmission, system operation, distri- market and settlement operator. It therefore manages the bution and marketing sector of the industry. metering system among generation, transmission and distribution companies. To address the twin issues of NEPA’s poor operational and financial performance, the FGN amended the then As a third step, the FGN put all the ten new National prevailing laws (Electricity and NEPA Acts) in 1998 to Integrated Power Project (NIPP) power stations up for remove NEPA’s monopoly and encourage private sector sale (with a combined capacity of 5,455 MW they were participation. The National Electric Power Policy, 2001, owned by the Niger Delta Power Holding Co. (ND- specified the reform agenda, while EPSRA provided the PHC) and scheduled for completion in 2014). FGN has legal basis for the unbundling of NEPA, the formation assigned N50 billion to escrow accounts to cushion losses of successor companies and the privatisation of the latter. that the GENCOs may suffer (be it from power transmission or due to a shortfall in supplies) and has also ob- The first step in the process was to restructure the NEPA tained a partial risk guarantee from the World Bank to to form the Power Holding Company of Nigeria (PHCN) the same end. The Nigerian Bulk Electricity Trading Plc founded in 2007, which existed until September 2013. (NBET) manages buying the electricity from the GEN- PHCN acted as the state-owned agency responsible for COs and selling it to the DISCOs in the interim. [Afri- generating, transmitting and distributing electricity for can Development Fund] the entire country of Nigeria while FGN sought to sell off much of the state-owned stake in the electricity services These three steps cover the unbundling of PHCN and are industry, retaining the transmission grid as a public enti- classified as the phase prior to the transitional electricity. As a first step the government-owned generating com- ty market (pre-TEM) being set up. Interim market rules panies (GENCOs) were put up for sale in two forms: The have been introduced until TEM becomes established, thermal power stations were to be sold outright and the according to which the GENCOs bill ONEM. ONEM hydropower stations were concessioned. Moreover, dis- as market operator sets the financing required for the tribution was unbundled into 11 successor distribution three arms of the market on the basis of the Multi-Year companies (Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Tariff Order 2 (MYTO II). The objectives of the rules Kaduna, Kano, Port Harcourt, and Yola). FGN retained are to establish a framework to govern trading arrange- control of the transmission and system operation under ments during the interim period when power purchase Transmission Company of Nigeria (TCN), which has a agreements (PPAs) between the privatised generation systems operator division and a market operator division. companies and NBET and vesting contracts between THE NIGERIAN ENERGY SECTOR 31

NBET and the privatised PHCN successor distribution To date, Nigeria has tended to rely on its fossil fuel re- companies has not yet become effective. TEM will first sources. At the same time, as regards electricity it has also, be declared open once the conditions are deemed to be in since the late 1960s, focused on establishing hydropow- place for the market to run by the private sector. This had er plants in order to exploit the great potential available. not yet been forthcoming when this report went to press. Moreover, the country possesses strong potentials for renewable energy as further described in Chapter 6 - On- 3.1 Energy Resources Grid Renewable Energy.

Nigeria is Africa’s largest oil producer and in 2012 was 3.2 Primary Energy Supply the world’s fourth largest exporter of liquid natural gas (LNG from associated petroleum gas). That said, these re- According to statistics from the International Energy sources are not fully tapped. Nigeria’s oil production is at Agency, in 2011total Nigerian primary energy supply was present impeded by the challenges of oil theft and supply 118,325 ktoe (excluding the electricity trade). The share disruptions caused by pipelines being sabotaged or fail- of biofuels and waste was 82.2%, oil 10.6%, natural gas ing. The gas sector is restricted by the ongoing shortfall 6.8%, and hydropower 0.4%. in infrastructure to monetise gas that is presently flared.8 Moreover, there are strong coal seams in at least two A total of 8,222 ktoe of oil products was imported, while states that have yet to be mined on a large scale, although 146,439 ktoe was exported. The latter can be subdivided plans are already afoot in Kogi and Enugu states. as follows: crude oil totalled 123,944 ktoe; oil products

TABLE 3 – 1: OVERVIEW OF FOSSIL FUEL RESOURCES9 Oil Gas Coal (total recoverable) Reserves 37.2 billion barrels (2012) 5.2 (trillion cubic metres) (2012) 209.4 (million short tons) (2008) Production 2417 (thousand barrels per day) 43 (billion cubic metres) n/a Years of extraction remaining 40.4 (2011) 77.9 (2011) n/a

TABLE 3 – 2: ENERGY BALANCES (KTOE) [46] Geo- Biofu- Coal and Oil Natural thermal, els and Elec- peat Crude oil products Gas Hydro solar etc. waste tricity Heat Total Production 20 129,955 0 29,211 486 0 97,255 0 0 256,927 Imports 0 0 8,222 0 0 0 0 0 0 8,222 Exports 0 -123,944 -1,312 -21,184 0 0 0 0 0 -146,440 International 0 0 -726 0 0 0 0 0 0 -726

marine bunkers International 0 0 -194 0 0 0 0 0 0 -194

aviation bunkers Stock changes 0 0 535 0 0 0 0 0 0 535 TPES 20 6,011 6,525 8,027 486 0 97,255 0 0 118,324 TPES (%) 0.02% 5.08% 5.51% 6.78% 0.41% 0.00% 82.19% 0.00% 0.00% 100.00%

8 Efforts are being made to promote foreign direct investment in the domestic gas infrastructure. One project of note in this regard is that being prepared in Delta State, the Delta Gas City in Ogidigben, Warri-South Local Council Area of Delta State. [17], [64] 9 Source: [BP; 2013] - 19 -

Geo- Coal and Crude Oil Natural thermal, Biofuels Elec- peat oil products Gas Hydro solar etc. and waste tricity Heat Total

International 0 0 -726 0 0 0 0 0 0 -726 marine bunkers International 0 0 -194 0 0 0 0 0 0 -194 aviation bunkers Stock changes 0 0 535 0 0 0 0 0 0 535 TPES 20 6,011 6,525 8,027 486 0 97,255 0 0 118,324

TPES (%) 0.02% 5.08% 5.51% 6.78% 0.41% 0.00% 82.19% 0.00% 0.00% 100.00%

A total of 8,222 ktoe of oil products was imported, while 146,439 ktoe was exported. The latter can be subdivided as follows: crude oil totalled 123,944 ktoe; oil products accounted for 1,312 ktoe and natural gas for 21,184 ktoe. It bears noting that despite being a leading oil and liquid natural gas producer, Nigeria paradoxically imports the fossilfuel products it currently uses.

Irrespective of the strong fossil fuel resources, the majority of the energy consumption relies on biofuel and waste. The primary biofuel source used is firewood.

As can be seen from the chart below, since the 1970s the reliance on biofuels and waste has risen dramatically in absolute terms, while that of oil and natural gas has remained fairly constant, despite the increase in the extractive industries. Presumably this can be attributed to the cost of oil and naturalTHE gasNIGERIAN to the consumer, ENERGY the SECTOR lack of local32 refining facilities, and the absence of a pronounced infrastructure for domestic gas utilisation.

FIGURE 3 – 1: FigureHISTORICAL 3-1: TOTALHistorical PRIMARY ENERGY Total Primary SUPPLY (MTOE) Energy 1971 Supply – 2011 (Mtoe) [46] 1971-2011 [46]

accounted for 1,312 ktoe and natural gas for 21,184 ktoe. As can be seen from the chart below, since the 1970s the It bears noting that despite being a leading oil and liquid reliance on biofuels and waste has risen dramatically in natural gas producer, Nigeria paradoxically imports the absolute terms, while that of oil and natural gas has re- fossilfuel products it currently uses. mained fairly constant, despite the increase in the extractive industries. Presumably this can be attributed to the Irrespective of the strong fossil fuel resources, the majori- cost of oil and natural gas to the consumer, the lack of ty of the energy consumption relies on biofuel and waste. local refining facilities, and the absence of a pronounced The primary biofuel source used is firewood. infrastructure for domestic gas utilisation.

20141121_Energy Sector Study_NESP Publication draft_v2.docx THE NIGERIAN ENERGY SECTOR 33 - 20 -

3.3 Energy Consumption Figure 3-2: FIGURETotal Energy3 – 2: ConsumptionTOTAL ENERGY by Economic CONSUMPTION Sector in 2012 (ktoe) BY [46]

ECONOMIC SECTOR IN 2012 (KTOE) [46] Around 82% of Nigeria’s consumed energy, with the annual figure being 94,682 ktoe, comes from biofuels and waste. Approximately 11% stems from conventional energy sources, much of it reimported oil products. The share of electricity in final energy consumption is almost marginal at less than 2%. The use of biofuels is the single largest factor accounting for the change in the country’s vegetation cover and the increase in desertification.10 The rate of fuel wood consumption far exceeds the replen- ishing rate, thus aggravating the desertification problem. Moreover, the problem will be compounded as the rural population increases in line with the forecast rate of 2.5% Table 3-3: Energy Consumption by Source (ktoe, 2012) [46] TABLE 3 – 3: p.a. ENERGY CONSUMPTION BY SOURCETotal Primary (KTOE,Energy Supply 2012) Total [46] Energy Consumption Energy source Total Primary TotalNigeria Energy Coal 30 30 Energy Supply Consumption Excursus: Annual fuel wood Crude oil 4,825 0 consumption per person: Oil productsEnergy source Nigeria7,640 11,860 Natural gas 12,613 3,099 Coal 30 30 Given a population of 170 million, primary energyNuclear 0 0 Hydro Crude oil 4,825 487 0 0 consumption translates into 6,650 kWh per person;Geothermal, Oil solar, products etc. 7,640 0 11,860 0 Biofuels and waste 108,142 99,305 with a cubic metre of wood sourcing 2,600 kWh,Electricity Natural gas 12,613 0 3,099 2,164 per capita consumption of fuel wood is 2.5 m³. GivTotal- Nuclear 0 133,737 0 116,458 Population, 2012 168,800,000 168,800,000 en, moreover, that about 69.8% of Nigerian populatoe- per capitaHydro 487 0.792 0 0.690 Geothermal, 0 0 tion depends onfuel wood for domestic and cottageA peer-groupsolar, comparison etc. (cf. Table 3-4) also reveals that in percentage terms energy consumption in Nigeria is skewed firmly towards the residential sector, and also illustrates the transportation infrastructure shortfall. It also industry purposes, those using fuel wood for energyindirectly highlightsBiofuels the andproblems facing Nigerian industry108,142, as residential energy consumption99,305 outstrips that for industry by wastea factor of almost nine. Given the substantial proportion of the population that lives in rural areas, the purposes are consuming about 3.3 m³ of wood a year.conclusion can only be that not only electricity generation to drive industrialisation is necessary, but in equal measure Electricity 0 2,164 The situation is compounded by the predominant userural electrification is a policy imperative. Total 133,737 116,458 of inefficient cooking methods, based largely on open Population, 2012 168,800,000 168,800,000

fire with obviously low thermal efficiency and associ20141121_Energy- Sectortoe Study_NESP per capita Publication draft_v2.docx 0.792 0.690 ated smoke related ailments, especially among women and children. in Nigeria, followed by industrial use, whereby the latter At the same time, policymakers face an additional dif- amount is not great, at approx. 8.7%, followed by the rap- ficulty: The need to find alternative sources of fuel -oth idly expanding transport sector. As indicated above, the er than firewood will likewise rise, leading either to lion’s share of residential usage is for cooking purposes, increased urbanisation and migration from north to as only thus can the predominant proportion of biofu- south as rural populations vacate areas where there are els and waste be explained. Moreover, oil products used no longer ready sources of combustible materials and the for domestic purposes are minor compared to the level distance to diesel or other fuel depots is great. for transport, suggesting that the former utilisation of oil As shows Figure 3–2, with a share of 78%, the residential products is presumably attributable to diesel for generat- sector accounts for most of the final energy consumption ing purposes.

10 The pprovedA National Forest Policy of 2006 states that between 1978 and 1995, there was a decrease in natural forests from 23,429,100 ha. to 15,097,900 ha. (25.7% to 16.0%), with a decrease in shrub/grassland from 13,441,200 ha. to 11,774,300 ha. (14.8% to 12.9%), while the increase in agricultural land use was from 50,293,500 ha. to 58,497,700 ha. (55.3% to 64.4%) THE NIGERIAN ENERGY SECTOR 34

TABLE 3 – 4: TOTAL ENERGY CONSUMPTION BY ECONOMIC SECTOR - COMPARISON WITH PEER COUNTRIES IN KTOE (2011) [46] Nigeria Bangladesh Brazil Indonesia South Africa Total 198,247 37,152 262,412 182,367 94,139 this includes: • Industry 11,398 4,293 82,808 4,488 25,566 • Transport 8,189 2,981 74,179 39,177 17,591 • Residential 87,246 12,457 23,246 57,095 15,323

TABLE 3 – 5: EXISTING NIGERIAN POWER PLANT FLEET Installed Average Available Location Year Completed Capacity in MW Generating Capacity in 20111 Former PHCN Thermal Power Generating Companies Ughelli Power Plc Delta State 1966–1990 972 225 Geregu Power Plc Kogi State 2007 414 269.59 Afam Power Plc consisting of Rivers State 1982–2002 776 57.62 Afam I to V power stations Sapele Power Plc Delta State 1978–1981 1,020 224.98 Egbin Power Plc Lagos State 1985–1986 1,320 954.33 Concessioned Hydro Power Generating Companies Kainji Power Plc Niger State 1968 760 258.39 Jebba Power plant Kwara State 1985 578 388.21 Shiroro Power Plc Niger State 1990 600 372.49 NIPP Thermal Power Generating Companies12 Alaoji Generation Company Nigeria Ltd Abia State 2012–2015 1,131 225 Benin Generation Company Ltd Benin State 2012–2013 508 225 (Ihovbor) Calabar Generation Company Ltd Cross River State 2014 634 0 (under construction) Egbema Generation Company Ltd Imo State 2012–2013 381 0 (under construction) Gbarain Generation Company Ltd Bayelsa State 2014 254 0 (under construction) Geregu Generation Company Ltd Kogi State 2012 434 434 Ogorode Generation Company Ltd Delta State 2012 508 450 (Sapele) Olorunsogo Generation Company Ltd Ogun State 2012 754 450 Omoku Generation Company Ltd Rivers State 2013 265 0 (under construction) Omotosho Generation Company Ltd Ondo State 2012 513 450 Independent Power Projects AES barge Lagos State 2001 224 195.60 Afam VI Rivers State 2009 642 489.97 Ibom Power Akwa Ibom State 2009 140 91.15 Okpai Power Delta State 2005 480 402.80 Total 13,308 6,164.13

12 [26], Completion Status of NDPHC Generation Companies, NDPHC Sep. 2013

THE NIGERIAN ENERGY SECTOR 35

A comparison shows that energy consumption per capita is skewed firmly towards the residential sector, and also is 0.690 toe, which is almost equal to the figure in Indo- illustrates the transportation infrastructure shortfall. It nesia and far higher than that in Bangladesh, but less than also indirectly highlights the problems facing Nigerian Brazil and the African benchmark South Africa. In the industry, as residential energy consumption outstrips that remainder of this study, these countries will be treated as for industry by a factor of almost nine. Given the sub- peers. The same comparison reveals that in absolute and stantial proportion of the population that lives in rural in percentage terms the reliance on biofuels and waste is areas, the conclusion can only be that not only electricity highest in Nigeria by far. Unlike the peers, Nigeria has by generation to drive industrialisation is necessary, but in far the lowest electricity consumption. A table of peer equal measure rural electrification is a policy imperative. comparison has been attached hereto as Annex 4 (cf. Table A–7). 3.4 Electricity Generation

Figure 3–2 and Table 3–3 below show the Final Energy According to NERC, the total licenced on-grid genera- Consumption for Nigeria and the Total Primary Energy tion capacity in Nigeria was 19,407 MW in 2014. Of this Supply (TPES). figure, 13,308 MW installed capacity is attributable to the main power plant fleet (see Table 3–5), the remain- A peer-group comparison (cf. Table 3–4) also reveals der has not yet been build or is under development. De- that in percentage terms energy consumption in Nigeria spite all efforts, the available generating capacity was just

TABLE 3 – 6: HISTORICAL PROGRESSION FOR ELECTRICITY GENERATION (2003 – 2009)13

No. Items 2003 2004 2005 2006 2007 2008 2009 1 Electricity generation (billion kWh) 22.03 23.9 24.22 23.8 23.3 21.27 20.8

2 Energy consumption per capita (kgoe/capita) 151.3 125.5 132.6 87.1 81.4 80.8 83.1 3 Electricity consumption per capita (kWh/capita) 174.6 176.4 181.4 167.6 161.2 142.9 135.2 4 GDP per capita (US$/capita) 620.7 658.0 826.3 1,030.3 1,223.5 1,286.3 1,106.8 5 Energy intensity (kgoe/US$) 0.244 0.191 0.161 0.085 0.067 0.063 0.075 6 GDP growth rate (%) 9.6 6.6 6.5 6 6.5 6.0 6.7

TABLE 3 – 7: PROJECTED ELECTRICITY GENERATION BY SOURCE (IN MW)14 2009 (Base Year) 2020 2025 2030 Coal 0 12,121.79 14,011.27 20,398.63 Electricity imports 0 0 0 67,737.00 Gas 3,803.00 49,996.47 120,512.45 164,306.85 Hydro 1,930.00 12,132.00 12,132.00 12,132.00 Nuclear 20 7199.99 7,199.99 7,199.99 Small hydro 0 759.85 1,660.05 3,502.10 Solar 0 6,417.27 14,969.94 39737.50 Wind 0 41.00 47.00 54.00 Biomass 0 30.00 65.00 100.00 Supply 5,746.00 88,698.37 171,597.69 315,158.07

13 Source: CBN (2005–2010), NCC Osogbo (2009) 14 [ECN; 2013] pp. 7; assumes 13% annual economic growth) THE NIGERIAN ENERGY SECTOR 36

above 6,100 MW in 2011. The highest peak generated can be seen from the Table 3–7 below, compared to the ever in Nigeria was 4,517.6 MW on December 23, 2012 2009 baseline, the rate or increase in generation capaci- and transmission losses are between 8 and 10%. ty as assumed is necessary to keep pace with population By comparison, off-grid licences cover a production ca- growth and the concomitant need for economic growth pacity of 305 MW and embedded generation is 49 MW is substantial in light of current levels. However, the pro- (cf. Table A–5 - NERC Licensees for Off-Grid Power jections are consistent with the World Bank’s forecasts as Generation in Annex 4). further detailed below. Unfortunately, it is not meaningful to calculate an exact The existing fleet of power plants is a mix of plants built figure for electricity generation in Nigeria at present, as before the 1990s and those built (or being built) since- 24 the- level changes daily and there are a great many sourc- the mid-1990s, as shown in Table 3–5. The older ther- es involved. The National Bureau of Statistics states that mal power stations suffer considerably from poor mainte- the only source of statistics is essentially PHCN (prior to nance as can be seen from the table. its unbundling). It comments in this regard: “The PHCN Table 3–6 below shows that data used as basis for the Re- does not have adequate electronic data processing facili- overview onnewable electricity Energy generation Master Plan (asprovided further detailedby the Worldin Chap -Bank.ties to enable it computerise the production and storage of ter 5.4.10) correlates electricity generation historically its administrative statistics. Electricity production and Figure 3-3with shows consumption, that Nigeria whereby performed the tracking worst not surprisingly of the four consumptioncountries in statistics question, are, therefore,generating not onlyavailable just in over ma- half the volume Bangladeshshows that as achieved the population in 2011. grows, A detailedso consumption historical chine-readablecomparison, form.…. as shows, “ [23] 15is Oneilluminating. of the great opportuOver a- 20 year period, thereper capitawas a drops slight as increaseno additional in mainline electricity generating generat- nitiescapacity afforded in Nigeria Nigeria (attributableby the privatisation to theof the investments power set aside for ingthe capacityNIPP butcame not on streamactually in therealise periodd by in question.2011). By sector contrast, is that the with three a private peers sector appreciably this difficulty ramped will atup their generatingThe capacities table shows by factorsclearly that in excessGDP growthof 6 for was Bangladesh independ- someand bypoint a factor be overcome, of as muchas private as generating30 for Indonesia. companies ent of a rise in electricity generation, meaning that it was will wish to invoice for what they have generated and dis- Figure 3-3:driven by factorsElectricity not relying Production on power. (GWh) Consequently, in Nigeria as tributingand Peer companies Countries will since wish to1981 bill for16 it.

FIGURE 3 – 3: ELECTRICITY PRODUCTION (GWH) IN NIGERIA AND PEER COUNTRIES SINCE 198116

15 Current Methods of Data Storage and Dissemination 16 See: World Bank The comparison also reveals Nigeria’s Achilles’ heel: A good three-quarters of electricity is consumed by the residential and office sector rather than by industry, whereas residential use accounts for well under half the total consumption in the other countries (cf. Chapter 3.3). In the absence of investment in generating capacity over the period from 1991 to 2011, Nigerian industry has simply not been able to grow at the pace seen elsewhere. Going forward, the Renewable Energy Master Plan assumes that the energy generation backbone will remain gas, but the percentage accounted for by coal-fired power plants will further increase. At the same time, while wind will play only a marginal role, solar power production will outstrip all sources other than gas and thus become the second key pillar of energy delivery in the nation. The structure that could make this possible will be examined in Chapter 6 - On- Grid Renewable Energy below.

According to the Vision 20:20 and the draft Rural Electrification Strategy, the government plans to achieve an overall electrification rate of 75% by 2025. The estimated transmission capacity is expected to rise from around 5,000 MW in 2013 to 16,000 MW in 2017, thereby topping the installed generation capacity.

3.4.1 Prospective Generating Companies

Two major new gas thermal power plants are being planned at present. The one is the Azura Edo IPP project 459 MW open-cycle gas power plant located in the vicinity of Benin City, in Edo State, Nigeria (Azura). The other is the Qua Iboe IPP (QIPP) 533 MW combined-cycle gas-turbine (CCGT) power plant to be constructed in Ibeno, Akwa Ibom State.

16 See: World Bank

20141121_Energy Sector Study_NESP Publication draft_v2.docx THE NIGERIAN ENERGY SECTOR 37

Quantifying how much diesel and petrol are used for off- residential and office sector rather than by industry, grid generation is very difficult, whereas pinpointing the whereas residential use accounts for well under half the output of gas turbines at any given point in time relies on total consumption in the other countries (cf. Chapter estimates as to gas supply constancy and turbine mainte- 3.3). In the absence of investment in generating capacity nance. over the period from 1991 to 2011, Nigerian industry has simply not been able to grow at the pace seen elsewhere. This does not alter the difficulties of computing off-grid Going forward, the Renewable Energy Master Plan as- power generation levels. The only direct method of doing sumes that the energy generation backbone will remain so would be to keep statistics on diesel generators sold, and gas, but the percentage accounted for by coal-fired power on the countless small petrol-fired generators. That said, plants will further increase. At the same time, while wind the World Bank assumes for its reference future scenario will play only a marginal role, solar power production that one-third of total off-grid generation is expected will outstrip all sources other than gas and thus become to be gas-based by 2035, while diesel will be the norm the second key pillar of energy delivery in the nation. The in more remote regions [WB; 2013 (Low-Carbon De- structure that could make this possible will be examined velopment Opportunities for Nigeria)]. By contrast, the in Chapter 6 - On-Grid Renewable Energy below. UN does not distinguish between on and off-grid in its key energy production statistics for Nigeria: According to the Vision 20:20 and the draft Rural Elec- trification Strategy, the government plans to achieve An indicative figure for 2011 electricity generation is an overall electrification rate of 75% by 2025. The 27,000 GWh as opposed to 15,463 GWh in 2001 (cf. estimated transmission capacity is expected to rise from Figure 3–3). Moreover, it also shows that Nigeria lagged around 5,000 MW in 2013 to 16,000 MW in 2017, far behind other African countries in terms of electricity thereby topping the installed generation capacity. generation and consumption. This latter remark is not without its consequences, as customarily the peer com- 3.4.1 Prospective Generating parisons rest on absolute figures which tend to mask the Companies real extent to which Nigeria lags behind. An example of this is the historical overview on electricity generation Two major new gas thermal power plants are being provided by the World Bank. planned at present. The one is the Azura Edo IPP project 459 MW open-cycle gas power plant located in the vicini- Figure 3–3 shows that Nigeria performed worst of the ty of Benin City, in Edo State, Nigeria (Azura). The other four countries in question, generating only just over half is the Qua Iboe IPP (QIPP) 533 MW combined-cycle the volume Bangladesh achieved in 2011. A detailed his- gas-turbine (CCGT) power plant to be constructed in torical comparison, as shows, is illuminating. Over a 20 Ibeno, Akwa Ibom State. year period, there was a slight increase in mainline generating capacity in Nigeria (attributable to the in- One major hydropower plant is now under develop- vestments set aside for the NIPP but not actually realised ment, the Zungeru 700 MW plant in Niger State. The by 2011). By contrast, the three peers appreciably ramped Gurara 30 MW hydropower plant in Kaduna State and up their generating capacities by factors in excess of 6 for the Kashimbilla 40 MW in Taraba State are two other Bangladesh and by a factor of as much as 30 for Indonesia. projects being prioritised by the FGN. The 3,050 MW The comparison also reveals Nigeria’s Achilles’ heel: A Mambilla hydropower plant project is currently being good three-quarters of electricity is consumed by the reviewed. THE NIGERIAN ENERGY SECTOR 38

In the field of utility-scale solar power projects, there is 3.5 Electricity Consumption an array of solar farms now with licenses or in the license pipeline. They include a 100 MW facility in Bauchi State, The available data on Nigeria for electricity consumption one of 120 MW in Katsina State, and various others in by sector reveals that – unlike energy consumption in Ekiti, Kaduna, and Nassarawa States. The Ministry of general, where transport plays a strong role – it is the res- Power has a 10 MW pilot wind plant in Katsina, which is idential sector that consumes by far the most. Likewise it scheduled for commissioning in the near future. is the residential sector where the increase over the ten- year period reviewed in Figure 3–4 is most pronounced. In September 2013 TCN disclosed the planned increase of generation capacities by phased inclusion of the NIPP The indicative figure for electricity consumption in 2011 Thermal Power Stations of the Niger Delta Power Hold- as given in Table 3–8 below and based on IEA figures ing Company (NDPHC) in the national grid. Between is 23,679 GWh. These figures do not account for the 2013 and 2017 a total of 16,000 MW (installed capacity) substantial losses in the system or for off-grid generation will be in operation and generating electricity of approx. during that period. The Presidential Task Force on Power 71,100 GWh/year to the end-user (DISCO). [29] regularly publishes the estimated peak demand as compared to the peak generation figure, whereby the former 3.4.2 Decentralised Diesel is regularly close to four times the latter. The only way Generator Capacity the shortfall could be made up is by relying on off-grid electricity generation, meaning diesel generating sets or According to a 2013 survey, approx. 80% of the Nigerians embedded plant. We have seen that the licensed volume use alternate source of electricity supply such as genera- of the latter is only 49 MW, cf. Table A–5 - NERC Licen- tors or solar inverters.17 Estimates suggest that as much sees for Off-Grid Power Generation in Annex 4. We will as 2.6 GW of decentralised diesel generator capacity is return to this below. currently installed in the country. Nigeria leads Africa as a generator importer, as none are produced locally, and is The figures reveal a sharp difference in consumption- be one of the highest importers worldwide, the total annual tween private households (residential) and the far lower import figure being N17.9 billion. Nearly every company, level for industry. In peer countries this relation is the or 85%, has its own diesel generator. In 2011, 60 million other way round (cf. Table A–2: Electricity Production power generator appliances were in operation or one per and Consumption for 2001 and 2011 in GWh in the An- every 2.5 members of the population. In this context, nex). This difference clearly underscores the reality of an Nigerian manufacturers, small scale businesses and underdeveloped industrial sector in Nigeria. It can be ex- families spend on average of N3.5 trillion per year to pected that with the development of the sector, electricity power their generating sets with diesel and petrol due consumption will increase significantly. to unstable supply of electricity. Among private households, the figure is N1.56 trillion ($13.35m) [8]. The price As intimated above, it is hard to judge electricity con- difference between businesses and households is from sumption in the Federal Republic of Nigeria in isolation N45 - N60/kWh for businesses compared to N160 per from electricity generation. The Nigerian electricity sup- litre Diesel fuel (approx. N16/kWh18, excluding mainte- ply system seems to hinge on a suppressed demand19 sce- nance costs) for households. nario. This means that the less is generated, the less can be consumed. Indeed, in the absence of hard data on the volume of electricity produced by diesel and petrol-driven

17 Opinion Polls 47: “Percent of Nigerians Experienced Poor Power Supply 19 “Suppressed demand” is a situation in which the energy services provided are in 2nd Quarter of 2013” [45] insufficient – due to poverty or lack of access to modern energy infrastructure – 18 1 litre of diesel fuel is equal to 10 kWh to meet the needs of stakeholders in terms of human development needs. - 26 -

THE NIGERIAN ENERGY SECTOR 39

19 FigureFIGURE 3-4: 3 – 4: Nigerian Electricity Consumption (million kWh) NIGERIAN ELECTRICITY CONSUMPTION (MILLION KWH)20

TheTABLE indicative 3 – 8: figure for electricity consumption in 2011 as given in Table 3-8 below and based on IEA figures is 21 23,679ELECTRICITY GWh. These CONSUMPTION figures FORdo not 2001 account AND 2011 for IN (GWH) the substantial losses in the system or for off-grid generation during 2001 2011 that period. The Presidential Task Force on Power regularly publishes the estimated peak demand as compared to Total production 15,463 27,034 the peakEnergy generation industry own usefigure, whereby the former is regularly close442 to four times the latter. The only774 way the shortfall couldLosses be made up is by relying on off-grid electricity generation,5,987 meaning diesel generating sets2,581 or embedded plant. We Finalhave consumption seen that the licensed volume of the latter is only 499,034 MW, cf. Table A- 5 - NERC23,679 Licensees for Off-Grid Power• Industry Generation in Annex 4. We will return to this below. 1,987 3,931 • Transport 0 0 • Residential 4,608 13,568 Table• Commercial 3-8: andElectricity public services Consumption for 2001 and 20112,439 in (GWh) 20 6,180

2001 2011 Total production 15,463 27,034 Energy industry own use 442 774 Losses 5,987 2,581 Final consumption 9,034 23,679 • Industry 1,987 3,931 • Transport 0 0 • Residential 4,608 13,568 • Commercial and public services 2,439 6,180

The figures reveal a sharp difference in consumption between private households (residential) and the far lower level for 20 industry.See UN database In peer countries this relation is the other way round (cf. Table A- 2: Electricity Production and Consumption 21 Source: [IEA; 2013]for 2001 and 2011 in GWh in the Annex). This difference clearly underscores the reality of an underdeveloped industrial sector in Nigeria. It can be expected that with the development of the sector, electricity consumption will increase significantly.

19 See UN database 20 Source: [IEA; 2013]

20141121_Energy Sector Study_NESP Publication draft_v2.docx - 27 -

As intimated above, it is hard to judge electricity consumption in the Federal Republic of Nigeria in isolation from electricity generation. The Nigerian electricity supply system seems to hinge on a suppressed demand21 scenario. This means that the less is generated, the less can be consumed. Indeed, in the absence of hard data on the volume of electricity produced by diesel and petrol-driven generating sets, it is difficult to gauge how much demand is covered by private mini off-grid solutions. The exact scale of diesel generation is hard to compute. While there is a 2007 MAN survey quantifying diesel generation in industry, it is out of date and notably was made before the elimination of the diesel subsidy that sent the price of that fuel source up and led to numerous companies no longer able to cover their power costs.

The IEA figures in Figure 3-5 show that the trend for electricity generation/consumption in Bangladesh over the 2001-2011 period is significantly unlike that for Nigeria. Generation rose by a factor of 2.6, and consumption by industry surged by a factor of 3.5, while residential consumption increased by less than a factor of two. This would suggest that there is clear link between electricity generation and manufacturing success. The conclusion would seem to be that in the absence of on-grid electricity, industry in Nigeria wasTHE not NIGERIAN able to resortENERGY to SECTORoff-grid sources40 in a manner that enabled a sustainable business model.

Figure 3-5: Electric Power Consumption in Nigeria and Peer Countries (kWh per capita)22 FIGURE 3 – 5: ELECTRIC POWER CONSUMPTION IN NIGERIA AND PEER COUNTRIES (KWH PER CAPITA)22

At the samegenerating time, sets, a closer it is difficult look at to consumption gauge how much in demandper capita At the terms same (for time, the a closer period look 2003 at consumption-2009) reveals in per capthat- it fell appreciablyis covered – see by Table private 3-9 mini. Two off-grid factors solutions. no doubt The pexactlayed ita a terms part (forhere, the namelyperiod 2003–2009) the population reveals increasethat it fell and the concomitantscale of dearth diesel generationof new generating is hard to compute.capacity Whilejoining there the fleetappreciably of power – see plants. Table 3–9. Two factors no doubt played is a 2007 MAN survey quantifying diesel generation in a part here, namely the population increase and the con- industry, it is out of date and notably was made before comitant dearth of new generating capacity joining the the elimination of the diesel subsidy that sent the price fleet of power plants. The projection of electricity gener- of that fuel source up and led to numerous companies no ation (cf. Chapter 3.4) is not consistent with the World longer able to cover their power costs. Bank’s forecasts for demand as shown in Figure 3–6 below. Whereas the REMP (Table 3–7) estimates a future The IEA figures in Figure 3–5 show that the trend for electricity supply of approximately 88,700 MW (relating

electricity generation/consumption in Bangladesh over to 777 TWh) for the year 2020, the World Bank’s esti- 21 “Suppressed demand” is a situation in which the energy services provided are insufficient – due to poverty or lack of access to modern energythe 2001infrastructure – 2011 period– to meet is significantlythe needs of stakeholders unlike that in for terms Ni- of matehuman is developmenta demand of needs. approx. 150–160 TWh for the same 22 Seegeria. World Generation Bank rose by a factor of 2.6, and consump- year (Figure 3–6). tion by industry surged by a factor of 3.5, while residential consumption increased by less than a factor of two. This Demand was estimated by Agusto & Co Consultants in would suggest that there is clear link between electricity September 2014 to be 12,800 MW and this figure is also generation and manufacturing success. The conclusion quoted by the FMP. [14] Agusto & Co suggests that de- would seem to be that in the absence of on-grid electricity, mand will rise to 41,133 MW and 88,282 MW by year- 20141121_Energy Sector Study_NESP Publication draft_v2.docx industry in Nigeria was not able to resort to off-grid sourc- end 2015 and 2020 respectively. The Renewable Energy es in a manner that enabled a sustainable business model. Master Plan, assuming 7% economic growth per year,

22 See World Bank - 28 - THE NIGERIAN ENERGY SECTOR 41

TABLE 3 – 9: Table 3-9:HISTORICAL PROGRESSIONHistorical Progression FOR ENERGY CONSUMPTIONfor Energy Consumption (2003–2009)23 (2003-2009)23 Items 2003 2004 2005 2006 2007 2008 2009 Items Energy consumption per capita (kgoe/capita) 151.32003125.5 2004132.6 200587.1 200681.4 200780.8 200883.1 2009 Energy Electricityconsumption consumption per capitaper capita (k (kWh/capita)goe/capita) 174.6151.3176.4 125.5181.4 132.6167.6 87.1161.2 81.4142.9 80.8135.2 83.1 Electricity consumption per capita (kWh/capita) 174.6 176.4 181.4 167.6 161.2 142.9 135.2 TABLE 3 – 10: COMPARISON OF PUBLISHED FIGURES (MW) 2010 2014 2015 2020

Agusto & Co., demand forecast -- 12,800 41,133 88,282 The projectionREMP, generation of electricity capacity generation (cf. Chapter 3.4--) is not consistent-- with the47,490 World Bank88,698’s forecasts for demandPTFP, as showngeneration in capacity Figure 3-6 below. Whereas the REMP-- (Table 8,6643-7) estimates a-- future electricity28,261 supply of approximatelyPTFP, distribution 88,700 capacity MW (relating to 777 TWh) for the-- year 2020,10,648 the World Bank’-- s estimate 32,774is a demand of approx.Tractebel 150-160 Engineering, TWh for demand the sameanalysis year (Figure 3-6). 4,825 -- -- 11,433

Figure 3-6:FIGURE 3 – 6: PProjectedROJECTED GRIDGrid AND and OFF- Off -Grid Electricity Demand in TWh24 GRID ELECTRICITY DEMAND IN TWH24

Source: Calculations based on FMP and Power Holding Company of Nigeria data and UN 2010 rural/urban population data (for off-grid D projections) listed in the chapter 3 references.

Demandprovides was estimateda demand figureby Agusto for 2020 & Co of 47,490Consultants MW or in of SeptemberTractebel 2014Engineering to be 12,800performed MW an andindependent this figure de -is also quoted88,698 by the MW FMP . These. [14] Agustofigures are& Coin contrast suggests to thatthe projecdemand- mand will analysis rise to in41,133 2007. MWThese and demand 88,282 projections MW by comyear- -end 2015 andtions 2020 issued respectively. by the Presidential The Renewable Task Force Energy (PTFP) Master esti- Plan,pared assumingwith the projections 7% economic for peak growth load pergive year figures, provides of a demandmating figure available for 2020 generating of 47,490 capacity MW to or grow of 88, from698 8,664 MW . aThese median figures of 4,825 are MW in contrast for 2010, to 11,433 the projections MW for 2020 issued by the PresidentialMW in 2013 Task to 28,261 Force MW(PTFP) in 2020. estimating Inconsistently, available be- generatingand 24,208 capacity MW for to 2030, grow whereby from the8,664 assumption MW in was 2013 to 28,261cause MW too in high, 2020. the Inconsistently,PTFP identified because estimated too capacity high , theof at PTFPleast 6.6% identified electricity estimated growth in capacitythe wake ofgrowth a phase in the distributiongrowth sector in the from distribution 10,648 sectorMW infrom 2013 10,648 to 32,774 MW in MW of in catching 2020. up the suppressed load (assumed at the time 2013 to 32,774 MW in 2020. to take until 2015). [PHCN; 2007] Table 3–10 summa- Tractebel Engineering performed an independent demand analysis in 2007. These demand projections compared rises the comparison. with the projections for peak load give figures of a median of 4,825 MW for 2010, 11,433 MW for 2020 and 24,208 MW for 2030, whereby the assumption was of at least 6.6% electricity growth in the wake of a phase of catching up the suppressed load (assumed at the time to take until 2015). [PHCN; 2007] Table 3-10 summarises the comparison. 23 Source: CBN (2005-2010), NCC Osogbo (2009) 24 See World Bank Table 3-10: Comparison of Published Figures (MW)

2010 2014 2015 2020 Agusto & Co., demand forecast -- 12,800 41,133 88,282

23 Source: CBN (2005-2010), NCC Osogbo (2009) 24 See World Bank

20141121_Energy Sector Study_NESP Publication draft_v2.docx THE NIGERIAN ENERGY SECTOR 42

Outages and Losses prices differing. In the USA, Canada, Great Britain and The World Bank reports that Nigerian businesses tend Japan the price for gas is determined on spot markets. In to suffer power outages of on average approximately 240 continental Europe the price of gas is determined by long- hours a month, and that this is the reason for nearly 7% term supply contracts with fixed prices. Newly emerging of lost sales. A recent study by the MAN reveals that in markets for natural gas are China and India, with the industrial clusters, on average between 7.8 and 8.3 hours Japanese market having changed significantly post-Fuk- per day were lost in 2013 [MAN; 2013]. The World Bank ushima and the US market having being emphatically concludes that: “As a result, most private enterprises are altered by the introduction of fracking as a means of tap- forced to resort to self-generation at a high cost to them- ping incountry gas reserves. selves and the economy (about US$0.3–0.5 per kWh as compared to the current grid based tariff of US$ 0.13 per Export prices for Nigerian crude oil correlate with the kWh).” [WB; 2014] . international market trends. The price has climbed consistently over time, bar the blips seen in crisis years. The Suffice it to say that Nigerian manufacturers, small scale US FOB price for Nigerian crude oil has risen since 1973 businesses and families spend an average of N3.5 trillion from US$ 7.81 to an initial peak of US$ 38.10 in the yearly to power their generating sets with diesel and pet- 1980s before steadily climbing since 2001, when the price rol due to unstable supply of electricity [65]. Transmission was US$ 24.85 upward to as much as US$ 114.51 in 2012 losses are calculated to be between 8.25% in 2007 and [IEA; 2013]. 9.98 in 2010. At present, the individual DISCO business plans indicate that aggregate technical, commercial and Nigeria has administratively set maximum prices for ker- collection (ATC&C) losses over a five-year period for the osene and gasoline and an indicative price for diesel. At distribution companies are assumed to be between 35- the core of this system, which was established in 2003, 40% at present, with the various DISCOs having com- is the Petroleum Products Pricing Regulatory Agency, mitted to lower that figure markedly [WB; 2014]. The which sets these prices every month. This agency ap- scale of such losses is also factored into the MYTO II plies import parity but is also expected to stabilise pric- conditions for DISCOs, with losses as a percentage of es, which it does with the help of the Petroleum Support distributed energy being expected to fall from 35% in Fund (PSF). Consumer subsidies exist for three energy 2012 to 24% in 2016. products: gasoline (Premium motor spirit [Pms]), household kerosene (hhK) and electricity. In the case of petro- 3.6 Energy Prices leum products, the government requires marketers to sell fuel at below the market rates. It then pays the difference 3.6.1 Fuel Prices to petroleum products marketers and licensed importers of fuel. The development of energy prices in the near and Crude oil is a globally traded commodity denominated distant future depends on political decisions, private in- usually in US dollars and for the purposes of this study, vestment in the energy sector and world market prices. to avoid exchange-rate distortions, quotations will be Realistic figures on the development of prices in the ener- kept in that currency. Demand for oil is pegged to global gy sector cannot be given at the moment. macroeconomic conditions and this influences international oil prices. Natural gas prices are less dependent on Diesel prices have been deregulated for several years. Gov- global trends as there is no world market for gas. Natu- ernment removed the gasoline subsidy on Jan 1, 2012 and ral gas is traded on more than one regional market, with allowed the retail price to rise above NGN 140 (US$ THE NIGERIAN ENERGY SECTOR 43

TABLE 3 – 11: DEVELOPMENTS IN FUEL PRICES AND FUEL SUBSIDIES, 2006–201225 2006 2007 2008 2009 2010 2011 2012 proj. Fuel subsidy (bln Naira) 251 290 637 399 797 1,761 1,570 Fuel subsidy (% of GDP) 1.3 1.4 2.6 1.3 2.3 4.7 3.6 Fuel Prices (Naira per litre) • Diesel (deregulated) 81 90 118 94 112 152 144 • Kerosene (subsidised) 50 50 50 50 50 50 50 • Gasoline (subsidised) 65 70 70 65 65 65 97

Note: For 2012, includes one-off payment of about 1% of GDP to settle arrears accrued in 2011.

0.88)/litre or higher, but following widespread protests 3.6.2 On-Grid Electricity Prices lowered it within two weeks to NGN 97 (US$0.61)/litre, which still represents a 49% increase on the price in 2011. Since the privatisation process kicked in, electricity pric- As shown in Table 3–11, the fuel subsidy still accounts es have been set centrally by the Nigerian Electricity Reg- for a substantial share of GDP and in absolute terms has ulatory Commission in line with its multi-year tariff or- risen by a factor of seven over the six years covered by the der (MYTO II). The prices thus defined shall be paid to table. Despite the surge in subsidies, the price of gasoline the generating companies, depend on the feedstock used, and diesel in Nigeria has climbed substantially over the and give the owners of each independent power plant a last 20 years, with that of diesel most marked because of firm basis for their business models. For example, the the elimination of subsidies. wholesale contract price for a gas power plant is in the order of 10,257 N/MWh (2013), whereas the wholesale Short availability of gas has been cited by the govern- prices for hydropower, wind, solar and biomass range be- ment as major reason for not being able to realise the tween 25,400 and 73,300 N/MWh (2013) (please refer planned power generation. The industry ascribes the to details in Table A–8, in Annex 4). Likewise the prices shortage of the gas for domestic consumption especially to be paid to the distribution companies are set and differ for gas-fuelled IPP’s mainly to the low gas prices in the by region. The price to be paid by the end consumer for domestic market compared to export market and pend- electricity in Nigeria is therefore not to be confused with ing approval of Petroleum Industry Bill (PIB). Although the price paid to the generating company. the International Oil Companies (IOC) in Nigeria have an obligation to provide a prescribed percentage of total The MYTO methodology combines the positive attrib- gas production for domestic consumption this has never utes of regulating the rate of return and a price cap, which materialised due to the unattractiveness of domestic mar- changes by region and type of electricity customer. The ket; there are various reasons for the latter, such as poor regulators factor three modules into the calculation: the gas pipeline assets and infrastructure, misaligned fund- allowed return on investment (RoI), the allowed return ing incentives, theft and vandalism. In August 2014, the of capital, and efficient operating costs and overheads. Minister of Petroleum Resources announced an upward Since the costs factored into the prices are assessed indi- revision of the gas price from $1.50 per million cubic feet vidually for power generation, transmission, distribution (mcf) to $2.50 per mcf, and an additional $0.80 fee for and retail, rates differ. transport costs for new capacity. Such an increase in the gas price may make the national market more attractive In each instance, in an effort to attract investment in the for IOCs. sector, MYTO emphasises cost recovery and financial

25 Sources: Nigeria authorities and IMF staff calculations and projections THE NIGERIAN ENERGY SECTOR 44

viability, whereby the intention is to encourage efficient ever, in a recent ruling NERC has decided that where investments. The multi-year structure provides investors customers of a DISCO have not received continuous or with a firmer basis for planning. Likewise, the tariffs fos- cumulate electricity supply for a period of 15 days in a ter an efficient use of the network, as tariffs are destined month, the fixed charge shall be waived to the extent that to reflect the marginal costs users place on the system and the disruption was not caused by consumers defaulting boost grid efficiency. on their electricity bills.

Consumer electricity prices range from between 4 and 3.6.3 Off-Grid Electricity Prices 30 N/kWh depending on the region (DISCO) and the type of customer. For an exhaustive list of the different The projected prices for off-grid electricity can be seen sub-categories of the main classes (residential, commer- from Figure 3–7 below. In the present set-up of the Ni- cial, industrial, special, and street lighting) please consult gerian electricity market, off-grid generation based on Table 6 in Annex 4. MYTO II specifically states, howev- medium-sized diesel gensets is by nature far more expen- er, that “in Nigeria, the true cost of electricity production sive for the consumer than on-grid supply of electricity. is not reflected in the consumer tariff.” The World Bank estimates cost for generation with medium-sized diesel gensets at approx. 250 USD/MWh (sim- Worthy of mention is the tariff design NERC has im- ilar to 0.25 USD/kWh or 40 N/kWh), which is higher plemented for DISCOs as it is intended to ensure that a than the electricity charges of 4–30 N/kWh for house- distinction is made between private, commercial and in- hold electricity purchased from the DISCOs. dustrial users as regards electricity prices, while enabling DISCOs to remain commercially viable. Each DISCO The striking element here is the clear projected decrease has tariffs reflecting its uniqueness in terms of cost, lo- in the price of electricity generated by solar PV, which is cation and customer profile. The Ministry of Finance expected to fall to a level similar to that for small hydro- - 32 - has provided a maximum subsidy of N50bn (2012) and power plants, with the cost of diesel/solar hybrid systems N50bn (2013) solely for residential customers. Moreover, falling by equal measure. NERC has retained a lifeline tariff at N4.00/kWh for allmore than in other (comparable) economies due to expected cuts in subsidies. Taking this into consideration, solar PV plants broke even with diesel generating set much earlier than predicted in the ESMAP 2007 study. Solar those consuming below 50kWh/month. Cross subsidiesPV/diesel hybrid systems can thus be expected to gain sway over time.

FIGURE 3 – 7: from large residential (category R), commercial (categoryFigure 3-7:OFF-GRID Off-Grid ELECTRICITYElectricity Prices26 PRICES26 C) and industrial (category D) customers to small resi - dential customers are implicit in the tariff design because the Federal Government subsidy is not sufficient. The -tar iff is specifically conceived to allow for recovery of fixed costs and energy charges. [NERC; May 2012]

At present, DISCOs’ bills to consumers are made up of two elements: a fixed charge and an energy charge. The former covers capital costs as well as the fixed costs of operation and maintenance across the industry. The latter is charged only when electricity is actually consumed and is Sources: ESMAP 2007; IEA 2010a intended to cover fuel costs, variable operation and main- 3.7 Electrification tenance costs and tax costs to market participants. HowSince- the pre-independence era, the Nigerian power supply system has been encumbered by the geographical concentration of generation facilities in the South-South, the related difficulties innate in the transmission system with high losses and load shedding. It has also been burdened with a system of poles at a long distance to all smaller

towns carrying26 See electrical World energy Bank through forest/villages or without proper protection - and with a whole host of illegal connections and all the attendant problems of billing.

Reasons for lack of electricity access and frequent blackouts in Nigeria are reported in the General Household Survey of 2010/2011. Over 60% of rural households sampled during the survey attributed the reason for a lack of electricity access to frequent blackouts and high connection cost. Unreliability of service was also reported as one of the reasons for lack of electricity in Nigeria. [NBS; 2010/11]

Rural electrification (including off-grid generation), its market, stakeholders and support mechanisms are further dealt with in Chapter 8.

3.7.1 National and State Electrification Rates

26 See World Bank

20141121_Energy Sector Study_NESP Publication draft_v2.docx THE NIGERIAN ENERGY SECTOR 45

Notably, to date solar PV is already substantially 3.7.1 National and State cheaper than electricity produced using diesel gen- Electrification Rates erating sets, and this is especially the case in areas a long distance from diesel depots – which includes most In 2011, the National Bureau of Statistics reported that of northern Nigeria. This trend seems to be persistent, between 2007 and 2009 the national rate of households considering various international predictions of the with no access to electricity changed from 41.4% and PV prices in comparison to other means of power gen- 48.0% to 35.3%. This implies that the electrification rate eration. As shown in Chapter 3.6.1, fossil fuel prices in (households with electricity supply, from any source) in Nigeria in particular are expected to rise more than in 2009 was 64.7%. other (comparable) economies due to expected cuts in subsidies. Taking this into consideration, solar PV plants However, according to the latest available data (Interna- broke even with diesel generating set much earlier than tional Energy Agency, 2012) the overall electrification predicted in the ESMAP 2007 study. Solar PV/diesel hy- rate for Nigeria is just 50% as compared to 31.8% electri- brid systems can thus be expected to gain sway over time. fication in Sub-Saharan Africa. As further detailed in Ta- ble 3–12 this cannot disguise the fact that there is a sharp 3.7 Electrification discrepancy between cities and rural areas, as the rate of urban electrification in Nigeria is 78% as compared to Since the pre-independence era, the Nigerian power sup- only 23% for rural electrification. ply system has been encumbered by the geographical concentration of generation facilities in the South-South, the Table 3–13 lists the distribution of households by state. related difficulties innate in the transmission system with The table shows all households with electricity supply high losses and load shedding. It has also been burdened (100%) and the type of supply as a percentage. The table with a system of poles at a long distance to all smaller distinguishes between households that are (only) con- towns carrying electrical energy through forest/villag- nected to the national grid (PHCN), those that have pri- es or without proper protection - and with a whole host vate generators or use solar panels, and households that of illegal connections and all the attendant problems of are supplied by rural electrification (i.e. minigrids). As billing. shown in the table, in households with electricity supply the type of electricity supply varies significantly by state Reasons for lack of electricity access and frequent black- and source. There is a clear North/South divide, possibly outs in Nigeria are reported in the General Household attributable to the location of the thermal power stations Survey of 2010/2011. Over 60% of rural households sam- in the south and the distance involved when wheeling out pled during the survey attributed the reason for a lack the power. Figures for those states that have made most of electricity access to frequent blackouts and high con- progress in rural electrification are marked yellow, while nection cost. Unreliability of service was also reported as green has been used to identify states where the reliance one of the reasons for lack of electricity in Nigeria. [NBS; on diesel generation was considered exceptionally high. 2010/11] What is also noticeable is that with the exception of a few states, over the period considered, little progress has Rural electrification (including off-grid generation), its been made in rural electrification or eliminating reliance market, stakeholders and support mechanisms are fur- on generators – whereby the figures given for generators ther dealt with in Chapter 8. seems low. THE NIGERIAN ENERGY SECTOR 46

TABLE 3 – 12: ELECTRIFICATION RATES IN NIGERIA27 Region Sub-Saharan Africa Nigeria Population without electricity millions 589 79 Overall Electrification rate (%) 31.8 50 Urban Electrification rate (%) 64.2 78 Rural Electrification rate (%) 12.9 23

The differences by state can also be read as an indication are often provided on the basis that investors will tacitly of market opportunities, since those states where electri- provide the surrounding “off-grid” units with electricity fication is lowest, or where reliance on PHCN is lowest, free of charge. are those states where there is the greatest need and therefore, by definition, the greatest potential for investments The gross of private investors active in off-grid gen- in rural electrification. eration usually do so in order to ensure their manufacturing facilities have a sustainable supply of power The same source reveals that most rural areas do not have and are not exposed to the oscillating provisions through their own generators and thus where electricity is pro- the national grid. With the reinforcement of the national duced using privately owned diesel generators. In other grid currently being undertaken by TCN, the system is words, rural electrification was until 2010 at any rate expected to become more stable. Future assessment of a largely left to the informal market, is neither regulated possible grid connection may be judged differently by pri- nor structured in a planned manner. vate investors if the economic viability is positive.

3.7.2 Off-Grid/Captive Generation The distribution code innate in the power sector privati- Technologies sation policy is not specific about off-grid or mini-grid networks, and the general assumption is that it does not Given that off-grid licences cover a production capacity apply to them, giving investors in such areas greater scope. of only 305 MW, and embedded generation is 49 MW, The distribution code is further detailed in Chapter the number of consumers supplied by these is a mere 5.5.4.2. Privately operated grids other than those granted fraction of those requiring power. More importantly, as by concession to DISCOs are not allowed under Nigeri- will be discussed below, policymakers still need to clarify an law. structures for off-grid and captive generation, specifically incentivisation of these in a privatised market. That said, [NERC; 2012] gives definitions in its regulations for In- all diesel generating capacity is off-grid but is not includ- dependent Electricity Distribution Networks (IEDNs) ed in the official statistics as no licences are issued for this for isolated off-grid rural IEDNs, specifically for an form of generation. The total installed licenced capaci- “IEDN in a rural area which is not connected to a distribu- ty for off-grid power generation is 305 MW, although tion network that is connected to the transmission system exact calculation of what is operational is not possible at operated by the system operation licensee.” In this context it this time. The licensees are mainly private entities. These defines as a rural area “any area of the country not existing private companies do not (officially) provide billable within 10km from the boundaries of an urban area or city electric power to the surrounding communities. In oth- and which has less than 20,000 inhabitants or population er words, the licences and building permits for industry density is less than 200 per square kilometre and which is

27 Source: [IEA 2012] THE NIGERIAN ENERGY SECTOR 47

TABLE 3 – 13: DISTRIBUTION OF HOUSEHOLD BY TYPE OF ELECTRICITY SUPPLY IN %, 2010 PHCN (NEPA) Rural Electri- Private PHCN / Rural Electricity State only fication Generator Generator / Generator Solar Panel Abia 89.6 0.9 0.5 5.0 4.1 0.0 Adamawa 89.5 2.9 1.9 4.8 1.0 0.0 Akwa Ibom 82.8 0.4 2.9 13.1 0.8 0.0 Anambra 81.0 1.7 1.0 15.6 0.7 0.0 Bauchi 77.5 8.0 1.4 9.4 3.6 0.0 Bayelsa 33.1 36.1 2.3 2.3 26.3 0.0 Benue 68.5 14.4 2.7 10.8 3.6 0.0 Borno 87.9 6.1 0.0 6.1 0.0 0.0 Cross River 91.7 6.2 0.5 1.6 0.0 0.0 Delta 93.6 2.7 1.5 1.5 0.8 0.0 Ebonyi 78.9 12.7 0.0 1.4 7.0 0.0 Edo 93.1 2.1 1.2 2.7 0.9 0.0 Ekiti 91.1 1.0 0.8 6.9 0.3 0.0 Enugu 75.0 16.9 1.3 5.9 0.8 0.0 Gombe 94.7 3.2 0.0 2.1 0.0 0.0 Imo 85.4 5.0 2.1 7.5 0.0 0.0 Jigawa 93.2 0.9 0.0 4.3 0.9 0.9 Kaduna 84.8 5.1 2.0 7.6 0.5 0.0 Kano 87.0 6.0 0.0 4.0 3.0 0.0 Katsina 80.4 14.7 0.0 4.3 0.0 0.6 Kebbi 86.4 1.6 3.8 7.1 1.1 0.0 Kogi 79.2 3.3 0.4 15.8 1.3 0.0 Kwara 92.8 1.8 0.3 2.4 2.7 0.0 Lagos 67.9 1.2 1.2 25.9 3.5 0.2 Nasarawa 76.0 0.6 7.2 13.2 3.0 0.0 Niger 75.2 1.8 0.9 21.7 0.0 0.4 Ogun 94.5 0.3 0.0 5.2 0.0 0.0 Ondo 87.5 0.8 2.9 2.9 5.8 0.0 Osun 90.5 0.0 0.4 7.1 2.0 0.0 Oyo 97.7 0.9 0.5 0.9 0.0 0.0 Plateau 92.5 1.3 1.3 3.8 1.3 0.0 Rivers 66.0 26.3 6.7 1.0 0.0 0.0 Sokoto 90.4 6.6 0.6 1.8 0.6 0.0 Taraba 85.7 0.0 0.0 14.3 0.0 0.0 Yobe 77.0 6.9 1.1 11.5 3.4 0.0 Zamfara 87.0 6.9 0.0 3.8 1.5 0.8 FCT Abuja 67.4 0.9 1.9 27.6 2.2 0.0 Sector Urban 83.2 2.7 0.8 11.3 2.1 0.0 Rural 81.5 7.5 2.0 6.2 2.6 0.1 National 82.2 5.5 1.5 8.4 2.4 0.1

Source: National Bureau of Statistics, 2014 THE NIGERIAN ENERGY SECTOR 48

at least 20km from the nearest existing 11KV line.” Iso- The National Grid operates at 330 kV and 132 kV voltage lated off-grid urban IEDNs are therefore all IEDNs in level (HV) while the distribution grid operates mainly on an urban area which are not connected to a distribution 33 kV and 11 kV level (MV and LV). In 2010, more than network that is connected to the transmission system 12,300 km of transmission lines (5,523 km of 330 kV and operated by the system operation licensee. Moreover, in 6,801 km of 132 kV) connecting 32 330 kV and 105 132 rural areas there is a scarcity of industrial applications. To KV substations were operational while more than 24,000 date, a total of 45MW is generated by captive generators, km of distribution network were available.28 At the cur- whereby captive generation is defined in NERC’s R0108 rent (2014) configuration the national grid has an in- as the “generation of electricity exceeding 1 MW for the stalled capacity of 6,500 MW but can handle a wheel- purpose of consumption by the generating entity, which is ing capacity of maximum of 4,500 MW.29 The ongoing consumed by the generator itself and not sold to a third-par- NIPP projects will further boost the capacity by 1,300 ty.” Under this regulation, anyone wishing to generate MW. The long-term planning of TCN is to further im- less than 1 MW of ‘surplus power’ and supply it to an prove the grid capacity to 10 GW by 2014, 16 GW by off-taker must apply for written consent to do so; if the 2017 and 20 GW by 2020 as further detailed in Figure power plant operator wishes to supply surplus power in 3–8, Figure 3–9 and Figure 3–10 below. excess of that amount to an off-taker, they will require a generating licence. The Nigerian national grid is characterised by the poor Essentially, all diesel generating sets exceeding 1 MW op- voltage profile in the network (especially in the north due erated at a single location by a single entity for own use to its radial nature) and is constrained by limited control thus count as captive power plants. Within the letter of infrastructure. Overloaded transmission lines and high the regulations, a company could therefore sell less than 1 technical and non-technical losses are a regular feature. MW to an off-taker. In 2010, transmission line losses were reported at as high as 8.5%.30 3.8 Transmission and Distribution Sector The key issues facing the improvement in national grid are to establish a clear plan for operational improvement Transmission to reduce technical and commercial losses, full market The privatisation exercise of NEPA was concluded by the integration of TCN to enable TCN to operate as cred- Bureau of Public Enterprises (BPE) and the Bureau of it-worthy industry participant, as well as a comprehensive Public Procurement (BPP) in 2013–2014 by unbundling assessment and clean-up of the project portfolio up to en- the successor companies into 11 distribution companies able completion of several ongoing and stranded projects. and 6 generation companies, as further detailed in Chap- ter 3 above. The Government retained control of the Distribution transmission and system operation under TCN. The Figure 3–11 shows the geographical areas covered by transmission lines and generators are interconnected in a the respective distribution companies as well as the common grid, with a single control centre at Oshogbo. megawattage allocated to them. The north/south di- In this way, government bears the cost of HV grid ex- vide is readily apparent from the ratio of population to pansion and encourages private investors to focus on megawatts, whereby within the north there is a sharp generating capacity. Distribution companies have been discrepancy between the mega-wattage allocated to the privatised and are responsible for the expansion of the northeast, and that to the central and western sections distribution network’s MV and LV grid. of the region. The companies are generally owned by

28 Investors’ forum for the privatisation of PHCN successor companies, 30 Investors’ forum for the privatisation of PHCN successor TCN (January 2010) companies, TCN (January 2010) 29 6th Nigeria Power Summit, PTFP (January 2014)

THE NIGERIAN ENERGY SECTOR 49

consortia, in some cases these include larger state governments. The 11 distribution companies, and they are- 37 - scheduled to handle over 5,000 MW, are: Abuja, Benin, Eko, Enugu, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Har- court, Yola.

Figure 3-8: Existing 330 kV Radial Grid, 201331 FIGURE 3 – 8: EXISTING 330 KV RADIAL GRID, 201331

Figure 3-9: 330 kV Transmission Grid for Wheeling 10,000 MW, End of 201431

31 Source: [TCN; 2013]

20141121_Energy Sector Study_NESP Publication draft_v2.docx - 37 -

Figure 3-8: Existing 330 kV Radial Grid, 201331

THE NIGERIAN ENERGY SECTOR 50

Figure 3-9: 330 kV Transmission Grid for Wheeling 10,000 MW, End of 201431 FIGURE 3 – 9: 330 KV TRANSMISSION GRID FOR WHEELING 10,000 MW, END OF 201431

By the end of 2014, the proposed system enhancements shown in Figure 3 – 9 are under construction but not yet completed. 31 Source: [TCN; 2013]

20141121_Energy Sector Study_NESP Publication draft_v2.docx

31 Source: [TCN; 2013] - 39 -

THE NIGERIAN ENERGY SECTOR 51

Figure 3-10: 330 kV Transmission Grid for Wheeling 16,000 MW, End of 201731 FIGURE 3 – 10: 330 KV TRANSMISSION GRID FOR WHEELING 16,000 MW, END OF 201731

31 Source: [TCN; 2013]

20141121_Energy Sector Study_NESP Publication final.docx THE NIGERIAN ENERGY SECTOR 52

- 39 -

FIGURE 3 – 11: Figure 3-11: TheTHE distribution DISTRIBUTION companies COMPANIES markets MARKETS[53] [53]

20141121_Energy Sector Study_NESP Publication draft_v2.docx 4. ENERGY MARKET – STAKEHOLDERS AND ROLES 53

With the privatisation of the power sector, the composi- alised nations faced when fast-tracking the use of renew- tion of stakeholders in it has changed markedly. From the ables. Nevertheless, the distribution and the generating inception of the interim market onwards, the main stake- companies will play as important a role as does central holders in the sector are and will be private entities, with government. The actual institutional spread at present is government retaining the role of regulator and grid oper- discussed in detail in a study published by GIZ in No- ator only. The World Bank still acts to provide the Fed- vember 2013 and entitled “Institutional and Policy Map- eral Government with a partial risk guarantee to cover ping of the Renewable Energy, Energy Efficiency and possible defaults in the system in the event of NBET not Rural Electrification Subsectors in Nigeria”. [GIZ; Oct being able to pay a generating company during the life- 2013] time of the interim market [African Development Fund]. Publicsector players still active in the market tend to be 4.1 National Public Institutions those states that have acquired or are acquiring shares either in distribution companies or in independent power The following chapters summarise the major national plants. NGOs and international donor organisations’ ac- public institutions active in the energy market in alpha- tivities are mainly focused on supporting policy-making, betical order. environmental energy efficiency, and renewable energy projects. Development finance institutes are involved 4.1.1 Energy Commission in various cases in debt financing for larger generating of Nigeria (ECN) company projects. With the restructuring of TCN there is renewed participation by DFIs in transmission sector Established in 1988, the Energy Commission of Nigeria upgrades and expansion. (ECN) is the government office in charge of energy sector planning and policy implementation. The commission Because of the hitherto non-commercial nature of the also promotes the use of renewables and alternative en- sector, activities by public institutions have tended to be ergies within the electric generation mix in Nigeria. The the primary driver of rural electrification (RrE), energy ECN fulfils the role of strategic overall planning, coordi- efficiency (EE) and renewable energy (RE) initiatives in nation and effective direction of Nigeria’s national ener- Nigeria to date. After all, until only a year ago the Fed- gy strategies within Nigeria and with ECOWAS member eral Government of Nigeria had the largest stake in the states. energy and power sector of the country, thus making private investor involvement limited and also posing the Energy research, development and training related ac- challenge to policymakers to create an investor-friendly tivities are carried out in the six technical departments climate in a domain not known for its short-term com- and the six energy research centres. Two of the centres, mercial viability. The role of regional and international located at Nsukka and Sokoto, are responsible for new institutions on the other hand is based on developmental and renewable energy research. The centre in Lagos ca- needs and strictly non-commercial. ters to energy efficiency and conservation, while the centre in Benin specialises in energy and environment. The A key advantage of the present structure is that it enables two centres in Ilorin and Bauchi are responsible for hy- the federal government to take the lead in pursuing clean dropower research and research in the area of petroleum technology and promoting a focus on a broad electricity respectively. ECN was instrumental in launching the mix of the country. Given the paucity of the power sector Renewable Energy Master Plan (2102). A significant con- per se, Nigeria can potentially avoid the snags industri- tribution by ECN was the first National Energy Policy ENERGY MARKET – STAKEHOLDERS AND ROLES 54

(2003) launched in 2005. This policy is currently under information is relevant to the discharge of its func- revision (2013). tions under this Act; • To monitor the performance of the energy sector in Based on the “Energy Commission of Nigeria Act”, 1979 the execution of government policies on energy; No. 62 the ECN is “charged with the responsibility for • To liaise with all international organisations in en- the strategic planning and co-ordination of national poli- ergy matters such as the International Atomic Energy cies in the field of energy in all its ramifications”. Agency, World Energy Conference and other similar organisations; This includes the following: • To promote training and manpower development in • To serve as a centre for gathering and dissemination the energy sector; and of information relating to national policy in the field • To carry out such other activities as are conducive to of energy development; the discharge of its functions under this Act. • To serve as a centre for solving any inter-related technical problems that may arise in the implementation The roles of ECN in the RE, EE and RrE sectors are fur- of any policy relating to the field of energy; ther outlined in Chapters 6.2, 7.4 and 8.2, respectively. • To advise the government of the federation or a state on questions relating to such aspects of energy as the 4.1.2 Federal Ministry of Environment government of the federation or a state may, from (FMENV) time to time, refer to it; • To prepare, after consultation with such agencies of The Federal Ministry of Environment (FMENV) was es- government whose functions relate to the field of tablished in 1999 by the Federal Government of Nigeria energy development or supply as the Commission with the statutory responsibility of protecting the natu- considers appropriate, periodic master plans for the ral environment against pollution and degradation and balanced and coordinated development of energy in conservation of natural resources for sustainable develop- Nigeria and such plans shall include: ment in Nigeria. FMENV is formally charged with envi- – recommendations for the exploitation of new ronmental responsibilities and also with coordinating all sources of energy as and when considered neces- climate change matters under its Special Unit Climate sary; and Change. The unit also represents the Ministry at interna- – such other recommendations to the government tional climate negotiations. of the federation relating to its functions under this Act as the Commission may consider to be in The Special Unit on Renewable Energy acts as the voice the national interest; of the ministry regarding renewable energy and energy • To lay down guidelines on the utilisation of energy efficiency issues. The objective of the unit is to develop types for specific purposes and in a prescribed and implement strategies that will achieve clean, reliable sequence; energy supply mechanisms in order to develop the sec- • To inquire into and advise the government of the tor based on international best practices and in order to federation or of the state on the adequate funding of showcase viability for private sector participation. Thus, the energy sector including research and develop- the unit’s activities revolve around three core issues: (i) ment, production and distribution; secure, safe, and reasonably priced energy supplies and • To collate, analyse and publish information relating services; (ii) economic growth and development; and (iii) to the field of energy from all sources, where such environmental protection. The focus on renewable ener- ENERGY MARKET – STAKEHOLDERS AND ROLES 55

gy and energy efficiency is mainly on displacement and 4.1.4 Federal Ministry of Power (FMP) reduction in use of conventional fossil fuels of biomass for household and small scale agricultural applications. The FMP is responsible for ensuring a robust power sector that fully supports the socio-economic needs of the The FMENV is also the regulator for the Environmental nation. The main goal of the ministry is directed at in- and Social Impact Assessment (ESIA). The ESIA is man- itiating, formulating, coordinating and implementing datory for all development projects as per the Nigerian broad policies and programmes on the development of EIA Act No. 86 of 1992. electricity generation from all sources of energy. FMP is also charged with the responsibility of developing and Its roles in renewable energy and rural electrification are deploying electricity-related renewable energy policies in further detailed in Chapters 6.2 and 7.4, respectively. Nigeria.

4.1.3 Federal Ministry of Lands Housing The FMP is headed by the Honourable Minister as Chief and Urban Development (FMLHUD) Executive of the ministry. The Honourable Minister of State is in charge of the operational activities of the Federal Ministry of Lands Housing and Urban Devel- Ministry, while the Permanent Secretary is the account- opment (FMLHUD) is an important actor in the pub- ing officer. The latter two offices are supported by seven lic sector as the implementing arm of government in all departments and five units. They are responsible for the matters relating to lands, housing and urban develop- coordination of all forms of electricity generated from ment. It is the drivers of policies and has the power to both renewable energy and other non-renewable energy enforce regulations in the building sector. It can be an sources. In order to facilitate diversification of the na- example for others to follow and hence plays a strategic tion’s energy mix, the ministry is encouraging renewable role in energy efficiency in buildings (e.g. with the update energy sources for power generation, especially in rural of the building code currently under preparation). The areas of the country. The ministry synchronises the In- state ministries of housing can play an equally major role ter-Ministerial Committee on Renewable Energy and at state level. Energy Efficiency (ICREEE), has commissioned some solar power pilot projects in Ogun and Cross River states, As approved by government, the functions of the Federal and is building a pilot wind farm in Katsina. The FMP Ministry of Lands, Housing and Urban Development are coordinates renewable energy and energy efficiency mat- to prepare and submit proposals for national lands and ters through the Electrical Inspectorate Services (EIS) housing as well as urban development programmes and department. [11] plans. It reviews all existing legislations in the lands and housing as well as urban development sectors to achieve 4.1.5 Federal Ministry of Water the goal of adequate housing for all Nigerians in a con- Resources (FMWR) ducive and liveable environment. Further the FMLHUD supervises the activities of the Federal Housing Authority The Federal Ministry of Water Resources (FMWR) was (FHA), the Federal Mortgage Bank of Nigeria (FMBN), created in its current form in April 2010 with the mis- and the registration boards of the relevant professional sion to provide sustainable access to safe and sufficient bodies. [9] water to meet the socio-economic needs of all Nigerians through efficient water resources management for basic human needs, irrigated agriculture, hydropower gen- ENERGY MARKET – STAKEHOLDERS AND ROLES 56

eration and the promotion of healthy population while tion is headed by the Director General, who is in charge maintaining the integrity of fresh water bodies. of all activities of the institute. One of the cardinal objectives of the National Electric Power Policy (NEPP) is to Through the Department of Dams and Reservoir Opera- have an electric supply industry that can meet the needs tions, the FMWR is involved in numerous renewable en- of its citizens in the 21st century. A key aspect of meeting ergy and rural electrification activities. In response to the these objectives is human resources development. There- policy directive of government to increase energy supply fore, the Nigerian Electric Power Policy clearly stated as to meet the nation’s energy demands, FMWR is collabo- one of its strategies that Government shall support the rating with the FMP on the aspect of handling the area establishment of a national electricity training institute. of power generation component, while the ministry handles the aspect of civil works in all the dam projects with In furtherance of the federal government of Nigeria’s Vi- hydropower potential. Small hydropower schemes have sion 20-2020 and the road map for the transformation of been integrated into some dam projects across the coun- the Power Sector, NAPTIN has been charged with the try in order to increase the energy supply of the nation. responsibility of producing a National Power Training Policy document for the Honourable Minister of Power. It is clear that the FMWR is responsible for the civil NAPTIN operates eight regional training centres na- structure in water projects, i.e. dams, whereas the FMP is tionwide, namely in Afam, Akangba, Ijora, Jos, Kaduna, responsible for the power components of such projects. Kainji, Kano and Oji (Enugu). To date, the above department has carried out studies on some of the completed and on-going dam projects for hy- 4.1.7 Nigerian Bulk Electricity dropower as further detailed in Chapter 6.1.2. Trading Plc (NBET)

4.1.6 National Power Training The Nigerian Bulk Electricity Trading Plc (NBET) is Institute of Nigeria (NAPTIN) a Federal Government of Nigeria (FGN) owned public liability company. The Bureau of Public Enterprises and The Ministry of Power under the leadership of the for- Ministry of Finance Incorporated are its two sharehold- mer Hon. Minister of Power Dr. Rilwan Lanre Babalo- ers of record with 80% and 20% stakes respectively. la recognised the existing massive training requirement, consummated the process of creating an institute solely NBET was incorporated on July 29, 2010, in line with catering for the power industry not just for Nigeria but the “Roadmap for Power Sector Reform” In fulfilment capable of meeting the training needs of the whole West of the requirements of Electric Power Sector Reform Act African region. This gave birth to the establishment of (EPSRA), 2005 it is a trading licensee holding a bulk the National Power Training Institute of Nigeria (NAP- purchase and resale license. Its mandate is to engage in TIN) on March 23, 2009. NAPTIN became a registered the purchase and resale of electrical power and ancillary legal entity with its incorporation with the Corporate services from independent power producers and from the Affairs Commission on September 1, 2009 which was successor generation companies. the date it was officially rolled out as the official trainer of power sector personnel. The transitional market trading arrangement is depicted in Figure 4-1. NBET signs PPAs with privatised genera- NAPTIN directly reports to the FMP and is supervised tion companies, greenfield IPPs and existing state-owned by a board of directors appointed by them. The organisa- power plants. They resell power via vesting contracts with ENERGY MARKET – STAKEHOLDERS AND ROLES 57 - 44 -

FIGURE 4 – 1: NBET, TRANSITIONAL MARKET TRADING ARRANGEMENT

Source: [Wonodi; 2013] Source: [Wonodi; 2013]

distribution companies and sign power sales agreements rent transitional market, the Nigerian Bulk Electricity 4.1.8with eligibleNigerian customers Electricity directly. NBET’s Regulatory power purchase CommissionTrading (NERC) Plc (NBET). agreements (PPAs) with independent power producers The Nigerian Electricity Regulatory Commission was established as an independent regulatory agency in 2005 under are backed by credit enhancement instruments provided NERC in its function as market regulator ensures fair the EPSR Act 2005. Its mandate is to monitor and regulate the electricity industry of Nigeria, and ensure compliance by the FGN. and competitive electrical trading. It is instrumental in with market rules and operating guidelines. Moreover, and crucially, NERC is responsible for assessing applications providing a 15-year tariff path which undergoes major for licenses to operate an independent power plant larger than 1 MW, and thus approves eligibility of the company 4.1.8 Nigerian Electricity Regulatory in question to negotiate a power purchase agreement with thereview central every off six-taker years in with the minor current reviews transitional biannually. market, As the Commission (NERC) Nigerian Bulk Electricity Trading Plc (NBET). part of its mandate NERC has at present set the Multi Year Tariff Order (MYTO II) which defines generation NERCThe inNigerian its function Electricity as market Regulatory regulator Commission ensures fairwas andand consumercompetitive offtake electrical prices. trading. It is instrumental in providingestablished a 15 as-year an independent tariff path which regulatory undergoes agency majorin 2005 review every six years with minor reviews biannually. As part of itsunder mandate the EPSR NERC Act 2005. has at Its present mandate set is tothe monitor Multi and Year TheTariff commission Order (MYTO also plays II )a whichkey role defines in consumer generation protec- and consuregulatemer offtake the electricity prices. industry of Nigeria, and ensure tion by ensuring development of customer service stand- compliance with market rules and operating guidelines. ards, fair pricing rules, and where necessary provides ef- TheMoreover, commission and alsocrucially, plays NERCa key role is responsible in consumer for protectionassess- fective by ensuring dispute resolutiondevelopment mechanism. of customer service standards, fair ingpricing applications rules, and for where licenses necessary to operate provide an independents effective dispute resolution mechanism power plant larger than 1 MW, and thus approves eligibility of the company in question to negotiate a power 4.1.9purchase Nigerian agreement National with the central Petroleum off-taker C inorporation the cur- (NNPC)

NNPC has sole responsibility for upstream and downstream developments in the oil industry, and is also responsible for regulating and supervising the sector on behalf of the Nigerian Government. NNPC was established on April 1, 1977 as a merger of the Nigerian National Oil Corporation and the Federal Ministry of Mines and Steel.

In 1988, the corporation was commercialised into 11 strategic business units, covering the entire spectrum of oil industry operations: exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments NNPC by law manages the relation between the Nigerian federal government and a number of foreign multinational corporations. Through collaboration with these companies, the Nigerian government conducts petroleum exploration and production. In its current version REMP insufficiently refers to the NNPC activities.

20141121_Energy Sector Study_NESP Publication draft_v2.docx ENERGY MARKET – STAKEHOLDERS AND ROLES 58

4.1.9 Nigerian National Petroleum the successful delivery of every milestone in the power Corporation (NNPC) sector reform roadmap.

NNPC has sole responsibility for upstream and down- The Technical Board of the PTFP brings together all stream developments in the oil industry, and is also re- the reform project stakeholders. The Board’s primary sponsible for regulating and supervising the sector on mission is to remove all technical, legal, commercial and behalf of the Nigerian Government. NNPC was es- regulatory obstacles. It is such obstacles that are capable tablished on April 1, 1977 as a merger of the Nigerian of hindering the development of a sustainable modern National Oil Corporation and the Federal Ministry of electricity market that offers the private sector the ena- Mines and Steel. bling environment necessary to mobilise the investments needed to grow power production and delivery under a In 1988, the corporation was commercialised into 11 competitive liberalised electricity market. PTFP also has strategic business units, covering the entire spectrum of the mandate to monitor the planning and execution of oil industry operations: exploration and production, gas various short-term projects in generation, transmission, development, refining, distribution, petrochemicals, en- distribution and fuel-to-power which are critical to meet- gineering, and commercial investments NNPC by law ing the service delivery targets in the power sector reform manages the relation between the Nigerian federal gov- roadmap. [PTFP; 2013] ernment and a number of foreign multinational corporations. Through collaboration with these companies, the 4.1.11 Rural Electrification Nigerian government conducts petroleum exploration Agency of Nigeria (REA) and production. In its current version REMP insufficiently refers to the NNPC activities. Nigeria has long since had a Rural Electrification Pro- gramme, which was launched in 1981, with the aim of NNPC is also exploring the use of biofuels (mainly eth- connecting all local government headquarters and select- anol and biodiesel) for mixing in conventional fuel to ed neighbouring towns and villages to the national grid. produce “green gasoline”. Otherwise its involvement in Prior to the creation of the Rural Electrification Agency renewable energy and energy efficiency is limited to -in of Nigeria (REA) as a Federal Government agency, rural ternal consumption. electrification activities centred on grid extensions, and were handled by the Federal Ministry of Power (formally 4.1.10 Presidential Task Force on Power Federal Ministry of Power and Steel) in collaboration with Power Holding Company of Nigeria (PHCN). The Presidential Task Force on Power (PTFP) was con- stituted to operate as the prime mover driving the imple- REA was established in 2006 under section 88 (I) of the mentation, monitoring and performance evaluation of Electric Power Sector Reform Act (EPSRA), 2005 with the power reform agenda with the Presidential Action the broad vision of mobilising capital for sustained pri- Committee on Power PACP providing the necessary vate-sector driven investment in rural electricity develop- presidential support to aid this mandate. The PTFP’s ment in Nigeria dedicated the goal of improving living mandate covers the development of the Roadmap and conditions in rural areas through enhancing agriculture, the provision of effective technical support to the sector’s commercial, industrial and domestic activities. REA’s reform agenda including project planning, monitoring core function is to promote and coordinate rural electri- and evaluation as well as inter-agency interface to ensure fication projects, implement and manage the Rural Elec- ENERGY MARKET – STAKEHOLDERS AND ROLES 59

trification Fund and regulation of rural electrical sector. • undertake investigations as necessary into the quality The REA projects centre on grid expansion to rural areas of facilities, materials and products in Nigeria, and via funding from the federal government’s annual budg- establish a quality assurance system including certifi- etary allocation; most recently it has broadened its ambit cation of factories, products and laboratories; to include the deployment of off-grid and mini-grid re- • provide reference standards for calibration and verifi- newable energy generating systems to accelerate the pace cation of metering and metering equipment ; of improvement. [Montgomery, E.; 2012] • compile an inventory of products requiring standard- isation; The REA provides overall support and coordination of • prepare Nigeria Industrial Standards; rural electrification activities of various stakeholders such • foster interest in the recommendation and mainte- as public -private partnerships, private investors and com- nance of acceptable standards by industry and the munity owned/operated projects. REA through its offic- general public; es in each of the six geopolitical zones conducts feasibility • develop methods for testing of materials, supplies surveys, market surveys, and willingness to pay surveys to and equipment; ensure easy offtake. The REF Management Directorate • register and regulate standard marks and specifica- of the REA is responsible for establishing and adminis- tion. tering the Rural Electrification Fund to provide capital subsidies, in a clear and transparent competitive process, The SON has developed and/or adopted some stand- to qualified rural electrification schemes developed by ards on renewable energy and energy efficiency recently. public and private sector entities. REA is also mandated Among these standards are a code of practice for the de- to develop and implement a regulatory policy to ensure ployment of outdoor solar lighting, design qualification compliance with technical standards and protection of and type approval of PV modules, safety standards for consumer’s rights as generation below 1 MW and distri- use of PV power converters, etc. The current list of SON bution below 100 kW is not regulated by NERC. standards is attached hereto in the Annex 3.

Since 2013, REA’s role has been in transition from the In order to encourage quality and competition that will earlier role of centrally managed and government-funded enable exporters, importers and the consumers at large projects; it is evolving a centrally coordinated, but con- have free access to desired quality and/or professional ser- sumer demand-driven market approach. vices SON’s services include the certification of products (SON Conformity Assessment Programme for Exports, 4.1.12 Standards Organisation SONCAP). SONCAP is a pre-shipment verification of of Nigeria (SON) conformity to standards process used to verify that products to be imported into Nigeria are in conformity with The Standard Organisation of Nigeria (SON) is a federal the applicable Nigerian Industrial Standard (NIS) or government establishment instituted by Act. No.56 of approved equivalents, and technical regulations before 1971 with the responsibility of ensuring that all products shipment. Under the SONCAP regime, imports are re- (imported and manufactured in Nigeria) keep to stipu- quired to undergo verification and testing at country of lated standards. supply and a SONCAP certificate is issued demonstrat- The breakdown of SON functions include [55] to: ing that the products meet the applicable standards. [55] • ensure compliance with standards designated and ap- The SON has defined three routes that may be applied proved by the Council; as appropriate conformity assessment procedures for pro- ENERGY MARKET – STAKEHOLDERS AND ROLES 60

duct(s) subject to SONCAP, according to type, risk and stake in PPPs as investments that offer both a long-term effect on the health and safety, and environmental pro- return and foster the prosperity of their inhabitants. tection. They cover: • unregistered/unlicensed products (conformity verifi- The power sector reform (cf. Chapter 3) has affected the cation) distribution of roles between federal level, states and pri- • registered products (registration and conformity vate sector with the states now able to acquire a stakehold- inspection) er position in DISCOs. The local reach of the DISCOs • licensed products (product certification systems) coupled with the possibility of backing from the state can allow the state to shape the future expansion of the power 4.2 Role and Functions of States distribution to closely match its aspirations. and Local Governments 4.3 Market Players in Generation, As is the case in other countries, the Nigerian constitu- Transmission and Distribution tion distinguishes between exclusive national, state and local competencies as well as concurrent competencies. The privatisation process (as further referred to in Chap- Whereas mines, minerals, oil, natural gas and water re- ter 2.4 and 3) has introduced competition in the gener- sources are defined as an exclusive competency of the ation of electricity as a key aspect of electricity industry federal government, power is a concurrent competency reform and decentralisation. A central feature of a decen- shared between the federal and state governments. The tralised electricity industry market is the wholesale elec- federal government has a mandate to regulate power gen- tricity spot market or pool, competitive pools, where generation and transmission of the national grid. States have erating entities compete to supply energy through their also a mandate in power generation; regarding transmis- supply prices or bids. This is central to the introduction of sion and distribution, their mandate is however confined competition in the electricity industry. to off-grid areas. This means that the Constitution does not spell out a clear mandate for distribution within the While transmission remains in the hands of government, national grid since it is neither mentioned under the fed- generation and distribution are now in private hands eral nor state responsibilities. following lengthy and in part fiercely contested bidding processes. The outcome of the bidding is clear and the Some Nigerian states deduce a mandate for energy and process has moved forward, with government generat- climate out of the concurrent competencies for environ- ing assets sold and new generating licenses having been ment, social and economic development, arguing that en- awarded. The chart in Figure 4–2 below describes the ergy is a vital and cross-cutting element for the achieve- roles and responsibilities in the sector post-privatisation: ment of the constitutional objectives in these three areas of concurrent competencies. The electricity produced by various generation companies (GENCOs) is sent to the regional distribution companies Some states such as Lagos and Rivers are already explor- via the Transmission Company of Nigeria. The DISCOs ing various models to generate, transmit and distribute sell the electricity received to the industrial, commercial electricity and are now pushing for an enhancement in or residential consumers. Consumers in turn pay for the their powers so they can transmit and distribute electrici- electricity drawn from the distribution network. These ty within their boundaries. With the privatisation of gen- payments are forwarded by NBET to the generation com- eration companies, states are actively seeking to acquire a panies. TCN is being paid for its services providing the - 48 - ENERGY MARKET – STAKEHOLDERS AND ROLES 61

FIGUREFigure 4 –4-2: 2: Structure of the Power Sector Post-Privatisation STRUCTURE OF THE POWER SECTOR POST-PRIVATISATION

(Prepared by GOPA-International Energy Consultants GmbH) (Prepared by GOPA-International Energy Consultants GmbH)

The electricity produced by various generation companies (GENCOs) is sent to the regional distribution companies network.via the TheTransmission federal government Company ofimplemented Nigeria. The DISCOsNBET as sellEach the entityelectricity was received incorporated to the asindustrial, a single-asset commercial generating or a bulkresidenti traderal toconsumers. compensate Consumers for any uncovered in turn pay payments for the electricitycompany. drawn Because from they the were distribution originally network. all government These payments are forwarded by NBET to the generation companies. TCN is being paid for its services providing the in the system through necessary subsidies. owned, these entities are called “successor privatised network. The federal government implemented NBET as a bulk trader to compensate for any uncovered payments in the system through necessary subsidies. GENCOs”. The last national power generating assets, the The government-owned electricity system comprised [30]: NIPP GENCOs, were sold to private investors in 2014. • Thethree government hydropower-owned plants electricity and system comprised [30]: • seven thermal generating stations. • three hydropower plants and • seven thermal generating stations.

Each entity was incorporated as a single-asset generating company. Because they were originally all government owned, these entities are called “successor privatised GENCOs”. The last national power generating assets, the NIPP GENCOs, were sold to private investors in 2014.

20141121_Energy Sector Study_NESP Publication draft_v2.docx ENERGY MARKET – STAKEHOLDERS AND ROLES 62

The National Integrated Power Project sogo (754 MW). The process entered its final phase in (NIPP): 2013 and was successfully completed in 2014. The National Integrated Power Project (NIPP) was con- Prior to their sale, each power plant was structured as ceived in 2004 as a major fast-track initiative to add sig- individual GENCO. NDPHC required further that nificant new generation capacity to Nigeria’s electricity the systems would have to be fully commissioned be- supply industry using gas-based power plants. The gen- forehand with all contractual structures in place. This eration projects were accompanied by supporting trans- set-up should reduce the exposure of investors to tech- mission, distribution and gas transport infrastructure nical risks from the construction and commissioning projects and at the time financed from the Excess Crude phase. The plants have been or are being constructed by Oil Fund. The Niger Delta Power Holding Company international engineering, procurement and construc- Limited (NDPHC) serves as administering institution tion (EPC) contractors using proven technology and for the contracts, management and operation of the as- established original equipment manufacturers (OEMs). sets developed and built under the NIPP using private On the commercial side, the configuration follows the sector best practices. After suffering some challenges in IPP modality recently developed in the market. The year 2008 and 2009 due to financial allocations, a new generation companies will sell the electricity under a structure was formulated under NDPHC to manage 20-year power purchase agreement to NBET. The cor- the construction projects and finally disinvest the pro- responding tariff will reflect the rates set forth in the jects to private investors. Similar to the other public as- most recent multi-year tariff order. Each GENCO will sets in the power sector, the ten key NIPP power plants procure its feedstock (natural gas supplies) under long- were chosen to be privatised. This involved the follow- term gas supply agreements with the Gas Aggregation ing facilities: Gbarain (254 MW), Benin (508 MW), Company of Nigeria (GACN). GACN was formed on Omotosho (513 MW), Egbema (381 MW), Omoku January 5, 2010 and is owned by the upstream joint (265 MW), Geregu (506 MW), Calabar (634 MW), ventures formed between NNPC and one or more in- Ogorode (508 MW), Alaoji (1,131 MW), and Olorun- ternational oil companies operating in Nigeria.

The World Bank and African Development Bank assist Partial risk guarantees are suitable for the privatisation of electricity investors with partial risk guarantees32 with a infrastructure assets as in the Nigerian privatisation pro- total project volume of US$ 670 million. These instru- gram and those provided by MIGA protect investors and ments are offered through the International Bank for lenders from risks associated with changes in government Reconstruction and Development (IBRD), the IDA, and policies. MIGA. Partial risk guarantees from the IDA and IBRD Table 4–1 below outlines in detail the key players in the protect private lenders and/or investors against the risk interim market. It will be readily apparent that the com- of a government entity not fulfilling its end of a contract. position is still mixed:

32 The development objective of the Power Sector Guarantees Project for Nigeria privatisation of generation companies (GENCOs) will include both gas-fired is to increase the supply of electricity received by Nigerian consumers. The as well as hydropower companies; (iii) under privatisation of distribution com- project supports one component, partial risk guarantee (PRG) series with panies (DISCOs), the ability of the DISCOs to successfully turn around three sub-components based on the type of transactions supported: (i) green- dismal customer service levels and improve revenues flows to finance invest- field ndependenti power producers (IPP) transactions will include the option ments upstream in the value chain will make or break the power sector reform of both credit enhancement for Nigerian bulk electricity trading (NBET) efforts. Out of the 11 DISCOs being privatised, four have been identified as and private debt mobilisation support, that is: (a) the NBET credit enhance- advanced stage candidates: Abuja DISCO, Benin DISCO, Eko DISCO, and ment guarantee, with or without letter of credit; (b) the commercial debt Ikeja DISCO. (World Bank Project ID: P120207) mobilisation guarantee; or (c) a combination of both forms of guarantees; (ii) ENERGY MARKET – STAKEHOLDERS AND ROLES 63

TABLE 4 – 1: NIGERIAN POWER SECTOR - KEY INDUSTRY PARTICIPANTS [28] Key Industry Participant Description Power Holding Company of Nigeria • Nine companies for ten power plants. (PHCN) Successor Generation • Three hydropower plants and seven gas-fired plants. Companies • Total installed capacity of 6,313 MW, of which 3,366 MW available. • Contracts for privatisation concluded

NIPP Generation Companies33 • Ten companies, each owning one gas-fired power plant • Total design capacity at ISO of 5,453 MW. • Five plants with an installed capacity of almost 2,000 MW fully or partially operational. Independent Power Producers • Eight power plants with an installed capacity of 2,127 MW of which 1,320MW available. (“IPPs”) • Plants use either gas or oil as fuel. PHCN Successor Distribution • Eleven distribution companies covering all 36 states and the Federal Capital Territory. Companies • Contracts for the privatisation of ten companies executed; one company is in the process of re-tendering. Transmission Company of • State entity responsible for the transmission of electricity from power plants to distribution Nigeria (TCN) companies, eligible customers and for export. • Acts as transmission services provider (TSP), system operator (SO) and market operator (MO). • Managed by Manitoba Hydro International of Canada under a three-year management contract. Nigerian Bulk Electricity Trading • Government entity responsible for purchasing electricity from generation companies PLC (NBET) under long term power purchase agreements and selling it to distribution companies. Nigeria Electricity Regulatory • Independent agency established to regulate the power sector in Nigeria. Commission (NERC) • Responsible, inter alia, for the issuance and renewal of generation licenses and the determination of tariffs that sector participants may charge for their products and services. Gas Aggregation Company of • Established in 2010 to manage the implementation of the domestic gas supply obligation Nigeria (GACN) regulations. • Acts as the facilitator between suppliers and purchasers of natural gas. Nigerian Gas Company Limited (NGC) • One of the subsidiaries of Nigerian National Petroleum Corporation. • Responsible for the transportation of natural gas through its pipeline network.

Transmission Company of Nigeria Distribution Companies The neutral role of grid owner is played by the TCN, For the market to operate freely, the generating compa- which holds PHCN’s grid assets and manages, on behalf nies must be able to sell their electricity to distribution of the government, boost efficiency for a period of 3 years companies who then sell it on to the end consumers. till 2015 these. Management has been outsourced to a pri- NERC sets the tariffs that these off-takers must pay the vate Canadian company. The operation of TCN includes GENCOs just as it sets the remuneration the DISCOs the key three functions of market operator (MO), system shall receive from consumers in what has to date been a operator (SO), and transmission service provider (TSP). highly subsidised system in which many electricity bills Governmental plans are to separate the TSP entity from were never paid. Nevertheless, planning has gone ahead the MO and SO allowing it to become a privatised com- and the 11 licenses for the DISCOs awarded. In many mercial company. Figure 4–3 below shows the responsi- cases, the respective states have shares in the companies bilities in greater detail: (cf. Chapter 3.8).

33 These companies are in the process of privatisation. - 51 - ENERGY MARKET – STAKEHOLDERS AND ROLES 64

FIGUREFigure 4 – 3:4-3: The Transmission Company of Nigeria THE TRANSMISSION COMPANY OF NIGERIA

(Prepared by GOPA-International Energy Consultants GmbH) (Prepared by GOPA-International Energy Consultants GmbH)

Distribution Companies

As partFor ofthe the market National to operate Integrated freely, Powerthe generating Project, companiesesti- must be able to sell their electricity to distribution matescompanies have been who made then of sell how it onmuch to theelectricity end consumers. can be NERC sets the tariffs that these off-takers must pay the suppliedGENCOs to the just DISCOs as it sets in thethe immediateremuneration future. the DISCOs There shall receive from consumers in what has to date been a highly subsidised system in which many electricity bills were never paid. Nevertheless, planning has gone ahead and is a clear disparity between the assumed installed capaci- the 11 licenses for the DISCOs awarded. In many cases, the respective states have shares in the companies (cf. ty andChapter the realities 3.8). on the ground.

As part of the National Integrated Power Project, estimates have been made of how much electricity can be supplied to the DISCOs in the immediate future. There is a clear disparity between the assumed installed capacity and the realities on the ground.

4.4 Other Relevant Stakeholders

Other stakeholders are active in the fields of renewable energy, energy efficiency and rural electrification. Just to name a few, the following organisations are mentioned here (this list is not exhaustive):

Council for Renewable Energy in Nigeria (CREN) The Council for Renewable Energy in Nigeria (CREN) is a non-profit multi-stakeholder association which promotes the appropriate use of renewable energy technology in Nigeria and the reduction of greenhouse gases through

20141121_Energy Sector Study_NESP Publication draft_v2.docx ENERGY MARKET – STAKEHOLDERS AND ROLES 65

4.4 Other Relevant Stakeholders Green Building Council of Nigeria (GBCN) The Green Building Council of Nigeria (GBCN) will, in Other stakeholders are active in the fields of renewable all likelihood, drive the development of an acceptable energy, energy efficiency and rural electrification. Just to green building rating system, with a view to unifying name a few, the following organisations are mentioned competing concerns and providing a single useful metric here (this list is not exhaustive): for establishing the relative greenness of a building. This should be beneficial to the profession, as the majority of Council for Renewable Energy existing rating systems require measurements or quanti- in Nigeria (CREN) ties to determine if sustainability objectives for certain The Council for Renewable Energy in Nigeria (CREN) materials have been met. Quantity surveyors will gain a is a non-profit multi-stakeholder association which pro- mandatory role and unavoidable influence in any project motes the appropriate use of renewable energy technol- seeking to acquire an internationally recognised rating. ogy in Nigeria and the reduction of greenhouse gases [71] through reduced consumption of fossil fuels. CREN aims to bring together the professional sector, govern- Nigerian Institute of Architects (NIA) ment and civil services, academics, associations, industry, NIA is a member organisation of professional architects, financial institutions and services, the non-profit sector with the objective of promoting the practice of the pro- and end users. Furthermore it acts as a forum where fession of architecture in Nigeria. [60] stakeholders can work together for efficient, appropriate renewable energy implementation and develop a compre- Nigerian Institute of Building (NIOB) hensive sustainable energy strategy for Nigeria. CREN NIOB is a professional institute in Nigeria for persons works with all stakeholders to address the challenges of engaged in the profession in a managerial, technical or awareness, availability, cost and appropriate implemen- administrative capacity in the development, construc- tation in Nigeria. In particular, CREN seeks to create tion and maintenance of buildings, including those who public awareness of and foster the emerging availability are engaged in academic research and teaching. [41] of reliable, economically viable renewable energy systems.

Manufacturers Association of Nigeria (MAN) Refer to Chapter 7.4.2. [22]

Nigerian Society for Engineers (NSE) The NSE is the umbrella organisation for the engineering profession in Nigeria. The society looks after the professional needs of members through well-structured programmes and regular interactions among the different cadre of membership, enhancing high professional standard and ethical practices. [43] 5. ENERGY POLICY 66

The energy policy of Nigeria mainly encompasses the de- management and allocation of petroleum resources shall velopment and regulation of the petroleum industry and be in accordance with the principles of good governance, electricity supply. Both sectors were characterised by transparency, and promote sustainable development and large government agencies that were responsible for a economic value to Nigeria. [PIB; 2012] The legislation, large part of the activities but have undergone significant which envisages amongst other things a change in the changes in recent years. These sector and market modi- tax regimes for oil and gas production, has been held up fications are mainly driven by a constant move towards in the two houses of parliament for a large number of privatisation and liberalisation. months owing to political wrangling as vested interests seek to shore up their positions. In the course of this pe- First a general overview on the two relevant energy mar- riod, there has been a tendency among International Oil kets on petroleum and electricity is provided together Companies (IOC) to sell off onshore oil blocks to indige- with other relevant policy areas. Detailing the policy as- nous companies and to focus operations offshore. pects further, summaries of key energy policy decisions formulated in the relevant documents are given and ma- The Petroleum Industry Bill (PIB) defines all stipulations jor regulations recapitulated up. governing the exploitation, administration and organisation of the petroleum sector in Nigeria. It supersedes 5.1 Fuel Market Policy and Strategy all previous petroleum-related laws such as the Petroleum Profits Tax Act or the Deep Offshore and Inland Basin One of the pillars of the current administration’s Trans- Production Sharing Act. After establishing the objectives, formation Agenda is the progressive deregulation of the the Act tackles all major areas of the sector which are: the petroleum industry. The partial removal of the fuel sub- management of the petroleum industry by institutions sidy on Premium Motor Spirit (PMS) by the federal gov- and definitions for upstream petroleum, downstream li- ernment in January 2012 was intended to conserve and censing, downstream petroleum, indigenous companies, maximise Nigeria’s oil wealth. The government set up a health as well as safety and environment, taxation in the fund into which the revenue otherwise dedicated to the petroleum industry and stipulations for the organisation subsidy would be funnelled, which is called the Subsidy of the transition towards this new law. Reinvestment and Empowerment Programme (SURE-P) [57]. It is mandated with using the subsidy savings to in- The major items and stipulations are summarised vest in infrastructural projects and social empowerment in the following: initiatives. • The bidding processes for the award of mining licen- At the same time, by initiating complete elimination of ces is monitored by the Nigeria Extractive Industries the fuel subsidy the administration seeks to promote the Transparency Initiative (NEITI) establishment of new private-sector refining capacity • The re-structuring of the petroleum industry admin- in-country. Applications have been filed for licences for istration, with the this purpose, above all to build a large refinery in the – Minister of Petroleum Resources responsible for Lekki Free Trade Zone, Lagos. The foundation of new the formulation and monitoring of the petroleum refineries would serve to ease the regular market bottle- policy; the negotiating and implementing of inter- necks experienced in petroleum products. This goes hand national petroleum treaties and agreements with in hand with some of the objectives set out in the Petro- other countries or agencies on behalf of the leum Industry Bill. [PIB; 2012] The PIB stipulates the government; and advising the President on ap- ENERGY POLICY 67

pointments of chief executives of all companies on privatisation and liberalisation of the electricity sec- and agencies established pursuant to the Act. tor. This fundamental change was kicked off under the – Petroleum Technical Bureau (‘the Bureau’) tasked assumption that the creation of an investor-friendly en- to provide technical professional support to the vironment with low participation of governmental in- Minster on matters relating to the petroleum stitutions and strong central regulation would help the ministry. country to overcome the previously poor service, low • The requirement to the administration to conduct a availability and high frequencies of outages in the system public inquiry in the case of planning changes to the would be solved by the new market structure. regulation. • Reorganisation of the petroleum equalisation fund The policy was the basis for the formulation of the Elec- and its administration tric Power Sector Reform Act (2005), which constitutes • The transfer of the NNPC into separated, unbun- the legal foundations for the process. The transfer of dled companies catering for the sub-sectors and their NEPA to PHCN and the subsequent splitting up of its successive privatisation: assets into 18 separate successor companies responsible – The National Petroleum Assets Management for generation, transmission and distribution as well as Corporation the establishment of the regulatory authority NERC are – The National Oil Company the central pillars of the reform. – The National Gas Company On the commercial side, a Transitional Electricity Mar- 5.2 Electricity Market ket (TEM) is currently being established and will on its Policy and Strategy enactment be overseen by the regulator (NERC) and managed by the guaranteed off-taker (NBET). This is the 5.2.1 Introduction result of the first major step in the reform process set in motion in 2010, when President Goodluck Jonathan in- The policies governing the electricity market and corre- augurated the Roadmap for Power Sector Reform based sponding regulations have undergone significant changes on the 2005 EPSRA, aiming at the successful delivery of in the last two decades. The main focus has been the drive the reform milestones embedded in the roadmap. The from a monolithic, vertically-integrated organisation un- roadmap contained two core and fundamental objectives der the roof of the national utility National Electric Pow- at its launch. er Authority (NEPA) toward a multi-actor landscape in a liberalised and privatised market. In the late 1990s the Firstly, to transition the Nigerian power sector into a pri- population and the economy both grew rapidly while vate-sector led market (“The Reform Objective”) by insti- NEPA failed to keep pace with this demand increase by tuting transparent and responsible management, limiting adding more generation capacity and expand the electric- political interference, eliminating government involve- ity system. This development led into an energy supply ment in utility management, and encouraging private crisis in 2001. In reaction to the situation, in 2001 the investment in generation (privatisation of PHCN and Federal Executive Council (FEC) of the administration NDPHC assets). At the same time, the idea was to create of that period issued the National Electric Power Policy a level playing field for all investors. Secondly, the reform (NEPP), aimed at fundamental changes of ownership, process was intended to support and improve service de- control and regulation of the power sector. This and livery levels during this transition to the Nigerian public subsequent policies as well as legislative changes focused (“The Service Delivery Objective”). ENERGY POLICY 68

The overall intention behind the reform process was two- 5.2.2 Major Programmes and Initiatives, fold: to release government funds otherwise tied down in Policy Mix generating capacity and to avoid having to commit substantial public-sector revenues to providing additional All policy stems from the Electric Power Sector Reform capacity. In this way, government would be able to focus Act of 2005. In line with its goals, a National Energy more strongly on education, health and infrastructure. At Master Plan was formulated over the next 18 months, the same time, the hope was also that the reform would which culminated in an Electricity Master Plan in 2008. encourage fast expansion of the power sector by ensuring A roadmap for the reform of the sector was drawn up and it was market-driven and that the shortfall in generating approved in 2010, on which basis MYTO II was issued in capacity and the attendant potential demand would per- 2012, while the grid and distribution codes were likewise suade investors that they enjoyed a very real opportunity. set. This overall process occurred simultaneously to the preparation of the Gas Master Plan. During this period, Coincidentally, the Presidential Action Committee on the Renewable Electricity Action Programme, launched Power (PACP) was set up to fast-track the reform process in 2006, was shored up first, in 2010, by the National by enabling regular, fast round-table and cross-ministeri- Policy and Guidelines on Renewable Energy, and then in al decision-making. 2012 by the Renewable Energy Master Plan, which has still to be enacted but is consistent with the MYTO II Finally, the process of the continuous changes over the tariff provisions for renewables. A National Policy on Re- last two decades has been instrumental to the achieve- newable Energy and Energy Efficiency was developed in ment of the following key reform milestones include: 2013–14 by the FMP and is now with the FEC; it takes into consideration the draft National Operational Frame- • New Tariff (MYTO II) instituted- June 2012 work for Energy Efficiency Policy. Neither document has • Appointment of Manitoba Hydro International as as yet been moved forwarded into legislation. The draft TCN management contractor – June 2012 Energy Efficiency Bill still awaits enactment. The same • Winning Bidders for GENCOs and DISCOS situation prevails as regards rural electrification, where announced – November 2012 despite having released an initial Rural Electrification • Payment of 25% of the equity sale value by purchas- Strategy and Implementation Plan in 2006 and this hav- ers – February 2013 ing progressed in various forms to culminate in the 2013 • TCN Board Inauguration - April 2013 Rural Electrification Strategy and Implementation Plan, • Eurobond Commitment for Capitalization Support no legislation other than the general phrasing of the Pow- of NBET and Project Financing of TCN – May 2013 er Sector Reform Act has been forthcoming. This means • MYTO II Minor Tariff Review – June 2013 investors face a conundrum: The policy intention of but- • Outstanding 75% payment of power assets by bidders tressing renewables and rural electrification is clear, but – August 2013 as yet there is no firm regulatory regime governing them. • Handover of PHCN DISCOs and GENCOs to new owners – November 2013 Other than the Renewable Electricity Action Programme • 15% cash payments by the preferred bidders for the and the industry incentives for Renewable Energy (e.g. assets in early 2014. MYTO II), to date no mainline national programmes • Bidding process for NIPP GENCOs completed are in place that complement the policy mix. These two in spring 2014. programmes are intended to support policymaking, but without clearly enacted laws or approved master plans it ENERGY POLICY 69

is hard to see what impact they can have. The main bodies cilitating collaboration inside Nigeria and with the global of legislation (policy mix) and the various programmes community. The principal aspects under this context are put in place to support the use of renewable energy sourc- desertification, loss of forest cover, carbon dioxide emis- es, rural electrification and energy efficiency measures are sions, water scarcity or other changes in the environment the subject of the Chapters 6, 7 and 8. that directly affect the livelihood.

5.3 Climate Change Policy and Strategy The objectives are to reduce the impacts of climate change through adaptive measures that can be undertaken by the On September 12, 2012, the Federal Executive Coun- federal, state and local governments, civil society, private cil (FEC) approved a National Adaptation Strategy and sector, communities and individuals, including measures Plan of Action on Climate Change for Nigeria (NASPA- that will: CCN) as a national document for implementing climate 1. improve awareness and preparedness for climate change activities in Nigeria [3]. The policy is in line with change impacts the United Nations Framework Convention on Climate 2. mobilise communities for climate change adaptation Change and the Kyoto Protocol. actions 3. reduce the impacts of climate change on key sectors A National Advocacy Campaign on Adaptation in Nige- and vulnerable communities ria (NACAN) was set up to review the national policy on 4. integrate climate change adaptation into national, climate change strategy and the NASPA-CCN in detail sector, state and local government planning and into every five years. The first review of the NASPA-CCN in the plans of universities, research and educational or- 2015 will allow Nigeria to incorporate experiences into ganisations, civil society organisations, the private the 2015 review of Nigeria’s efforts to achieve the MDGs. sector and the media. Looking further to the future, the ten-year time frame for the second NASPA-CCN review cycle is in line with the The climate change policy regards energy resources and timeframe of Nigeria Vision 20:2020. connected infrastructure as vulnerable to the impacts of climate change. Since the supply of energy is a service of The strategy entails the vision of creating a country in public interest any negative change of its availability and which climate change adaptation is an integrated com- quality impedes the development of other sectors and ponent of sustainable development, reducing the vulner- citizens. So-called sustainable energy and also renewable ability and enhancing the resilience and adaptive capacity energy is regarded as a one of the measures to reduce risks of all economic sectors and of all people – particularly as regards energy supplies and the pressure on the envi- women, children, and men who have little resources – to ronment. The mitigation effect such technologies could the adverse impacts of climate change, while also cap- have due to their reduced or even non-existent emissions turing the opportunities that arise as a result of climate on the climate changes themselves are not considered as a change. reason for their promotion.

Its goal is to take action for adapting to climate change The FMENV’s dedicated climate change unit has a key by reducing vulnerability to climate change impacts and role to play in the implementation process and has since increasing the resilience and sustainable wellbeing of all the inception of the policy and strategy been devising the Nigerians; and to reduce or minimise risks by improving relevant programmes.34 The programmes of the ministry adaptive capacity, leveraging new opportunities, and fa- are further detailed in Chapter 6.1.2.

34 See the Brochure on Renewables published by the unit for an exhaustive list of projects and programmes. - 58 - ENERGY POLICY 70

FIGURE 5 – 1: 35 OVERVIEWFigure 5-1 ON: PRINCIPAL Overview POLICIES on AND Principal LAWS35 Policies and Laws

35 Source: [GIZ; Oct 2013]

20141121_Energy Sector Study_NESP Publication draft_v2.docx ENERGY POLICY 71

5.4 Milestones in National Energy fective contribution to the country’s economy. It covers Policy and Laws the development, exploitation and supply of all energy resources (petroleum and electricity), their utilisation by This section contains a summary of each of the major different sectors and other related topics such as the en- strategies, policies, acts, regulations, norms and stand- vironment, energy efficiency and energy financing as well ards. The relevant legislative and regulatory documents as energy policy implementation. [ECN; Apr 2003] are summarised in chronological order. An overview on the policies and regulations is also depicted in Figure 5–1. After a short introduction and overview, it looks briefly at the various aspects, describes the policy goals and lists 5.4.1 National Electric Power Policy individual objectives for the policy – which could also (NEPP), 2001 be understood as indicators to measure the achievement of the policy goals. The policy includes renewable energy This policy statement was the initial stipulation of the resources, rural electrification and expansion of electrifi- form direction in the electricity sector. It is the result of cation as well as energy efficiency at many points of the the consultations of the Electrical Power Implementation sector-wide framework. In this context, it elaborates in a Committee (EPIC), the central body tasked to elaborate, very straightforward manner on the policy goals, strate- coordinate and monitor all activities relating to the re- gies and goals for the respective energy sources including form, restructuring and privatisation of the power sec- renewable energy and rural electrification. It therefore tor.36 It defined the three principal phases for achieving provides the basis for subsequent changes in the sector the reform goal of a reliable and sufficient energy sys- such as the establishment of the Rural Electrification tem. The first step aimed at the privatisation of the ver- Fund later incorporated under the Rural Electrification tically-integrated parastatal company NEPA and the Agency as well as constituting a blueprint for all subse- introduction of IPPs as well as private emergency pow- quent policies on the promotion of renewable energy. er producers. The second step focused on increasing the Although some parts of the policy may require an update competition between market participants, reduction of and new developments in the sector are covered in sub- subsidies (i.e. payment of full fuel prices) and sale of ex- sequent policy papers or acts, the policy still remains in cess power to DISCOs. During the last phase the mar- force as the guiding principle for the direction of sector ket and competition would even be more intensified by reforms. [48] full cost pricing of supply, liberalised selection of supplier beyond the local DISCOs by larger customers and full Renewable energy: The NEP 2003 recognises that the competitive market trading. level of energy utilisation in an economy coupled with ef- The provisions were – to a large extent – incorporated ficiency of the conversion of energy resources is vital for into the Electric Power Sector Reform (EPSR) Act of the development of the economy. Thus, it made provision 2005.37 This marked the milestone for the implementa- for all forms of energy including renewable energy sourc- tion of the reform policy. es and how they can be effectively utilised.

5.4.2 National Energy Policy Energy efficiency and conservation: NEP 2003 pointed (NEP), 2003 out that energy utilisation of the country is far from efficient and called for the promotion of energy conservation This document was designed to stand as the first overall at all levels of exploitation of the nation’s energy resources framework for the development of the sector and its ef- by adopting energy efficient methods in energy utilisation.

36 International Institute for Sustainable Development (2008): Clean Energy Investment in Nigeria 37 [FMPS; 2006] ENERGY POLICY 72

Rural electrification: NEP 2003 recommends the pro- al Electric Power Policy adopted in 2001, provides a new motion of off-grid and standalone systems in order to legal and regulatory framework for the sector. The fun- supply electricity to remote areas of the country. damental change it entailed was the privatisation of the government-owned electricity company and the process 5.4.3 National Economic Empowerment towards a completely liberalised market. It stipulates the and Development Strategy (NEEDS), provisions for the vertical and horizontal unbundling of 2004 the electricity company into separate and competitive entities; development of a competitive electricity markets; The strategy issued in 2004 by the National Planning setting out of a legal and regulatory framework for the Commission under President Obasanjo was intended as sector; a framework for rural electrification; a framework the response to the development challenges of Nigeria. It for the enforcement of consumer rights and obligations: was intended to guide combating the grossly underesti- establishment of performance standards. It resulted mated extent of social, political, and economic decay in in the transfer of the previously public power company, the country since 1999, to serve as an overarching state- NEPA, into a (temporary) Holding Company, the Power ment for the following years (2003–2007) to consolidate Holding Company of Nigeria (PHCN) - called “Succes- the achievements of the previous legislative period and sor Company” in the legal text. The reform act in general formulate the basis for further sustainable poverty reduc- kicked off the horizontal and vertical unbundling and tion, employment generation, wealth creation, and value privatisation of the NEPA by the following processes: reorientation. 1. Transfer of NEPA assets to the holding company PHCN and its successive restructuring by privatisa- As regards infrastructure, the policy promotes the priva- tion and transfer into 18 different generation, distri- tisation of infrastructure which is regarded as key instru- bution and transmission companies; ment for achieving improved service delivery. The govern- 2. Development of a competitive electricity market by ment would still remain important for funding projects creation and operation a wholesale electricity market with high investment requirements or low attractiveness in Nigeria; for the private investors (i.e. rural areas). The document 3. Foundation of the Nigerian Electricity Regulatory further suggests increasing the share of renewable ener- Commission (NERC) as national regulatory body to gy in the total energy mix. It again stresses the need for oversee the market and administer licenses the renewable energy agency and its equipment with 4. Requirements for licensing, its conditions and regu- respective funds through the Electric Power Sector Act lation of the generation, transmission, system opera- (i.e. the National Power Sector Reform Act). It therefore tion and distribution, as well as supply of generated represents one more step towards inclusion of the role of electricity; renewable energy in the power sector and emphasises the 5. Introduction of tariffs and corresponding calculation importance of continued efforts for rural electrification. methodologies to be elaborated and adopted by NERC 5.4.4 National Power Sector Reform Act 6. Implementation of consumer rights and consumer (EPSRA), 2005 protection including the Power Consumer Assis- tance Fund to subsidise the tariff for less-privileged In 2005, the Nigerian energy sector was liberalised by the consumers Electric Power Sector Reform Act (EPSRA) [EPSRA; 7. Use guiding standards and codes as guidelines and 2005]. This Act, which is a consequence of the Nation- requirements for activities in the sector; ENERGY POLICY 73

8. Establishing a Rural Electrification Agency to ex access to electricity including the use of renewable energy. pand access to electricity to the rural areas and the financing of its activities. 5.4.5 Renewable Electricity Policy Guidelines (REPG), 2006 The reforms under this Act were to be done in consecutive phases. The implementation of the reform started well, The document issued by the Federal Ministry of Power but suffered delays. For instance, even though licences and Steel stipulated that the federal government would were granted for the private sector to build independent expand the market for renewable electricity to at least five power plants, the very low tariffs made it impossible to per cent of total electricity generation and a minimum of fully recoup the costs of doing business and thus prevent- 5 TWh of electric power production by 2016. ed investments in new generation capacity and necessary upgrades to the transmission and distribution networks. The Policy Guidelines on Renewable Electricity (herein referred to as the Policy Guidelines) is the federal govern- In short, the law restructured the whole energy landscape ment’s overarching policy on all electricity derived from of the country along the value chain with different play- renewable energy sources. The Policy Guidelines sets out ers for generation, transmission, distribution and com- the federal government’s vision, policies and objectives mercialisation. The intention was to increase competition for promoting renewable energy in the power sector. significantly by establishing a Wholesale Electricity Mar- ket (WEM) and promoting the participation of private In the document, renewable energy is clearly regarded as companies in the generation as Independent Power Pro- means to extend electricity services to those not yet con- ducers (IPP). nected to supply sources (e.g. new settlements in urban areas) and to run electrification campaigns in rural areas. The law can be considered as the most important legisla- These aspects make a clear distinction between it and oth- tion in the sector and resulted in a broad range of changes er energy generation technologies – with the exception of within recent years since it lays a foundation for the new diesel based generation. As a final goal, renewable energy institutions, restructuring older public enterprises, and shall in the mid-term be integrated into the energy mix of sets the future direction of the power market. the national grid. The policy recognises the advantages renewable energy can bring to the system such as adding In terms of renewable energy, the Act encouraged the pro- additional generation systems to the constrained system, motion of electricity generated from all sources of energy enhancing the stability mitigating local disruptions in including renewable energy by mandating NERC to cre- supply and reduction of emission. ate a level playing field in the Nigerian electricity market. The Act also mandates NERC to ensure that all electrici- The document gives a very brief overview on the electricity generated is fed into the grid and is efficiently sourced ty sector situation, recaps the role and situation of renew- and delivered to the consumers. The Act recommended able energy against the background of other policies and the creation of the REA and stipulates under section the legal framework, reviews the existing and preceding 88(9) that information presented to the President by the policies including their targets, formulates RE policy Minister of Power and Steel should include expansion of objectives, and sets the following policy goals along with main grid, development of isolated and mini-grid systems, respective strategies: and renewable energy power generation. The REA was also mandated to provide a strategy plan for expanding 1. Expansion of the market for renewable electricity to ENERGY POLICY 74

at least five percent of total electricity generating 5.4.6 Renewable Electricity Action capacity and a minimum of 5 TWh of electric power Programme (REAP), 2006 production; 2. Establishment of stable and long-term favourable The Renewable Energy Action Programme (correspond- pricing mechanisms and ensuring of unhindered ing to the REPG) was issued by the Federal Ministry of access to the grid with guaranteed purchase and Power and Steel in 2006. transmission of all electricity produced by renewable electricity producers and obliging the grid operators The Renewable Electricity Action Programme (REAP) upgrade the system accordingly; was produced the same year and sets out a roadmap for 3. Construction of independent renewable electricity implementing this policy. The document provides an systems in areas not covered by the electricity grid; overview on the electricity and puts the situation of the 4. Development of innovative, cost-effective and practi- renewable electricity in this the context of the sector. Sub- cal measures to accelerate access to electricity services sequently, it gives an overview on the Renewable Energy in rural areas through renewable sources; potentials, technologies and market and then elaborates 5. Setting up of a Renewable Electricity Trust Fund to on the development targets per technology and applica- be governed by the Rural Electrification Fund. tion, strategies for their achievement, outlines financing 6. Creation of a multi-stakeholder partnership for the procedures via the Renewable Electricity Fund (REF) delivery of renewable electricity to meet national de- and other sources, looks into roles of government bodies velopment goals; and concludes with a risk assessment as well as structures 7. Broadening international cooperation in expanding for monitoring and evaluation. the role of renewable electricity for meeting national development goals and contributing to global efforts The study is relevant for mid-term on-grid renewable en- in addressing climate change. ergy but more interesting for the rural energy supply since this was the principal application area of Renewable En- Further to these goals, the document looks at the energy ergy at the time of writing. reserves and renewable energy potentials, the global capacities and technologies together with their costs trends. The core focus of the document is on utilising all forms of renewable energy sources for electricity generation and REPG recognised that Nigeria’s electricity needs cannot highlights potential gaps, technical assessments and fi- be met through conventional energy sources alone, espe- nancial implications, benefits and limitations of Nigeria’s cially in rural areas where grid expansion and access is renewable energy sources potentials. However, this pro- very limited in the short-medium term. Off-grid renew- gramme seems to be abandoned with the restructuring able energy electricity operations are vital to meeting the of the Ministry of Power and Steel to the new Ministry federal government’s policy on the electric power sector of Power. and expanding access to rural areas. Rural electricity options via renewable energy sources offered include mi- 5.4.7 National Biofuel Policy and ni-grid concession and standalone systems. In financing Incentives (2007) renewable electricity, REPG provides that rural electrification trust funds (RETF) should be set up to promote, This document was issued at the peak of the global biofu- support and provide renewable electricity through pri- el promotion trend and formulates a biofuel support pro- vate and public sector participation. [FMPS; 2006] gramme aiming at integrating the agricultural sector of ENERGY POLICY 75

the economy with the downstream petroleum sector. The sions and ozone pollution as well as reduction in particu- authors assumed that biofuels would impact on the qual- late emission and replacement of toxic octane enhancers ity of petroleum products from a market perspective in gasoline. where the use of fossil-based fuels have been increasingly regarded as an environmental concern and demand for The most distinct targets of the policy include: more environmentally friendly fuel has risen worldwide. • Contribution of all biofuels companies with 0.25% of their revenue towards funding research into feed- As regards biofuels, the document refers to ethanol and stock production, local technology development and bio-diesel or other fuels made from biomass and pri- improved farming practice marily used for automotive, thermal and power gener- • An import duty waiver for biofuels granted by for 10 ation, according to quality specifications stipulated by years will be required the national norms and standards. Under biomass, the • Exemption from taxation, withholding tax and cap- policy-makers understand agriculturally produced raw ital gains tax imposed in respect of interest on foreign materials which are available on a renewable or recurring loans, dividends, services rendered from outside Nige- basis, including trees, crops, plant fibre, cellulose based ria to biofuel companies by foreigners. materials, industrial wastes, and the biodegradable com- • Launching of a preferential loan arrangement to in- ponent of municipal solid waste. vestors in the biofuel industry to aid the development of large-scale Schemes and large scale integrated op- Biofuels are often linked to clean technologies and may eration including a plantation, a plant and within-the reduce climate change threats in terms of air emissions gate colocated power generating plants. and greenhouse gases. Biofuel is also a form of renewa- • Blending of up to 10% of fuel ethanol with gasoline ble energy that can boost economic development of rural to achieve a blend to be known as E-10 during the areas through industrialisation, business and infrastruc- seeding phase of the programme tural development thus creating employment leading to • The Biofuel Production programme aspires to achieve poverty reduction. 100% domestic production of biofuels consumed in the country by 2020. The objective of the policy was the development and pro- • Off-take guarantee by NNPC for biofuels as buyer of motion of a national fuel ethanol industry utilising agri- last resort. cultural products in order to improve the export proper- ties of automotive fossil-based fuels produced in Nigeria. The objective was to implement the policy in two phas- The policy sets out to link the agricultural and energy es: the market-seeding phase and the operational biofuel sectors with the underlying aim of stimulating develop- production programme. During implementation, several ment in the agricultural sector. The following benefits components were to be considered for a successful attain- were intended to be achieved: additional tax revenue ment of the objective: setting up a Biofuels Energy Com- by economic activities of this industry, job creation, in- mission, establishment of a Biofuels Research Agency creased economic development and empowerment of and further measures such as granting the industry and rural communities, agricultural benefits via improved its products pioneer status, support of importation, ex- farming techniques, increased agricultural research, and ecution of blending by NNPC, installation of industry increased crop demand resulting from activities in the incentives, instantiation of off-take guarantees and inte- industry, energy benefits from co-generation benefits, -en grating government ministries and state agencies in the vironmental benefits with the reduction of exhaust emis- sector development activities. ENERGY POLICY 76

Although the policy seems to be in force, no information the National Integrated Power Projects. It develops a set is available as to the extent to which it has been imple- of recommendations and proposals for the continued de- mented and whether adjustments have been made to it in velopment and reviews the media coverage of the reform. light of experiences gained with the first steps and after feedback from players in the agricultural and petroleum The principle issues and activities required for the full subsectors. The major player, NNPC performed feasibil- implementation of the reform agenda are: ity studies on ethanol production as well as cassava and palm-oil-based products but only mentions a few pro- • development of an optimal transmission capacity ex- jects and initiatives on its website. It can be concluded pansion plan and funding strategy to provide a reliable that the topic gained most interest during the peak years highway for wheeling generated power; 2009–2012 of the global move towards biofuels but lost • acceleration of the management and operational effi- momentum after this source was largely criticised for its ciency levels of the Transmission Company of Nige- conflicting use of foodstuff and agricultural land for the ria (TCN); cultivation thereof. • improvement of collection efficiency and returns to the market during the pre-Transitional Electricity 5.4.8 Roadmap for Power Sector Market (TEM) declaration stage; Reform, 2010 and 2013 (Update) • commencement and conclusion of all labour negotiations, settlement of liabilities, rationalisation and In December 2012, the Presidential Task Force on Pow- eventual winding down of the Power Holding Com- er (PTFP) presented its Roadmap for Power Sector Re- pany of Nigeria (PHCN). form - Revision 1 (August 30, 2013) [PTFP; 2013] based • continuation of the clear and firm political will to on the Roadmap for Power Sector Reform 2010 [PTFP; resist efforts that could undermine privatisation and 2010] including reviewed and fine-tuned plans and strat- the reform. egies to finalise the drive to complete the power sector re- • firm commitment to deliver the gas development and form and setting the nation on a steady course to produce transportation infrastructure projects earmarked for clean and efficient electricity in the country at competi- gasto-power alignment. tive rates. The Roadmap does not, in principle, introduce • prevention of frequent acts of vandalism to pipelines new policies but rather sets strategies to accelerated ac- such as the Trans-Forcados and Trans-Niger crude tions for achieving the objectives of the National Energy oil lines, and the Escravos Lagos Pipeline Systems Policy (2003) as enshrined in the Electric Power Sector (ELPS) gas pipelines. Reform Act (EPSRA) of 2005. It aims at providing an • clarity on the interim operation and maintenance of update on the status of the reform as well as pointing out the National Integrated Power Projects (NIPP) gene- critical issues and challenges which should be addressed ration assets; in the period of 2013–2014. • firm commitment from NIPP to deliver its critical transmission projects scheduled for 2013 as well as After describing memoranda from key market institu- the Omoku, Gbarain and Alaoji power plants to tions and assessing their respecting performance with re- come on stream without further delay; gards to the implementation of the reform, the roadmap • meeting of the conditions precedent to the declaration takes a closer look at the key aspects of the sector and the of TEM, before the handing over the successor com- development including fuel-to-power (i.e. fossil fuel sup- panies to the new owners. ply), generation, transmission and distribution as well as • positioning a well-capitalised Nigerian Electricity ENERGY POLICY 77

Liability Management Company (NELMCO) to sumption, e.g. by undertaking major efforts to increase address post hand-over fall outs from creditors. the overall energy efficiency. • securing a minimum, transitional service-delivery level through project and process optimisation. The country’s dependence on the exploration of petroleum is seen as a major weak point in the economy and the The Roadmap is very limited in terms of renewable energy, document establishes the need to diversify the national energy efficiency and rural electrification. The core focus income away from that source. This concern is based on of the Roadmap was on other forms of energy delivery major market and demand-side trends and concerns as systems. In summary, it is the guiding high-level plan- regards the production outlook. This includes the as- ning document of the administration containing a review sumption that the world market for petroleum does not of the reform process since 2010 and a listing of action for evidence the same upward trend as in previous years and the next planning period complied based on the check of will thus not allow sufficient revenues to be garnered to the performance, development and progress. sustain the envisaged GDP growth. It is recognised further that other countries are trying to move away from 5.4.9 Relevant Sections of Vision exclusive dependence on fossil fuels and that global trea- 20:2020, 2010 ties on carbon emission reductions require relevant policy changes in order to react to the new circumstances. Aside The Vision 20:2020 as released at the end of 2010, out- from the world economic down-turn of the post-finan- lines the path for the global and national vision to posi- cial crisis years after 2008 and the resulting contraction tion the country among the leading 20 economies of the in global demand and the buyers-side energy mix diver- world in 2020 and aims at a holistic transformation of the sification trend, the discussion on the expected rise in economy. The vision programme identifies the barriers to demand from emerging markets and the possibilities of the country’s development (e.g. unreliable power supply, ‘peak oil’ being reached in the medium term all contrib- poor and decaying infrastructure, high dependence on ute toward this motivation to broaden the sources for na- the oil sector) and names the directions for achieving the tional income and the energy policy. target using a strategy of three main pillars building one on to each other. These central parts aim at guaranteeing The impact on the national economy is mentioned as be- foundation productivities and wellbeing, optimising key ing the most prominent driver for triggering a change factors of economic growth and at promoting a sustaina- in the energy sector – including petroleum production ble economic development. [24] and electricity provision. Mitigation of climate change and protection of the environment play a far smaller role. Energy provision is regarded as a key component of all By aiming at including these aspects into education and three pillars. Its development is intended to be led by the awareness programmes, this may change in the future, i.e. private sector in a liberalised market. The role of govern- during or after implementation of the Vision’s plan. One ment and state agencies shall then be limited to provid- consequence is that the objectives for the energy sector ing the legal and regulatory environment. Overall, an development are developed on the assumption that a increase of the installed capacity to 35,000 MW by 2020 similar energy intensity as other emerging or developed is planned for. The vision does not detail what study or countries (India, China) is required in order to achieve factor was used to determine this target nor does it state the Vision’s targets. The Vision document deduced a stra- whether any efforts are planned to de-couple economic tegic roadmap for power generation with three different development (growth) from an increase in energy con- horizons: ENERGY POLICY 78

• Horizon I (short-term): a 6 GW capacity base by • an increase in training efforts by strengthening 2009 achieved by rehabilitation of the existing the National Power Training Institute of Nigeria PCHN plants and completion of on-going IPP projects; (NAPTIN) • Horizon II (medium-term): encouragement of IPPs • an enforcement of transmission capabilities, system to increase capacity at their plants and putting ongoing redundancies, demand-side management, introduc- NIPP projects on fast-track shall more than treble tion of energy efficiency measures in industry, en- capacity to 20 GW; largement of the gas network for supplying gas-fired • Horizon III (long-term): the plan is to achieve the power plants final target capacity of 35 GW by adding large hydro- • complete privatisation of the distribution systems power schemes, coal-fired power facilities and renew- (DISCOS) including billing and factorisation. able energy plants through the IPP model. • broad adoption of renewable energy technologies (RET) for electrification and heating in the context The Vision documents do not mention any analysis of es- of rural and semi-urban settlements. timated demand or load expressed in energy consumed but simply describe capacity targets. This rather tradi- Over and above these general plans, the dedicated ener- tional perspective driven by conventional installations gy working group detailed the Vision’s goals further and with high capacity factors will make it much more diffi- redefined them slightly. This led to the following global cult to plan an increasingly diverse system. priorities, namely to:

Since these plans require a considerable amount of in- • attract private investments for a capacity increase in vestment – with the expectation being that this is mainly all subsectors driven by the private-sector – the Vision creates an envi- • consolidate and complete the ongoing efforts to ronment that is purportedly attractive to outside inves- establish effective institutions and an appropriate tors. The idea in the Vision is to achieve this by further regulatory environment; development towards deregulation and a transparent • enhance supply security by utilisation of renewable regulation, provision of guarantees for investments and energy sources allowance for a reasonable rate of return. • reinforce and broadly expand local content in all energy subsectors (oil and gas, electricity) Measures proposed to achieve the targets include: • foster sustainable generation and consumption patterns. • the promotion of alternative technologies which include hydro, wind, solar, biomass, coal and nuclear – For each of the subsectors, further objectives, goals, strat- all with the goal of decreasing reliance on gas-fired egies and initiatives were outlined which will help to ar- plants. This statement ironically contradicts other rive the overall vision targets described. The objectives stipulations in the Vision document, such as the fact were stipulated quantitatively per subsector (oil, gas) and that reducing the dependency on external markets per technology. These clear goals were underpinned by does not sit well together with the plan to use nuclear the respective strategy necessary to drive the initiatives power and coal-based generation as major energy sup- described. The group has also listed the time-frame (short, ply sources, whereas the share of gas (a source which could mid, long term) for the required activities and the author- be easily combined with renewable energy systems) ities required to execute theses. shall be decreased. ENERGY POLICY 79

Vision 20-2020 recognises the importance of Nigeria’s Simultaneously to the overall increase in power supply renewable energy resource potential in meeting national from renewable energy sources, the REMP targets higher electricity targets. Therefore, it called for various meas- electrification rates, from 42% in 2005 to 60% in 2015 ures and strategies as contained in the document to and 75% by 2025. Below we shall return to the precise support the sustainable integration of renewable energy targets set for each subsector of renewable energy. How- generated electricity into the energy mix of the country. ever, in this context it is important to note that the Some of the goals highlighted in the document include: REMP has still not been signed off by the government • achieving a 15% and 20% contribution of hydro- or formulated into a law governing the renewable energy power to the nation’s electricity generation mix by development. Only once that has happened will investors 2015 and 2020 respectively; have a clear path for drawing on the various financial in- • ensuring a 1% contribution of wind energy to the centives envisages, such as pioneer status (tax exemption) nation’s electricity generation mix by 2020; and custom duty waivers. • attaining a 1% contribution of solar energy to the nation’s electricity generation mix by 2020; The REMP still has to be approved by the National As- • replacing 50% of firewood consumption for cooking sembly to be passed into law. It stresses the importance of with biomass energy technology by 2020; solar power in the country’s energy mix. Based on the • putting in place an power generation capacity of REMP, Nigeria intends to increase the supply of renew- 1,000 MW using biomass resource; able electricity from 13% of total electricity generation • maintaining a biofuel blend not exceeding 10% in in 2015 to 23% in 2025 and 36% by 2030. Renewable transport fuels by 2020 using locally produced electricity would then account for 10% of Nigeria’s total renewable biofuels from secondary biomass energy consumption by 2025.

The current administration has responded to the need for The master plan also includes topics that are common to a holistic transformation of Nigeria in its Transformation all subsector programmes, such as Agenda, which covers the period 2011–2015. This Trans- • The legal, regulatory and institutional framework, formation Agenda is based on the Nigeria Vision 20:2020 • incentives (financial and fiscal, e.g. tax exemptions), and the 1st National Implementation Plan (NIP). [56] • capacity building (human and infrastructural), • inter-agency/governmental collaboration, 5.4.10 Renewable Energy Master Plan, • research and development, 2005 and 2012 (Update) • monitoring and evaluation, • renewable energy portfolios and feed-in-tariffs. The Renewable Energy Master Plan (REMP), drafted by the Energy Commission of Nigeria and the United Na- The detailed targets are further analysed in Chapter 6.3. tions Development Programme (UNDP) in 2005 and reviewed in 2012, expresses Nigeria’s vision and sets out 5.4.11 National Renewable Energy and a road map for increasing the role of renewable energy in Energy Efficiency Policy (NREEEP), 2014 achieving sustainable development. The REMP is not specifically differentiating between on-grid and off-grid The National Renewable Energy and Energy Efficiency generation, however, it refers to integrating renewable Policy (NREEEP) outlines the global thrust of the poli- energy into buildings, electricity grids and “other distri- cies and measures for the promotion of renewable energy bution systems”. [ECN; 2013] and energy efficiency. NREEEP seeks to bring to the -at ENERGY POLICY 80

tention of policymakers the economic, political and so- ing of new and existing renewable electricity genera- cial potential of renewable energy. It recommends that an tion activities; appropriate strategy should be developed to harness these 3. declare that the proportion of Nigeria’s electricity potentials in order to add value to the ongoing changes generated from renewable energy sources shall in- in Nigeria’s power sector. The document also stipulates crease to a level that meets or exceeds the ECOWAS that existing policies lack a coherent and all-encompass- regional policy targets for renewable electricity gen- ing framework that drives the sector and therefore calls eration and energy efficiency for 2020 and beyond; for an integrated renewable energy and energy efficien- 4. declare energy efficiency to be a major, low-cost, and cy policy which will serve as a useful vehicle that limits under-utilised Nigerian energy resource offering sav- conflicts in the future and promotes development and de- ings on energy bills, opportunities for more jobs, ployment of renewable energy technologies in Nigeria. It improving industrial competitiveness, and lowering can be regarded as an umbrella document consolidating air pollution; the various other aforementioned policies and strategies 5. recognise that poverty mitigation and environmental in one document. NREEEP was developed by the FMP protection are hindered by the continued predomi- in 2013/14 and is currently before the Federal Executive nance and inefficient use of oil and natural gas in Council for approval. meeting our energy needs; 6. take a step in the right direction and broaden the This policy encourages the development of a nation- definition of energy security to include renewable al renewable energy action plan and a national energy energy and energy efficiency as equally important efficiency action plan which will facilitate the overall indigenous sources of energy, in addition to oil and achievement of the objectives it sets out. The NREEEP gas; recognises the multi-dimensional nature of energy and 7. incorporate provisions for renewable energy and therefore addresses diverse issues such as renewable ener- energy efficiency generation activities into govern- gy supply and utilisation; renewable energy pricing and ment policy statements and plans, and recognises the financing; legislation, regulation and standards; energy importance of enabling framework conditions for efficiency and conservation; renewable energy project -im private investment in renewable energy and energy plementation issues; research and development; capacity efficiency; building and training; gender and environmental issues; 8. set national targets for achievements in electricity planning and policy implementation. The overall focus of from renewable energy and energy efficiency capacity the policy is on optimal utilisation of the nation’s energy addition by 2020 and beyond; resources for sustainable development. 9. require the preparation of a national action plan for renewable energy and for energy efficiency and set a The purpose of this policy on renewable energy and ener- time frame within which implementation is required; gy efficiency is to: 10. recommend that the signatory parties to this policy 1. set out a framework for action to address Nigerians’ should collaborate in preparation of the action plans challenge of inclusive access to modern and clean and work together in achievement of the final man- energy resources, improved energy security and cli- datory targets; mate objectives; 11. make it mandatory for the Ministry of Power to facil- 2. recognise the national significance of renewable elec- itate the development of an integrated resource plan tricity generation activities by providing for the de- (IRP) and ensure the continuous monitoring and velopment, operation and maintenance, and upgrad- review of the implementation and effectiveness of the ENERGY POLICY 81

action plans prescribed under the national policy • new-entrant gas power plants statement; • new-entrant coal-fired power plants 12. take steps away from the overheated rhetoric that • successor large hydropower plants Nigeria’s future energy independence be secured by • small hydropower plants ever more gas and oil consumption; and • land-mounted wind power plants 13. facilitate the establishment of a framework for sus- • solar power plants tainable financing of renewable energy and energy efficiency projects and programmes in Nigeria. The details of MYTO II and the implications of a feed-in tariff system are outlined in detail in Chapter 6. The situation and expansion path for the renewable energy sector is described in Chapter 6 (On-Grid Renewable 5.4.13 Draft Rural Electrification Energy) while the status and development of energy effi- Strategy and Implementation Plan ciency is detailed in Chapter 7 (Energy Efficiency). (RESIP), 2014

5.4.12 Multi-Year Tariff Order (MYTO) Rural electrification is coordinated at the federal level, whereby implementation is at the state level. The draft The Multi-Year Tariff Order (MYTO), which is set to RESIP, which is also an outline of the policy as innate in cover a total of 15 years going forward and is reviewed the EPSRA section on rural electrification, is a national biannually, sets a feed-in bandwidth in order to ensure document that applies pari pasu to the states and local there are clear rules in the interim market. The MYTO II government areas. According to a draft version of May policy document in its latest revision (1 June 2012 to 31 2014, it proposes that: “The primary objective of the Ni- May 2017) states: gerian Rural Electrification Policy and by extension this “In Nigeria, the true cost of electricity production is not re- Rural Electrification Strategy and Implementation Plan flected in the consumer tariff. MYTO II is intended to be is to expand access to electricity as rapidly as can be af- costreflective and provide financial incentives for urgent- forded in a cost-effective manner. This implies full use of ly-needed increased investments in the industry. These both grid and off-grid approaches, with subsidies being investments, in turn, lead to a significant and continuous primarily focused on expanding access rather than con- improvement in the quantity of energy and quality of ser- sumption.” It seeks to do so by “promoting a full menu of vice enjoyed by the consumer (…). NERC has determined rural electrification options, grid, off-grid, mini-grid and that the price of electricity to be paid to generators will be standalone systems”. [FMP; 2014] at the level required by an efficient new entrant to cover its life cycle costs (including its short-run fuel and operating The relevance to rural electrification is outlined in costs and its long run return on capital invested) (…). It is Chapter 8.3.1. pertinent to note that feed-in tariffs have been developed for investors wishing to invest in generation capacity that uti- 5.5 Key Electricity Market Regulations lises other sources of energy including solar, wind, biomass and small hydro.” [NERC; Jun 2012] 5.5.1 Regulations on the Procurement of Generation Capacities, 2014 Although not yet operational, the MYTO II sets the feed-in tariff for the following categories of generation: The Regulations on the Procurement of Generation Ca- • successor gas power plants pacities, 2014 issued by NERC, sets out rules and require- ENERGY POLICY 82

ments for the acquisition of additional generation capac- 5.5.2 Embedded Generation ities by a licensed buyer authorised to trade electricity Regulations, 2012 from generation companies. The objective is to establish clear instructions, specify technical standards, enable full In the Embedded Generation Regulations NERC de- transparency on that process and facilitate the involve- fines the standard rules for embedded generators and the ment of the private sector. The definition extends to any operation of electricity supply systems. It equally de- generation system being connected to the transmission scribes the responsibility of distribution planning includ- system or an embedded generator in the distribution net- ing forecasting of demand, analysis of the impact of new work. connections, grid expansion planning, monitoring and solving supply quality problems, execution of necessary The procedures include the procurement process, criteria studies and attributes these to the holders of distribution of bidders and their qualification, requirements for re- licenses. [37] quests for proposals, the bidding process and the implementation of the contract including PPA. Further to the Embedded generation is defined as generating units that central aspects, the communication protocols as well as are connected to the national grid through the distrib- auditing and control procedures are defined. utor and therefore connected indirectly. The following definitions apply (cf. Table 5–1): The regulation includes all transactions for generation facilities beyond the lower threshold (“small power plants”) If embedded generation units are to be connected to the of 10 MW. The main actor in the process is the future distribution network, then this shall be done in accord- buyer of the additional capacities while its procedures are ance with the Distribution Code. However, embedded overseen and approved by NERC. Procedures include generation providers are not obliged to maintain a public the application of new generation capacity to NESI, the connection. In addition, operators of renewable energy establishment of qualification criteria for the bidders, power systems shall ensure that where storage is not re- requirements on the request for express of interest and quired, flexible generation exists to allow the intermit- their evaluation for the qualification of potential bidders, tent and uncertain power to be absorbed into the grid on conditions for the proposal process and evaluation of bid- a priority basis. The regulation prescribes that the licen- der’s proposals. The regulation only outlines the struc- see shall enter into the various network agreements such ture, sequence and formal requirements on the process. as a power purchase agreement, a connection agreement/ The actual criteria and detailed conditions (often subject interface agreement, a use of networks agreement, and an to the specific technology or project) are not part of the ancillary services agreement with the relevant authori- document. ties. In particular an end-user tariff shall be negotiated

TABLE 5 – 1: EMBEDDED GENERATION - LICENSING DEFINITIONS38 Rated Capacity Connection Voltage Level Small units with 1 MW - 6 MW 11 kV medium distribution voltage Large units with 6 MW - 20 MW 33 kV medium distribution voltage ≥ 20 MW 33 kV medium distribution voltage for every 20 MW being evacuated

38 Source: [NERC; Jan 2012] ENERGY POLICY 83

between the embedded generation provider and the eligi- After a definition of licences and their application, the ble customers. Tariffs shall be fixed for a specified period, procedures state in detail how these permits will be grant- subject to periodic reviews and approval by NERC. ed, establish the conditions for operation of the networks including provisions on the detailed evacuation capaci- Equally as in the other regulations, an embedded genera- ties to be foreseen per plant type or peak capacity, and tion (EG) system is a generator directly connected to and finally conclude with the obligatory definition of terms. evacuated through the distribution grid. Most small and mid-sized renewable energy systems are very likely to be 5.5.4 Transmission, Distribution connected directly to the distribution either due to the and Metering Codes voltage level or driven by the location and connection costs. The Nigerian electricity networks are governed by two main codes, the National Grid Code for the Transmis- The complete processes and provision include access con- sion System (Tx) and the Distribution Code (Dx). For ditions to the distribution system, connection require- commercial operation of a power plant the Metering ments and the special requirements for renewable energy Code is another important document and provides power systems (REPS) with references to the relevant details on the limits of supply and invoicing. All codes bounding sections in the metering code, the commis- currently in force refer to relevant section in the Electric sioning procedures with the testing and inspection rules Power Sector Reform Act. [35] as well as documentation requirements. Over and above the technical procedures and requirements, commercial The Grid Code and Distribution Code of Nigeria de- procedures and arrangements as well as losses are defined scribe in a clear and consistent way the requirements for and the sequence of the application process outlined. synchronous generators connected to transmission levels The document concludes with a list of requirements for and embedded generators. However, renewable genera- license applicants, classification of EG and finally a defi- tors are not specifically addressed either in the connec- nition of relevant terms. tion conditions of the Code or in the Operation Code. This mainly includes requirements for the behaviour of 5.5.3 Regulations for Independent renewable generators during network disturbance (e.g. Electricity Distribution Networks FRT capability, voltage support during grid faults; Reac- (IEDN) tive power capability during partial load operation; and Frequency control/Active power requirements). This document states the necessary provisions for the issuance of licences for distribution network operators and 5.5.4.1 Grid Code electricity distributors independent of the distribution company of Nigeria (NB: after the completion of the pri- The Grid Code, also abbreviated as the Code, stipulates vatisation, this now entails all actors in the distribution the conditions for the electricity transmission system in field.). An Independent Electricity Distribution Network Nigeria. According to [EPSRA; 2005], the Transmission (IEDN) entails all isolated rural or urban networks not and System Operating Company (TCN) is tasked to connected to the national grid and embedded networks. guarantee functioning transmission system operations of An IEDN is required either to operate its own generator the high-voltage network and is responsible for oversee- or to obtain electricity from another distribution compa- ing operations. The document is the reference document ny via a service agreement. [NERC; 2012] for the day-to-day operating procedures and principles ENERGY POLICY 84

governing the development, maintenance and operation. works in the voltage range from 240 V up to 33kV. By It was designed with two goals in mind: facilitating ef- law, the DISCOs are responsible for overseeing network ficient production and supply of electricity for all users operations and retail sales of electricity. [35], [40] of the transmission system and TCN itself, on the one hand, and enabling competition in the generation and To support this function the Distribution Code (DCode) supply of electricity in the country, on the other. Thus, establishes a Distribution Code Review Panel and regu- it is mandatory for all users of the transmission system, lates how unforeseen circumstances beyond technical including TCN, to comply with these prescriptions. The definitions of the document shall be handled. The first document is being reviewed by the dedicated Grid Code chapter explains the processes during distribution plan- Review Panel. [34] ning with requirements on the relevant planning data, planning documents, load forecasting, exigencies on dis- The code is prepared in a well-structured manner explain- tribution planning and system studies. Conditions for ing the background, scope and application of the docu- alterations of the system by new connections or modifi- ment itself, establishes principles for system planning cation are governed in Section 3, starting with the appli- including load forecast, expansion planning, user involve- cation process including connection agreements and de- ment and requirements for relevant data. The key section scribing commissioning, showing ownership boundaries from a plant developer’s and operator’s point of view is (i.e. limits of supply). The most important part for the the chapter on connection conditions. It details the re- system designer is Section 4, which states the details of quirements on the performance characteristics with the the requirements of the grid connection point including principal parameters such as frequency and voltage, the frequency, voltage, protections and grounding, stand- sequence and conditions of the connection process and ards, requirements on generators with the definitions of generally specifies the SCADA system, telecommunica- the connection point. The DCode regulates operations tion and data exchange. The last chapter dealing with the including planning, system texting and safety prescrip- system operation is important for keeping up availability, tion and concludes with construction and maintenance stability and performance, and includes provisions for the provisions. processes and situations that occur during the operation: system control with voltage and frequency regulation, re- Given the nature of the document as a general code for serve operation, emergency handling, planning of system the distribution networks of various types and charac- operation, necessary information exchange, scheduling teristics of the different DISCOs, the Code avoids being and dispatch, testing and safety rules. very specific on technical parameters and sequences or procedures. Instead, it stipulates responsibilities, rights GIZ under its Nigerian Energy Support Programme and duties for information, agreement and relevant has made recommendations for specific definitions for processes between the responsible parties. For detailed renewable energy schemes which will be integrated into technical specifications, parameters and settings, a con- subsequent updates. sultation process between the corresponding DISCO and the participants of the system (generation facility or 5.5.4.2 Distribution Code consumers), called the user, is still required. The connection agreement between the DISCO and the user is Based on the EPSRA, the document is the reference for therefore the essential result of the consultation defining all distribution networks operated by the DISCOs that the conditions into more detail. In this sense, the DCode perform the functions of distributing electricity in net- makes reference to standards and prudent industry prac- ENERGY POLICY 85

tice without further detailing the standard or actual method to be employed.

5.5.4.3 Metering Code

The last overall document which can be regarded as essential for the set-up of a commercial project is the Metering Code.39 It covers metering in the transmission system and the distribution networks. It defines the conditions and requirements for electricity meters in the country. Im- portant for the developers and owners of energy projects is the type and characteristics of the metering devices, description of exchange of acquired data and the location of the meters. The location of the meter is very important since it marks the commercial limits of supply and thus of responsibility for the interconnection line losses.

39 Nigeria Metering Code, Version 02 [35] 6. ON-GRID RENEWABLE ENERGY 86

Renewable energy is energy which can be obtained from 6.1 A Market in its Infancy natural resources that can be constantly replenished. Re- newable energy technologies include technologies that 6.1.1 The Potentials use (or enable the use of) one or more renewable energy sources. Types of renewable energy technologies include, The Renewable Energy Master Plan (REMP) in its sec- in alphabetical order: ond draft of November 2012 as prepared by the Energy Commission of Nigeria seeks to increase the supply of • Bioenergy renewable electricity from 13% of total electricity gener- • Geothermal energy ation in 2015 to 23% in 2025 and 36% by 2030. Renew- • Hydropower, larger than 10 MW able electricity would then account for 10% of Nigerian • Tidal energy total energy consumption by 2025. The REMP, although • Solar energy not ratified, identifies the following potentials:40 • Wind energy However, the viability of wind as a primary energy source Renewable energy technologies also include hybrid and needs to be investigated more diligently before any further related technologies. This chapter refers to large capacity recommendations can be made. The REMP lists wind “ongrid” renewable energy technologies with the poten- speed figures at a height of 10 metres above the ground. tial to provide electricity as a generation company (utili- This figure is not very relevant for large-scale wind farms. ty-scale IPPs). In Chapter 8 we refer to renewable energy Detailed wind measurement campaigns are necessary to as means of rural electrification, i.e. small-scale “off-grid” identify potentials. The solar energy potential is given as a systems. figure in kWh/m² and day. Yet, the method of measuring

TABLE 6 – 1: RENEWABLE ENERGY POTENTIALS41 Resource Potential Current Utilisation and further remarks Large Hydropower 11,250 MW 1,900 MW exploited Small Hydropower* 3,500 MW 64.2 MW exploited Solar 4.0 kWh/m2/day – 6.5 kWh/m²/day 15 MW dispersed solar PV installations. (estimated) Wind 2–4m/s @ 10m height mainland Electronic wind information system (WIS) available; Biomass (non-fossil Municipal waste 18.5 million tonnes produced in 2005 and now estimated at organic matter) 0.5kg/capita/day Fuel wood 43.4 million tonnes/yr. fuel wood consumption Animal waste 245 million assorted animals in 2001 Agricultural residues 91.4 million tonnes/yr. produced Energy crops 28.2 million hectares of arable land; 8.5% cultivated

* Potential in small hydro power projects is dealt with separately in Chapter 8 Rural Electrification, Including Off-Grid .

40 [ECN; 2013], p. 12; these figures compare with those given in [Sambo, A.S.; 2008], with the significant difference that there, the upper limit for solar irradiation is set at 7 kWh/m²/day. 41 [ECN; 2013] ON-GRID RENEWABLE ENERGY 87

(DNI, GHI, and GTI)42 is not indicated. Thus the pure gestion in the landfill. At landfill sites, the gas produced figure may be misleading for project developers. More- by the natural decomposition of MSW (approximately over, the figures for biomass (non-fossil organic matter) 50% methane and 50% carbon dioxide) is collected from are not substantially described for developers to assume the stored material and scrubbed and cleaned before be- the potential of this technology. On the other hand, the ing fed into internal combustion engines or gas turbines potential on large and small hydro power seems to be an- to generate heat and power. The organic fraction of MSW alysed rather consistently. can be anaerobically stabilised in a high-rate digester to obtain biogas for electricity or steam generation. Ac- Below we elucidate the potentials for large-scale RE- cording to a study in 2009 about 25 million tonnes of NEWABLE ENERGY in detail. municipal solid waste are generated annually in Nigeria. [Ogwueleke T.; 2009] Bioenergy / Biomass / Biofuel Data covering biomass projects or companies active in From the perspective of available land and wide range of the sector is unavailable, since there is no central body re- biomass resources, Nigeria has significant potential to sponsible for this segment, which cuts across various min- produce biofuels and even become an international sup- istries as well as federal, state and local government levels. plier. Bioenergy feedstock is not only abundant in Nige- One positive exception is the Jatropha Growers Associa- ria, it is also widely distributed. Nigeria is the largest pro- tion.43 While there are numerous very small-scale projects ducer of cassava in the world. It is interesting to mention mooted, any figures on total volume would be guesses. that Nigeria could also be a major player in the biofuel industry given the enormous magnitude of various waste However, a variety of biomass resources exist in Nigeria / residues (agricultural, forestry, industry and municipal in large quantities with opportunities for expansion. Bi- solid) available in the country. omass resources include agricultural crops, agricultural crop residues, forestry resources, municipal solid waste The World Bank in its “Low Carbon Report”, while and animal waste. Agricultural crop residues include firmly advocating the use of solar PV, also suggests “other those produced from the processing of crops. The agri- sources of power include using municipal waste to generate cultural crops that have potential as biomass feedstock methane to generate power, combusting other biomass to for biofuel production include sugar cane, cassava, rice, make power, and small-scale (micro or pico) hydropower. maize and sorghum for ethanol and oil palm, groundnut, (…) These technologies are promising and advantageous coconut, cotton, soybean, Jatropha and sesame (locally with suitable local conditions, and are well worth pursu- called biniseed) for biodiesel. [Agba A.M., Ushie M.E., ing.” [WB; 2013 (Low-Carbon Development Oppor- Abam F.I., Agba M.S., Okoro J; 2010] tunities for Nigeria)] The suggestion is that by 2015 biomass-to-power could deliver as much as 1,643 GWh/ Another source of biomass is municipal solid waste year, with the figure rising to 13,140 GWh/year by 2035. (MSW), which is generated by households, commercial Worthy of mention here are the attempts by the Lagos and industrial sectors as result of concentration of pop- Waste Management Authority to investigate methods for ulation, and is collected with vast majority disposed of generating power with the waste they collect as an alter- in landfill dumps. The waste takes many forms including native to opening up new landfills. plastics, paper, textiles, glass, metal, wood, and other organic waste. Municipal solid waste can be converted into With similar forms of waste collection in place in Abu- energy by direct combustion, or by natural anaerobic di- ja, Kano and Port Harcourt, and the very large volumes

42 See next chapter 43 National workshop on Jatropha for sustainable energy development, h 6t – 7th may 2008, ON-GRID RENEWABLE ENERGY 88

of waste accumulating there, the potential for waste-to- Hydropower power projects in the large conurbations needs to be in- The Ministry of Power classifies the hydropower plants vestigated in greater detail. that have a generating capacity of less than 10 MW as small and medium hydro [11]. The Ministry is focusing To date, there has been little mention of any plans to es- on small and medium hydropower plants in Gombe, Ka- tablish large biomass power plants, for example along the duna, Kano, Katsina, Ondo, Ogun, Oyo, Sokoto, and model developed in Brazil for sugarcane plantations, Zamfara states. The description of the potential of small where the crushed fibres (bagasse) are used as the feed- hydro power is further elaborated in Chapter 8. stock to great effect. This is even more surprising given the prevalence of academic literature demonstrating the Nigeria has significant hydropower potential. It current- biomass potentials on the ground in Nigeria. Putting the ly has 2.2 GW hydropower capacity installed, although huge quantities of biomass resources, mostly in the form some of that requires maintenance and is not being used of agricultural residues and wastes, which are currently for generation. A World Bank reference scenario follow- disposed by burning or dumping, to energy production ing FGN plans and feedback from stakeholders suggests could potentially increase the energy supply thereby in- hydropower utilisation could be increased to 7.2 GW by creasing energy mix and balance in Nigeria.44 2035. [WB; 2013 (Low-Carbon Development Opportu- nities for Nigeria)] Table 6–2 below summarises the potential of residues from agricultural crops in Nigeria at approximately 1,958 Current large-scale projects under consideration of imple- PJ (or 543,890 GWh) per annum. mentation are two projects, namely Kashimbila /Dadin

TABLE 6 – 2: RESIDUESESTIMATE FROM AGRICULTURAL CROPS, 201045 Crop Production (‘000 t) Component Weight available Total energy available in million tons (PJ) Rice 3,368.24 Straw 7.86 125.92 Husk 1.19 23.00 Maize 7,676.85 Stalk 10.75 211.35 Cob 2.10 34.19 Husk 0.92 14.32 Cassava 42,533.17 Stalks 17.01 297.68 Peelings 76.56 812.30 Groundnut 3,799.25 Shells 1.81 28.35 Straw 4.37 76.83 Soybean 365.06 Straw 0.91 11.27 Pods 0.37 4.58 Sugar cane 481.51 Bagasse 0.11 1.99 Tops/Leaves 0.14 2.21 Cotton 602.44 Stalk 2.25 41.87 Millet 5,170.45 Straw 7.24 89.63 Sorghum 7,140.96 Straw 7.14 88.39 Cowpea 3,368.24 Shell 4.89 95.06 Total 145.62 1,958.94

44 [Simonyan, K.J. & Fasina, O.; 2013] or [Audu, T. & Aluyor, E.; 2012]; and [Agbro, E. & Ogie, N.; 2012] 45 [Simonyan, K.J. & Fasina, O.; 2013] - 76 -

plans and feedback from stakeholders suggests hydropower utilisation could be increased to 7.2 GW by 2035. [WB; 2013 (Low-Carbon Development Opportunities for Nigeria)]

Current large-scale projects under consideration of implementation are two projects, namely Kashimbila /Dadin Kowa (40 MW) close to Gombe in the North-East, and Gurara (40 MW) in Niger State, just a few kilometres north of Abuja. The Ministry of Water and Ministry of Power is working with Niger Delta Power Holding Company (NDPHC) on two other hydropower projects under the NIPP programme. The Ministry of Power has setup a new regulatory agency – the Integrated Water Regulation Commission – to address water concession issues for power and agriculture. This new commission regulates water concessions by the water resources act which is not yet gazetted. Special incentives for hydropower projects do not currently exist.

As shown in Figure 6-1 below, various dams are available for retrofittingON-GRID with RENEWABLE hydropower ENERGY plants, and89 the list includes the Challawa; Dadin Kowa, Kiri and Zamfara dams.

Figure 6-1: Location of Major Dams in Nigeria FIGURE 6 – 1: LOCATION OF MAJOR DAMS IN NIGERIA

Solar Energy Kowa (40 MW) close to Gombe in the North-East, and includes the Challawa; Dadin Kowa, Kiri and Zamfara

Gurara (40 MW) in Niger State, just a few kilometres dams. Nigeria has a potential for electricity production from Solar PV technology in the range of 207*1012 Wh per year or north of Abuja. The Ministry of Water and Ministry of 207,000 GWh per year if theoretically only 1% of the land area (e.g. 920 km² = 920*106 m²) were covered with Power is working with Niger Delta Power Holding Com- Solar Energy state-of-the-art poly-crystalline PV modules,46 with an electricity yield of 1,500 Wh/Wp per year (free field, fixed pany (NDPHC) on two other hydropower projects under Nigeria has a potential for electricity production from installation). This figure is tenfold the total electricity production of Nigeria in 2011 (cf. Figure 3-3). the NIPP programme. The Ministry of Power has setup Solar PV technology in the range of 207*1012 Wh per

a new regulatory agency – the Integrated Water Regula- year or 207,000 GWh per year if theoretically only 1% of tion Commission – to address water concession issues for the land area (e.g. 920 km² = 920*106 m²) were covered power and agriculture. This new commission regulates with state-of-the-art poly-crystalline PV modules,46 with water concessions by the water resources act which is not an electricity yield of 1,500 Wh/Wp per year (free field, 46 p-yetSi Module, gazetted. 150Wp Special per incentives m² for hydropower projects fixed installation). This figure is tenfold the total electric- do not currently exist. ity production of Nigeria in 2011 (cf. Figure 3–3).

As shown in Figure 6–1 below, various dams are availa- Flat-plate photovoltaic devices utilise both diffuse and ble for retrofitting with hydropower plants, and the list direct radiation.47 For horizontal solar equipment the

20141121_Energy46 p-Si Sector Module, Study_NESP 150Wp per Publication m² draft_v2.docx 47 “Direct” or “beam” solar radiation is the radiation that comes directly from the sun, with minimal attenuation by the Earth’s atmosphere or other obstacles. “Diffuse” solar radiation is that part of the radiation, which is scattered, absorbed, and reflected within the atmosphere, mostly by clouds, but also by particulate matter and gas molecules. - 77 -

Flat-plate photovoltaic devices utilise both diffuse and direct radiation.47 For horizontal solar equipment the pertinent radiation is the global horizontal irradiation (GHI). More commonly, solar equipment is tilted relative to the horizontal (usually tilted toward the equator, e.g. south in the northern hemisphere, at an angle at or near the local latitude), such as on a sloped rooftop. In such cases, both direct normal (DNI) and global horizontal irradiation (GHI) data can be used to estimate or model the solar radiation in the plane of interest, with the result referred to as global tilted irradiation (GTI). Since Nigeria has a better potential for ON-GRIDphotovoltaic RENEWABLE systems than ENERGY for concentrating90 optical equipment, Figure 6-2 below shows the irradiation levels of GHI in Nigeria.

Figure 6-2: Solar Irradiation Levels, GHI FIGURE 6 – 2: SOLAR IRRADIATION LEVELS, GHI

As can bepertinent seen from radiation the mapis the above, global horizontalthe best potential irradiation for 6–2large below-scale shows solar the power irradiation plants levels (preferably of GHI in PV)Nigeria. lies in the northern(GHI). part ofMore the commonly, country. solarLong equipment-term annual is tilted average rela- GHIAs can values be seen in from the the northern map above, states the best ranges potential from for 2,000 to 2,200 kWh/mtive to the². This horizontal high solar(usually irradiation tilted toward is comparable the equator, tolarge-scale very high solar-yield power sites plants in southern (preferably Spain, PV) lies northern in the Africa, Australiae.g. and south Latin in theAmerica. northern The hemisphere, south of at Nigeria an angle has at orless potentialnorthern part for ofsolar the country.energy asLong-term it is mainly annual cloudy average and has a longer rainynear season.the local latitude), such as on a sloped rooftop. In GHI values in the northern states ranges from 2,000 to such cases, both direct normal (DNI) and global hori- 2,200 kWh/m². This high solar irradiation is comparable zontal irradiation (GHI) data can be used to estimate or to very high-yield sites in southern Spain, northern Af- Solar PV Power Plant - an Example: model the solar radiation in the plane of interest, with rica, Australia and Latin America. The south of Nigeria A 15 MWp solar IPP is under construction in Yola, in Adamawa State, giving a specific yield in average between the result referred to as global tilted irradiation (GTI). has less potential for solar energy as it is mainly cloudy 1,450 kWh/kWp and 1,650 kWh/kWp per year. For comparison, we calculate with a diesel generator producing Since Nigeria has a better potential for photovoltaic sys- and has a longer rainy season. tems than for concentrating optical equipment, Figure 47 “Direct” or “beam” solar radiation is the radiation that comes directly from the sun, with minimal attenuation by the Earth’s atmosphere or other obstacles. “Diffuse” solar radiation is that part of the radiation, which is scattered, absorbed, and reflected within the atmosphere, mostly by clouds, but also by particulate matter and gas molecules.

20141121_Energy Sector Study_NESP Publication draft_v2.docx ON-GRID RENEWABLE ENERGY 91

Solar PV Power Plant - an Example Wind Energy A 15 MWp solar IPP is under construction in Yola, The Ministry of Science and Technology has carried in Adamawa State, giving a specific yield in average out wind energy resource mapping [LI, 2005]. This between 1,450 kWh/kWp and 1,650 kWh/kWp per wind mapping project indicated several areas with wind year. For comparison, we calculate with a diesel gener- speeds suitable for wind energy applications. The highest ator producing same amount of electricity (66 MWh wind speeds can be expected in the Sokoto region, the per day). Assuming a fuel efficiency of this equipment Jos Plateau, Gembu and Kano / Funtua. The stations at of 33% the diesel genset needs around 19,925 litres of Maiduguri, Lagos and Enugu also indicated relatively diesel fuel and a truck transporting 20,000 litres of strong wind speeds, sufficient for energy generation by diesel from Warri to Yola every day. The return trip is wind farms. Apart from these sites, other promising re- 2,100 kilometres. This truck uses 630 litres diesel dai- gions with usable wind potential are located on the Ni- ly for the trip (30 litres diesel consumption per 100 geria western shoreline (Lagos Region) and partly on the kilometres). The solar PV plant in operation would Mambila Plateau. The calculations indicate the highest thus substitute for around 7,502,600 litres of diesel energy yield at the coastal area of Lagos, followed by the fuel per year. Sokoto area and the Jos Plateau. The computed 3D wind map is shown in Figure 6–3 below. Wind speeds are fair in the north and the southwest, according to this assess- Specifically, the World Bank recommends in this context ment. that off-grid solutions be developed using renewable energy sources, commenting that “PV and hybrid systems are The figures imply only a local potential for wind energy, already economically competitive for many off-grid applica- i.e. for micro and small wind turbines. tions. Gasoline and diesel generators produce power at levelised cost of energy (LCOE) between US$0.23 and $0.42/ The afore-mentioned wind resource mapping was carried kWh. The cost of electricity from PV and hybrid PV-wind- out on-shore. However, in the absence of detailed wind diesel systems are in the range of $0.30/kWh and $0.22/ mapping, constant speeds that would enable commercial- kWh, respectively. As the costs of renewables continue down ly viable power generation may only obtain offshore. To the learning curve, and fossil fuel prices in Nigeria revert to date, the Federal Ministry of Power reports that an off- global market prices (“export parity”), the economic advan- shore wind mapping is being undertaken [12]. However, tages of renewables will become ever greater.” It proposes no details about this have been disclosed. Such informa- that solar PV in particular be used for water pumping tion would beneficial for further investigation of the po- and irrigation, as further detailed in Chapter 8. tential of wind power in Nigeria.

The economic viability of solar PV is meanwhile beyond There are two larger wind farm projects ongoing at pres- question. As mentioned earlier, this becomes doubly true ent, namely 10 MW in Katsina, and 100 MW in Plateau if the location of the solar IPP is somewhere that is not State. As regards the 100 MW wind-power farm outside close to a diesel depot and the investment case becomes Jos, due diligence has been completed on the application increasingly strong if this can be converted into a carbon for a license to operate. The owner reports that a provi- credit. sional Independent Power Producer (IPP) license has - 79 -

ON-GRID RENEWABLE ENERGY 92

Figure FIGURE6-3: 6 – 3: 3D Wind Map of Nigeria 80 m Above the Ground 3D WIND MAP OF NIGERIA 80 M ABOVE THE GROUND

Source: Ministry of Science and Technology, Nigeria 2005 Source: Ministry of Science and Technology, Nigeria 2005

The afore-mentioned wind resource mapping was carried out on-shore. However, in the absence of detailed wind mapping,been constantobtained fromspeeds the that National would Electricity enable commerciallyRegulatory Otherviable Resourcespower generation may only obtain offshore. To date, theCommission Federal Ministry(NERC) ofacknowledging Power reports that that JBS an Windoff-shore Presently, wind mapping the potentials is being of undertakensome resources [12] such. However, as geo- no detailsPower about Limited this have has been met disclosed.all regulatory Such requirements information to would thermal, beneficial nuclear for energy, further waves, investigation tidal and oceanof the thermal potential of wind powercommence in Nigeria. operation [20]. The smaller 10 MW Katsina gradient still remain untapped and unqualified. Never- pilot wind farm is being built by a French company on theless, a study has been conducted on geothermal power, Therebehalf are two of FMP, larger which wind has farm assigned projects a budgetary ongoing allocation at present, e.g. namely by the Ahmadu10 MW Belloin Katsina, University, and Department 100 MW ofin GePlateau- State. toAs move regards the theproject 100 closerMW towind completion.-power farm [Lawa outside Salisu; Jos, ology due diligencein collaboration has been with completed University on of the Silesia, application Facul- for a license2013] to operate. The owner reports that a provisionalty Independentof Earth Sciences, Power Poland Produ [Ewacer Kurowska, (IPP) license Krzysztof has been obtained from the National Electricity Regulatory CommissionSchoeneich; (NERC) 2010]. acknowledgingThe study concluded that thatJBS geothermal Wind Power LimitedOther has wind met energyall regulatory pilot plants requirements are under consideration. to commence operationanalysis based [20 ].on The geothermal smaller gradients10 MW indicatedKatsina pilotareas wind farm is being built by a French company on behalf of FMP, which has assigned a budgetary allocation to move the project closer to completion. [Lawa Salisu; 2013]

Other wind energy pilot plants are under consideration.

Other Resources

Presently, the potentials of some resources such as geothermal, nuclear energy, waves, tidal and ocean thermal gradient still remain untapped and unqualified. Nevertheless, a study has been conducted on geothermal power, e.g. by the Ahmadu Bello University, Department of Geology in collaboration with University of Silesia, Faculty of Earth

20141121_Energy Sector Study_NESP Publication draft_v2.docx ON-GRID RENEWABLE ENERGY 93

of higher-than-average gradient values and geothermal investors and developers have obtained NERC licences anomalies within sedimentary basins. Further detailed for various projects. However, none of these projects have studies are necessary to identify the potentials. yet been completed.

Although nuclear technology is more a fossil-fuel technol- NERC Licensees ogy than a renewable energy it should be mentioned here Some companies have applied to NERC for licenses for that between 1979 and 2001 a uranium mining company solar PV or wind power plants. Table 6–3 lists approved existed in Nigeria (the Nigerian Uranium Mining Com- licensees for unsolicited renewable generation by NERC pany, NUMCO). It found uranium reserves at Mika and as of 2014. [36] Ghumchi.48 It would not be surprising if the Nigerian uranium reserves are further analysed in the future with It is worth mentioning that some of the licensees above a view to using nuclear power as a “CO2 free”-technology. are obviously not actively pursuing the full capacity in their current projects. The licenced 504 MW biomass 6.1.2 Existing and Planned Renewable plant in Lagos, for example, will certainly not be imple- Energy Projects - Current Progress mented in one phase due to the immense investment that would be necessary. Actual figures (from private licen- As described above, the nationwide potential for large- sees) about the “real” capacities to be expected by imple- scale renewable energy projects is immense. Each tech- menting the projects in the near future are not available. nology has its specific challenges and many projects are under development for implementation. Existing large- Projects of the Federal Ministry of Environment scale grid connected renewable energy projects mainly As parts of the efforts being made by the Federal Min- take the form of large hydropower plants. To date, no istry of Environment (FMENV) to mitigate climate real commercial large-scale project has been successfully change impacts in the country, the Renewable Energy implemented, other than hydropower (and small biomass, Programme has initiated the following projects. [52] e.g. ethanol production). NERC, the Federal Ministry of Environment and the Federal Ministry of Power all have Under the Renewable Energy Programme of the Minis- programmes to support and implement various renewa- try of Environment, Global Biofuels Ltd is developing a ble energy technology projects in the near future. Private biofuel production complex at Ilemeso in the northern

TABLE 6 – 3: NERC LICENSEES, RENEWABLE ENERGY Name of Licensee Capacity (MW) Fuel Type State Geopolitical Zone JAP Energy Limited 504 Biomass Lagos South-West Premier Energy Limited 50 Hydrogen fuel cell Adamawa North-East Rook Solar Investment Limited 50 Solar Osun South-West Quaint Global Nigeria Limited 50 Solar Kaduna North-West Nigeria Solar Capital Partners 100 Solar Bauchi North-East Anjeed Kafanchan Solar Limited 10 Solar Kaduna North-West Lloyd and Baxter LP 50 Solar Abuja North-Central KVK Power Pvt Limited 50 Solar Sokoto North-West Pan African Solar 54 Solar Katsina North-West Mabon Limited 39 Hydro Gombe North-East JBS Wind 100 Wind Plateau North-Central

48 Uranium Development in Nigeria, Ministry of Mines and Steel Development ON-GRID RENEWABLE ENERGY 94

part of Ekiti state of Nigeria. Similar plants are planned These projects are split into three lots, namely Wind (Lot to be established at Ondo, Kwara, Osun, Oyo, Kogi, Ka- A), Solar (Lot B) and Biomass (Lot C). The consultancy duna, Kano, Zamfara, Benue, Plateau, and Nasarawa. contracts were all awarded in December 2013 and results from the studies are yet to come. The Renewable Energy Programme office, Adamawa State Government and Green Carbon Afrique is devel- In the same instance, FMP lists on-going projects in re- oping sugarcane based biofuel plants in Girei and Dem- newable energy, which solely consist of feasibility studies sa Local Government Areas of Adamawa State covering and energy audits. 2,000 hectares of plantations. This initiative is to produce sugar for local use and export, ethanol and ultimate- On the other hand, FMP is pursuing the development of ly electricity. This integrated project is being replicated in large-scale hydropower projects. Table 6–4 lists hydro- ten states of the country. power development as of 2014. The projects are described as being at different stages of implementation. The major Currently, rice production and processing in Nigeria is national projects are the Mambilla and Zungeru plants. typically undertaken by small local farmers using basic While financing for the former has not yet been secured, processing technology. Typical issues limiting economies the latter (expected to generate 700 MW) is bring loan of large-scale rice production include lack of access to im- financed through China’s Exim Bank. proved technologies, the high costs of energy for parboil- ing, and lower output quality (post processing). However, Under cooperation with the FMENV, this will involve working in conjunction with Carbon Quest and Ad- the construction of at least 16 large, medium and small amawa State, the Renewable Energy Programme office hydropower plants at dams in northern states and the is establishing an integrated “Rice Processing and Power country as a whole.49 In total, these additional HPPs Generating Facilitator”, to the economic benefit of the in- would increase the country’s power generation capacity vesting state, garnering the advantages of large-scale rice by about 4,000 MW. production and self-generated power from the rice husks. In addition to the above-mentioned projects, the FMP is Considering the prospect of solar energy in a developing engaged in the 10MW Katsina Wind Project. A contract economy like Nigeria, the Synergent Powershare Group for the construction was awarded by the Federal Gov- of Company is investing in a 50 MW solar farm in Ka- ernment to a French company with a completion period duna which was officially launched by the Honourable of 24 months. The Ministry is currently evaluating the Minister of Environment and Kaduna State Governor in procurement of contractors for the erection of a 33kV September 2011. transmission line/sub-station and wire mesh fencing of the project site. [15] Projects of the Federal Ministry of Power Since large-scale projects in renewable energy are assigned Projects of the Federal Ministry of Water to the private sector under the ongoing privatisation pro- Resources (FMWR) gress, the Federal Ministry of Power is no longer pursuing Currently, the FMWR is engaged in the construction such projects. However, as of February 2014, the FMP and rehabilitation of 33 dam projects and 27 small earth has awarded several contracts to Nigerian consultants dams. Seven other major dams with a combined storage to undertake “consultancy services for wind, solar and capacity of 2,269 million cubic meters have been com- biomass projects in different locations nationwide”. [10] pleted. These are Gurara, Owiwi, Sabke, Owena, and

49 Others are Itisi Dam HPP, Kaduna, 40 MW; Bakolori Dam HPP, Zamfara State, 3.0 MW; Challawa Dam HP, Kano, 7.5 MW; Tiga Dam HPP, Kano, 10 MW; Kampe Dam HPP, Kogi State, 0.5 MW; Zobe Dam HPP, Katsina, 0.30 MW; Jibia Dam HPP, Katsina, 4.0 MW. The rest are Doma Dam HPP, Nasarawa State, 1.0 MW; Katsina Ala Dam HPP, Benue State, 40 MW; Oyan Dam HPP, Ogun State, 10 MW; Ikere Gorge HPP, Oyo State, 6.0 MW; and Owena Dam HPP, Ondo State, 0.45 MW. The NDPHC would also build a small dam-based HPPs at the Ahmadu Bello University (ABU), Zaria, Kaduna State and a Jado Dam HPP in Adamawa state. ON-GRID RENEWABLE ENERGY 95

TABLE 6 – 4: HYDROPOWER DEVELOPMENT BY FMP, 2014 [10] No. Power Station MW Zone Status 1 Zungeru project - Niger State 700 North Central financing secured 2 Mambilla Project - Taraba State 3,050 North East under development 3 Gurara II Project - Niger State 40 North Central under development 4 Gurara I Project - Niger State 30 North Central under development 5 Itisi Project - Kaduna State 40 North West under development 6 Kashimbilla Project - Taraba State 40 North East under development

TABLE 6 – 5: FMWR, PRIORITY PROJECTS TO BE COMPLETED BEFORE 2015 [16] Name Balokori Dam Embarkment and Spillway Goronyo Dam and Spillway Structure Goronyo Dam: Rehabilitation works at Goronyo Dam, breached emergency spillway Gurara dam embarkment, reservoir and spillway Ikere Gorge dam spillway Kashimbila Dam Kashimbilla / Gamovo multi-purpose dam project under construction Kontagora (Auna) Dam embankment and intake tower under construction Owiwi Dam and spillway Ugwuashi-uku: Construction works at Ugwuashi-uku multi-purpose dam project

Shagari dams as well as the rehabilitation of Goronyo for hydropower generation with a total capacity of 3,557 and Alau dams. Owiwi multipurpose dam was commis- MW. These dam include; Gurara, Oyan, Ikere Gorge, sioned by Mr. President in 2010. Rehabilitation work on Bakolori, Dadin Kowa, Tiga, Kiri, Jibiya, Challawa Goronyo Dam has commenced on the emergency spill- Gorge, Owena, Doma, Waya, Mgowo, Zobe, Kampe, way which breached as a result of 2010 flooding. Kashimbilla, Ogwashiku, Zungeru and Mambilla.

In line with the policy directive of government to in- 6.2 Renewable Energy Stakeholders crease energy supply to meet the nation’s energy demands, Federal Ministry of Water Resources is collaborating 6.2.1 Public Authorities with the Federal Ministry of Power, with the latter handling the power generation component, while the Min- Using the analysis of the mandates, roles, relationships istry handles civil works in all the dam projects with and activities presented in Chapter 4, it is clear that FMP hydropower potentials. Small hydropower schemes have drives activities in the renewable energy sector. By exten- been integrated into some dam projects across the coun- sion, TCN, NERC and ECN all have pivotal roles to play try in order to increase the energy supply of the nation. in the renewable energy market. However, rather than having a symbiotic relationship, there seem to be overlaps To date, FMWR has identified and carried out studies especially in the relationships between ECN as the da- on some of the completed and on-going dam projects for ta-gathering think tank, FMP, NERC, and the FMENV hydropower, nineteen (19) of which have the potentials and FMWR. All the active institutions seem to be pur- ON-GRID RENEWABLE ENERGY 96

suing individual mandates, whereby these are sometimes land procurement forwarded to the NIPC for approval. construed or presented as national efforts made in a bid NBET is the state entity responsible for purchasing elec- to drive activities in the sector. tricity from generation companies under long term Power Purchase Agreements (PPA) and selling it to distribution According to its mandate, FMP is the clear lead in policy companies. To obtain a generation licence from NERC is formulation and implementation to promote a diversified required to obtain a PPA Letter of Intent (“LOI”) from electricity mix for the country including electricity gen- NBET (or from a distribution company for embedded erated from renewable energy sources. The inclusion generation), prior to being licensed. NBET, on the oth- of electricity generated from renewable energy into the er hand, wants to see funding commitments prior to the power mix of the country is technically the responsibility LOI. of FMP, NERC and TCN. FMENV plays a secondary role, as it has no direct man- FMWR is also becoming important in the sector. Due to date in the power sector. The Ministry approves ESIA its role in hydropower development (e.g. dam construc- prepared by generation companies under the approval tion, hydrological activities etc.), its engagement in the process for generation licences. However, since Renewa- near future will become more pronounced. Currently, it ble Energies have limited or at least no negative impact on undertakes civil works on hydropower stations on behalf the environment they are considered sustainable. of the FMP. Therefore, a strong relationship of both institutions could further promote more hydro generation Table 6–6 summarises the functions and roles of the pub- capacity in the country. lic authorities in the Renewable Energy Sector described above. FMP currently leads the Inter-ministerial Committee on Renewables and Energy Efficiency (ICREEE), which is 6.2.2 Key Players in Nigeria’s the key to coordination here. ICREEE started to meet Emerging RE Market regularly in 2014 and will address how the current overlap in activities and shortfalls in regulations can be read- For on-grid renewable energy technologies there are not ily obviated. sufficient national manufacturing facilities in Nigeria. No sole national contractor is currently capable of build- NERC as a national regulator also has an important role ing a large-scale renewable energy project. At least no to play. The administration and implementation of the local company would be able to handle the development feed-in tariffs is pivotal to achieving diversification in the and implementation of a large-scale multi-million US$ electricity mix of the country and also to promote rural project on its own and without support by accomplished electrification. However, in line with the “Regulations international partners. The manufacturing and industry on the Procurement of New Generation Capacities”, the market is working to gain competence and the financial support mechanism of the FIT system is likely to change muscle to implement such projects with the support of to a competitive bidding system for large-scale renewable international partners and financing institutions. energy. In addition, here again, a lack of clarity is to be noted: Investors wishing to erect utility-scale solar PV Some positive examples of companies coming into the plants at present have to apply to the FMENV’s renew- market can be given, e.g. a PV modules manufacturing ables unit to have an application for a tax holiday, a full facility built by a German company in Sokoto. The facil- customs exemption on the hardware, and assistance with ity completed in February 2014 was partly financed by ON-GRID RENEWABLE ENERGY 97

TABLE 6 – 6: RENEWABLE ENERGY STAKEHOLDERS, PUBLIC AUTHORITIES

Main actors Functions Role in Renewable Energy

Federal Ministry FMP is responsible for policies, programs and moni- To promote a diversified electricity mix for the country of Power (FMP) toring of the power sector in the country. including electricity generated from renewable energy The Ministry is politically headed by the Minister for sources. Power, but administratively ran by the Permanent Leads the Inter-ministerial Committee on Renewables Secretary. and Energy Efficiency (ICREEE) Federal Ministry The FMENV prepares comprehensive national policies Plays a secondary role, as it has no direct mandate in of Environment for the protection of the environment and conservation the power sector. It approves ESIA prepared by gener- (FMENV) of natural resources, including procedure for environ- ation companies under the approval process for gene- mental impact assessment of all developing projects ration licences. In addition, FMENV grants tax holiday for utility scale PV plants. Federal Ministry The FMWR formulates National Water Resources Role in hydro development (e.g. dam construction, of Water Resourc- policies towards ensuring adequate water supply for hydrological activities etc.), its engagement in the near es (FMWR) agricultural, industrial, recreational, domestic and future will become more pronounced. Currently, the other uses. It develops programmes and policies FMWR undertakes civil works on hydropower stations towards surface water storage schemes and guiding on behalf of the FMP. principles for dam construction nationwide Nigerian Electricity NERC is a key organisation under Federal Ministry of Technical inclusion of electricity generated from Regulatory Com- Power responsible for regulation of the power sector renewable energy into the power mix of the country. mission (NERC) across power generation, transmission and distribu- Publish multi-year tariff orders for industrial con- tion. NERC is responsible for the creation of a com- sumers and regulate tariff related aspects, NERC petitive power sector participated by private players; issues generation licenses to applicants in Renewable establishment of operating codes and standards; Energy and administers and implements feed-in tariffs licensing and regulation of persons engaged in any of the power subsector activities; tariff determination; approval of amendments to electricity market rules; and other related regulatory functions. It is governed by 7 commissioners, 6 from geopolitical regions and 1 designated Chairman/CEO.. Energy Commission ECN is the government office in charge of energy Co-ordination of National Policies in the field of energy of Nigeria (ECN) sector planning and policy implementation. The across all consumer sectors including industrial sector. commission also promotes the use of renewables Coordinate with all relevant agencies in defining the and alternative energies within the electric gener- policy, roadmap and targets for energy efficiency in ation mix in Nigeria. The ECN fulfils the role of for industrial sector and support FMP in implementation strategic overall planning, coordination and effec- of the policy Recommendations for the exploitation of tive direction of Nigeria’s national Energy strategies new sources of energy to the Government Lay down within Nigeria and with ECOWAS member states. guidelines on the utilisation of energy types for specific purposes; Inquire into and advise the Government of the Federation or of the State on the adequate funding of the energy sector including research and development, production and distribution; Collate, analyse and publish information relating to the field of energy; ECN also promotes the use of renewables and alternative energies within the electric generation mix in Nigeria. Nigerian Bulk NBET is a Federal Government of Nigeria (FGN) owned Enter into and execute PPAs with power generating Electricity Trad- public liability company. It was incorporated as a trad- companies and procure new generation capacity on ing Plc (NBET) ing licensee holding a bulk purchase and resale license competitive basis, as required. to engage in the purchase and resale of electrical pow- NBET receives payments from DISCOs for energy er and ancillary services from independent power pro- received and pays generation companies for bulk power ducers and from the successor generation companies sent to the grid. Transmission Com- State entity responsible for the transmission of elec- TCN provides grid connection and ancillary services pany of Nigeria (TCN) tricity from power plants to distribution companies, agreements as Transmission Service Provider. TCN eligible customers and for export. is also the System Operator and Market Operator for Acts as Transmission Services Provider (TSP), System which generation companies pay respective charges. Operator (SO) and Market Operator (MO). Managed by Manitoba Hydro International of Canada under a three year management contract. ON-GRID RENEWABLE ENERGY 98

the World Bank, and the plan is to produce solar panels International and National Donors and designed to operate in extreme climates. Further to this Organisations plant in Sokoto, Karshi Solar Panel Plant (KSPP) with an Most of the major international institutions currently ac- annual production capacity of 7.5 MWp has been built tive in the general field of energy in Nigeria are active in under NASENI’s intervention programme in Abuja. one way or another in the field of renewable energy. Clean and efficient modern energy services are the cornerstone Also non-profit organisations have recently become active of sustainable development, economic activity and pov- in the field. They are active in supporting and building an erty reduction. International and national donors and awareness of renewable energy and their applications. organisations’ initiatives and programmes contribute sig- Amongst them are CREN (cf. Chapter 4.4), NAE and nificantly towards raising awareness of the increased role ANSEP (see solar section below). of renewable energy sources in the global energy supply.

Nigeria Alternative Energy (NAE) is a global consorti- The major bilateral implementing agencies with a local um with the vision of increasing capacity in Nigeria with office in Nigeria are: alternative energy solutions. The network is dedicated to the use of renewable energy and energy efficiency includ- • Agence Française de Développement (AFD), French ing all solar-based energies such as photovoltaics, thermal development cooperation organisation heating and cooling, wind, biomass and hydro power and • Department for International Development (DFID), green farming. NAE offers a monthly update service pro- British development cooperation organisation viding in-depth coverage of the Nigerian market in alter- • Gesellschaft für Internationale Zusammenarbeit native energy, climate change, rural electrification, grants (GIZ), German agency for international cooperation and greenhouse gas emissions. [32] • Japan International Cooperation Agency (JICA), Japanese development cooperation organisation In addition to ECN’s mandate to provide strategic plan- • The Norwegian Agency for Development Coopera- ning for and coordinated national policies in the field of tion (NORAD), Norwegian development coopera- energy overall, and its coordinating, monitoring and en- tion ergy policy formulation functions, the Commission has • United States Agency for International Develop- been undertaking the following activities: ment (USAID), US development cooperation organi- • energy and rural development sation • energy policy and planning • energy supply and demand projections The main development banks active in Nigeria are: • energy research and development • energy information activities • African Development Bank (AfDB); Tunisia50 • energy statistics and database • International Finance Corporation (IFC), USA • energy extension services • Islamic Development Bank (IsDB), Kingdom of • national and international cooperation in energy Saudi Arabia • physical development of laboratories and offices. • Kreditanstalt für Wiederaufbau (KfW), Germany • World Bank (WB), USA These ECN activities are carried out by the departments at its head office and the Energy Research Centres located at Nsukka, Sokoto, Lagos, Bauchi, Ilorin and Benin.

50 AfDB Temporary Relocation Agency (Tunis) ON-GRID RENEWABLE ENERGY 99

Last but not least the following UN Organisations have geria’s solar technology with potential power generation an office in Nigeria: of up to 3,000 MW.

• United Nations Development Programme (UNDP), The Association of Nigerian Solar Energy Promoters USA (ANSEP) is a duly registered non-profit organisation that • United Nations Industrial Development exists for all individuals, corporate bodies and NGOs en- Organisation (UNIDO), Austria gaged in the development and propagation of solar and • United Nations Office for Project Services other renewable energy technologies [58]. ANSEP pro- (UNOPS), Denmark vides a platform for interaction amongst professionals engaged in the propagation of solar and other renewable Key players in solar energy technologies. They further promote the propaga- Several joint ventures by international and national cor- tion and utilisation of solar and other renewable energy porations and financial institutions are currently engaged technologies, e.g. through public-awareness campaigns. in utility-scale solar IPP projects that are either in the licence-application stage or in solar panel fabrication and In 2008, the Nigerian and German governments agreed installation projects. As the solar market in Nigeria is on cooperation in the energy sector. Based on this formal very interesting for local and international market partic- agreement the Nigerian German Energy Partnership ipants, players are being attracted from the EPC segment, (NGEP) was founded. NGEP has been coordinating and suppliers of one or more parts within PV power plants, originating mainly utility-scale solar IPPs in Northern financiers, etc. Nigeria since 2011. The project portfolio has since been expanded to include smaller diesel/solar hybrid projects In November 2013, The Federal Ministry of Environ- for universities. [44] ment awarded the first Environmental Impact Assess- ment (EIA) certificate for a grid-connected solar gen- Key players and projects in hydropower eration project. The Anjeed Kafanchan Solar project is Inadvertently, the National Integrated Power Project 15MW gridconnected solar project located in Kafanchan, (NIPP), through its owners the Niger Delta Power Hold- Kaduna State. The project is estimated to be completed in ing Company (NDPHC) has emerged as a key player in mid-2015. the renewable energy market going forward. The Nation- al Economic Council has instructed NIPP to invest 80% On May 7, 2014, Nigeria entered into an agreement with of the funds rose through the sale of its generating assets SkyPower FAS Energy to develop and operate 3000 MW to hydropower plants and transmission line upgrades and of utility-scale solar photovoltaic power plants for the expansion. As a first step a list of eligible hydropower pro- next 5 years starting in 2015. This $5-billion joint ven- jects is being compiled. It is not readily apparent whether ture was finalised through a foreign investment forum the FMP and the FMWR are being consulted in a coor- promotion and protection agreement (FIPA) between dinated manner. Canada and Nigeria during the World Economic Forum on Africa. In the field of hydropower, under the privatisation of national assets, the hydropower plants were not sold, but In June 2014, the Minister for Power expressed the Fed- franchised. The holders of these franchises are the Shiro- eral Government’s commitment to support, through a ro Hydro Power Plc; Kainji Hydro Power Plc; Jebba pow- Public Private Partnership (PPP) model Super Solar Ni- er station (part of Kainji Hydro Power Plc.). ON-GRID RENEWABLE ENERGY 100

Financing for Zungeru HPP (expected to generate 700 ment (NCERD), at the University of Nigeria, Nsuk- MW) has been secured through China’s Exim Bank. The ka (responsible for research in solar and renewable contract was awarded to a consortium of two Chinese energy) electric power firms. • Sokoto Energy Research Centre (SERC), at Usmanu Danfodiyo University, Sokoto (also responsible for Key players and projects in wind energy research in solar and renewable energy) The first almost completed51 large-scale, grid connected • National Centre for Energy Efficiency and Conser- wind farm in Nigeria is the 10 MW Katsina Wind Farm vation (NCEEC) at the University of Lagos (respon- Project. It is owned by Federal Ministry of Power. The sible for research in energy efficiency and conserva- project was awarded to a French contractor. The project is tion). cited at Lamba Rimi in Rimi Local Government of Kat- • National Centre for Hydropower Research and sina State in Nigeria where reasonable yield of wind ener- Development (NCHRD) at the University of Ilorin gy was measured during the feasibility study. (responsible for research in hydropower). • National Centre for Petroleum Research and Devel- Key players and projects in Biomass opment (NCPRD) at the Abubakar Tafawa Balewa To date, ethanol production in Nigeria relies on crude University, Bauchi (responsible for research in petro- ethanol precursors, mainly imported from Brazil, rath- leum oil and gas). er than on local feedstock, for example the Alconi and UNIKEM plants in Lagos. Other private companies are Federal government has established a National Agency producing smaller amounts of ethanol for the national for Science and Engineering Infrastructure (NASENI) market from molasses and/or cassava, e.g. Dura Clean in 1992. NASENI’s intervention in the energy sector is (Formerly NIYAMCO52) in Bacita, Kwara State and in pioneering projects for manufacturing PV modules in Allied Atlantic Distilleries Ltd. (AADL) in Sango-Otta, Karshi, Abuja, local manufacture of small hydro power Ogun State. (SHP) turbines and installation of same in each of the six geopolitical zones of the country, the design and produc- The Jatropha Growers, Processors and Exporters Associ- tion of pole mounted transformers, and the design and ation of Nigeria has set up a pilot plant for refining the production of wind turbine blades, just to name a few. oil for biofuel production in Kano but still requires more NASENI advises the science and engineering communi- seed financing [Agbro, E. & Ogie, N.; 2012]. Last but not ty and SMEs to take advantage of the facilities available least, a private investor is currently developing a Jatropha to fast-track their manufacturing processes and upgrade plantation and biofuel production plant in Cross River their Research and Development (R&D) knowledge. state. [51] Key players in capacity building and training Key players and projects in research The lack of adequate capacity building in the power sector and development has led to deficiencies in skilled personnel in generation, Several pilot projects, surveys and studies have been un- transmission and distribution and also in the areas of dertaken under the supervision of the ECN, which has management of regulatory and policy framework. registered five energy research centres. All of them vested with specific technical/research roles: Given this state of affairs, the Federal Government of Ni- geria established the National Power Training Institute • National Centre for Energy Research and Develop- of Nigeria (NAPTIN) and strategically positioned it to

51 98% completion reported by FMP in 2014; however the Author, based on site visits, is of the opinion that the completion of the wind farm may require further efforts by the Contractor. 52 Nigerian Yeast and Alcoholic Manufacturers (NIYAMCO) Plc ON-GRID RENEWABLE ENERGY 101

provide the lacking capacity building and skills develop- grid codes (transmission and distribution codes) applies ment for the growing Nigerian power sector and beyond to power stations connected to the transmission and dis- in the long term. tribution system. The grid code thus covers the ability of an IPP to connect to the national grid without jeopard- NAPTIN’s mandate is to serve as a focal point for human izing the latter’s stability. As a matter of fact, renewable resource development and workforce capacity building as energy aspects are currently being included in the code in well as research centre on matters relating to power in line with international best practice.53 Nigeria. NAPTIN also provides capability to formulate and implement pilot projects in the relevant fields of elec- In terms of policies, the development of renewable energy tricity production. NAPTIN started as a training insti- is central in the National Energy Policy. As regards the tute for conventional power generation, but is well aware strategy, acts and main by-laws, these have been discussed of the needs to increase their portfolio to Renewable En- in Chapter 5.4. The following documents are the guiding ergy, Energy Efficiency and Rural Electrification. statements for renewable energy:

6.3 Renewable Energy Regulations • Renewable Energy Policy Guidelines, 2006, see and Policies Section 5.4.5 • Renewable Energy Master Plan (REMP). 2012, sum- There are two areas of crucial regulations for on-grid re- mary in Section 5.4.10 and expansion targets below newable energy projects. The first covers submission of a • National Renewable Energy and Energy Efficiency dossier to NERC to obtain a license for a renewable en- Policy (NREEEP), 2014, see Section 5.4.11 ergy IPP (cf. Chapter 4.1.8). The same rules obtain here as do for conventional independent power projects, even The most elaborated document among these is probably if the PPAs are signally different. For example, while the the Renewable Energy Master Plan (REMP). It sets out conventional PPAs requires an analysis of feedstock pric- in the short, medium and long term what the national es, this does not apply to renewable energy. energy supply mix should be and articulates the strategic approach and measures to meet the targets. The REMP The second relates to grid access and requirements: name- is therefore a roadmap for implementing government’s ly the grid code and potential injection points (cf. Chap- commitment to create the necessary enabling environ- ter 5.5.4.1). These are decided by NERC in consultation ment for sustainable energy supply for national devel- with TCN. The grid code is a regulatory document initi- opment with active participation of the private sector. It ated by the NERC as mandated in the EPSR Act 2005. is divided in to programmes with targets, timelines and It outlines the day-to-day operating procedures and prin- activities. Incentives to promote the attainment of the ciples governing the development, maintenance and op- programmes as well as generally grow the renewable en- eration of an effective, well-coordinated and economic ergy market are also provided. However, the REMP still transmission system for the electricity sector of Nigeria has to be approved by the National Assembly to be passed [34]. As noted in the document, the grid code is designed into law. to facilitate an efficient production and supply of electricity for all users of the Transmission System and TCN The REMP sets the targets for power generation using itself without any act of discrimination between users or four sources: biomass, solar, hydropower and wind. We class of users; and facilitate competition in the generation shall distinguish here between those for biomass and and supply of electricity in the country. The scope of the wind, which have little significance in MW terms but

53 GIZ NESP programme ON-GRID RENEWABLE ENERGY 102

TABLE 6 – 7: REMP: BIOMASS AND WIND TARGETS Timeline/Quantity Activity/Item Short Term Medium Term Long Term Biomass electricity (MW) 5 30 100 Improved woodstoves (no.) 300,000 500,000 1,000,000 Biogas digesters (no.) 500 6,000 8,000 Biomass briquetting machines (no.) 30 50 80 Biofuel (ML/day) • Bio ethanol (B10) 5.3 9.7 24.2 • Biodiesel (B20) 2.0 3.4 11.7 Wind electricity (MW) 23 40 50 Windmill water pumping systems (no.) 20 100 200

TABLE 6 – 8: REMP: SOLAR AND HYDROPOWER TARGETS Timeline/Quantity Activity/Item Short Term Medium Term Long Term Solar PV home systems (SHS) (MW) 5 10 15 Solar PV water pumping (MW) 50 1,000 5,000 Solar PV community services (MW) 45 500 3,000 Solar PV refrigerators (MW) 20 500 2,000 Solar PV street and traffic lighting (MW) 100 1,000 10,000 Solar PV large-scale PV plants (1 MW capacity) 80 990 9,990 Solar thermal electricity (1 MW capacity) 300 2,136 18,127 Large hydropower (MW) 4,000 9,000 11,250 Small hydropower (MW) 100 760 3,500

TABLE 6 – 9: REMP: RENEWABLE ELECTRICITY SUPPLY PROJECTION IN MW54 Resource Now Short Term Medium Term Long Term All renewables 1,985.18 4,628 15,966 63,032 All energy resources 8,700 47,490 88,698 315,158 (installed capacity 2012) % of Renewables 23% 10% 18% 20% % RE Less LHP 0.8% 1.3% 8% 16%

From supply projections based on 13% GDP growth impact more strongly at the local level, and those for hy- wattage volume and seems overly ambitious compared dropower and solar: to the current generation capacity. Again there is a clear split between home and local use, and schemes undertak- The emphasis here is clearly on local-level projects to en either by municipal authorities or by private corpora- improve biomass use in homes and rural areas, with the tions. The short-term hydropower objective is consistent wind electricity target being half of that already in the with the figure for the Mambilla and Zungeru projects. NERC licence pipeline. Taken in combination, the REMP envisages a short-term Here, the emphasis is on delivery of a substantial mega- dip in the ratio of renewables to conventional generation,

54 CBN, NPC: Short Term: 2013 – 2015; Medium Term: 2016 – 020; Long Term: 2021 – 2030 ON-GRID RENEWABLE ENERGY 103

TABLE 6 – 10: NREEEP: SUMMARY OF RENEWABLE ELECTRICITY TARGETS Short Term Medium Term Long Term S/N 55 2012 [MW] Resource (2015) [MW] (2020) [MW] (2030) [MW] 1 Hydro (LHP) 1,938.00 2,121.00 4,549.00 4,626.96 2 Hydro (SHP) 60.18 140.00 1,607.22 8,173.81 3 Solar 15.00 117.00 1,343.17 6,830.97 4 Biomass - 55.00 631.41 3,211.14 5 Wind 10.00 50.00 57.40 291.92 All renewables plus LHP (1,985.18) (2,438.00) 8,188.20 23,134.80

All energy resources (on-grid power plus 21,200** 24,380** 45,490** 115,674** 12,500MW of self-generated power)

% of renewables incl. LHP (23%) 10% 18% 20% % renewable energy excl. LHP 0.80% 1.30% 8% 16% presumably to account for the NIPP power stations com- energy programmes with targets and timelines in Table ing on-stream post-privatisation. Thereafter the share will 6–10.56 climb back to the target of 20% set overall. Realistic as the target may be given the potentials, for it to be achieved, (**) The projection for “all energy resources (on-grid pow- however, the hurdles outlined above need to be overcome. er plus 12,500MW of self-generated power)” is based Just recently, in Oct 2014, the National Renewable En- on the addition of on-grid power, and a base capacity of ergy and Energy Efficiency Policy (NREEEP) has been 12,500MW of self-generation (i.e. power generated for filed for approval with the Federal Executive Council (cf. own use) including off-grid generation from year 2012 to Section 5.4.11). Once approved, this new policy paper 2030. will presumably replace the REMP. NREEEP refers to “12,500 MW self-generated power”, The NREEEP recognises the importance of renewable which is evidently considered as neither increasing nor energy for both on-grid and off-grid systems. The docu- decreasing. An exact definition of this source of power is ment points out that energy use in the nation is far from not given. We can assume that this is intended to reflect efficient at all levels, i.e. household, industry, and trans- the fleet of power gensets that are operated to be used as port. It introduces the concept of energy efficiency as a back-up system and uninterrupted power supply by indi- source of energy. On this note the document calls for the vidual people. If that would be the case, the figure shall need to introduce measures to promote energy conserva- most probably decrease with an increase of stability of tion and efficiency in the country. power supply from the national grid.

As per its objectives, the NREEEP shall declare that The targeted percentage in renewable energy by NREEEP the proportion of Nigeria’s electricity generated from shall be understood as tentative, as (in view of high cost of renewable energy sources shall increase to a level that renewable energy power plants) NERC has, for the next meets or exceeds the ECOWAS regional policy targets five years, set a cap on energy from renewable sources at for renewable electricity generation and energy efficien- 10% of total energy sent out. The cap may be subject to re- cy for 2020 and beyond. The contribution of renewable view whenever the federal government’s policy on energy energy towards the realisation of these targets (based on mix is established. 7% growth scenario) is presented through the renewable

55 NREEEP classifies Hydropower as follows: 56 The figures shown in the table are original figures from the source. Figures Pico Hydropower: Pico <100kW in (red) are obviously arithmetically wrong. Micro Hydropower: 100kW ≤ Micro <500kW Mini Hydropower: 500kW ≤ Mini <1MW Small Hydropower (SHP): 1MW ≤ Small < 30MW Medium Hydropower: 30MW ≤ Medium < 100MW Large Hydropower (LHP): Large > 100MW ON-GRID RENEWABLE ENERGY 104

6.4 Renewable Energy Support have actually secured DFI financing to date. The equity/ Mechanisms, existing and planned debt split is difficult for some of the project developers. The French and Dutch DFI’s split ratio, for example, IPPs relying on renewable energy can expect to face the seems to be more favourable, but the respective DFIs same difficulties as their larger conventional “sisters”: The want a ‘monopoly’ on arranging the debt financing. lack of coherence in the regulatory regime as will be outlined below in the discussion of PPAs. The key hurdles in Moreover, various commercial banks have indicated a the transition to a fully operational market are the guar- willingness to become involved in Renewable Energy antees NBET and by extension the DISCOs shall pro- financing: The Bank of Industry and TIB for example vide. In the absence of a firm metering system there are wish to act mainly as ‘financial arrangers’, meaning they fears that DISCOs may not be able to recoup their costs, will not provide debt. The others may provide debt, but and thus they will find themselves unable to pay the IPPs at 15% interest rate upwards, which makes the return on the tariffs due the latter. To date, only one privately-fi- investment the project would need to generate too high. nanced large gas thermal IPP has been finalised, with None of the banks in question is currently providing seed market players no doubt waiting to see how the interim financing to cover the development costs for utility scale market evolves. While power purchasing agreements for projects, which has prevented many investors getting off gas-fired power stations are a highly complex undertak- the ground. ing (especially given the difficulties of indexing of gas prices), this will not apply to renewable PPAs, where the Tax incentives feedstock is steady and has no price. Another support programme is the availability of tax hol- idays for “Pioneer Projects”. [42] The Nigerian Govern- Fiscal incentives ment has put in place a number of investment incentives The REMP proposes to implement a set of fiscal and mar- for the stimulation of private sector investment from ket incentives to support Renewable Energy deployment. within and outside the country. While some of these On the short term, the plan includes a moratorium on incentives cover all sectors, others are limited to some import duties for renewable energy technologies. Plans specific sectors. The nature and application of these -in still need to be developed to educate customs officials on centives have been considerably simplified. Pioneer status what classifies as renewable energy hardware, to mitigate is a tax holiday granted to qualified or (eligible) industries potential difficulties in customs clearance. On the longer anywhere in the Federation and seven-year tax holiday in run, the plan advises the design of further tax credits, respect of industries located in economically disadvan- capital incentives and preferential loan opportunities for taged local government area of the Federation. renewable energy projects.57 As the REMP has not been approved, today, fiscal incentives are not existent. At the moment, there is a list of 71 approved industries declared pioneer industries, which can benefit from tax Financing mechanisms holiday. The Government encourages investors in the As regards financing mechanisms and opportunities, following industries related to renewable energy with tax Development Finance Institution’s (DFI)58 financing is holiday of 5–7 years, which may be granted to: readily available for utility scale projects that meet the a. companies that manufacture transformers, meters, respective criteria as is indicated by some of the projects control panels, switchgears, cable and other electrical in the licence approval pipeline. However, to the best of related equipment, which are considered pioneer our knowledge, none of the utility-scale pipeline projects products/industries and

57 See the remarks above and in chapter 3.1.10 above relating to the NIPC incentive package of pioneer status. The options open to generating companies in general apply to companies wishing to establish power plants run on renewable energy. Tax regulations/incentives (incl. export and import regulations) 58 A development finance institution (DFI) is an alternative financial institution which includes microfinance institutions, community development financial institution and revolving loan funds. ON-GRID RENEWABLE ENERGY 105

TABLE 6 – 11: MYTO II FEED-IN TARIFFS - WHOLESALE CONTRACT PRICES (N/MWH) 2012 2013 2014 2015 2016 Hydropower plants, small up to 30 MW 23,561 25,433 27,456 29,643 32,006 Land-mounted wind power plants 24,543 26,512 28,641 30,943 33,433 Solar PV plants, ground mounted, fixed 67,917 73,300 79,116 85,401 92,192 Biomass power plants 27,426 29,623 32,000 34,572 37,357

b. manufacturers of solar-energy-powered equipment (without tracking system), wind and biomass. NERC as- and appliances sumes that the tariff will reflect the IPPs long-run mar- c. biomass, large scale mechanised farming (wheat, ginal costs of operation (i.e., 20 years). On the basis of the maize, rice and sorghum) MYTO II, a negotiation has to be conducted between d. energy efficiency schemes, for manufacturers of oven, the IPP license-holder (the power generator) and the cookers, cold rooms, refrigerators, fridges, freezers, off-taker (to date NBET). The electricity thus purchased air conditioner will, in turn, be sold to the DISCOs through a vesting e. utility services (independent power generation utilis- contract (cf. Figure 4-1). Such bilateral contracts will be ing gas, coal and renewable energy sources). executed via the procurement framework currently being developed by NERC, but not yet in place. This arrange- The FiT Structure ment, while being of utmost importance to the immedi- The financial modelling of new generation plants will -in ate viability of the Nigerian Electricity Supply Industry, variably orient itself toward the feed-in tariffs set to date is temporary. It will continue for each DISCO only until by NERC in its Multi-Year Tariff Order (MYTO II) pol- such a time when NERC, in consultation with relevant icy document. [NERC; Jun 2012] stakeholders, determines that the DISCO has become financially viable and is able to contract for new capacity To date, the MYTO II is the framework for determining on its own account and also to take over (novate) these the industry pricing structure. However, when it comes existing PPAs with the GENCOS. The contract will to the renewable energy feed-in tariffs stipulated there- then be ceded by NBET to the DISCO once the market in, it is merely a tariff guideline and it is not clear how is fully functional. This will probably take some years. incremental costs are being funded, neither are there provisions for other vital ingredients of a FIT like priority ac- As all DISCOs are undergoing a privatisation process cess, obligation to pay and corresponding compensations currently, it can be assumed that retail prices for embed- for non-offtake. Furthermore, it is questionable if Nigeria ded generation (connection to distribution network) will would introduce an open-end FIT (like in Germany), or be negotiated between the generation company and the instead set a cap on the amount of renewables eligible for DISCO directly. The MYTO II does not apply in this a preferential tariff. This in turn would mean a selection case. mechanism would have to be establish which would actually turn the FIT into a tender system (similar deliber- The tariffs there are specifically intended to incentivise ations led South Africa to abandon the FIT and establish the establishment of such power plants and then form the a bidding system). basis on which the investors or company negotiate with In this study we focus on renewable energy and thus look the off-taker what it will be paid for the electricity it feeds closer into large-scale hydros, small hydro power, solar PV into the grid. ON-GRID RENEWABLE ENERGY 106

The proposed MYTO II tariffs in Naira per MWh for 6.5 From Project to Realisation: negotiation with NBET are listed in Table 6–11 below. It Renewable IPPs - The Process could be understood from reviewing the MYTO II that the proposed feed-in tariffs are not limited by capacity. Any generation company with plans to sell electricity to the national grid or to DISCOs will need to apply for a By comparison, the wholesale contract price to a gas pow- generation licence with NERC as well as for a Power Pur- er plant with tariffs indexed to pre-existing agreements is chase Agreement with NBET. The process, which typi- in the order of 9,850 Naira per MWh. cally takes up to one year, is detailed below.

These tariffs are indeed advantageous, even by interna- 6.5.1 NERC - Generation Licence tional comparison, and are guaranteed and can be negotiated in a way to hedge exchange risk. Due to the high tar- All IPPs (as well as other generation companies) need a iffs, e.g. for solar power plants, NBET has never accepted license from NERC to operate in Nigeria. NERC rules the full PV tariff and also said it will not do so in future. dated February 2014 apply for both renewable and However, as we have seen, companies wishing to develop non-renewable IPPs as regulated under “Regulations for such projects first have to contend with the not insignif- the Procurement of Generation Capacity 2014”. icant hurdle of upfront costs for the relevant studies and the need to accept that such will need an estimated 18 The rules apply only to new projects with more than 10 months minimum to complete. Moreover, and this is per- MW capacity and do not apply to off-grid island appli- haps the major hurdle at present, to date no power pur- cations. Under the new rules NERC has a number of chase agreement (PPA) has been concluded by NBET for potential roles in relation to the generation procurement either a small hydropower plant, a solar PV or CSP plant, regulations. These include: let alone a wind power plant. In the absence of a PPA template, prospective investors do not yet know in what a. approving the quantity of power to be procured; sort of a financing model they can be active under. Indeed b. setting the rules for competitive procurement as is major progress has been achieved, but NERC and NBET done through the drafting of these Regulations and are still in the process of establishing templates for such Guidelines; power purchase agreements.59 c. appointment of Tender Auditor for approving the Tender Documents; This is the crux of the matter as while MYTO II sets a d. review of the entire exercise at the end of the procure- feed-in tariff, this is based on a specific calculation of IPP ment process. costs, the short-run operating costs and long-run return e. advance approval of departures by the Buyer from on capital. Now these will inevitably vary for each pro- the generation procurement Regulations or the RFP; ject as the project technology may vary, the feedstock and may vary (solar irradiation levels), the return on capital f. proposing or approving amendments to the Genera- employed will vary (interest rates granted by commercial tion Procurement Regulations itself, banks or DFIs), to name but three areas. All these aspects have to be taken into account when negotiating with Under existing procurement laws small projects (under NBET what actual price will be included in the power 10 MW) fall outside the procurement regulations and purchase agreement. this suggests that projects under 10 MW capacity cannot be connected to the grid. Such small projects could pur-

59 At the time this study went to press, the interim market was in operation and this means there were no full market operations. Thermal operators were being paid only 60% of the capacity charge and not the feedstock charge, resulting into recurring losses. This difficulty will not dog renewables projects, as there is no fuel charge, e.g. solar, wind, water resources are free (gas prices fluctuate considerably…). ON-GRID RENEWABLE ENERGY 107 - 98 -

sue the option of connecting directly with the DISCO. FIGURE 6 – 4: Figure 6-4: LicencingLICENCING Submission SUBMISSION Process PROCESS NERC requires the IPP to submit the following documentation as part of license and tariff approval process:

1. Completed application form 2. Certificate of Incorporation and Memorandum and Articles of Association, or Deed of Partnership, or Deed of Trust 3. Registered title deed to site, or sale agreement, or deed of assignment/gift, or evidence of submission of a title deed to a relevant land processing agency 4. Tax clearance certificate for immediate past three (3) years 5. Certified audited financial statements and accounts for immediate past three (3) years 6. Detailed CVs of managerial and technical staff of the proposed power plant 7. Location map 8. Single line diagram 9. Power plant design (Prepared by GOPA-International Energy Consultants GmbH) 10. Site plan drawings (Prepared by GOPA-International Energy Consultants GmbH) 11. Ten-year business plan 12. Off-take agreement or arrangement 6.5.2 NBET - Power Purchase Agreement 13. Environmental Impact Assessment (EIA)Any Approval generation licence must be complemented by a power purchase agreement (PPA). The Bulk Trader, Nigerian Bulk Electricity Trading Company (NBET) has the central, yet temporary, role in the economic and competitive Certificate, or proof of submission andprocurement acceptance of newOnce generating documents capacity during have the been transitional submitted, stage market. the process On this takesbasis, the IPP will have to for processing of the Report on EIA to thenegotiate Ministry an individual the PPA following for their project path, with as NBET.described in Figure 6-4 below.

of Environment, Housing & Urban or Planning,NBET has requires four mandatory submissions from IPP developers prior to initiating a PPA approval process as 14. Fuel supply agreement, or a letter from a detailedfuel supplier below: 6.5.2 NBET - Power Purchase

and transporter indicating the inclusion1. of theLand fuel requirements Agreement: needs of the applicant in the supply plans of the• Registeredfuel title deed for the project land site. • Notarised sale agreement of the project site land. supplier and transporter • Deed of assignmentAny generation / gift of the licence project site must land. be complemented by a pow- 15. Agreement with/approval from Ministry of •Water Evidence ofer submission purchase of agreement a title deed to (PPA). a relevant The land processingBulk Trader, agency regardingNigerian the project site land.

Resources (if applicable) 2. EnvironmentalBulk & Social Electricity Assessments Trading Company (NBET) has the cen- 16. Letter of Intent or a MoU from EPC contractorAn Environmentaltral, Impactyet temporary, Assessment (EIA)role thatin the meets economic the Federal and Ministry competitive of Environment standards has to be completed. NBET expects to receive the final and complete EIA for the project and also the approval from 17. MoU or Letter of Intent from the technical partnerthe Federal Ministryprocurement of Environment. of new generating capacity during the tran- 18. Evidence of confirmation from Transmission Com- sitional stage market. On this basis, the IPP will have to pany of Nigeria and proposed connection point has negotiate an individual PPA for their project with NBET. capacity to accept the proposed load. 20141121_Energy Sector Study_NESP Publication draft_v2.docx 19. Financing agreements or letter to fund the project NBET has requires four mandatory submissions from from bank(s) IPP developers prior to initiating a PPA approval process 20. Power plant commissioning schedule as detailed below: ON-GRID RENEWABLE ENERGY 108

1. Land requirements: PPA with NBET, FMENV shall review and approve the • Registered title deed for the project land site. site-specific EIA. • Notarised sale agreement of the project site land. • Deed of assignment / gift of the project site land. TCN - Transmission Line Connection • Evidence of submission of a title deed to a relevant Agreement land processing agency regarding the project site Interested IPP developers must conduct a power flow land. study to confirm that all generated power can be delivered to the national transmission grid without creating 2. Environmental & Social Assessments any technical issues. Upon request, TCN supplies the An Environmental Impact Assessment (EIA) that IPP developer with the necessary grid input data for com- meets the Federal Ministry of Environment stand- pletion of this analysis. ards has to be completed. NBET expects to receive the final and complete EIA for the project and also Typically an IPP developer has to define costs, equipment the approval from the Federal Ministry of Environ- specifications, engineering design specifications to con- ment. nect to the grid for its internal planning and cost estimate purposes. Presently TCN does not have a standard 3. Transmission line connection agreement application package for interested IPP developers. A comprehensive load flow study at the project site must be completed and the project must get a provi- Power-flow or load-flow studies are important for plan- sional approval from the Transmission Company of ning future expansion of power systems as well as in Nigeria (TCN). This will provide NBET the com- determining the best operation of existing systems. The fort that there will be no stranded generation capacity. main information obtained from the power flow study is the magnitude and phase angle of the voltage at each bus 4. Energy source/ fuel supply study and the real and reactive power flowing in each line. For all renewable generation, NBET requires to see the resource availability reports and completed studies. NBET requires a copy of TCN approved load flow study as part of the PPA application package. Additional NBET due diligence includes review of: 6.5.3 Embedded Generation • Project partners, sponsors, technical and financial partners Based on the “Regulations for the Procurement of Gen- • Status of other required permits eration Capacity 2014” embedded generation means the • Project information, capacity, technology, construc- generation of electricity that is directly connected to and tion schedule, etc. evacuated through a distribution system which is connected to a transmission network operated by the licen- Ministry of Environment - EIA see vested with system operations functions (cf. Chapter The Federal Ministry of Environment, Environmental 5.5.2). [NERC; Jan 2012] Impact Assessment (EIA) Division is responsible for implementing the EIA Act No. 86 of 1992 with the The NERC procurement rules dated February, 2014 state: mandate to register of new projects, verify sites, screen- 1. Generation capacity up to 10 MW is exempt from ing/scoping of projects. As regards the negotiation for the February 2014 published rules ON-GRID RENEWABLE ENERGY 109

2. Various existing arrangements and applications are 6.6 Conclusions: Strong Potential for also exempt from the new rules Renewable Energy 3. For addition of any generation capacity over 10 MW a competitive bid is required Market and Potential 4. There are two methods for DISCOS to obtain addi- Nigeria has immense potential and opportunities tional embedded generation; as regards making the leap to large-scale reliance on . a Request NERC to facilitate a competitive bid pro- utility-scale renewable power plants, specifically bio- curement or mass-to-power, waste-to-power, solar PV projects and . b Individual DISCO to initiate a competitive bid small and mediumsized hydropower stations (on-grid). procurement The viability of wind as a primary energy source would need further investigation. 6.5.4 Challenges For on-grid renewable energy technologies, the manu- Before a project gets to the licence submission stage, a facturing and industry market in Nigeria is on its step to large quantity of studies need to have been completed, gain competence and financial strength for implementa- meaning that the company or investor ‘developing’ the tion of large-scale projects with the support of interna- project must be prepared to incur in part substantial costs tional partners and financing institutions. Several joint ahead of licence approval in the hope to gain such. The ventures of international and national corporations and studies must obviously include a power evacuation study financial institutions are currently engaged in for in- (proving the viability of the grid connection), an Envi- stance utility-scale solar IPP projects that are either in ronmental Impact Assessment (ESIA). The EIA shall be the licenceapplication stage or in solar panel fabrication prepared by a registered Nigerian company. Moreover, ev- and installation projects. There are however not sufficient idence must be furnished that the Transmission Compa- national manufacturing facilities in Nigeria; only some ny of Nigeria (TCN) confirms that proposed connection local production of PV modules is done. point has the capacity to take the load, which will be fed into it. Compiling the legal & regulatory studies and the Planned projects financial modelling will also entail costs and time inputs. To date, no real commercial large-scale project has been successfully implemented, other than hydropower (and Investors, particularly donor agencies, international fi- small biomass, e.g. ethanol production). Stakeholders and nancing institutions and funds, attracted by green energy key players all have programmes to support and imple- concepts may not want to engage in such an expensive ment various RE technology projects in the near future. project development and make any real commitments The FMP for instance has awarded contracts to Nigerian until they have a license and PPA LOI in place. consultants to undertake “consultancy services for wind, solar and biomass projects in different locations nation- To date, a large number of such licences have been grant- wide”; results are outstanding. FMP in cooperation with ed, for both on- and off-grid independent power produc- the FMENV will construct at least 16 large, medium and ers (IPPs). However, the number of the projects that have small hydropower plants, increasing the country’s power since progressed to financial close and are buttressed by generation capacity by about 4,000 MW. Private inves- PPAs is limited, suggesting that licenses were obtained as tors and developers have licensed various projects with negotiating chips for future sale rather than with the firm NERC already. However, none of these projects have yet commitment to build and operate a power plant. been completed. ON-GRID RENEWABLE ENERGY 110

RE policy and strategy targets Good foundations in formulating the renewable energy A coherent support mechanism is compulsory, in order policy and strategies have been made. At present, the Na- to attract first-class reliable generation companies. Oth- tional Policy on Renewable Energy and Energy Efficien- erwise it may be to the detriment of consumers as it may cy is subject to approval. However, due to the shortage encourage the introduction of sub-standard facilities that of distinctness covering the variety of regulations, pro- are not in any way sustainable. Indeed, to date it is not cedures etc. implemented by the diverse regulators and discernible that NERC itself opts for a market-driven agencies in the power sector, which per se is fluid and in approach in its methodology on renewables, and factors transition at the moment, serious investors looking to this into its peer-group comparison when devising regu- invest immediately in Nigeria’s renewable energy sector lations. may not readily be willing to do so. Project realisation, opportunities Support mechanism and challenges As regards financing mechanisms and opportunities, De- Before a project gets to the licence submission stage, sev- velopment Finance Institution’s (DFI) financing is in eral studies need to be completed ahead of license approv- theory readily available for utility scale projects. Moreo- al. A company or investor ‘developing’ the project must ver, various commercial banks indicate a willingness to hence be prepared to incur resources for these studies. become involved in RE financing, such as the Bank of Industry (BoI) and The Infrastructure Bank (TIB). Ni- In practice, anyone looking to obtain a generation licence gerian banks aim to act merely as “financial arranger”, i.e. from NERC is required to obtain a PPA Letter of Intent without providing own seed financing and/or at high in- (“LOI”) from NBET (or from a distribution company terest rates (15% upwards). The current National Policy for embedded generation), prior to being licensed. The on Renewable Energy and Energy Efficiency supports the NBET, on the other hand, wants to see funding commit- introduction of financial incentives; but this needs to be ments prior to the LOI. At present, NERC also considers operationalised in the subsequent. examples from peer countries such as Kenya, South Afri- ca and Tunisia. The MYTO II, as the framework for determining the industry pricing structure, is potentially advantageous for At the same time, given the pressure on government to foreign investors. Though, this certainly requires factor- deliver megawatts soonest, regulators face the conun- ing in country risks, logistics, the blurring ministerial re- drum that they need to decide quickly. sponsibilities as regards the applications processes for tax relief and customs exemption. In addition, quality monitoring still needs to be put in place as well as benchmark- ing to international best practises. From this perspective, Nigeria appears to be a comparatively unregulated market for renewable energy at the moment.

Currently, negotiations on the basis of the MYTO II, has to be conducted between the IPP license-holder (the power generator) and the distributor (to date NBET) to obtain a power purchase agreement, individually. 7. ENERGY EFFICIENCY 111

7.1 Energy Efficiency Market efficiency becomes. Despite the fact that the key focus in the energy sector in Nigeria today is on improving pow- The main factors driving energy efficiencies are savings er generation, there is need to formulate and implement realised from a reduced need for investment in infra- energy efficiency programs in the various sectors of the structure (economy level) or savings on fuel expenses economy. This will contribute not only in reducing the (individual entity level) as well as the mitigation of en- power shortage, but also will increase the competitive- vironmental effects and climate change (global level) by ness of the industrial sector through the reduction of reduction of GHG emissions. energy intensity60 per unit product. Moreover, reduced energy costs would also give policymakers greater lati- Any cost-related decision concerning energy efficiency, at tude for reducing electricity subsidies and freeing up the the individual level, is based on a trade-off between an national budget. Last but not least, reducing energy use immediate cost and a future decrease in energy expenses by enhancing efficiency is one method of cutting carbon expected from increased efficiency. The higher the energy dioxide emissions and mitigating climate change. price, observed or expected, the more attractive energy

TABLE 7 – 1: ENERGY EFFICIENCY AND CO2 INDICATORS FOR NIGERIA61 Unit 2000 2011* 2000-11 (%/year)*

Key indicators Primary energy intensity (at purchasing power parities (ppp) koe/$05p 0.498 0.319 -4.0 Primary energy intensity excluding traditional fuels (ppp) koe/$05p 0.090 0.052 -4.9 Final energy intensity (at ppp) koe/$05p 0.457 0.292 -4.0 Final energy intensity at 2005 GDP structure (ppp) [2] koe/$05p 0.287 0.556 6.8* CO2 intensity (at ppp) [1] k CO2/$05p 0.227 0.130 -4.9 CO2 emissions per capita [1] t CO2/cap 0.333 0.291 -1.2

Industry Energy intensity of industry (to value added at ppp) koe/$05p 0.167 0.152 -0.9 Energy intensity of manufacturing (at ppp) koe/$05p 0.857 0.781 -0.8 Share of electric process in steel production % 100 100 0.0 CO2 intensity of industry (to value added at ppp) [1] k CO2/$05p n.a. 0.058 n.a.

Households Average electricity consumption of households per capita kWh/cap 35.8 80.2 7.6 Average electricity consumption of electrified households kWh/hh 399 604 3.8

Services Electricity intensity of service sector (to value added at ppp) kWh/k$05p 38.1 44.1 1.3 CO2 intensity of service sector (to value added at ppp) [1] k CO2/$05p n.a. 0.037 n.a.

Transformation sector Efficiency of total electricity generation % 48.8 45.3 -0.7 Rate of electricity transmission-distribution losses % 39.3 17.7 -7.0 Efficiency of thermal power plants % 37.0 39.7 0.6 Share of renewables in gross electricity consumption % 38.2 20.7 -5.4

[1] CO2 from fuel combustion [2] by main sector * data of 2010 if 2011 data not available

60 Energy Intensity is a measurement of energy conservation, the amount of energy consumption per unit (here GDP). It expresses the consumer behaviour in energy saving or changes in the industrial sector as an average figure for the whole country 61 Source: [7], units: koe = kilogram oil equivalent, $05p = US$ basis 2005 ENERGY EFFICIENCY 112

There are two levels at which energy efficiency potentials 7.1.1 Existing Energy Efficiency Projects can be exploited. The one level is the way energy is generated, transmitted and distributed; the second is the way With the exception of the UNDP/ECN programme de- energy is consumed in the various sectors of the economy scribed below measures in the sense of centrally planned (e.g. transportation, buildings, and industries). A subsid- or coordinated programmes are not yet in place, although iary level to the first is to avoid the energy losses current- some policies exist through ECN, NCEEC and FMENV. ly innate in the grid wheel-out system (load shedding, transmission losses, etc.). That said, the National Centre for Energy Efficiency and Conservation (NCEEC) attached to the University of Table 7-1 shows an excerpt of the energy efficiency indica- Lagos has been conducting research into energy efficiency tors gathered by the World Energy Council for the years and conservation and under this mandate has conducted 2010, and 2011. The database gathers the information on studies into the promotion of energy efficient appliances a very high level and may contain some gaps due to miss- and light bulbs (see below for details on the organisation). ing information but it serves as a indicator for the trend The insights have not yet been fed into tangible measures. in energy efficiency. The Energy Commission of Nigeria (ECN) in partner- The potential for investment in energy efficiency by -man ship with the Cuban government and with support from ufacturers/vendors (profiting from machinery/appliance ECOWAS has been distributing 1 million CFLs in Nige- substitution) shown in Table 7-1 is enormous. The scope ria free to residents in organised estates across the country. for institutions supporting rural and lower-income house- Under the aegis of Federal Ministry of Environment’s holds in reducing their energy consumption is likewise National Clean Cooking Scheme (NCCS) run by the immense, as already observed purely with regard to stoves Renewable Energy Programme Unit, the Rural Women and fuel wood consumption [CREDC; 2008]. It bears Energy Security (RUWES) has started production and considering here that the payback period is significantly distribution nationwide of a purpose designed bio-fuel longer, meaning the drag placed on disposable income stove in partnership with pot-makers Tower and energy is initially high, a possible deterrent for lower-income firm Envirofit.63 households struggling to meet expenses. The Rural Energy Access Project (REAP) was initiated The table shows how few energy efficiency gains have by the Federal Ministry of Environment’s Renewable En- been made in industry over the 11 years covered, and also ergy Programme Unit to address the need to source and reveals that CO2 emissions per capita have not notice- deploy alternative and sustainable sources for lighting ably fallen over the 11 year period presented in the ta- purposes, whereby here energy efficiency spells empower- ble, whereas the population has grown significantly and ment as it brings light to the rural poor who suffer most overall energy intensity has risen. Both are areas where from a dearth of electricity. REAP hinges on reducing there is a market potential. Moreover, the table clearly in- power consumption by using clean, energy efficient LED dicates that there is a massive efficiency shortfall in the bulbs and introducing household stand-alone solar kits energy generation sector, highlighting the extent of dis- to replace incandescent bulbs, single-wick kerosene and tribution/transmission losses and the problems with the oil lamps as well as small diesel generators.64 fleet of thermal power stations.62

62 As a side note: it can already observed with this well curated data set that the GmbH and Lernen - Helfen - Leben e.V. (LHL) and a Nigerian NGO, establishment of a consistent data on energy efficiency is a difficult tasks since Developmental Association for Renewable Energies (DARE) to promote it depends on available data and a common method or definition on how to dissemination of improved cooking stoves to households in Nigeria. This measure efficiency, losses and emissions. This can be exemplified with the rate project has been registered as a CDM project and is being financed by a of electricity transmission-distribution losses that jump over the years: Carbon offset company Atmosfair GmbH. 39.7 (1990), 39.3 (2000), 24.4 (2005), 6.04 (2009), 17.7 (2010), 17.7 (2011). 64 The nstitutionalI Woodstoves Project is a pilot project in Nigeria to emon- The umpsj in the series may be caused by the extension of the data gathering strate the benefits of institutional woodstoves and will serve as an dvocacy to other parts of the system or change of methodology platform for launching a national initiative on institutional stoves. The project 63 See also the “Save80 Stoves: Promoting Energy End-Use Efficiency for Sustain- was based on an institutional rocket stove model developed by Aprovecho, able Development” project launched in 2011. The „Efficient Wood Fuel Stoves USA. And the project is funded by Embassy of Switzerland, GTZ and ICEED. for Nigeria Programme“ is a joint initiative of the German NGOs, Atmosfair ENERGY EFFICIENCY 113

Julius Berger of Nigeria introduces energy efficient build- Abuja Centenary City: Being planned by an investor ings to the country. In 2013, the company completed the from the Gulf and designed by Julius Berger Internation- office building of the Central Bank of Nigeria in Lagos al, this city will feature an array of sustainable measures, and has ongoing projects, like the Rose of Sharon Build- renewable energy sources, and energy-efficient mecha- ing, Nestoil Towers, Akwa Ibom Stadium Complex. Ac- nisms. [Primetech AS&P; 2014] cording to its own presentation, the company has the specialised knowhow needed to construct buildings that With support from the Global Alliance for Clean Cook- meet the Leadership in Energy and Environmental De- stoves, ICEED is establishing the Nigerian Clean sign (LEED) standards for certification. However, these Cookstoves Design and Testing Centre at Afikpo, Eb- pilot projects are high-cost measures and cannot be re- onyi State. The centre will provide stove producers and garded as common practice in the building industry. users, and other relevant stakeholders the opportunity to confidently compare stove performance and safety. In The Energy Efficient Housing Scheme is a partnership addition, it will provide a common set of terminology for between the FMENV and Aso Savings And Loans Plc, a wood stoves for easier understanding and communica- leading mortgage bank with the objectives of providing tion; give stove producers, marketers and users assurance affordable energy efficient housing for staff of the Minis- of product quality. try by micro generation mainly from solar and Bio-energy. The project was recently launched in Kaduna with the The Nigerian Clean Energy Access Program - NCEAP. prospect of containing 2000 Housing Units and many In line with the quest to reduce the global impact of cli- more are on the pipeline from different states across the mate change and as part of the solution to the epileptic Nation. power supply in Nigeria through the Nigerian Clean Energy Access Program, NCEAP which plans to distrib- Projects looking at energy efficiency in the industrial ute 150 million bulbs over the next five years under the sector are not existent so far. To a limited extent, a few Clean Development Mechanism (CDM). This is part of industries implemented energy audits. This involves iden- FMENV’s initiative to ensure energy efficiency is private tifying in each state all manufacturing hubs and major ar- sector driven. eas of industrial production. The estimated energy needs of all industrial manufacturing hubs will be included in GIZ - Nigerian Energy Support Programme: The Ni- Nigeria’s energy dispatch considerations, and used in gerian Energy Support Programme (NESP) in coopera- planning the electric power sector.[NIRP; 2014] tion with the FMP, FMLHUD and the FMTI focuses on energy efficiency in the building and industrial sector. 7.1.2 Planned Efficient Energy Projects Pilot projects will be implemented for apartment buildings, for the application of solar water heaters and with The Abuja Green City: The Abuja Green City is an initi- regard to energy management systems in selected indus- ative of the Renewable Energy Programme of the Federal tries. Experiences are used for up-scaling into policy de- Ministry of Environment, together with Green Carbon velopment and the development of support mechanisms Afrique Creation Environmental Services and Integra such as financing schemes, introduction of ISO stand- Integrated Renewable Energy Services. The low-carbon ards and standards and labels for household appliances. development is using a combination of local electricity generation, improved insulation, and energy efficient devices for the apartments. ENERGY EFFICIENCY 114

7.2 Energy Efficiency Market 7.2.2 Genset-Based Generation

7.2.1 Efficiency of On-Grid Generation, The absence of on-grid energy supplies or unreliable pow- Transmission and Distribution er supply from the grid has led consumers from all categories to install their own generation and even distribution The technical efficiency in the electricity sub-sector is- de equipment. The majority of these generators use diesel or termined by a few indicators: efficiency of the generators petrol as fuel. Replacing old diesel generators with at least used in the system, losses in the transmission and dis- newer more efficient generators can increase the reliabil- tribution. Additionally, the share the renewables on the ity of the electricity supply and reduce the energy costs; gross generation can be used as a sign for the fossil fuel empirical evidence would suggest that over a 30 year life- intensity or non-sustainable generation. span the generators’ output falls by half. That said, in the medium to long-term the goal must be to replace such According to the data on the efficiency of thermal power generators with renewable energy sources wherever pos- plants in Nigeria provided by the World Energy Council, sible. the electricity generation efficiency is with an average of 38.3% even slightly above the mean values of similar In 2008 a study from the University of Chicago estimat- economies (e.g. India: 28.6%, Indonesia: 34.6%, South ed the life-cycle costs of a diesel genset in Nigeria at US$ Africa: 35.7%). It is not clear what was considered when 13,160 per kVA installed capacity (12 years lifetime, 8% generating these values and also no information on exist- discount rate) [Kennedy-Darling, J., Hoyt, N., Murao, K., ing environmental measures such as reduction of noise or Ross, A.; 2008]. Since then, the prices for genset, diesel emission is provided. and maintenance has risen and it can be assumed that the life-cycle costs for a diesel genset are much higher today. The fleet of power plants producing base-load capacity in Nigeria consist of gas turbine power plants in open-cycle The gains to be made from efficient generators are there- configuration. The efficiency of such power plants is- lim fore immense in absolute terms as is the potential market. ited by physical laws (Carnot process). Nigeria’s overall ef- In this context, the Standards Organisation of Nige- ficiency in base-load could be increased by changing the ria (SON) has the mandate by law to make sure that technology, for example to combined cycle power plants substandard generators and other industrial goods and (CCPP) or combined heat and power (CHP) technolo- spare parts do not come into the country. Reports about gy. In some cases these more efficient technologies have sub-standard generators and parts in shops and markets already been introduced, for example at Afam VI, Alaoji, would seem to indicate that the mandate is not fulfilled Okpai and Olorunshogo power stations. resulting in unnecessary costs and the waste of energy and resources. Indeed, there is scope also to introduce On the other hand, system losses in power transmission a LEME (List of Eligible Equipment and Materials) [5], and distribution are very high. The potential to increase [6]. Energy efficiency measures would reduce the demand the stability of power transmission and to reduce losses is for generators or at least demand for their continuous enormous. Since the privatisation of TCN and DISCOs, use [GIZ; 2013]. The introduction of clear efficiency -lev the issue will be pursued from the economic point of view. els for generators would ensure more efficient use of the The companies will put all efforts to increase their sales by feedstock, and thus greater efficiency in the generation. minimising their system losses as further detailed in Moreover, and this is more than a side-effect, more effi- Chapter 3.8. cient diesel generators would reduce CO2 emissions. ENERGY EFFICIENCY 115

TABLE 7 – 2: ENERGY INTENSITY - A PEER-GROUP COMPARISON [68] Base year Nigeria Indonesia Bangladesh South Africa Brazil Energy intensity (kg of oil equivalent) 2011 137.5 101.6 90.9 231.3 95.9 per US$ 1,000 GDP (constant 2011 PPP) GDP per unit of energy use (constant 2011 7.3 9.8 11.0 4.3 10.4 2011 PPP US$ per kg of oil equivalent) Energy use (kg of oil equivalent) 2011 721 857 205 2,741 1,371 per capita Pump price for diesel fuel avg. 1.09 0.47 0.76 1.42 1.02 (US$ per litre) 2009–2013 Consumption by households 2005 7.7 41.18 8.94 36.97 83.19 (in billions of kWh)

7.3 Energy Efficiency: Consumption [NBS; 2010/11], provides data on the population distribution of regular households by type of main lighting Similar to the comparison of other parameters of quanti- fuels. It has been revealed that more households rely on ty there is a specific parameter to measure the consump- kerosene as the main lighting fuel, followed by electricity, tion of energy required for a certain product or unit: en- battery/dry cell and firewood respectively. Based on these ergy intensity. The energy intensity is the ratio of energy figures, one can assume that electricity consumption for consumption in relation to the reference metric. This is lighting will increase with households connected to elec- typically the national gross domestic product in the case tricity supply. of a country’s energy intensity, or energy consumption Table 3–4 in Chapter 3.3 shows quite clearly that the key per household for sector-specific intensities but it can also area of energy consumption is residential: In thousand be measured in energy used per unit of commercial floor tonnes of oil equivalent (ktoe) on a net calorific value ba- space, per dollar value industrial shipment, or another sis, the residential sector accounts for some 80% of total metric indicative of a sector or process. energy consumption (baseline year 2011). A close focus on areas where energy efficiency can be achieved here A peer group comparison of energy use is quite instruc- thus makes sense and also identifies what potential mar- tive to highlight the situation in Nigeria today: ket is available for manufacturers of appliances, which are mainly imported. Indeed, the range of opportunities for In relation to other countries, Nigeria shows relatively distributing energy-efficient appliances is very large, as high energy use per unit of GDP expressed in US$ 1,000. can be seen from. This can hardly be influenced by a low price of grid electricity, given that electricity supply from the grid is erratic Energy Efficiency in Buildings and that the alternative source is diesel generator, which An analysis of the potentials as regards energy consump- as the table shows is comparatively expensive in the coun- tion conducted last year reveals that there are three key try. The low absolute consumption figure is indicative of inbuilding areas in which significant energy efficiency re- the lack of generating capacity. However, that high ener- sults can be achieved [GIZ; 2013]. Due to a lack of data, gy use is clearly a point where energy efficiency measures the study conducted a survey among key building sector could pay off. stakeholders. The results show that appliance-related sav- As an example, the 2010/2011 General Housing Survey ing potentials could be drawn from domestic hot water carried out by the National Bureau of Statistics in Nigeria heating, cooling and lighting. ENERGY EFFICIENCY 116

On a more global level, buildings would gain or be more ing bulbs are still far more expensive, the indiscriminate efficient if built according to the climate at the respective use of electricity among urban dwellers in Nigeria such as location. Specific energy consumption of a building is de- leaving appliance on when not in use or multiple use of pendent on the quality of the building as such, the build- inefficient equipment, and the purchase of second-hand ing orientation and the design and material of the build- appliances which have often been rejected by former using envelope, just to name a few criteria. Unlike in former ers in favour of more efficient appliances. time with the traditional housing, modern architecture and also the clients in the urban areas do not account for In [FMENV; 2010] the FMENV’s Special Climate bioclimatic construction. As a result, the study recom- Change Unit outlined how the energy-efficiency poten- mends also top-level policy changes in the building sector tials offered an option to mitigate the climate change such as development of an energy building code, making impact of Nigeria’s energy system by adoption of the fol- the compliance with minimum energy requirements and lowing: targets to be established compulsory for permits, the cre- 1. Introduction of compact fluorescent light (CFL) ation of a design catalogue for affordable energy efficient bulbs at a negative incremental cost of $58/ton CO2, buildings, introduction of technical and financial sup- with 5.155m ton CO2 reduction capacity; port mechanisms, priority for energy efficiency in public 2. Introduction of improved kerosene stoves in house- procurement - all accompanies by promotion and aware- holds, at a cost of $21/ton of CO2 reduced (6.122 m ness measures as well as training and capacity building. ton CO2 reduction capacity) ; 3. Fuel-oil to natural gas fuel substitution in the cement Looking at the end-user side, savings of some 26.8% of industry at $18/ton (7.49m ton CO2 reduction ca- the total energy consumed per household can be achieved pacity); if solar water heaters are introduced (whereby this does 4. Improved electrical appliances ($16/ton) and wood- not consider the use of energy to pump the water). Sec- stoves ($3/ton) in the residential sector (9.566m ton ondly, estimates are that the total energy requirement can CO2 reduction capacity); and be reduced by a further 6.68% if the average energy con- 5. Introduction of efficient motors in industry at $15/ sumed by cooling systems is decreased by introducing ton (10.738m ton CO2 reduction capacity). the relevant steps (insulation, timer switches, etc.). Third- ly, the introduction of energy-saving lighting sources will Table 7-3 is relating solely to refrigerators, which are sim- produce net energy savings of around 6% per household. ply taken here as an ideal-typical case in comparison with All in all, measures taken in this regard would garner en- France, England and Sweden (ignoring geographical fac- ergy consumption reductions of close to 40%. tors, but assuming an average for the population whereby the majority of the Nigerian population has no access to Energy Efficiency in Households such appliances). One of the reasons for inefficient use of energy in Nigeria is the use of old and inefficient equipment and produc- Given the volume of kWh required per annum in Nigeria, tion processes. The other reasons are practices that lead to it is imperative that energy efficiency standards be -in energy wastage, such as the inefficient traditional three- troduced in this field. stone fuel woodstoves used by 70–80% of households [NBS; 2010], the use of vehicles with low fuel efficiency Solar Water Heaters (SWH) (e.g. old vehicle fleets, poor maintenance), the predomi- A recent GIZ study concludes that the associated energy nant use of incandescent light bulbs because energy sav- cost savings when using SWHs for domestic application ENERGY EFFICIENCY 117

TABLE 7 – 3: ENERGY EFFICIENCY AND KITCHEN COOLING APPLIANCES - A COMPARISON OF AVERAGE ANNUAL CONSUMPTION 65 Expected impact of energy efficiency (kWh/p.a.) Fridge Fridge-freezer Freezer measures such as standards and labels France 2007 253 460 556 36% Sweden 2007 225 469 470 7% England 2007 162 427 344.5 38% Nigeria 2012 420 698 756 n.a.

are too low at the moment in comparison with electric and the general public. Such public training sessions on heaters. The major reason for this is that the market for SWH designs, fabrication, and installation are offered at SWHs is not yet well developed in Nigeria. The second some cost to the participants. reason could be that the electricity tariffs in Nigeria are still low (although rising according to the MYTO II reg- To date there are no commercially available SWHs made ulation). The situation is similar in educational institu- in Nigeria. However, thermosyphon SWHs have been tions and hospitals. Therefore, incentives, grant, and -fi developed by the Sokoto Energy Research Centre (SERC) nancing models are needed to make SWH attractive for and the National Centre for Energy Research and Devel- potential users. [GIZ; Dec 2013] opment (NCERD) mainly for research purposes and as prototypes for demonstrations. The materials for these Subsidy schemes which can be investment grants or ca- prototypes were sourced from the local markets. Follow- pacity payments, output or production based payments or ing several years of research activities involving optimisa- soft loans are the main drivers of solar energy technology tion and re-optimisation of the SWH in the above two globally (Govinda et al. 2012). According to them, India research centres, market-ready flat-plate collector-based for instance has made SWH popular by implementing prototypes have been developed and are waiting for the a subsidy scheme that pays up to 90% of the system cost. enabling framework for their commercialisation. Nigeria has no subsidy or incentive system in place to support the popularisation of SWH. The Solar Energy Society of Nigeria is the only professional organisation that promotes renewable energy technol- The use of SWH could be profitable in hotels. Results ogy in Nigeria and its membership derives mainly from show a theoretical payback period of 3 to 10 years. SWH academics from the universities and research institutes. A will pay for from the savings to be made if used instead platform that unites SWH dealers will be necessary as of grid electricity and electricity from diesel generators they are key stakeholders in the strife to develop SWH respectively. However, most hotels have decentralised sys- market in Nigeria. The Energy Commission of Nigeria tems of water heating for hot water prepared for bathing (ECN) could mobilise them through the MAN. and laundry. Data on SWH technology, installed collector area, and There are no standard codes for SWH systems in Nigeria, other information are scanty since the industry is still in and trainings and qualifications are not standardised, ei- its infancy. However, what is clear is that the installed ther. However, the two ECN research centres and other collector area is very small, when compared with the po- universities offer training programmes from time to time tentials. for their staff, students and staff of the host universities

65 Source: UNDP newsletter / case study ENERGY EFFICIENCY 118

TABLE 7 – 4: POTENTIAL AREAS OF ENERGY SAVINGS ACROSS INDUSTRIAL SUB-SECTORS Plastics Textiles Chemicals/ Automotive Metal ProductsMetal Food & Beverage Pharmaceuticals

Lighting X X X X X X HVAC X X X X X X Thermal/Steam X X X X X Electro-Mechanical X X X X X X Air-Compressors X X X X X Heat Controllers X X X X Water Pumping X X X X X X

Energy Efficiency in the Industrial Sector Industries typically comprise high energy consuming The industrial sector is probably the segment of the econ- equipment such as boilers, chillers, motors, diesel gensets omy where energy efficiency measures would be easy to etc. It can therefore be inferred that attractive opportu- identify and to implement. Sustainable energy efficien- nities for energy savings and energy management exist in cy measures would show results quickly in the form of the sector. Implementing energy conservation measures, higher productivity through overall optimisation of pro- which reduce power consumption significantly, may in cesses and savings in feedstock and energy expenses. This turn reduce operating costs. However, industries tend to assumes that energy efficiency is understood as part of a calculate savings from the investment point of view, tak- global efficiency and optimisation process guided by -in ing more emphasis on the return of investment. dustry standards for quality and energy management. A slogan for promoting energy efficiency in industries The assessment of the industrial energy sector, the map- cannot be to reduce energy consumption to save the ping of the main actors, and various institutions in Ni- world from global warming. A slogan to successfully in- geria, confirm that the constant power shortages, across troduce energy efficient processes and appliances must the country, and the lack of sustainable efforts from the read: “Optimise your process to increase the return of government to respond to the energy demand in the in- investment” dustrial sector, remain the main barriers to a sustainable development of the industrial sector in Nigeria. To cope An audit conducted by the Manufacturers’ Association with the poor electricity supply from the national grid, in- of Nigeria (MAN) in 2007, concluded a ranking of total dustries rely on self-generation, primarily through diesel electric power consumption in industry sector from high- gensets. An analysis of self-generation scenario in the in- est as follows: Chemicals/ Pharmaceuticals, Plastics, Met- dustrial sector reveals that chemicals & pharmaceuticals al Products, Food & Beverage, Automotive and Textiles. sub-sector has the highest installed self-generation capac- The following table presents potential areas where energy ity followed by food & beverage, basic metal and plastic & savings is feasible across these industrial sub-sectors. rubber sub-sectors in that order. [GIZ; Nov 2014] ENERGY EFFICIENCY 119

The Nigerian industrial sector presents an attractive option of such renewable solutions also poses a barrier for portunity for the energy efficiency industry. There is an diversification of energy sources in the industrial sector. excellent scope to create a win-win situation for both the industrial sector as well as energy efficiency product/ser- Looking even more closely at the industrial processes, op- vice providers. portunities comprise the following [GEF-UNDP; 2011]: • monitoring and eventual retrofit of better electric As per the power and energy audit carried out by MAN, drives, the max power demand for manufacturing is projected to • changes in the controlling of fans, blowers and pumps, be in the range of 2,500 MW (based on average of a 5 year • optimised dimensioning and failure safe operation of projected power demand - 2007–12). Over half of the air compressors, power requirement of the manufacturing sector is being • optimisation of design and use of heating, ventilating, met through self-generation. The weekly diesel consump- and air-conditioning operation via maintenance and tion by the sector for power generation is in the range of recirculation, 8.6 million litres. This demonstrates excessive reliance on • improvement of lighting concepts and selfgeneration due to unavailability of reliable grid pow- • last but not least, behaviour changes which would er. From a manufacturing sub-sector perspective, chemi- also optimise the overall manufacturing set-up. cals & pharmaceuticals, metal products and plastics are the top three sub-sectors in terms of concentration of However, inadequately trained personnel and profession- high powerconsuming industrial units. They account als is another factor inhibiting the development of energy for about 60% of power consumption in the >100,000 efficiency in Nigeria. Out of the 150 respondents inter- kWh per month category. Lagos area has the maximum viewed in the study conducted by Community Research concentration of industrial units (71%) consuming over and Development Centre (CREDC) in 2009, 77% of 100,000 kWh per month. [GIZ; 2014] them said that no member of their organisations had been trained on energy management. Nigeria as a country The industrial sector is a main source of national carbon lacks adequate energy efficiency experts that will drive dioxide emissions from primary energy use. There is sig- the development of energy efficiency policy and projects/ nificant potential to reduce the amount of energy used in programmes. the manufacturing sector. Technical reduction potential can ranges from about 10% to 40% for energy-intensive Behavioural Habits & Awareness industrial sub-sectors. Low energy efficiency or waste of energy is not only the result of poor or wrongly designed infrastructure and It should be stated that before being able to implement processes but also the consequence of lack of awareness of any energy efficiency and process optimisation, compa- the issue. The [CREDC; 2009] survey identified the fol- nies are concerned first and foremost with securing the lowing habits as reasons for energy wasting in the coun- energy supplies fundamental to their processes. In this try: dominant use of incandescent light bulbs, putting on area, companies still perceive barriers in the access to lights to advertise goods, switching on outdoor lighting technical know-how and financial funds for upgrading during the day, proliferation of private water boreholes, existing facilities in order to make the processes more industrial activities in residential areas, setting applianc- energy efficient as well diversifying the energy sources by es on standby mode, simultaneous use of multiple appli- complimenting existing sources with renewable energy ances in public buildings, leaving appliance on when not options. The absence of subsidies or incentives for adop- in use, multiple use of inefficient heating equipment, pur- ENERGY EFFICIENCY 120

chase of second-hand appliances in fear of buying a new gy efficiency has been limited to electricity/power issues but substandard product. which it has not fully addressed. Increased energy efficiency is also linked to NERC’s mandate of ensuring that Such use habits can be overcome by making people aware electricity is delivered to customers in a cost-effective and of their actions and the effect on environment and energy sustainable manner. Other main stakeholders in energy system, by enabling the customers to find and purchase efficiency include the Energy Commission of Nigeria quality and standard products, and by requiring smart (ECN) and Standards Organisation of Nigeria (SON). concepts and appliances (e.g. lighting switches that sense the daylight). Within the framework of collaboration with UNDP, the ECN under the FMST are also undertaking impac- 7.4 Energy Efficiency Stakeholders toriented initiatives and projects, through research and development in clean energy technologies; the energy ef- As stated above, the significant obstacle for the broader ficiency strategy document currently under development development and realisation of energy efficiency meas- by the ECN may however overlap with FMP’s mandate, ures in Nigeria is the lack of a policy framework and reg- which is why close cooperation is crucial. In maintain- ulations to introduce and mandate legal energy efficiency ing a hierarchical relationship with FMENV, National requirements. This would help to change human behav- Environmental Standards and Regulations Enforcement iour as well as sending the right signals and drivers for Agency (NESREA) has remained relatively restrained in market transformation. The absence of Energy Efficiency activities until recently. The agency has started to take a policy in Nigeria is due to a lack of understanding among proactive role in promoting energy efficiency by setting policymakers and other stakeholders of the potential for guidelines and standards for energy and ensuring com- reducing energy demand through energy efficiency by pliance. However, there is need for coordination of NES- end consumers, which can be explained in part by the REA’s activities and SON in order to avoid overlap and lack of data gathered. conflict in mandates.SON has the mandate to set standards and ensure compliance of all energy-related equip- 7.4.1 Public Authorities ment, something it has started to fulfil by developing standards for certain electric appliances. Although ener- With regards to energy efficiency, there is no clear pub- gy efficiency plays a key role in the built environment and lic institution in the lead for coordinating activities. The building designs, the activities of FMLHUD have been FMENV has been active within the framework of its cli- relatively silent in the past. This is set to change with the mate change programmes and initiatives (see initiatives building code that is currently being revised by the Min- described in Chapter 4.1.2). As the energy policy maker istry and other professional bodies. for the Federal Government, FMP’s role as regards ener- ENERGY EFFICIENCY 121

7.4.2 Key Players in Energy Efficiency

TABLE 7 – 5: LIST OF ADDITIONAL STAKEHOLDERS Stakeholder Mandate Role in Relation to EE Special Climate Change Unit focal agency on matters relating Designated national authority responsible for approving (SCCU) to climate change in Nigeria and Clean Development Mechanism (CDM) projects National Ozone Office Manages the mandatory phasing out of A positive side effect of the CFC phase-out is the impetus to (NOO) and Ozone Project Im- chlorofluorocarbons (cfc) and hydro- develop and invest in a new generation of energy efficient air- plementing and Management chlorofluorocarbons (HCFCs) imple- conditioning and refrigeration equipment. Unit (OPIAMU) mented under the Montreal Protocol. Nigerian Custom Service (NCS) Government agency charged with The agency could help to enforce EE standards for appliances. major responsibility for controlling all Over 700 NCS officers and other chemical enforcement cargo and goods entering, exiting or officers have been trained by OPIAMU to empower them transiting through Nigerian territory to eliminate the importation of the CFC-based materials. Nigerian Association of Industry association Members are strategic partners and most have been trained Refrigeration and Air Condi- by OPIAMU and are sensitised to the banning of CFC based ap- tioning Practitioners (NARAP) pliances. Most of these members will be targeted for training on the benefits of adopting EE appliances. Manufacturer’s Association Strong industry network spread MAN will continue to be a key partner in developing and proof Nigeria (MAN) over Nigeria with 10 sectors posing capacity building, technical assistance and workshop activities to appliance manufacturers. Indigenous manufacturers have indicated that they will require technical assistance to ensure that the proposed EE standards and labels do not create a barrier to entry for them. National Centre for Energy Responsible for research in energy Working in close collaboration with SON, NCEEC is a potential Efficiency and Conservation efficiency and conservation centre for establishing an independent EE testing centre for (NCEEC) appliances. Energy efficiency testing of such equipment and materials can be efficiently carried out in testing laboratories, coordinated in part by the NCEEC. Climate Change Desk of Consultation forum for desk officers The Ministry has set up 11 centres of excellence intended to the Federal Ministry of from other parastatals in order to conduct R&D on RE and other issues related to climate change Science and Technology provide links to these parastatals. and also ensures that findings are developed into sustainable commercial projects. There is the potential to partner with these units in developing energy efficient appliances/equipment and systems. National Association of Cham- Industry association NACCIMA members (from the power and industrial sectors) bers of Commerce, Industry, will be critical in the successful promotion and mainstream- Mines and Agriculture ing of EE appliances. (NACCIMA) Importer of Electrical Commerce Appliance manufacturers and importers will be critical part- Appliances ners for any labelling programme. Appliance manufacturers, once they have been established locally, will need to ensure proper testing of all new models according to internationally recognised testing procedures. Consumers Buyer of EE products All Nigerian consumers will be important beneficiaries of any labelling programme, as they will be able to reduce the share that energy represents in household budgets. Nigerian house owners Buyer of EE products House owners and households alike will accept better technology to reduce their consumption rate. Policies and legislation shall be developed. They are the ones to retrofit their homes with EE equipment and change their behaviour to reduce wastage of electrical energy. Community Research and Carries out activities that promote Works closely with the SCCU and other organisations. CREDC Development Centre (CREDC) RE and EE in Nigeria. published a report of an EE baseline survey in Nigeria. With a high level of expertise in EE and advocacy, CREDC will be very instrumental in carrying out public outreaches and training of professional. [CREDC; 2009] IPP owners, DISCOs, TCN Principle power sector players Given the severe generation, transmission and distribution losses, these corporations and TCN stand to gain substantially from more energy efficient measures. ENERGY EFFICIENCY 122

7.4.3 International Organisations Main activities are among others the exchange of experience, trainings, and the development of standards. Cur- An increasing number of international organisations are rently, ECREEE is actively supporting Nigeria in the de- already active or planning to get involved in supporting velopment of the National Energy Efficiency Action Plan the energy efficiency sector in Nigeria. (NEEAP).

The Nigerian Energy Support Programme of GIZ in 7.5 Energy Efficiency Policy cooperation with the FMP, FMLHUD and the FMTI and Strategy Targets focuses on energy efficiency in the building and industrial sector (cf. Chapter 7.1.2). Concrete measures in these To date, there have been a number of barriers impeding sectors, the introduction of standards and support mech- the introduction of energy efficiency measures in Nigeria anisms are paired with strategy development for the up- [Oyedepo, S.; Aug 2012]. First and foremost, there has scaling of energy efficiency into policies and regulation. been a dearth in policies promoting and incentivise energy efficiency, specifically as regards private households. The UNDP-GEF Energy Efficiency Project looks at- im But there are no codes and regulations that cater for en- proving energy efficiency of household appliances (ACs, ergy efficiency programs - as further detailed in Chapter refrigeration, lamps, electric motors, fans etc.). The pro- 7.5. At present, no agency has been tasked with estab- ject is working closely with the FME, the ECN, SON lishing such policy recommendations and monitoring and the NCEEC on the development and introduction of implementation, let alone in formulating what financial energy performance standards, including MRV schemes assistance could or should be provided centrally; and if and political outreach campaigns. there were such an institution, it would not be able to rely on a rigorous database of energy consumption data and USAID’s Renewable Energy and Energy Efficiency Pro- structured energy audits.66 ject (REEEP) aims to facilitate the financing of energy efficiency markets by improving the access to loans for In addition, in the absence of local manufacturing of energy efficiency measures. appliances and energy efficiency equipment, these will remain expensive as imported. Added to which there is The French Agency for Development AfD is planning to a lack of public awareness of quick-fit solutions, such as establish a credit line for energy efficiency measures pro- better insulation of windows.67 viding interest-reduced loans. 7.5.1 National Renewable Energy and In the building sector, UN Habitat together with the Energy Efficiency Policy FMLHUD is revising the current Nigerian building code by introducing resource efficiency and energy con- This draft policy is summarised in section 5.4.11. In rela- servation aspects. tion to energy efficiency, the document identifies as objectives the need to the prudent (i.e. rational) exploitation On a regional level the ECOWAS Centre for Renewable of the nation’s energy resources, the enhancement of the Energy and Energy Efficiency aims to overcome the tech- energy security and self-reliance, the reduction of pro- nical, financial, legal, institutional, social, gender and ca- duction cost of energy-dependent goods and services, and pacity related barriers that hinder the implementation of finally the decrease of adverse impacts of energy uti- cost effective energy efficiency measures and systems. lisation on the environment and eliminate avoidable

66 See for a detailed account of this and the lack of trained personnel to collect 67 Research and awareness raising-through conferences has been conducted in and evaluate the data: G. O. Unachukwu*; I. H. Zarma+ and A. S. Sambo+: the past (2008–9) by the Lagos-based Community Research and Development „Energy Efficiency and Barriers towards Meeting Energy Demand in Industries Centre It has been supported in this endeavour by grants from International in Nigeria, National Centre for Energy Research and Development University Rivers, the Global Greengrants Fund and the Environmental Rights Action/ of Nigeria, Nsukka, [70] pp. 11–12; often data collection is merely in the form Friends of Nigeria. of manual entries in logbooks. The last extensive industry audit was conducted by the Manufacturing Association of Nigeria in 2007, a time when industry had not yet suffered the impact of the diesel price subsidy removal of 2009. ENERGY EFFICIENCY 123

investments in energy supply infrastructure. The goals enforcement of various standards for efficient energy use. show that the policy is led by the provision of basic ser- The objectives and strategies show that the policy main- vices (security of supply) and good conditions to market ly aims at energy saving within the power sector or con- participants while targets for the wider public receive a sumption. Efficiency in terms of optimising processes subordinate ranking. For the first time, energy efficiency and industrial operations is not very much included. The is related to energy supply. The NREEEP sees improve- policy is still struck with the key barrier of the whole ments in the efficiency of power utilisation as newly avail- sector - the uninterrupted supply of the economy with able power supply: “Energy efficiency is a source of energy sufficient energy. since it would reduce inefficient consumption, thereby providing greater access to electricity consumers.” 7.5.2 Draft National Energy Efficiency Policy for Nigeria The document proposes policy measures to achieve these objectives. Among these are: the promotion of energysav- At present there is a “Draft National Energy Efficiency ing appliances and devices through a nationwide energy Policy for Nigeria” under discussion (status since Decem- campaign and training sessions, the implementation of ber 2012). It was drawn up by ECN with support from incentives for consumer adoption of energy saving tech- UNDP/GEF68 other coordinating partners were FMP, nologies, establishment of incentives for retailers and FMENV, NERC, and SON. The draft national energy importers of energy efficient products and promote local efficiency policy paper for Nigeria highlights the need manufacturing of such products, changes in the procure- to develop a policy comparable with international best ment and active replacement of inefficient devices with practice. The document shows that the current drive of energy efficient ones and promote the same at the state the government to increase electricity access of the coun- and local levels as well as set-up of a monitoring of the try with the on-going reforms calls for a coherent policy adoption of energy efficiency. that will work with other energy policy documents of the country to enhance the promotion of energy use and con- Strategies to put the policy goal in practice include the servation of the country. The draft also highlighted key accounting for energy efficiency and saving in electrici- barriers to energy efficiency and conservation in Nigeria ty tariffs and contracting models, use of incentives, de- and provides recommendations as to how these barriers velopment of energy efficiency building codes, ensuring can be removed. In order to ensure consistency with the of importation of the more energy-efficient equipment NREEEP (cf. Chapter 5.4.11) developed by the FMP, a and machinery, fostering of research and development name change into “Operational Framework for Energy activities in energy conservation and efficiency, promo- Efficiency” was discussed, but not concluded. The draft tion of public awareness about the benefits of improved document sets out the objectives aiming at a situation energy efficiency, requiring for efficiency improvements where energy is efficiently utilised, non-energy efficient with regard to electricity transmission and distribution, products are being phased out of the market in favour mandating the deployment of energy saving light fixtures of energy saving domestic and industrial electrical appli- in federal government offices and facilities, ensuring that ances, energy efficient technologies for buildings, homes the National Building Code requires every new house and industry are promoted, mandatory labelling of home designed in Nigeria must incorporate energy saving and office electrical appliances is enforced and energy (ef- measures, encouraging all buildings in Nigeria to install ficiency) management is widely institutionalised in the renewable source of energy as much as possible, imple- country. mentation of energy audit programme nationwide and

68 See the report: Promoting Energy Efficiency in Residential and Public Sectors heaters to provide hot water thus this will help to reduce the amount of in Nigeria, (GEF UNDP Energy Efficiency Programme, Abuja, 2011). Two electrical energy spent on heating water. Solar heaters have been developed key insights (p. 15) given dovetail with the findings of the present study three and used in other parts of the world to provide hot water in residential years on: „Providing incentives for purchasing energy efficiency products have houses.“ been used to change the behaviour of consumers to promote energy efficiency. This has been operational in other parts of the world. Policy is made to place a penalty on people using inefficient products and reward those buying very efficient appliances. The use of renewable energy technologies can help to reduce the use of electricity. For instance, households and hotels can use solar ENERGY EFFICIENCY 124

The draft policy document also maintains that in order to UNDP-GEF and Cuban support is being provided monitor and evaluate the progress and implementation of through 2015 69 to establish Minimum Energy Perfor- the policy over time, it is imperative to set targets which mance Standard (MEPS) that can go into both policy will guide programme planning and implementation. and law. MEPS are specified minimum energy efficiency Accordingly, the short and long term targets of the policy levels products, e.g. CFLs, must meet before they can be are as follows [ECN; 2012]: legally sold in any country. Specific energy standards are • produce guidelines on all the key components of en- set before products are allowed into a country and sold. ergy efficiency by 2015; MEPS are mandatory standards and are done in a man- • enact all relevant legislation required for policy ner that they balance technical possibility with economic implementation by 2015; viability and the competitive force within a particular • Nigeria to attain 60% consumption of energy-effi- market. The programme study is being conducted by cient lighting, refrigerators, freezers and air condi- ECN. tioners by 2016 and 100% by 2020; • achieve replacement of 40% (by 2016) and 100% (by The Standards Organisation of Nigeria (SON) published 2025) of old non-energy efficient appliances in Nige- standards related to energy efficiency, such as a code of ria with energy efficient appliances; practice for the deployment of outdoor solar lighting • review and improve on the recommended energy effi- systems, electrical installations of buildings, and a stand- ciency practices by 2016; ard for safety and performance of CFLs. A list of SON • sustain best energy efficiency practices beyond 2025. Standards is listed hereto in Annex 3.

While the document is well-drafted and its intentions Standards for air condition equipment and an energy laudable, implementation and due financial resources building code is under development, supported by GIZ are imperative before its quality can be assessed mean- and UNDP / UN Habitat. ingfully, as no measures or mechanisms are yet in place destined to enable its targets to be achieved [Oyedepo, S.; The activities for the development and promotion of Ener- Aug 2012]. Moreover, at present there is a need for align- gy Efficiency could be supported by existing internation- ment with NREEEP; the creation of a Bureau of Energy al standards such as the standard for energy management Efficiency has been dropped in the most recent version, systems (ISO 50001) and the related Eco-Management which avoids overlaps with SON and other institutions. and Audit Scheme (EMAS) and the more specific standards such as energy efficiency assessment of buildings 7.5.3 Standards and Labelling (ISO 23045) or auditing like ISO 14064-1:2006 - the guidance at the organisation level for quantification and While there is no labelling programme in place, SON reporting of greenhouse gas emissions and removals. organises conferences and training for industries. SON training services provide training, conferences, informa- Energy Management Systems according to tion and knowledge on standards, and the achievement ISO 50001 of regulatory approval of products in Nigeria. They fur- Consistently driving down energy consumption demands ther support organisations in the understanding and use a structured organisation-wide energy management sys- of standards. SON offers training in the understanding, tem (EnMS) such as ISO 50001 involving everyone from use, implementation, auditing and certification of stand- the top down. ISO 50001 is the global Energy Manage- ards and management system training. ment System Standard, launched in June 2011 and is

69 Promoting Energy Efficiency in Residential and Public Sector Nigeria, 2011-2015 ENERGY EFFICIENCY 125

gaining momentum worldwide with over 1,500 organi- 7.6 Energy Efficiency Support sations certified to March 2013. It is designed to help or- Mechanisms ganisations establish the systems and processes necessary to improve energy efficiency and reduce carbon emissions. Given the fact that the energy efficiency sector in Nigeria It specifies the requirements for an energy management is still in its infancy and no dedicated national policy has system to develop and implement policy and objectives, as yet been finally enacted, the range of support mech- while taking into account significant energy aspects and anisms is still limited. However, this should not detract legal requirements. from the clear potentials the sector offers, and the fact that such mechanisms will need to swiftly be put in place ISO 50001 is fully compatible to and use the same once the Operational Framework for Energy Efficiency methodology as quality standard ISO 9001 and/or the has been implemented. environmental standard ISO 14001. Therefore, new documentation can be added to existing systems, and inter- 7.6.1 Price Incentives nal auditors can be up-skilled accordingly. ISO 50001 provides a framework for industrial units to use energy There are currently no price incentives in place. While an more efficiently through the development of an energy elimination of the subsidy on electricity may encourage management system (EnMS). more energy-efficient behaviour by those who rely on grid-sourced energy, it bears remembering that given the This management system standard will help the industri- sporadic nature of electricity supplies and the low elec- al units to: trification rate this is not a given as many consumers will rely on diesel generators. That said, subsidies either pro- • develop a policy for more efficient use of energy vided by governmental institutions or NGOs as part of • fix targets and objectives to meet the policy the regime foreseen by the Operational Framework for • use data to better understand and make decisions Energy Efficiency could encourage target groups to invest about energy use in energy efficiency activities, to overcome the high up- • measure results and benchmark against policy front costs of introducing such technologies. This would • continually improve energy management be necessary to expedite the spread of solar water heaters, improved kerosene cooking stoves and subsidies for CFL Hence, the ISO 50001 standard provides a holistic solu- bulbs. Another effect of price incentives while eliminat- tion for energy management in the industrial sector, pav- ing subsidies on electricity could be the chance that poor ing way to improved performance, lower energy bills and users would gain the possibility to adopt energy efficient reduced carbon emissions. behaviour and buying preferences.

This standard offers advantage to serve as basis for a ho- 7.6.2 Tax Relief listic energy management and related efficiency measures. Although, Nigeria is member of the ISO organisation, The FMENV is trying to obtain a tax relief on importa- this implementation of this standard is not adopted in tion of energy efficient light bulbs. Nigeria. [19] ENERGY EFFICIENCY 126

7.6.3 Financing Mechanisms/ (including standardised energy audits), product market- Opportunities ing and development etc.

While at present there are no financing mechanisms in International donors are planning to set up lending pro- place, the opportunities are as great as the potential for grammes supporting EE and RE while USAID already energy efficiency. Microfinance institutions / banks and has an active credit line under the Renewable Energy and non-bank financial institutions could all be encouraged, Energy Efficiency Program (REEP). after implementation of the Operational Framework for Energy Efficiency, to design appropriate financial prod- 7.7 Conclusions ucts for their existing (potential) customers: Energy Efficiency Potentials Local banks are ideally positioned to provide consumer Understandably given the shortfall in generating capacity loans to private households in order to finance energy ef- and, as will be seen in Chapter 8, the lack of access to ficiency measures (e.g., air conditioners, efficient cooking electricity in many parts of the country, the focus among stoves, and efficient diesel generators); furthermore they policymakers has to date been more on energy generation can furnish loans to MSMEs and farmers for energy effi- and renewable energy. However, the potential for energy ciency investments in power generation. As an initiative efficiency is to be found at both the generating and the to foster such financing structures, USAID has a initiat- consuming ends of the energy market. ed a credit line with Eko Bank, Nigeria, that offers loans with reduced interest for energy efficiency and renewa- Similar to the private sector, the Nigerian industrial ble energy investments. Other lenders from the financial sector presents an attractive opportunity for the energy cooperation sector such as KfW and AFD are planning efficiency industry. Promising potentials to generate -en similar credit lines for Nigerian banks. ergy savings via improved load and energy management exist in particular in chemicals & pharmaceuticals, metal Banks can typically provide similar financial services to products and plastics. There is hence an excellent scope to their customers (mostly economically stronger than MFI create a win-win situation for both the industrial sector customers), such as better-off households, MSMEs and as well as energy efficiency product/service providers. farmers etc. Planned Energy Efficiency Projects Non-bank financial institutions (e.g. leasing companies) Several projects with reference to energy efficiency are can traditionally offer leasing of energy efficiency appli- in the pipeline. They are supported by Ministries (FMP, ances to private households or MSMEs, farmers etc. Usu- FMENV, etc.) and international development coopera- ally before offering such products, these companies will tion organisations (e.g. GIZ). The announced projects are need to identify business partners who are able to deliver all in relation to the private sector, e.g. CFLs and biofuel such appliances. cookstoves. Except GIZ, no other institution is following Energy Efficiency projects in the industrial sector. In general, financial institutions need to increase awareness in-house of topics such as EE and RE. Often it is Policy and Strategy Targets furthermore crucial as well to train the banking staff in Barriers that are impeding the introduction of energy different areas, like identifying energy efficiency clients efficiency measures in Nigeria are the lack of harmo- among the current clients, conducting loan appraisals nised and operationalised policies to actively promote ENERGY EFFICIENCY 127

and incentivise energy efficiency. There are no codes and regulations that cater for energy efficiency programs. At present, no agency has been tasked with establishing such policy recommendations and monitoring implementation. These challenges are further hampered while there is no clear public institution in the lead for coordinating policies and strategies.

The GIZ study on “Energy Efficiency in Buildings” provides a list of meaningful recommendations that are generally applicable in the current climate:

• supporting energy building code development • defining of minimum energy requirements and targets • preparing of a design catalogue for affordable energy efficient buildings • introducing energy management and information systems (EMIS) • developing a financing model for energy efficiency in buildings • encouraging voluntary commitment of the public administration on energy efficiency in public procurement • introducing training and capacity building measures • promoting awareness measures for energy efficiency solutions address the associations in the building sector. • Launching pilot projects for energy efficient housing and public buildings

Support mechanisms The key to unlocking the vast potential for energy efficiency in Nigeria today would be a coordinated introduction of support mechanisms. Thus far, the lack of operationalised policies does not provide for existent support mechanisms. The government does, however, plan to introduce price and tax incentives. 8. RURAL ELECTRIFICATION, INCLUDING 128 OFF-GRID RENEWABLE ENERGY

The Draft Rural Electrification Strategy and Implemen- 8.1 Rural Electrification Market tation Plan (RESIP) July 2013 prepared by the REA and FMP clearly stipulates targets for rural electrification Rural electrification is the process of bringing electrical on the part of the Federal government: “In the National power to rural and remote areas. In this chapter we talk Electric Power Policy and the more recent Rural Electrifica- about rural electrification as electricity supply without tion Policy, the FGN has set an ambitious target: to make connection to the national grid. The process of rural elec- reliable electricity available to 75% of the population (rural trification has long been a focus of Nigerian policymak- or urban) by 2020 and at least 10% of renewable energy ers. However, the sheer scale of the enterprise and the mix by 2025.” attendant impact on budgets has prevented successive administrations from fielding decisive solutions to meet In order to gauge the plans for roll-out of rural electrifi- the target of electrifying 75% of the population (Vision cation schemes, the magnitude of the challenge must be 20:2020). In general this can be achieved by: considered. At present, the FMP estimates that perhaps as many as 70,000,000 Nigerians in rural areas lack ac- • expanding the national electricity grid to rural areas cess to reliable electricity supply. The FMP puts this in the • using mini- or off-grid systems context of its overall electrification targets and suggests • standalone systems like Solar Home Systems (SHS). that “only if by 2020 urban electrification reaches 95% and rural electrification reaches 60%” will it prove possible to As just mentioned, this chapter will focus on the latter reach the national target of 75% electrification. It goes on two options. to say that “this will only happen by connecting more than 10,000,000 additional rural households. The new generat- In Nigeria, “Rural Area” means any area of the country ing capacity required serving the additional domestic and characterised by [NPC; 2004]: non-domestic rural demand is around 6,000MW. This is more than the current capacity of the entire Nigerian power • located at a distance of more than 10 km from the system. Achieving this would take the rural electrification boundaries of an urban area or city and rate to 60%.” [FMP; 2014] The electrification rate calcu- • population of less than 20000 inhabitants or lated by the World Bank for 2011 was 48.0% [67]. The • population density less than 200 per square kilo- enormity of the task of rural electrification at hand is metre and thus adequately described. Plans based on this will entail • located at least 20 km from the nearest existing 11 kV enormous costs that would place a great strain on the na- line. tional budget. Finally, rural is also defined as eligibility criteria for the The RESIP also outlines what the cost of such a policy Rural Electrification Fund (REF) as follows: are, saying that “achieving the 2020 target of 75% electrification will require between NGN317.8 billion and • 5+ km from the nearest existing 11 or 33 kV line NGN 525.8billion for administration and project costs • 5+ km from the boundary of the nearest urban area combined.” [FMP; 2014] • up to 10 MW of generation capacity at a single site RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 129

TABLE 8 – 1: HOUSEHOLD ELECTRIFICATION RATE BY STATE IN % State of Residence Have Electricity No Electricity Missing Number of hh surveyed North Central 48.7 51.2 0.1 5,942 FCT-Abuja 77.7 22.0 0.3 361 Benue 22.1 77.9 0.0 1,365 Kogi 62.9 37.1 0.0 876 Kwara 90.6 9.1 0.3 617 Nasarawa 33.2 66.5 0.3 550 Niger 51.7 48.2 0.1 1,504 Plateau 36.3 63.7 0.0 669 North East 29.3 70.4 0.3 5,115 Adamawa 37.6 62.2 0.2 726 Bauchi 29.3 70.3 0.4 932 Borno 33.0 66.5 0.5 1,560 Gombe 48.1 51.8 0.1 464 Taraba 10.9 88.8 0.3 634 Yobe 18.1 81.7 0.2 799 North West 42.2 57.7 0.1 9,992 Jigawa 26.0 74.0 0.0 1,152 Kaduna 53.5 46.2 0.3 1,915 Kano 52.1 47.9 0.0 2,606 Katsina 31.3 68.5 0.2 1,257 Kebbi 44.4 55.6 0.0 1,069 Sokoto 38.9 60.9 0.2 898 Zamfara 29.1 70.6 0.3 1,096 South East 66.4 33.6 0.0 4,687 Abia 81.7 18.3 0.0 644 Anambra 88.1 11.8 0.1 1,050 Ebonyi 39.2 60.7 0.1 978 Enugu 55.4 44.6 0.0 920 Imo 69.9 30.1 0.0 1,096 South South 68.3 31.3 0.4 5,239 Akwa Ibom 68.0 31.8 0.2 892 Bayelsa 52.5 47.3 0.2 322 Cross River 57.4 41.4 1.2 848 Delta 78.3 21.6 0.1 946 Edo 82.4 17.5 0.1 702 Rivers 65.1 34.5 0.4 1,529 South West 81.1 18.8 0.1 7,546 Ekiti 92.7 7.3 0.0 376 Lagos 99.3 0.5 0.2 2,240 Ogun 72.0 27.9 0.1 1,355 Ondo 66.3 33.7 0.0 920 Osun 89.4 10.6 0.0 853 Oyo 66.6 33.3 0.1 1,802 Total 55.6 44.2 0.2 38,522

Source: National Bureau of Statistics, 2013 RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 130

With the emergence of renewable energy sources the power outages from the national grid. Households in ru- opportunities to achieve rural electrification using stan- ral areas usually cannot afford to buy and operate gensets. dalone and off-grid systems have improved markedly. For [WB; 2013 (Low-Carbon Development Opportunities this reason alone, the sector is being revisited by the gov- for Nigeria)] ernment, in line with its commitment to “facilitate the extension of electricity services to all Nigerians, irrespec- As regards renewable energy sources, there is no differ- tive of where they live and work.” [FMP; 2014] ence in principle between the potential for rural projects than those for grid-connected utility-scale projects, other The electrification rate calculated by the World Bank for than the fact that economies of scale may make the rural 2011 was 48.0% [67]. According to UNESCO and IEA, projects more expensive. However, off-grid REs are eco- the electrification rate in Nigeria in 2009 was 50.6%. The nomically more interesting in case of remote areas with differing data show the difficulty to define and calculate poor accessibility. the rate. Nevertheless, the tendency keeps in the same range. Chapter 6.1.1 refers to the general potential of renewable energies in Nigeria (including solar and wind). As a pure Table 8-1 displays distribution of households by access to potential is not related to the kind of grid connection, a electricity, according to state of residence in 2013. Present detailed analysis of allocation to on- or off-grid should data show the slow development of rural electrification; be defined within the future renewable energy concepts. here indicating the percent distribution of households by access to electricity according to state of residence. 55.6% Mini, Micro and Small-Hydro of electrified households indicate the enormity of the task In 1980, UNIDO listed a set of project opportunities for but also the potential scope. small hydro power development in Nigeria. This list is certainly outdated, however it gives an overview of what 8.1.1 Renewable Energy and Rural potential is available for rural electrification by small hy- Electrification Potentials dro power projects. The list is included in Annex 2. The ECOWAS Small Scale Hydropower Programme70 esti- As descripted in chapter 6, this chapter refers to renewa- mates the small scale hydropower potential at about 414 ble energy as means of rural electrification, i.e. small-scale MW on 97 sites, where only sites with a potential below “off-grid” systems in opposite to grid-connected renewa- 30 MW are counted listed in various studies and country ble energy. This differentiation is also categorised by the reports. FGN defining mini-grids and stand-alone-systems as off- grid solutions. [NREA; 2014] In addition to wind power and solar PV, one field offering great potential that has not yet been explored in this re- Reporting current off-grid capacity and generation is un- port is that of small-scale hydro plants given the plethora doubtedly challenging. Even when generators of 1 MW of rivers in the country. Hydropower currently accounts or greater must be registered with the Federal Ministry for over 20% of the total electrical power supply (cf. Fig- of Power (FMP) only limited actual data is available. ure 8-1). SHP potential sites exist in virtually all parts of Calculations from the World Bank estimate an installed Nigeria with an estimated total capacity of 3,500 MW, capacity of 3 GW off-grid diesel generators and 1.3 GW not differing between grid connection and off-grid. They offgrid gasoline generators. The majority of these gensets indicate that Nigeria possesses potential renewable source is installed by individual people in urban areas to cover of energy along her numerous river systems, a total of 70

70 ECOWAS, 2012, p. 17 RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 131

- 123 -

micro dams, 126 mini dam and 86 small sites have been million m3 of biogas every day from animal waste only. identified [Vincent-Akpu, I.; 2012]. Policy makers and Assuming an electricity production of 5 to 7,5 kWh/m3 market players need to bear in mind in this context that biogas, this amount of biogas is sufficient to generate given the frequent remoteness of the areas involved, is- yearly 12,400 to 17,400 GWh. Nevertheless, the total small scale hydropower potential at about 414 MW on 97 sites, where only sites with a potential below 30 MW are sues of maintenance problems play a greater role at the potential of biomass for off-grid generation has still to be counted listed in various studies and country reports. rural level. quantified.

In additionBiomass/Biogas to wind power and solar PV, one field offering8.1.2 great Existing potential Rural that has Electrification not yet been explored in this report isAs that shown of insmall chapter-scal 6.1.1,e hydro Nigeria plants has agiven wide rangethe plethora of bi- Projects of rivers in the country. Hydropower currently accounts for overomass 20% resources of the totalusable electrical decentralised power and supplyoff-grid. (cf. Apart Figure 8-1). SHP potential sites exist in virtually all parts of Nigeria fromwith municipal an estimated solid wastetotal forcapacity large scale of 3,500grid-connect MW,- notAccording differing to betweenthe Rural gridElectrification connection Agency and off(REA),-grid. They indicateed that energy Nigeria production, possesses it has potential been estimated renewable that Nigeria source of600 energy projects along have her been numerous installed. Noriver details systems, are availaa total- of 70 micro dams,produces 126 about mini 227,500 dam tonsand of86 fresh small animal sites waste have daily. been bleidentified on capacity, [Vincent energy -produced,Akpu, I.; or 2012] consumers. Policy supplied. makers and market Sinceplayers 1 kg need of fresh to bear animal in wastemind produces in this contextabout 0.03 that m3 givenLikewise, the frequent no details remoteness are available of on the technology, areas involved, but this issues of maintenancebiogas, problems then Nigeria play can a greaterpotentially role produce at the ruralabout level. 6.8 can be assumed to either be a connecting line to the na-

Figure 8-1: Small Hydro Power Sites in Nigeria FIGURE 8 – 1: SMALL HYDRO POWER SITES IN NIGERIA

Source: UNIDO Source: UNIDO

Biomass/Biogas

As shown in chapter 6.1.1, Nigeria has a wide range of biomass resources usable decentralised and off-grid. Apart from municipal solid waste for large scale grid-connected energy production, it has been estimated that Nigeria produces about 227,500 tons of fresh animal waste daily. Since 1 kg of fresh animal waste produces about 0.03 m3 biogas, then Nigeria can potentially produce about 6.8 million m3 of biogas every day from animal waste only. Assuming an electricity production of 5 to 7,5 kWh/m3 biogas, this amount of biogas is sufficient to generate yearly 12,400 to 17,400 GWh. Nevertheless, the total potential of biomass for off-grid generation has still to be quantified.

8.1.2 Existing Rural Electrification Projects

According to the Rural Electrification Agency (REA), 600 projects have been installed. No details are available on

20141121_Energy Sector Study_NESP Publication draft_v2.docx RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 132

tional grid or a diesel generator. Geographically speaking, • NAIJA LIGHT Solar Electrification Programme. the projects are said to be distributed evenly across the • The Federal Ministry of environment has patented country’s geopolitical zones. The Association of Rural products under the Renewable Energy Access Pro- Electrification Contractors of Nigeria (ARECON) has gramme (REAP) to give instant power to the remo- said that 50 of the 280 contracts awarded to its members test communities in partnership with the Indian by the Rural Electrification Agency (REA) in 2013 are Government that include; presently ready for commissioning, but project details are – The NAIJA LIGHT Solar Kit: portable solar not available. The REA faces the difficulty that all its pro- ‘electrification kit equipped with a light bulb an jects are too small for the main backbone of 33 kV lines. outlet for a fan and 10 point mobile phone charg- Hybrid systems that switch between diesel and solar PV ing unit. power generation have yet to be deployed but would defi- – NAIJA LIGHT Solar Hair-care Kits for both nitely make sense in many areas as they would ensure male and female salon owners: an energy efficient cost-efficient delivery of power round the clock, and thus dipper. an energy efficient handheld hair dryer could be used to drive critical infrastructure and agricul- two lighting points and 10 point mobile charging tural equipment, such as water pumps. unit – NAIJA LIGHT Primary Health Care Solar Kits Furthermore, some former investments which were at the rural level: mini freezer for storage of made but, at some time prior to the end of their econom- serums and vaccines, two lighting points and a 10 ic life (as assumed at the investment decision point), are point mobile phone charging unit no longer able to earn an economic return are stranded (stranded assets). This may be a result of changes in the Biomass Projects market and regulatory environment. • Global Biofuels Ltd is developing a biofuel production Complex at Ilemeso in the northern part of In the framework of the Renewable Energy Programme Ekiti state of Nigeria. Similar plants are planned in the following projects have been initiated by the Federal other states. Ministry of Environment to mitigate climate change im- • Renewable Energy Programme office, Adamawa pacts in the Nigeria [FMENV; 2014]: State Government and Green Carbon Afrique is developing sugarcane based biofuel plants covering Solar Projects 2,000 hectares plantation. This initiative is to pro- In 2011, NERC listed 58 solar-based rural electrification duce sugar for local use and export, ethanol and project across the country. The following were all covered ultimately electricity. This integrated project is being by Energy Commission of Nigeria, namely: replicated in ten states of the country. • street lighting • Carbon Quest and Adamawa State is establishing an • solar powered boreholes integrated rice processing and power generating faci- • electrification of households/centre up 2.85KWp litator as a source self-generated power from rice- • more projects have will be executed this year (2011) husk and of power for urban and rural communities. • The Renewable Energy Programme in cooperation Further projects completed are: with Federal Ministry of Women Affairs and Inter- • Synergent Powershare Group of Companies is invest- national Centre for Energy Environment and Deve- ing in a 50 MW solar farm in Kaduna, officially lopment (ICEED) through the Alliance for Clean launched in September 2011. Stoves initiated a sensitisation campaign for clean RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 133

cook stoves. The main thrust of the alliance is to • extension or the completion of extensions of electri- distribute 30 million clean and energy efficient city lines including e.g. 300 or 500kVA transformers cook stoves in the next 5 years. at 33 kV / 0.415 kV level, 11 kV control rooms • rural electrification at various locations The Abuja Green City • provision and installation of solar street light at vari- This initiative will a city with low carbon emission (like ous locations Masdar city in United Arab Emirates). The low-carbon development is using a combination of local electricity Several kilometres of street lighting were also initiated by generation, improved insulation, and energy efficient de- the state and local government councils. vices for the apartments. The activities under the Nigerian Energy Support Pro- Establishment of a Renewable Energy Village gramme are structured as indicated in Figure 8-2.71 Un- This is an initiative that is borne to stimulate low and me- der its component 3 “Rural Electrification and Sustaina- dium entrepreneurs in Nigeria to attract investors, man- ble Energy Access”, the electrification of up to ten villages, ufacturers, distributors/and maintenance services for all municipal institutions and/or commercial production renewable energy components. sites using renewable energy is envisaged. The pilot projects shall demonstrate the viability of renewable energy The Nigerian Clean Energy Access technologies for rural electrification and provide sus- Program – NCEAP tainable business models for their large scale replication NCEAP plans to distribute 150 million bulbs over the across the country. Community-based approaches, pro- next five years under the Clean Development Mechanism ductive use application and women empowerment will be (CDM). included as main aspects of the pilot projects. Promotion of improved woodstoves for productive uses will also be Rural Women Energy Security (RUWES) Project explored as a complementary action. RUWES hopes to promote the adoption of clean cook stoves, solar dryers etc. and also impact rural women with In 2014, a new national programme was launched called skills. “Operation Light-Up Rural Nigeria” as a subsidiary programme to the “Light-Up Nigeria” campaign [49], [50]. Compressed Natural Gas (CNG) Vehicles Federal Ministry of Power inaugurated the project as The FMENV in collaboration with TATA Group is part of the Power Sector Reform. The project is aimed at working towards replicating the model of a CNG pow- using renewable energy to get electricity across to rural ered transport system in Nigeria battling pollution like communities in all the 36 states of the federation, espe- in New Delhi. cially communities not connected to the national grid.

8.1.3 Planned Rural Electrification In early 2014, the first pilot solar-driven system under the Projects scheme was installed by a French company in Durumi, Bwari Area Council of Abuja, using a 3.5 kVa standalone In July 2014, the Rural Electrification Agency (REA) system, three systems to be installed per state initially. tendered the 2nd batch of rural electrification projects under 2014 FGN capital appropriation summarising 175 projects with three main issues:

71 GIZ: Nigerian Energy Support Programme (NESP) - 126 -

component 3 “Rural Electrification and Sustainable Energy Access”, the electrification of up to ten villages, municipal institutions and/or commercial production sitesRURAL using renewable ELECTRIFICATION, energy is envisaged. The pilot projects INCLUDING OFF-GRID RENEWABLE ENERGY 134 shall demonstrate the viability of renewable energy technologies for rural electrification and provide sustainable business models for their large scale replication across the country. Community-based approaches, productive use application and women empowerment will be included as main aspects of the pilot projects. Promotion of improved woodstoves for productive uses will also be explored as a complementary action.

FIGURE 8 – 2: strategies at the state level. According to the EPSR Act Figure 8-2: Nigerian Energy Support Programme (NESP) NIGERIAN ENERGY SUPPORT PROGRAMME (NESP) 2005, they are coordinated by the Rural Electrification Agency (REA).

Rural Electrification Agency (REA) is one public authority, based in Abuja, charged with designing and implementing strategies to achieve rural access to electricity. It relies on and manages the Rural Electrification Fund for financial resources. REA has the key role to play in ensuring that standalone and off-grid renewable energy systems are equally promoted and deployed so these areas

will not be left out of the current drive. The legal frame- In 2014, a new national programme was launched called “Operation Light-Up Rural Nigeria” as a subsidiary programme to the “Light-Up Nigeria” campaign [49], [50]. Federal Ministry of Power inaugurated the project workas for the REA is outlined in the EPSR Act 2005. The part of the8.2 Power R Sectorural Reform. Electrification The project is aimed at using renewable Stakeholders energy to get electricity across to rural communities in all the 36 states of the federation, especially communities not connected to the national grid. REA was established as an independent and accountable

In early 2014, the first pilot solar-driven system under the scheme was installed by a French company in Durumi,agency, responsible for the coordination of rural electrifi- Bwari Area Council of Abuja, using a 3.5 kVa standalone system, three systems to be installed per state initially. Due to the very limited coverage of grid infrastructure cation activities in Nigeria. To ensure that REA is effec- in rural and semi-urban areas of the country, REA has tively managed and for efficient allocation of resources to- 8.2 a Ruralremarkable Electrification role toStakeholders support standalone and off-grid wards rapid development of the sector, the REA has two

Due to therenewable very limited coverage energy of grid systems infrastructure while in rural andNERC semi-urban covers areas of the the country, grid REA hasmajor a divisions to be headed by two Executive Directors remarkable role to support standalone and off-grid renewable energy systems while NERC covers the grid extension regulationextension. Close coordination regulation. between REA and Close NERC is coordinationtherefore equally important between, as detailed inREA Chapter 4.1. under the Managing Director.

and NERC is therefore equally important, as detailed in 8.2.1 ChapterPublic Authorities 4.1. and Their Roles TheFederal Ministry of Power (FMP) is responsible for A detailed overview of the “institutional and policy mapping of the renewable energy, energy efficiency and rural policy development on increasing access to electricity and 8.2.1 Public Authorities and Their Roles will thus set and revise targets as required. FMP current-

20141121_Energy Sector Study_NESP Publication draft_v2.docx ly leads the ICREEE and is actively involved in ensuring A detailed overview of the “institutional and policy map- that power/electricity is available to the citizens from all ping of the renewable energy, energy efficiency and rural forms of energy. electrification subsectors in Nigeria” is given in the epon- ymous publication [GIZ; Oct 2013]. The Federal Ministry of Environment (FMENV) has launched a Renewable Energy Project (REAP, see 5.4.6 In general, energy is concurrent competency between the and 8.4.2.3). federal government and the states of Nigeria. The federal government regulated power generation and transmis- The Federal Ministry of Science and Technology sion on national grid level, while the states are mandating (FMST) is involved in numerous renewable energy, en- mainly for distribution and generation in off-grid areas. ergy efficiency and rural electrification activities. The In practice, they can install new generating capacities renewable energy, bio-fuel and biomass section of the within their boundaries and handle transmission and department coordinates research activities in renewable distribution of the electricity therein (e.g. Rivers State or energy (wind, solar, biomass etc.) especially in terms of Akwa Ibom State). Even state managed power generating electricity generation and supply to rural areas where grid companies have been funded. Each state has a State Rural connection is unavailable. Through the National Agency Electrification Board, and these are developing i.e. energy for Science and Engineering Infrastructure (NASENI),

71 GIZ: Nigerian Energy Support Programme (NESP) RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 135

FMST has completed a 7.5 MW solar panel manufac- The transmission sector is managed by the newly created turing plant in Abuja and a 10 kW hydro power plant at Transmission Company of Nigeria (TCN). A close co- Ketti Site in Abuja. [M.S. Haruna] ordination between REA, TCN and NERC is therefore equally important. Nigerian Electricity Regulatory Commission (NERC)’s role is the establishment of rules and regula- The Energy Commission of Nigeria (ECN) has the tions for extending the grid to rural customers. This in- overall lead in promoting all forms of energy by gathering volves setting of the tariffs and ensuring that all utilities and disseminating information of same as well as leading and distribution companies comply strictly with the law research and development of the sector in the country. regarding feeding electricity generated from renewable NASENI is involved in promoting local manufacturing energy into the grid. Regulatory policy with regards to of renewable energy power generation equipment e.g. so- relevant Renewable Energy schemes shall also be devel- lar PV, small hydro, etc., thus helping to advance R&D oped by NERC in consultation with stakeholders. In ad- and industrialisation in the sector. dition to its licensing ambit, which only covers projects of 1 MW generating capacity or larger, NERC has overall State governments also have a mandate in power gen- regulatory powers over rural electrification in Nigeria. It eration. Regarding transmission and distribution, their bears stating that according to the provisions of EPSR mandate is however confined to off-grid areas. This Act 2005 RE schemes with generation capacity at a single means that the Constitution does not spell out a clear site of 1 MW and below or whose distribution capacity is mandate for distribution within the national grid since 100kW and below are exempt from such licences. it is neither mentioned under the federal nor state responsibilities. However, some states derive a mandate for However it is essential to balance the need to promote energy and climate out of the concurrent competencies the existence of alternative electricity service providers, for environment, social and economic development, ar- with the need to protect consumers from unsafe operat- guing that energy is a vital and cross-cutting element for ing practices and abuse of market power through relevant the achievement of the constitutional objectives in these regulatory tools. NERC shall determine and advice the three areas of concurrent competencies. With regards to Honourable Minister of Power on the rural electrifica- rural electrification, State Rural Electrification Boards tion clusters from the expansion plans of the DISCOs to as stated in the EPSR Act 2005 are coordinated by the give a clear definition of the boundaries of rural electri- Rural Electrification Agency. Under the draft Rural Elec- fication undertakings in such a manner that clusters of trification Policy the state government are expected to non-electrified communities may be bundled into rural play a key role in driving rural electrification at state level. electrification franchise to attract private sector partici- Rural Electrification Fund financing will be disbursed pations. The development of mini-grids by communities accordingly in line with the Rural Electrification Imple- and private enterprises will be encouraged in the appro- mentation Plan. priate circumstances in collaboration with REA. In the absence of NERC’s direct regulatory oversight, REA 8.2.2 Rural Electrification takes advantage of the enormous resources at its disposal Market Players to ensure that project applying for financial and technical support from REF meet the requirement that ensure pro- In the absence of a meaningful market, other than the tection of consumers, providers and power equipment. Federal Government and donor organisations no other market players are active. In order to lay the basis for RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 136

entering a future market, various component and system intermediary between central government, the states and suppliers have provided solutions either through demon- local government areas. The REA delegates financing is- stration plants (solar panels, battery packs, etc. that pro- sues to the REF in this regard. The same structure applies vide lighting) or donor mechanisms, but no long-term as regards interfacing between government and project sustainable solution has yet been implemented. Interna- sponsors. tional companies are the major drivers behind the “Oper- ation Light Up Rural Nigeria” project and have provided, The RESIP itself, while acknowledging the need for coor- at no cost, many installations in order to stimulate a mar- dination, seeks to place the implementation of rural elec- ket in rural electrification. [13] trification squarely on the shoulders of the private sector. RESIP declares unequivocally that “in recognition of the However, once policy is in place and it becomes clear advantages of a bottom-up approach, the FGN will promote which application track is required for accessing subsidies a centrally coordinated but demand-driven approach, that for capital costs, project developers may find that there is is, market-oriented approach to rural electrification. While latitude for engagement. the REA will still provide overall coordination of rural electrification activities centrally, the development of projects After privatisation of the distribution companies, they themselves will come from the communities, operators and are obliged to provide the inhabitants of the region with promoters that identify a particular need. Public-private sufficient electricity. However, private companies tend partnerships will be encouraged, whereby the private sector to operate at low cost and high margins to be profitable. and community-based organisations will be increasingly re- People in remote areas are usually not able to pay high sponsible for much of the service delivery with the minimum electricity bills. That is why a real market for rural electri- necessary financial support from the public sector.” [FMP; fication does not exist. State governments note this prob- 2014] It is a moot point whether the private sector will lem and support rural electrification programs. respond to this indirect request for involvement.

8.3 Rural Electrification Policy The draft instrument thus restricts the role of govern- and Strategy ment substantially when stating that: “While it is clear that rural populations are eager to get access to electricity, 8.3.1 Draft Rural Electrification Stra- it is not clear that their demand and willingness to pay for tegy and Implementation Plan (RESIP) the services, as envisioned, will be forthcoming. Often rural communities believe it is the responsibility of government RESIP is the key document, as it brings together the to provide highly subsidised infrastructure services, such as strands of policy making hitherto in a coherent form electricity.” [FMP; 2014] However, this is not consistent However, in its version of May 2014 it still remains a draft with project roll-out to date, which has been handled ex- and has not yet been enacted by the Federation. It states clusively by the REA itself. quite unequivocally that rural electrification is a federal matter: “1. The FGN shall facilitate the provision of The policy document places an important emphasis on steady and reliable electric power supply at all times, at the role of various forms of renewable energy technolo- economic rates, for residential, commercial, industrial, gies in helping to meet the electricity needs of the rural and social activities in the country.” In terms of actual co- areas of the country at a cost-effective and affordable ordination of activities, it falls to the REA, the sole bearer price. Thus, as one of the guiding principles of the Nige- of a mandate, to implement the legislation and act as the rian rural electrification strategy, the RESIP states that RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 137

the FGN shall facilitate the promotion of private sector be based on lowest tariff offered in the cluster. The agreed participation in rural electrification (on- and off-grid) tariff will be sufficient to cover promoters’ costs and profit in the development of the nation’s abundant renewable margins, while remaining affordable for consumers. Final- energy resources by creating an enabling environment, ly, the tariff will take into account the level of grant capital while ensuring that governmental agencies, cooperatives funding from the REF. and communities, where feasible, have adequate room to participate in enhanced electricity service delivery. Vari- Tariffs will be reviewed annually and recorded in the Elec- ous rural electricity projects will be carried out through tricity Supply Contract between consumers and RE service three main processes- grid extension, mini-grid system, providers after obtaining NERC approval. In case of capac- and standalone systems. Renewable energy sources have ity stipulated in the EPSR Act 2005, NERC will retain the capacity to support all of these systems and help to responsibility for monitoring and enforcing agreed-upon provide reliable and affordable electricity supply which tariffs.” [FMP; 2014] enables rural households to devote less of their time and income to procuring energy supplies, freeing them up for This is without doubt a laudable and viable structure, as- productive use. It could also help ensure that energy is suming rural communities have the financial means to used efficiently and sustainably. [FMP; 2014] pay the cost of electricity generation and distribution; whereby it bears stating that this is presumably an ide- 8.3.2 Tariffs al-typical scenario. However, it in effect introduces an asymmetric relationship between urban and rural areas. Tariffs are set out in the RESIP as follows: “In accordance Given that urban environments at present benefit from with the RE Policy and international best practice, tariffs electricity subsidies, they do not at present pay a cost-re- for rural electricity service will be cost-reflective. They shall flective price. Moreover, to date no tariffs have been set account for the average annual cost of fuel, operation, main- under the above proviso, just as the quasi-regulatory tenance, safety, generation, distribution, revenue collection, structure does not as yet need to be implemented as no spares, equipment and operator fees, expected sales of elec- private-sector projects have been forthcoming. tricity, generator capacity, number of connections, volume of consumption, and level of service (…) Tariffs will be cal- The REA will establish its own internal guidelines and culated using appropriate formulae/methodology to be de- policies, as well as those for providing financial and tech- veloped by NERC in consultation with project developers nical support of renewable energy. Therefore, a structured and customers. support mechanism is needed for rural electrification and explained in the following. At present, there is no mechanism in place to allow a private-sector company supplying electricity to a rural area to 8.3.3 Further Policy Documents enforce billing for such. In the absence of this, the opportunities for private-sector players remain circumscribed. Moreo- A whole host of acts and by-laws cover rural electrifica- ver, given the minor capacity to pay, the question is also how tion as further detailed in Chapter 5. They include the an investor can achieve scale. following:

Based on established willingness to pay and associated subsi- • National Electric Power Policy (NEPP, 2001) dy requirements, a baseline tariff shall be determined. Fol- • National Energy Policy (2003) lowing this, developers will bid for projects and selection will • Electricity Power Sector Reform Act (2005) RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 138

• Rural Electrification Policy (2006) networks not connected to the transmission system oper- • Rural Electrification Strategy and Implementation ated by the system operator. An Independent Electricity Plan of the Federal Republic of Nigeria (RESIP) Distribution Network Operator (IEDNO) designs, con- (2006) structs, commissions, operates and maintains distribu- • Rural Electrification Policy Paper (REPP) (2009) tion systems divided in • Regulations for Independent Electricity Distribu- a. rural isolated off-grid tion Networks (IEDN), 2012 b. urban isolated off-grid • Draft Rural Electrification Strategy and Implemen- c. embedded tation Plan of the Federal Republic of Nigeria (RESIP) (FMP, July 2013, revision May 2014) The project sponsors, so the hope, will be private-sector-led. However, communities and government will Nigeria’s Vision 2020 is to meet the target of electrifying also be encouraged to act as such. Various private-sector 75% of the population with an increasing percentage of participation models are envisaged by the policymakers, Renewable Energy (10% in 2025). To achieve this goal, including concessions, dealerships and leasing arrange- Nigeria has a suitable potential of renewable energies, ments [FMP; 2014]. The REA Operational Manual sets even when it is difficult to concretise this potential. For out the qualifications such project sponsors must have, small hydro power, the Renewable Energy Master Plan, but has not yet been published. The REF will decide in published by ECN & UNDP, for example sees a poten- line with an “objective and verifiable set of criteria” and tial of 3,500 MW while about 65 MW are exploited cur- “on the basis of competition” which projects will qualify rently. for subsidies.

The NEPP 2001 defines the three principal phases to 8.4 Rural Electrification Support achieve the reform goal of a reliable and sufficient -en Mechanisms ergy system (1. privatisation of the vertically-integrated parastatal NEPA; 2. increasing the competition between 8.4.1 Price Incentives - the Rural market participants; 3. full cost pricing of supply and lib- Electrification Fund eralised selection of supplier). NEPP contains especially the goal of Federal Government of Nigeria to increase No price incentives are foreseen other than the subsidy access to electricity to 75% by 2020 and at least 10% of toward the initial capital costs via the Rural Electri- renewable energy mix by 2025. fication Fund (REF). As mentioned in chapter 8.3.1, these incentives are designated to be infrastructure The Nigerian Rural Electrification Policy 2009 seeks to based (incentives to reduce the installation costs) and express the intention of Federal Government of Nigeria not electricity-production based (incentives to reduce the to enable greater access to electricity and to enhance sus- consumption costs). The RESIP explains that Rural Elec- tainable economic and social development throughout trification Implementation Plan shall be sponsored using Nigeria. REP enables to meet the 2020 rural electrifica- an independent Rural Electrification Fund operated by tion target of reliable electricity available to 75% of the the Rural Electrification Agency. This will only “supply population. some proportion of the total funding so that other parties (distribution companies, local communities, business The Regulations for Independent Electricity Distribution groups, etc.) would have to provide the rest.” [FMP; 2014]. Network (IEDN) creates the framework for distribution Microfinance is likewise not an obvious choice for larger RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 139

- 132 - mini-grids, as all banks are adverse to the risks involved. FIGURE 8 – 3: Figure 8-3:TRANSPARENT Transparent Selection SELECTION of Projects72 OF PROJECTS72 Technical barriers, by contrast, are low, since precisely small solar PV plants have a proven track record for such applications and are already in use in numerous locations in the country to power telecoms masts. Therefore, project finance by microfinance may be an opportunity for standalone systems with a long history of experience in this field worldwide.

It is questionable how, without a different subsidy regime, commercial enterprises are to find any commercial viability in projects with a larger and more regional back - The REF will decide in line with an "objective and verifiable set of criteria" and "on the basis of competition", which projects will qualify for subsidies. The criteria applied will include: ground by means of off-grid mini-grids. Here the access • economic and financial viability, with the initial capital subsidy; to development, commercial or private finance including• promotion• e conomicof social and economic and objectives; financial viability, with the initial • the choice of technology to be used (e.g., preferential scoring of RE projects); microfinance is limited and public funding or incentives• cost -effectiveness;capital subsidy; • nature and extent of community support; and are needed. Price incentives can be given in various ways• investor• commitment.promotion of social and economic objectives; mainly based on two indicators: The RESIP• statesthe that choice the second ofobjective technology is to keep costs toto government be used low: (e.g.,“The REA preferential will mandate the use of low- cost options in RE projects that apply for subsidy grants towards start-up costs. Furthermore, the REA will advocate for the • new connections made (premium paid per householdbroader availabscoringility and use of of suchRE low projects);-cost equipment and materials so that all rural electrification projects (and consumers) may benefit from the potential cost reductions.” [FMP; 2014] Indirectly, the REF management is thus / consumer connected and maintained over a prede-entrusted • withc theost-effectiveness; task of keeping the price to the consumer low, but does not itself intervene in the pricing process. Government has not yet indicated whether it is willing to countenance tax relief for such project sponsors. fined period of time) • nature and extent of community support; and

• amount of electricity delivered / consumed (per unitSource • of Fundsinvestor commitment.

incentive) The fund will consist in accordance to the EPSR Act 2005 including fines obtained by NERC, any donations gifts or loans made by international agencies, state governments, the federal government, local communities, businesses or any otherThe entity. RESIP Market participantsstates thatlike producers the second and consumers objective are also att isracted to likekeep contributions costs from domestic and international parties such as commercial banks, NGOs, bilateral and multilateral donors and However, the subsidies in question are granted with twodevelopment to government banks, project sponsors low: and end“The-users. Finally,REA rural will electrification mandate developers, the includinguse of thelow DISCOs,- shall be engage in a public private partnership by REA. [FMP; 2014] specific objectives in mind. As regards the first it stipu - cost options in RE projects that apply for subsidy grants to- lates that “subsidies towards the initial capital costs asso72- Source:wards [FMP; 2014]start-up costs. Furthermore, the REA will advocate ciated with establishing rural electrification schemes will for the broader availability and use of such low-cost equip- be granted in order to lower the economic barriers to entry. ment and materials so that all rural electrification projects 20141121_Energy Sector Study_NESP Publication draft_v2.docx It has been determined that such mechanisms are the most (and consumers) may benefit from the potential cost reduc- efficient and sustainable means for funding rural electrifi- tions.” [FMP; 2014] Indirectly, the REF management is cation in Nigeria.” [FMP; 2014] Companies can apply for thus entrusted with the task of keeping the price to the these through the REF, whereby the latter’s management consumer low, but does not itself intervene in the pricing is compelled to press for “least-cost subsidy for maximum process. Government has not yet indicated whether it is community benefit”. Figure 8-3 gives the evaluation mech- willing to countenance tax relief for such project spon- anism for this process developed by the REF Manage- sors. ment. Source of Funds The REF will decide in line with an “objective and ver- The fund will consist in accordance to the EPSR Act 2005 ifiable set of criteria” and “on the basis of competition”, including fines obtained by NERC, any donations gifts or which projects will qualify for subsidies. The criteria ap- loans made by international agencies, state governments, plied will include: the federal government, local communities, businesses

72 Source: [FMP; 2014] RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 140

or any other entity. Market participants like producers marketing support. In 2014 about 1000 entrepreneurs and consumers are also attracted like contributions from achieved that about 180,000 people are benefitting from domestic and international parties such as commercial solar light in 3 countries (Nigeria, Ruanda and Tanzania). banks, NGOs, bilateral and multilateral donors and de- [54] velopment banks, project sponsors and end-users. Finally, rural electrification developers, including the DISCOs, 8.4.2.2 The International Centre for shall be engage in a public private partnership by REA. Energy, Environment and Development [FMP; 2014] (ICEED) - 133 - Co-funding of individual projects with other sources of The ICEED provides ideas that link energy and climate funds multiplies the benefits delivered by the REF. Co- change policy reforms to prosperity for Nigeria’s poor. funded projects are expected to be the most successful in ICEED works with progressive Nigerian and interna- Co-funding of individualcompeting projects with for REFother fundingsources of - cf.funds Figure multiplies 8–4 below. the benefits deliveredtional by research the REF. centres, Co- government agencies, specialists funded projects are expected to be the most successful in competing for REF funding - cf. Figureand 8-4 entrepreneurs below. [18]. They build multi-stakeholder

platforms to respond to energy and climate challenges Figure 8-4: ExamplesFIGURE for Project 8 – 4: Funding EXAMPLES FOR PROJECT FUNDING that affect the poor with two focal issues • Sustainable energy programmes – Energy efficient woodstoves projects in Nigeria – Renewable electricity action programme – Rethinking biomass energy in Africa. • Climate Change Programme

8.4.2.3 The Rural Energy Access Project (REAP)

REAP was launched by the FMENV’s Renewable En-

ergy Programme to create alternative and sustainable clean and renewable energy sources for lighting purpos- 8.4.2 Other Support Programmes es. REAP is proposing a reduction in power consump- 8.4.2 Other Support Programmes tion (by using clean, energy efficient LED bulbs) and 8.4.2.1 Solar Sisters introducing household stand-alone solar kits to replace Solar Sisters eradicate 8.4.2.1energy poverty Solar by empoweringSisters women with economic opportunity.incandescent They combine bulbs, the single-wick kerosene and oil lamps breakthrough potential of solar and clean cooking technology with a deliberately woman-centred direct sales network and small diesel generators. The goal of the project is to to bring light and opportunity to even the most remote communities in rural Nigeria and other countries in Africa. Solar Sisters provide theSolar women Sisters with eradicatea "business energy in a bag poverty", a start -byup empoweringkit of inventory, ensuretraining affordableand marketing and sustainable clean energy access to support. In 2014 aboutwomen 1000 entrepreneurs with economic achieve opportunity.d that about 180 They,000 people combine are benefitting the the fromrural solar poor light and in reduce 3 black carbon. countries (Nigeria, Ruandabreakthrough and Tanzania) potential. [54] of solar and clean cooking tech-

nology with a deliberately woman-centred direct sales 8.4.2.4 Operation Light-Up Rural 8.4.2.2 The Internationalnetwork Centre to bring for light Energy, and opportunityEnvironment to and even Development the most Nigeria (ICEED) remote communities in rural Nigeria and other countries The ICEED provides ideas that link energy and climate change policy reforms to prosperity for Nigeria's poor. ICEED works with progressivein Africa. Nigerian Solar Sistersand international provide the research women centres, with government a “busi- Theagencies, new specialists national and programme called “Operation Light- entrepreneurs [18]. Theyness build in multia bag”,-stakeholder a start-up platforms kit of toinventory, respond to training energy and and climate Up challenges Rural Nigeria” that affect was inaugurated by Federal Ministry the poor with two focal issues

• Sustainable energy programmes – Energy efficient woodstoves projects in Nigeria – Renewable electricity action programme – Rethinking biomass energy in Africa. • Climate Change Programme

8.4.2.3 The Rural Energy Access Project (REAP)

REAP was launched by the FMENV's Renewable Energy Programme to create alternative and sustainable clean and renewable energy sources for lighting purposes. REAP is proposing a reduction in power consumption (by using clean, energy efficient LED bulbs) and introducing household stand-alone solar kits to replace incandescent bulbs,

20141121_Energy Sector Study_NESP Publication draft_v2.docx RURAL ELECTRIFICATION, INCLUDING OFF-GRID RENEWABLE ENERGY 141

of Power as part of the power sector reform process. The are responsible for the realisation and management of project is aimed at using renewable energy to get electric- Renewable Energy policies and regulations with regard ity across to rural communities in all the 36 states of the to rural electrification. Therefore a close coordination federation, especially communities not connected to the between these authorities is indispensable. Besides other national grid. [49] public authorities, like Ministries and their parastatals, a private marked does not yet exist. 8.5 Conclusions For the future activities the draft Rural Electrification Given the epileptic provision of electricity in the first Strategy and Implementation Plan (RESIP, July 2013) place, it is an unresolved point whether or not central prepared by the REA and FMP clearly stipulates targets planning efforts in the many townships should perhaps for rural electrification. A whole host of acts and by-laws focus first on providing steady electricity to hospitals, cover rural electrification, especially the above-mentioned schools and other key infrastructure before expending RESIP, the Electricity Power Sector Reform Act (2005) great effort on efficiency programmes in the same loca- and the Rural Electrification Policy Paper (REPP) (2009). tions. However, ongoing electrification planning should henceforth factor in energy efficiency from the outset. The RESIP explains that a rural electrification implementation plan shall be sponsored using an independent Rural Electrification Market and Potentials Rural Electrification Fund operated by the Rural Electri- Rural electrification in Nigeria is the process of bringing fication Agency. electrical power to rural and remote areas divided by A GIZ policy study concluded that the “RESIP 2013 pre- • using mini- or off-grid systems sents targets and similar objectives for rural electrification • standalone systems like solar home systems (SHS) in Nigeria as already stated in previous documents. There is a need to set up mandatory and binding targets with clear The market potential for rural electrification would be consequences for rural electrification in Nigeria. It is also enormous, since the current electrification rate in Nige- necessary to integrate the private sector into the policy and ria is just above 50 %. It could be worth pursuing small process of delivery as without this approach the subsector solar PV installation, mini or small hydropower installa- will continue to be driven by the public sector as the case is tions and larger hybrid systems to provide electricity to for now.” [GIZ; Oct 2013] rural communities. Even small decentralised biogas projects offer a wide range of potential. The sources of renew- Support Mechanism able energy are available. Price incentives are not foreseen in any of the strategies. Thus, it is questionable how commercial enterprises are to Off-grid capacity and generation is undoubtedly chal- find any commercial viability in projects with a larger lenging. However, REA has about 600 projects ongoing, and more regional background by means of off-grid mi- mainly in the field of solar energy and energy efficiency. ni-grids. Here the access to development, commercial or Other small projects are being pursued by various institu- private finance including microfinance is limited and tions and companies. public funding or incentives are needed. However the REF provides hope for subsidies. Companies can apply Policy and Strategy for these, whereby the REF’s management is compelled Two main organisations, REA (under the FMP) and the to obey to “least-cost subsidy for maximum community Nigerian Electricity Regulatory Commission (NERC), benefit”. 9. RECOMMENDATIONS 142

Any recommendation derived from the assessment of the in regions where the majority of populations typically opportunities and challenges in the three segments of re- resides. newables, energy efficiency and rural electrification -giv en in this study must distinguish carefully between two In the distant future, Nigeria could become a leading ex- different things, namely utility-scale projects and house- porter of biofuels. The local use of biofuels could ease the hold-scale projects. financial strain relating to the heavy burden of fossil fuel subsidy and also enhance local livelihood within the pro- The recommendations below rest on the overarching duction chains [Abila N., 2010]. assumption that attention is paid throughout to eliminating overlap in responsibilities at the ministerial or Given the high potential for biofuel production, a case parastatal level and streamlining the “one-stop shop” ap- could be made for investing in agriculture for the pro- proach. They also assume that a strong focus is placed on duction of energy crops and the establishment of biofuel capacity building wherever necessary. processing plants in Nigeria. However, all agricultural resources and efforts should surely, in the first step, be -di 9.1 On-Grid Renewable Energy rected towards securing in-country food supplies for the Nigerian population. Solar and Small Hydropower Plants The potential for generating electricity from renewable Municipal solid waste can be converted into electricity by energy sources in Nigeria on a large scale of over 100 kW direct combustion or by natural anaerobic digestion in or even at the utility scale from 5 MW upwards has been the landfill (waste-to-power). The potential for waste-to- shown to be great, specifically as regards solar PV farms power projects in the large conurbations needs to be in- and small hydropower plants. Given such potentials, it vestigated in greater detail, however it seems to offer good would seem logical to focus efforts on spurring develop- reasons for pursuing pilot projects. ments in these two areas. Wind The key will therefore be on deciding how best to promote The Ministry of Science and Technology wind mapping investments in hydropower and solar PV plants, whereby project indicates there are viable sites, but does not quan- the scale of these will most certainly vary and could range tify the potential of specific sites. Wind potential cannot from small stand-alone units for rural electrification therefore be qualified at present as no detailed wind map- through to large utility-scale systems. ping is available. Specific data measurement and gathering must first be undertaken before predictions can be Biomass made on the commercial viability of on-shore wind farms. Biomass-to-power is a slightly different case, as most Such detailed wind mapping and the identification of probably the emphasis here should be on small units, and development corridors falls within the natural ambit of on linking these to the rural electrification schemes. The government, which could set up a centralised and inves- availability of biomass resources in Nigeria offers an im- tor-friendly data base to this end. Offshore wind speeds mense potential for small-scale biofuel production from are, by contrast, regularly and durably higher, but off- these resources. Biofuel may be of special interest in Ni- shore wind parks entail other technological challenges. It geria as the climate is well-suited to growing biomass and bears noting perhaps that the management of wind farms biomass production is inherently rural and labour-in- is far more complex than that of solar PV plants or small tensive, and could function as a job creation mechanism hydropower facilities in particular. RECOMMENDATIONS 143

Small-Scale RE plants As detailed in Chapter 6 - On-Grid Renewable Energy, In spite of Nigeria’s substantial renewable energy re- we would recommend that it makes most sense for the sources, efforts to push a reliance on renewables have yet lawmakers to concentrate on actively and speedily in- to gain real commercial traction as regards utility-scale centivizing large-scale biomass-to-power, waste-to-power power generation through grid-connected power plants. and solar PV projects, as this route overcomes geograph- By contrast, as described in Chapter 8.1, off-grid solar ical grid challenges and offers fast-delivery solutions. In PV has already started to gain a strong foothold in small- the process, contractual certainty must be assured and scale commercial applications in combinations of panels legislative overlap or obscurity clarified. and battery sets, for example for street lighting, CCTV powering, hospital and school electrification. This fact The national energy policy guarantees apply to small util- can mainly be attributed to patronage by various govern- ity-scale renewable projects (<100 MW) just as much as ment parastatals, states and international donor agencies they do to “larger” thermal power stations. rather than to the existence of a market. In light of the cost of diesel in Nigeria and the additional cost of trans- FMENV’s state offices could function as a useful struc- porting it, there is undoubtedly a market for small-scale ture to coordinate and oversee the renewable energy activ- solar or hybrid systems waiting to be tapped. Standards ities; however, the issue of overlaps with REA’s mandate have yet to be set in this field. has to be managed carefully. Indeed, to date applications to the NIPC have been routed through the FMENV’s General Policy Recommendations & Special Unit on Renewable Energy rather than through institutional landscape the FMP or even NERC. The lack of feedback loops and Nigeria now has a published energy policy that under- consultative process cause uncertainty and a lack of clari- scores the development of renewable energy. However, ty in planning going forwards. policy integration and a vigorous implementation strategy are needed to facilitate rapid diffusion of renewable Areas that we recommend policy makers to revisit in- energy in the nation’s energy mix. Clear policy alignment clude: between governmental institutions would help limit conflicts and further promote current electricity delivery sys- • publishing approved templates for solar PV and wind tem of the country. PPAs, as their absence could deter potential investors. • publishing the incentives system to be operated for The study has identified numerous areas of policy over- small hydropower plants lap between the mandates of FMENV, FMWR, FMP, • clarifying whether allocation of small hydropower NERC and ECN, as well as policy inconsistency, and plants to private operators will be by concession or policy shortfall precisely in what could otherwise be pro- not moted as a key pioneering area: renewable energy. The rel- • clarifying whether it is the FMP or the FMWR who evant authorities should set up and implement a series of awards the concession. political and financial support schemes such as: i) feed-in • defining whether small hydropower plants estab- tariffs, ii) grants / investment incentive, iii) tax relief; and lished as PPPs will compete with small hydros set up iv) low interest rates on loans. by government using funding from the NIPP asset Over and above this, government should make it trans- sales. parent which agency is responsible for each, and nomi- • stating what privileges a biomass- or waste-to-power nate the respective focal points. system would enjoy. RECOMMENDATIONS 144

Detailed Policy Recommendations lation between tariffs and power purchase agree- 1. Approval of policies & plans: To date the REMP ments for the renewables sector. In summary, the has not been approved; it should be clarified whether evidence would suggest that what makes most sense it will play a part in policymaking going forward in is for lawmakers to concentrate on actively and spee- order to give investors a clear basis for decision- dily eliminating the regulatory hurdles the study making. shows renewables projects still face as this will fur- 2. Data collection and statistics: Specific guidelines ther incentivise national and international investors and then regulations should be put into place in order to fast-track undertakings, specifically, as the study to properly follow the progress made versus the mas- outlines, if they are solar PV, wind or biomass-to- ter plan implementation in the renewable energy power projects. sub-sector 7. Role of FMENV: The role of FMENV could be to 3. Financial incentives: Although the initial cost of ensure that power generated from renewable energy installation of renewable energy equipment is high, sources are efficiently utilised without negative ef- the life cost is competitive with conventional energy fects on the environment. sources. Government should ensure that fiscal and 8. Awareness & information: The current flow of infor- non-fiscal incentives are put in place for private inves- mation on renewable energy technologies is inade- tors who are willing to invest. The development of quate, demonstration projects on various energy renewable energy services should be linked to many forms should be established widely so that the perfor- other sectors such as agriculture, small scale industrial mance and efficiency with which services are deli- enterprises or millennium goals. They will have vered be exhibited. This will sensitise the public as greater likelihood of success if implemented in line well as assist in the creation of markets for renewable with these activities to ensure sufficient demand energy system. for the energy services providers and may attract 9. Capacity building: There is a strong need for capacity funding. building both at the institutional and personnel level 4. Subsidies: Experience has shown that most renew- to ensure delivery of the technical, organisational, able energy technologies (especially those that can be and managerial skills required. The exact capacity locally manufactured) require subsidies only in the building needs should be identified. Activities such initial stages, and can become financially sustainable as entrepreneurship and managerial skills develop- in the short to medium term after a certain level of ment training programmes and technical courses in technology dissemination has been attained. A renewable energy technologies with a view to deve- scheduled phasing of subsidies would create investor loping energy service companies for providing ser- clarity here. vices to rural areas need to be introduced. The exist- 5. PPA templates: Detailed base calculations should ing research and development centres and technology preferably be provided in PPA templates “per energy development institutions should be adequately source”, as this would enable investors to calculate strengthened to support the shift towards increased commercial viability of projects and would provide a renewable energy utilisation. quick and transparent solution. It devolves upon 10. Stakeholders: Synergies need to be created among NBET with support from NERC to develop these stakeholders, as investors need to fulfil all require- templates. ments at one desk not at several. A single designated 6. Fast-track regulation: Two fields requiring streamlin- body should be set up to facilitate the investment ing are the application routes for tax relief and the re- process. RECOMMENDATIONS 145

9.2 Energy Efficiency (MRC) should be fast-tracked as this will greatly improve the mortgage finance system in the country. In doing this, Industry the energy performance of the building should be taken The study shows that few energy efficiency gains have into account. been made in industry. Not only could the situation be improved by addressing the issue of diesel genset effi- Household Appliances ciency, but our recommendation is for proper audits of The study concludes that it is absolutely imperative that industrial processes, starting with the drive systems used energy efficiency standards be introduced in this field at and covering such areas as controls for fans, etc., dimen- the manufacturers’ end. It recommends that promotion sioning of air compressors, optimising design and use policy focused on water heaters, cooling systems and of HVAC systems via maintenance, recirculation, and lighting, and not only on the lighting as it has been the improvement of lighting concepts. Energy management practise to date. After all, it outlines that greatest effi- and information systems (EMIS, EnMS e.g. ISO 50001) ciency gains are to be achieved by introducing solar wa- should be introduced in industry and the achievements ter heaters, more efficient cooking stoves, more efficient disseminated through the respective association. household appliances, and possibly insulation. Financing schemes and business models are to be developed and implemented, e.g., an energy efficiency The need to address energy efficiency is included in the financing model for SMEs could be devised together relevant policies and the agenda of the institutions. The with international donor agencies or banks. For example, study suggests that ahead of implementing energy effi- government should provide incentives such as tax allow- ciency measures, a greater government and public aware- ances, rebates or “pay as you save” programmes for speci- ness of the field needs to be created, especially as the cost fic building materials. to the private consumer is not inconsiderable. Stakehold- ers should likely start with “good practices on house- Buildings keeping”, e.g. implementing energy efficiency measures at The study also recommends top-level policy changes in their institution. the building sector such as the development of an energy building code, making the compliance with minimum General Policy Recommendations energy requirements and future targets set be compulsory A clear role needs to be assigned to central government for permits, the creation of a design catalogue for afforda- and donor agencies in funding pilot programmes to ble energy efficient buildings, introduction of technical raise public awareness of the benefits of energy efficiency and financial support mechanisms, priority for energy measures. In this context, a clear distinction should be efficiency in public procurement – all accompanied by made between industry and private households. More- promotion and awareness-raising measures as well as over, policymakers should also examine to what extent training and capacity building. Policymakers should re- subsidizing the emergence of an appliance assembly or visit the energy efficiency increments to be gained from better still manufacturing segment would help fast-track architecture that takes account of bioclimatic construc- the implementation of energy efficiency measures. Spe- tion and advantage for such construction work. cifically, SON could be entrusted with drawing up and fasttracking a labelling programme. Training should be provided for staff in charge of building permits and commissioning, for architects and engi- • Energy Management and Information Systems neers. Establishing of a mortgage re-financing company (EMIS, EnMS e.g. ISO 50001) should be introduced RECOMMENDATIONS 146

for selected buildings and the results disseminated calculations need to be made and circulated nation- through the respective association. wide. Likewise industry and residential standards for • For industry, the focus should primarily be on an en- energy efficiency need to be developed and promul- ergy efficiency financing facility designed for SMEs gated as quickly as possible. • For buildings (with the primary focus on public 5. Capacity Building: During capacity building buildings), energy building codes should be deve- schemes, participants need to be clearly familiarised loped and implemented with the meaning of energy efficiency and energy • For household appliances, energy efficiency stan- management. Technical assistance should be provi- dards should be introduced as a first priority ded to financial institutions in these fields, loan appraisal, product development, marketing etc. Detailed Policy Recommendations 6. Data collection and statistics: Specific guidelines With policies in place and institutional structures estab- and regulations should be put into place in order to lished, the inclusion of energy efficiency into the activi- properly follow the progress made versus the renew- ties of all participants (economy and society) should con- able energy master plan implementation in the ener- tinue with the next phase that would implement energy gy efficiency sub-sector. efficiency as part of the planning, processes and everyday 7. Procurement: To encourage the purchase of energy life. efficient equipment in public procurement, an agreement paper on the voluntary commitment of the 1. Legislation and regulation for energy efficiency is republic administration to energy efficiency in public quired to enhance its effective introduction. procurement should be developed and implemented. 2. Energy efficiency technologies: The study identifies 8. Land acquisition and energy efficiency:Nigerian great potential for efficiency gains specifically in the land law should be reviewed to make access to land fields of solar water heaters and more efficient cook- less cumbersome, which will eventually lower the ing stoves. The use of LEDs or CFLs instead of light cost of acquiring a house or premise. This can then be bulbs is to be encouraged, just as is the use of efficient tied to energy efficiency requirements. Cheap fund- cooking stoves instead of kerosene wicks. It is ques- ing sources for energy efficient buildings in the form tionable whether a strategy of subsidizing manufac- of “greenhouse loans” could be provided by govern- turers/importers by whatever means will have a large-- ment especially for housing finance. scale impact on energy consumption. 3. Billing: A stringent electricity billing regime should 9.3 Rural Electrification be introduced. This will itself lead to more efficient use of energy if only by dint of prompting consumers Solar Energy to turn off equipment more regularly. Given the great potential and easy local deployment of so- 4. Standards: A twofold strategy shall be adopted of lar power generating sets, this area seems one most open both strongly empowering the Standards Organi- for quick-wins. The study recommends encouragement of sation of Nigeria and putting commercial reasons in the provision of solar packs consisting of panels and bat- place to encourage manufacturers to engage in this tery storage systems as long as this is backed up by instruc- market. Without this, conditions will most probably tion schemes teaching maintenance of such equipment. not change. Standards need to be developed specifically for energy efficient small generators to replace It suggests research be done into the nation-wide de- old and out-dated diesel generators. The necessary ployment of small solar units with batteries, solar phone RECOMMENDATIONS 147

chargers and refrigerators. It believes government should General Policy Recommendations encourage the further development of such appliances Firstly, in light of the low electrification rate in Nigeria and explore whether it does not make more sense to out- today and the policies put in place to ameliorate the sit- fit rural communities with a brace of such items and or- uation, a concerted effort will be required involving the ganise coherent planning, regular maintenance visits and public sector. The revision of the RESIP indicates that monitoring than to prefer line-based capacity. one main role of the REA will be to administer and to support the REF, i.e., to secure funding into the REF and Biomass to manage the funds in the REF. Nigeria has a wide range of biomass resources usable for decentralised and off-grid. One such source is fresh ani- Secondly, the policy path proposed as a possible solution mal waste daily, another is plant residues. The study rec- to bringing power to 70,000,000 Nigerians living in ru- ommends an assessment be made of promoting providing ral areas, namely to have the process driven by the private rural areas with small biodigesters and efficient cooking sector, would seem to be more the product of expecta- stoves that lock into this potential. tions rather than practicality. A campaign should be forthcoming in favour of diesel/ solar hybrid and biomass systems in instances where Thirdly, given the size of the rural electrification problem, nighttime power is still required (or of standalone so- a robust and extensive capacity development programme lar PV systems, if power is only required during the day is required. time). Initiatives and campaigns for small hydro projects are already started, e.g. ECOWAS. This is an area where Whether rural communities will ever have the income subsidizing inputs could result in a significant strength- to pay for smart-metered remote generation systems is ening of the country’s agricultural backbone. doubtful. The REF may need to be a permanent structure. The private sector will not finance a supply system Wind due to high risks, but they are ready to build and/or op- The study recommends the use of wind as an energy erate them with a small private participation with equity. source for rural electrification only for microsystems, e.g. Therefore, it is reasonable to open the REF structure to driving water pumps. Such systems should, as with the any rural electrification business. solar sets, only be installed if maintenance instruction is given. Small, potentially regionally produced wind vanes A structured support mechanism is definitely needed for come into question for smallholder water pumping re- rural electrification. This could be based on the initiative quirements – and should be promoted by the Federal by WB / NIAF to establish a National Electricity Access Ministry of Agriculture accordingly. As with solar, gov- Expansion Rollout Programme (electrification master ernment should make a strong case to encourage a move plan with identified funding pools). away from diesel generation by familiarising the general public with the cost advantages. Detailed Policy Recommendations Were the policy emphasis to focus more on communities Micro-hydro and government-driven schemes, the potential for rural Given the dearth of data on this field, the study recom- electrification projects would be immense. Inclusion of mends an evaluation to be made of the cost/benefit ratio microfinance institutions and agricultural cooperatives of run-of-the-river micro systems and of converting mi- in structuring projects is another field worth visiting in cro-dams into hydropower systems. this regard, especially if international donor agencies RECOMMENDATIONS 148

were to help fund pilot projects to test commercial viability and sustainability.

In summary, the following issues need to be addressed by the federal and state governments:

• There is no mechanism for private-sector companies to supply electricity • Rural communities have no capacity to pay for electricity bills or only a minor ability to do so • Banks are reluctant to provide funds • Subsidy regimes are unclear • Pilot projects are needed to test commercial viability • Subsidised community tariffs should be considered (e.g. by REF). A cluster approach (clustering villages, applying ABC model with anchor customers) could be employed. • A billing mechanism shall be developed that ensures a due return on investment (and therefore a subsidy structure) • A clear ownership system for rural electrification shall be put in place to enable it to become private- sector driven. An example perhaps is the creation of credit cooperatives to ‘own’ pan-village projects. • Further opportunities for financing shall be explored, such as co-funding of projects by donor organisation or alternative financing mechanisms. • Different means of mitigating the scale of the problem of economy be investigated and promoted, for example: small-scale standalone renewable systems. • Data collection and statistics: Specific guidelines and regulations should be put into place in order to properly follow the progress made versus the renewable energy master plan implementation in the off-grid rural electrification sub-sector 10. BIBLIOGRAPHY 149

Author, Year Document Place of Publication [Abila N., 2010] Nelson Abila, (2010) “Biofuels adoption in Nigeria: A preliminary review no place of feedstock and fuel production potentials”, Management of Environ- mental Quality: An International Journal, Vol. 21 Iss: 6, pp.785 - 795 [African Development Bank; 2013] “African Economic Outlook 2013”, African Development Bank, Organ- Issy les Moulineaux, isation for Economic Co-operation and Development, United Nations France Development Programme, Economic Commission for Africa (2013) [African Development African Economic Outlook, Nigeria (2014) Issy les Moulineaux, Bank; Nigeria 2014] France [African Development Fund] Partial Risk Guarantee In Support of the Power Sector Privatisation, 2013 Issy les Moulineaux, France [Agba A.M., Ushie M.E., Abam Developing the Biofuel Industry for Effective Rural Transformation, UK F.I., Agba M.S., Okoro J; 2010] European Journal of Scientific Research;Feb2010, Vol. 40 Issue 3, p441 [Agbro, E. & Ogie, N.; 2012] “A Comprehensive review of Biomass Resources and Biofuel Production Baltimore, USA Potentials in Nigeria,” in: Research Journal in Engineering and Applied Sciences, Vol. 1, No. 3, 2012 pp. 149-55 [Amadi, S.; 18 Feb 2013] “Gas, Power & Renewables: What has been Achieved & where we are Abuja, Nigeria Heading”, presentation in NIGERIAN OIL & GAS CONFERENCE, Abuja (18-21 Feb. 2013) [Amadi, S.; 2013] Transforming the Nigerian Power Sector-Challenges and Solutions Abuja, Nigeria [Amadi, S.; 2013] “A Keynote Address To The 2013 Akindelano Legal Practitioners (Alp) Abuja, Nigeria Seminar Series: “Transforming the Nigerian Power Sector-Challenges and Solutions”, (2013) [Amadi, S.; 21 Feb 2014] “Success and Challenges of the Power Sector reform So Far,” presented Abuja, Nigeria to Nigerian Bar Association Conference, (Yenagoa, 21-2 Feb., 2014) [Anjeed Innova Group; 2013] Nigerian Power Sector Report (January 2013) Kaduna, Nigeria [Audu, T. & Aluyor, E.; 2012] “Potentials of Bioenergy and Biofuels. Technology Development in Nigeria,” Abuja, Nigeria in: Petroleum Technology Development Journal, Vol. 1, 2012, pp. 1-7 [BP; 2013] Statistical Review of World Energy (2013) UK

[CREDC; 2008] The Report of a National Dialogue to Promote Renewable Energy and Lagos, Nigeria Energy Efficiency in Nigeria, (Lagos, 2008) [CREDC; 2009] Energy Efficiency Survey in Nigeria: A Guide for Developing Policy and Lagos, Nigeria Regulation, (Lagos, 2009) [Dagogo-Jack, R. B.; 2014] “Maintaining Service Delivery & The Early Stabilisation Of The Infant Abuja, Nigeria Privatised Nigerian Electricity Supply Market,” presented to 6th Nigerian Power Summit (30-31 Jan 2014) [Dominguez J. L.; 2011] Feasibility study for solar energy in Nigeria (August, 2011) no place [ECN; Nov 2012] Renewable Energy Master Plan Abuja, Nigeria [ECN; 2012] Draft National Energy Efficiency Policy for Nigeria (2012) Abuja, Nigeria [ECN; 2013] Energy Commission of Nigeria: Renewable Energy Master Plan (2013) Abuja, Nigeria [ECN; Apr 2003] National Energy Policy Abuja, Nigeria [Ekpo, E.O, 2012] “MYTO 2 and Embedded Generation” presented to GE Nigeria Power Abuja, Nigeria Development Summit (May 2012) [EPSRA; 2005] Electric Power Sector Reform (EPSR) Act (2005) Lagos, Nigeria [Etiosa Uyigue; Sep 2009] Energy Efficiency Survey in Nigeria Benin City, Nigeria [Ewa Kurowska, Krzysztof Geothermal Exploration in Nigeria, Proceedings World Geothermal Bali, Indonesia Schoeneich; 2010] Congress 2010, 25-29 April 2010 [FMENV; 2010] Federal Ministry of Environment Abuja, Nigeria (Special Climate Change Abuja, Nigeria Unit): National Environmental, Economic and Development Study (Needs) For Climate Change In Nigeria (Final Draft) (September 2010) [FMENV; 2010] Federal Ministry of Environment Abuja, Nigeria (Special Climate Change Abuja, Nigeria Unit): National Environmental, Economic And Development Study (Needs) For Climate Change In Nigeria, (Final Draft), September 2010, p. 4 [FMENV; 2014] Federal Ministry of Environment: Scaling Up Renewable Energy Abuja, Nigeria Development In Nigeria (2014) BIBLIOGRAPHY 150

Author, Year Document Place of Publication [FMP; 2014] Federal Ministry of Power: Draft Rural Electrification Strategy and Abuja, Nigeria Implementation Plan (RESIP) [FMP;] Federal Ministry of Power: Small And Medium Hydro Power Projects Abuja, Nigeria Description, circulated PDF [FMPS; 2006] Federal Ministry of Power & Steel: Renewable Electricity Policy Guide- Abuja, Nigeria lines, compiled by ICEED (December 2006) [GEF-UNDP; 2011] Promoting Energy Efficiency in Residential and Public Sectors in Nigeria Abuja, Nigeria (GEF UNDP Energy Efficiency Programme, Abuja, 2011) [GIZ; 2013] Energy Efficiency in Buildings (EEB) in Selected Subsectors of the Nige- Abuja, Nigeria rian Building Sector: Development of recommendations for interventions to promote energy efficiency in buildings (2013) [GIZ; Oct 2013] Institutional and Policy Mapping of the Renewable Energy, Energy Effi- Abuja, Nigeria ciency and Rural Electrification Subsectors in Nigeria (October, 2013) [GIZ; Dec 2013] GIZ: Solar Water Heaters (SWH) for Shaving of Electricity Peak Load and Abuja, Nigeria CO2 Reduction: Development of recommendations for interventions to promote the use of solar water heaters in residential buildings and educational buildings (Dec. 2013) [GIZ; Nov 2014] Scoping Study Energy Efficiency in the Manufacturing Sector in Nigeria Abuja, Nigeria (November 2014) [IEA, 2010] IEA: Electricity access in 2010 - Africa Paris, France [IEA; 2012] IEA: World Energy Outlook (2012) Paris, France [IEA; 2013] IEA: Key World Energy Statistics (2013) Paris, France [IMF; Jan 2013] Case Studies on Energy Subsidy Reform: Lessons and Implications no place (Jan. 2013) [IMF; Oct 2013] World Economic Outlook (October, 2013) no place [Kennedy-Darling, J., Hoyt, N., The Energy Crisis of Nigeria, An Overview and Implications for the Future Chicago, USA Murao, K., Ross, A.; 2008] (The University of Chicago) (2008) [Lawa Salisu; 2013] Electricity Generation Using Wind in Katsina State, Nigeria (2013), Gujarat, India International Journal of Engineering Research & Technology (IJERT), Vol. 2 Issue 2, February - 2013 [LI, 2005] Wind Energy Resource Mapping and Related Works Project, Bad Vilbel, Germany Lahmeyer International, 2005 [M.S. Haruna] Solar Panel Manufacturing In Nigeria (National Agency for Science and Abuja, Nigeria Engineering Infrastructure) [MAN; 2013] MAN Economic Review 2013 Lagos, Nigeria [McKinsey; 2010] Lions on the move: The progress and potential of African economies no place (June, 2010), McKinsey Company [Montgomery, E.; 2012] “Renewable Energy, Off-Grid Power & Energy Efficiency Nigeria” Abuja, Nigeria presented at Nigeria Power Sector Retreat (21 January 2012) [NBS; 2010] Nigerian National Bureau of Statistics, Annual Abstract of Statistics (2010) Abuja, Nigeria [NBS; 2010/11] Nigerian National Bureau of Statistics, General Household Survey Panel Abuja, Nigeria 2010/2011 [NBS; 2011] Nigerian National Bureau of Statistics, Annual Abstract of Statistics (2011) Abuja, Nigeria [NBS; 2014] Nigerian National Bureau of Statistics, Statistics for 2013 (2014) Abuja, Nigeria [NBS; GDP 2014] Nigerian National Bureau of Statistics, Revised and final GDP Rebasing Abuja, Nigeria Results by Output Approach, National Bureau of Statistics (2014) [NERC; 2012] Nigerian Electricity Regulatory Commission: Regulations For Independent Abuja, Nigeria Electricity Distribution Networks (Abuja, 2012) [NERC; Jan 2012] Nigerian Electricity Regulatory Commission Regulations For Embedded Abuja, Nigeria Generation 2011 (January 2012) [NERC; May 2012] Multi Year Tariff Order (MYTO) and its benefit to consumers Abuja, Nigeria (Power Consumer Assembly, May, 2012) [NERC; Jun 2012] Multi-Year Tariff Order for the Determination of the Cost of Electricity Abuja, Nigeria Generation for the Period 1 June 2012 to 31 May 2017 (June, 2012) BIBLIOGRAPHY 151

Author, Year Document Place of Publication [NERC; 2014] Summary of the MYTO II Retail Tariffs (2014) Abuja, Nigeria [NIRP; 2014] Nigeria Industrial Revolution Plan, Nigerian Investment Promotion Abuja, Nigeria Commission (January 2014) [NPC; 2004] Nigeria Demographic and Health survey 2003, National Population Abuja, Nigeria Commission, Federal Republic of Nigeria, 2004 [NREA; 2014] “Draft Rural Electrification Strategy & Plan” 2014 Abuja, Nigeria [Ogwueleke T.; 2009] Municipal Solid Waste Characteristics and Management in Nigeria, Iran Iranian Journal of Environmental Health Science and Engineering, 2009, Vol. 6, No. 3, pp. 173-180 [Oyedepo, S.; Aug 2012] “Energy Efficiency and Conservation Measures: Tools for Sustainable Australia Energy Development in Nigeria,” in: International Journal of Energy Engineering, Vol. 2, no. 3 (Aug. 2012) [Peel, M. C., Finlayson, B. L., Updated world map of the Köppen-Geiger climate classification, Hydrol. no place and McMahon, T. A; 2007] Earth Syst. Sci., 11, 1633-1644, doi:10.5194/hess-11-1633-2007, 2007. [PHCN; 2007] Power Holding Company of Nigeria: National Load Demand Study National Abuja, Nigeria Energy Development project Draft Final Report, Vol. 1, National Load Demand Forecast (authored by Omega Systems & Tractebel Engineering Suez, Jan. 2007) [PIB; 2012] The Petroleum Industry Bill 2012, for an act to provide for the establish- Nigeria ment of a legal, fiscal and regulatory framework for the petroleum industry in Nigeria and for other related matters, enacted by the National Assembly of the Federal Republic of Nigeria [Primetech AS&P; 2014] Centenary City, Abuja: Development Controls (22 Jan 2014) Abuja, Nigeria [PTFP; 2010] Roadmap for Power Sector Reform (2010) Abuja, Nigeria [PTFP; 2013] Roadmap for Power Sector Reform, Revision I (2013) Abuja, Nigeria [Sambo, A.S.; 2008] “Matching Electricity Supply with Demand in Nigeria,” in: International Cleveland, USA Association for Energy Economics, 2008, Q4, pp. 32-36 [Simonyan, K.J. & Fasina, O.; 2013] “Biomass resources and bioenergy potentials in Nigeria,” in: African Lagos, Nigeria Journal of Agricultural Research, Vol. 8(40), Oct. 2013, pp. 4975-89 [Szabo, S. et al.; 2013] “Sustainable energy planning: Leapfrogging the energy poverty gap no place in Africa,” in: Renewable and Sustainable Energy Reviews, vol. 28 (2013), pp. 500-509 [TCN; 2013] Transmission Plans (2013 -2017) and Evacuation of Niger Delta Power Abuja, Nigeria Holding Company (NDPHC) Power Plants Generation (20 Sep 2013 communication) [UN; 2012] World Population Prospects: The 2012 Revision New York, USA [Vincent-Akpu, I.; 2012] "Renewable Energy Potentials in Nigeria," in: IAIA12 Conference Porto, Portugal Proceedings Energy Future The Role of Im-pact Assessment, 32nd Annual Meeting of the International Association for Impact Assessment, 27 May- 1 June 2012, Porto - Portugal [WB; 2011] World Bank: Nigeria 2011, An Assessment of the Investment Climate Abuja, Nigeria in 26 States [WB; 2013 (Low-Carbon Develop- Low-Carbon Development Opportunities for Nigeria, Raffaello Cervigni, Washington, USA ment Opportunities for Nigeria)] John Allen Rogers, and Max Henrion, (eds.), (International Bank for Reconstruction and Development / The World Bank, Washington, 2013) [WB; 2013 (Toward Climate-Re- Toward Climate-Resilient Development in Nigeria, Raffaello Cervigni, Washington, USA silient Development in Nigeria)] Riccardo Valentini, and Monia Santini, (eds.) (International Bank for Reconstruction and Development / The World Bank, Washington, 2013) [WB; 2014] Nigeria - Power Sector Guarantees Project: Project Appraisal Document Abuja, Nigeria (14 Apr 2014) [Wonodi; 2013] “Bulk Trader in the Power Sector Transformation” presented by Lagos, Nigeria Rumundaka Wonodi, Managing Director/CEO, NBET (2013) 11. LINKS USED 152

REF. Owner Link / Document Title [1] African Economic Outlook www.africaneconomicoutlook.org/en/countries/west-africa/nigeria/ Country Notes - Nigeria [2] Budget Office of the Federation www.budgetoffice.gov.ng/2011-2013%20MTEF%20&%20FSP.pdf Federal Ministry of Finance Medium-Term Expenditure Framework & Fiscal Strategy Paper, 2011-2013 [3] Building Nigeria’s Response To nigeriaclimatechange.org/docs/naspaAug2012.pdf Climate Change (BNRCC) National Adaptation Strategy and Plan of Action on Climate Change for Nigeria (NASPA-CCN), December 2011 [4] climatemps.com www.nigeria.climatemps.com/Nigeria Climate [5] Daily Times of Nigeria PLC www.dailytimes.com.ng/article/son-moves-against-importers-substandard- generators Article: “SON moves against importers of substandard generators”, December 6, 2011 [6] Daily Times of Nigeria PLC http://dailyindependentnig.com/2014/05/sons-many-hurdles-substandard- products/Article: “SON’s many hurdles against substandard products” [7] ENERDATA Information Services www.wec-indicators.enerdata.eu/world.php Indicators by Country/Region [8] Energy Commission of Nigeria (ECN) www.energy.gov.ng/index.php?option=com_content&view=article&id=74 Article: “60m Nigerians now own power generators —MAN” [9] Federal Ministry of Lands, Housing www.landsandhousing.gov.ng/ and Urban Development [10] Federal Ministry of Power www.power.gov.ng/ [11] Federal Ministry of Power http://www.power.gov.ng/index.php/department/lectrical-and-inspectorate-services Department “Renewable and Rural Power Access” [12] Federal Ministry of Power www.power.gov.ng/download/Investment%20Opportunities%20in%20the%20Nigerian %20Power%20Sector.pdf Investment Opportunities In The Nigerian Power Sector [13] Federal Ministry of Power www.power.gov.ng/download/POWER%20MINISTER%20REVEALS%20FG%20PLANS% 20ON%20%E2%80%98OPERATION%20LIGHT%20UP%20RURAL%20NIGERIA%27.pdf Power Minister Reveals FG Plans on ‘Operation Light Up Rural Nigeria’ [14] Federal Ministry of Power www.power.gov.ng/index.php/component/content/article/78-featured/140-power- statistics Power Statistic [15] Federal Ministry of Power http://www.power.gov.ng/index.php/department/energy-resources-development Department “ Energy Resources Development” [16] Federal Ministry of Water Resources www.waterresources.gov.ng/departments/dams-and-reservoir-operations Department “ Dams and Reservoir Operations” [17] Guardian News www.theguardianmobile.com/readNewsItem1.php?nid=25196 Article: “All set for Delta gas city project’s kick-off” [18] International Centre for Energy, www.iceednigeria.org Environment & Development [19] International Organisation for http://www.iso.org/iso/about/iso_members/iso_member_body.htm?member_id=1982 Standardization Member list [20] JBS WindPower Ltd. jbswindpower.com/our-projects.html [21] Leaders & Company Limited www.thisdaylive.com/articles/fg-targets-75-electrification-across-nigeria/128452/ Article: “FG Targets 75 % Electrification across Nigeria”, 23 Oct 2012 [22] Manufacturers Association www.manufacturersnigeria.org of Nigeria [23] National Bureau of Statistics www.nigerianstat.gov.ng/pages/download/6 Electricity Supply and Demand Statistics [24] National Planning Commission www.nationalplanning.gov.ng/index.php/national-plans/nv20-2020 National Plans [25] National Population Commission www.population.gov.ng/images/ndhs_data ndhs_2013/2013_ndhs_key_findings.pdf Nigeria, 2013 Demographic and Health Survey, Key Findings [26] Niger Delta Power Holding Company www.nipptransactions.com Limited [27] Niger Delta Power Holding Company www.nipptransactions.com/background/purpose/ Limited LINKS USED 153

REF. Owner Link / Document Title [28] Niger Delta Power Holding Company www.nipptransactions.com/wp-content/uploads/downloads/2013/07/1.-CPCS-NIPP- Limited Roadshow-Presentation.pdf Privatisation of Niger Delta Power Holding Company Limited Generation Companies, 2013 [29] Niger Delta Power Holding Company www.nipptransactions.com/wp-content/uploads/downloads/2013/09/Transmission- Limited Development-TCN.pdf Transmission Plans (2013–2017), 2013 [30] Nigeria Electricity Privatisation www.nigeriaelectricityprivatisation.com (PHCN) [31] Nigeria Electricity Privatisation www.nigeriaelectricityprivatisation.com/wp-content/plugins/download-monitor/ (PHCN) download.php?id=69 The System Operator [32] Nigeria Energy Consortium www.nigeriaalternativeenergy.org [33] Nigeria High Commission London, www.nigeriahc.org.uk/about-nigeria UK Nigeria, key data [34] Nigerian Electricity Regulatory www.nercng.org/index.php/document-library/func-startdown/27/ Commission The Grid Code for the Nigerian Electricity Transmission System, Version 01 [35] Nigerian Electricity Regulatory www.nercng.org/index.php/industry-operators/codes-standards-and-manuals Commission Codes, Standards and Manuals [36] Nigerian Electricity Regulatory www.nercng.org/index.php/industry-operators/licensing-procedures/licencees Commission ?limitstart=0 Licensees [37] Nigerian Electricity Regulatory www.nercng.org/index.php/nerc-documents/Regulations/orderby,3/ Commission Regulations [38] Nigerian Electricity Regulatory www.nercng.org/industry-operators/licensing-procedures/licencees Commission [39] Nigerian Electricity Regulatory www.nercng.org/nercdocs/Regulation-for-the-Application-for-Licence.pdf Commission Regulation No: NERC - R - 01 10 A [40] Nigerian Electricity Regulatory http://www.nercng.org/index.php/document-library/func-startdown/26/ Commission The Distribution Code for the Nigeria Electricity Distribution System, Version 01, [41] Nigerian Institute of Building www.niobng.org [42] Nigerian Investment Promotion www.nipc.gov.ng/investment.html Commission Investment Incentives [43] Nigerian Society of Engineers www.nse.org.ng [44] Nigerianisch-Deutsche Energie- www.ngenergypartnership.de/ partnerschaft [45] NOI-Polls www.noi-polls.com [46] OECD/IEA www.iea.org/statistics/topics/Electricity/ Electricity Statistics [47] Organisation of the Petroleum www.opec.org Exporting Countries [48] Presidential Task Force on Power www.nigeriapowerreform.org/index.php?option=com_content&view=article&id=1195% 3Ainvesting-in-nigeria-s-renewable-energy-sector&catid=36&Itemid=336 Article: “Investing in Nigeria\’s Renewable Energy Sector” [49] Project Light-Up Nigeria www.projectlightupnigeria.com/rural-electrification-projects.html Rural Electrification Projects [50] Project Light-Up Nigeria www.projectlightupnigeria.com/the-project.html About us [51] Renewable Energy Programme Of- renewableenergy.gov.ng/cross-river-farm-to-produce-biodiesel/ fice; Federal Ministry of Environment Cross River farm to produce biodiesel [52] Renewable Energy Programme Of- renewableenergy.gov.ng/projects/ fice; Federal Ministry of Environment Projects [53] Securities & Exchange Commission, www.sec.gov.ng/files/Prof%20Nnaji%20Presentation.pdf Nigeria Power Sector Outlook in Nigeria: Governments Renewed Priorities, 2011 [54] Solarsister www.solarsister.org [55] Standards Organisation of Nigeria www.son.gov.ng LINKS USED 154

REF. Owner Link / Document Title [56] Statehouse office of the President, www.statehouse.gov.ng/ Federal Republic of Nigeria [57] Subsidy Reinvestment and Empow- www.sure-p.gov.ng erment Programme Committee [58] The Association of Nigerian www.ansep.org Solar Energy Promoters [59] The Federal Ministry Of Information www.nigeria.gov.ng/2012-10-29-11-05-46 About Nigeria [60] The Nigerian Institute of Architects www.nigerianinstituteofarchitects.org (NIA) [61] UNICEF www.unicef.org/infobycountry/nigeria_statistics.html#99 At a glance: Nigeria [62] United Nations unstats.un.org/unsd/energy/edbase.htm Energy Statistics Database [63] US DOE, U.S. Energy Information www.eia.gov/countries/ Administration Countries [64] US DOE, U.S. Energy Information www.eia.gov/countries/cab.cfm?fips=NI Administration Nigeria [65] Vanguard Media Limited, Nigeria www.vanguardngr.com/2013/01/nigeria-spends-n3-5trn-annually-on-power-generators /#sthash.1V0cklN3.dpuf Article: “Nigeria spends N3.5trn annually on power generators”, January 16, 2013 [66] World Bank Group data.worldbank.org/country/nigeria Data Nigeria [67] World Bank Group data.worldbank.org/indicator/EG.ELC.ACCS.ZS Data Access to electricity (% of population) [68] World Bank Group data.worldbank.org/indicator/EG.USE.COMM.GD.PP.KD Energy use (kg of oil equivalent) per $1,000 GDP (constant 2011 PPP) [69] World Bank Group www.doingbusiness.org/data/exploreeconomies/nigeria Nigeria [70] World Energy Council http://89.206.150.89/documents/congresspapers/57.pdf Energy Efficiency and Barriers towards Meeting Energy Demand in Industries in Nigeria [71] World Green Building Council www.worldgbc.org/worldgbc/members/ Member List ANNEX 1 155

Annual Rainfall in Nigeria by State, 2005 - 2009 (millimetre)

States and Capitals 2005 2006 2007 2008 2009 Abia (Umuahia) 125.3 171.7 135.5 144.2 1,980.1 Adamawa (Yola) 865.7 1,057.3 827.4 468.5 718.1 Akwa Ibom (Uyo) 2,711.8 2,558.7 2,532.2 2,106.2 1,911.7 Anambra (Awka) 159.7 1,910.3 2,026.8 2,056.7 2,273.4 Bauchi (Bauchi) 1,104.5 1,017.9 1,136.9 1,133.1 1,621.3 Bayelsa (Yenagoa) - - - - - Benue (Makurdi) 871.3 1,343.0 1,339.9 1,050.7 1,401.5 Borno (Maiduguri) 917.3 553.7 1,076.3 600.9 587.5 Cross River (Calabar) 3,862.1 2,896.8 3,427.9 3,060.8 2,521.8 Delta (Asaba) 1,756.4 1,906.4 1,802.4 1,765.1 1,765.8 Ebonyi (Abakiliki) - - - - - Edo (Benin) 2,014.0 2,358.5 2,647.8 2,670.0 2,122.6 Ekiti (Ado-Ekiti) 114.6 109.7 - - - Enugu (Enugu) 1,697.4 2,096.3 1,911.2 1,738.4 1,757.2 Gombe (Gombe) 975.5 955.4 833.6 985.9 857.4 Imo (Owerri) 2,247.2 2,350.2 2,362.1 2,818.0 2,738.0 Jigawa (Dutse) - - - - - Kaduna (Kaduna) 994.2 88.7 865.0 827.9 1,267.9 Kano (Kano) 114.7 109.1 113.1 109.0 - Katsina (Katsina) 750.6 726.5 704.1 557.1 473.8 Kebbi (Birnin-Kebbi) 1,055.0 959.2 886.9 1,223.0 1,196.0 Kogi (Lokoja) 939.4 1,681.9 1,531.4 1,259.7 1,631.5 Kwara (Ilorin) 1,234.9 1,303.8 1,308.8 1,468.5 1,352.3 Lagos (Ikeja) 1,484.9 1,675.2 1,649.1 1,816.0 1,391.7 Nassarawa (Lafia) 1,290.7 1,320.1 1,569.6 10,718.8 1,566.0 Niger (Minna) 1,108.7 1,423.2 1,423.3 1,269.2 1,421.6 Ogun (Abeokuta) 924.2 1,142.1 876.2 1,371.7 1,465.5 Ondo (Akure) 1,317.1 1,381.0 1,405.7 1,466.1 1,309.6 Osun (Oshogbo) 1,130.2 1,469.7 1,421.7 1,597.6 1,277.7 Oyo (Ibadan) 1,192.0 1,260.2 1,218.8 889.4 1,702.1 Plateau (Jos) 1,203.5 1,248.4 1,357.2 1,259.8 1,236.9 Rivers (Port Harcourt) 2,055.2 2,868.6 2,865.2 1,606.6 2,601.6 Sokoto (Sokoto) 635.1 745.5 636.4 514.6 603.0 Taraba (Jalingo) 872.0 923.6 1,070.6 1,038.4 1,569.1 Yobe (Damaturu) 448.6 409.5 483.1 320.3 366.5 Zamfara (Gusau) 920.3 961.8 615.8 954.0 1,006.0 FCT, Abuja 1,471.8 1,311.6 1,388.9 1,174.7 1,444.6

Source: Nigerian Meteorological Agency [NBS; 2011] ANNEX 2 156

Investment Opportunities for Small Hydro Power Development in Nigeria (UNIDO, 1980) ------Benefiting Com Benefiting ban populationban munities ban populationban ban populationban ban populationban Ungwan Dogo, Galadi UNHCR and UNIDO Urban population Ugbokpo and Amoke - UNICAL; Peri-ur Eza, Amaku, Alage Balanga; Rural Pres. Library Complex - Ikeji Ile - Ijesa, Ira - Population Dutsin - Ma; Rural population Erin Ijesa, Erin Oke - ma, Dindile, Tudunwada peri-urban population population peri-urban population peri-urban population Olusegun Obasanjo Okinni - peri-ur and Yelwa - peri-ur and Kabomo - peri-ur Ajassor - Rural Funding Source of DPR UNIDO-GEF 3. Fed Government UNHCR and UNIDO UNICAL UNIDO CountryUNIDO Office Ministry of Water Resources Nigeria Min. of Water Resources Rural Electrification Fed. Govt. of Nigeria Ministry of Work Min. of Water Resources Gombe State Government State Gombe and Rural development.and and Transportand Rural Developmentand Agency, NigeriaAgency, 2. Benue State Government & Rural Development& 1.UNIDO Country Office1.UNIDO 89,847.95 593,850.33 511,256.76 US$ 3,246,126.09 994,026.28 659,672.14 404,352.87 1,298,790 177,301.47 17,346,912.55 1,009,015.96 1,525,402.90 89,077,549.14 Project Design Cost NGN (Implementation Cost) (Implementation 98,950,820.58 60,652,930.0 26,595,220.6 2,602,036,882.0 228,810,443.00 486,918,913.43 76,688,515.76 194,818,566 149,103,942.36 13,477,193.9 151,352,394.10 Date of DPR* Feb. 2008 Nov. 2009 March 2008 Sept. 2011 Aug. 2007 Aug. 2008 Aug. 2008 2006 Jan. 2010 July, 2009 July 2011 June, 2011 -

tial tial [KW] Design Design Poten 370 6,500.0 200 291.0 450 400.0 720.0 78.94 764.59 1,225 17.0 1,900 Head [m] 8.0 5.53 32.0 90.0 27.0 2.6 2.7 20.0 7.0 75.88 11.98

- Project Location: billa, Taraba UNICAL / Calabar, Kabomo / Bakori / Katsina Doma / Doma / Nasarawa Kakara / Mam Balanga / Bal - Dutsin-Ma / Katsina Erin Ijesa / Ikeji Ile Ijesa / South / Ogun Cross River Cross River Oriade / Osun Oriade / Osun Okinni / Egbedore / Osun anga / Gombe Abeokuta / Abk Amoke-Ugbokpo / Apa / Benue Ajassor / Etung / Town / L.G.A. / State

Project Name UNICAL SHP Base R.E to support Rural Electrification Doma Dam Eficghim WaterfallEficghim Power project Pico-Hydro power Balanga SHP Dam Kabomo River Valley Erin Ijesa Small project Power Hydro Ikeji-Ile Ijesa (OOPL Complex) SHP SHP project.SHP SHP projectSHP Small Hydro SHP as Mini Grid SHP projectSHP Okinni Dam projectSHP Amoke / Ugbokpo Zobe Dam, SHP Tunga Dam SHP No. 8. 5. 3. 9. 6. 2. 7. 4. 1. 12. 11. 10. ANNEX 3 157

List of Renewable Energy and Energy Efficiency components standards elaborated/adapted/adopted by SON

1. NCP 031:2010ET: Code of practice for the deployment of outdoor solar lighting systems 2. NIS IEC 61215: 2005: Crystalline Silicon Terres- trial Photovoltaic (PV) Modules – Design Qualifica- tion and Type Approval 3. NIS IEC 61646: 2008: Thin-film Terrestrial Photo- voltaic (PV) Modules – Design Qualification and Type Approval 4. NIS IEC 62109: 2010: Safety of Power Converters for use in Photovoltaic Power Systems – Part 1: General Requirements 5. NIS IEC 62109: 2010: Safety of Power Converters for use in Photovoltaic Power Systems – Part 2: Particular requirements for inverters 6. NIS IEC 61427: 2005: Secondary cells and batteries for Photovoltaic Energy Systems (PVES) – General requirements and methods of test 7. NIS IEC 60364-7-712: Electrical installations of buildings - Part 7-712: Requirements for special installations or locations - Solar photovoltaic (PV) power supply systems 8. NIS IEC 61730: 2004-1: Photovoltaic (PV) module safety qualification – Part 1: Requirements for construction 9. NIS IEC 61730: 2004-2: Photovoltaic (PV) module safety qualification – Part 2: Requirements for testing 10. NIS IEC 61683:1999: Photovoltaic systems – Power conditioners – Procedure for measuring efficiency Standards for safety and performance of CFLs

Table A- 1: Main Sources of Fuel for Cooking

ANNEX 4 Source Percentage 158 Fuel wood 69.8 Kerosene 26.6 Gas 1.11 Charcoal 0.84 Additional Information Electricity 0.52 Crop residues/sawdust 0.09 Animal waste 0.07 TABLE A – 1: MAIN SOURCES OF FUEL FOR COOKING Others 0.84 Source: Federal Ministry of Environment 2014 brochure on Scaling-up Renewable Energy Development 9n Nigeria, quoted from Source NationalPercentage Bureau of Statistics Fuel wood 69.8

Table A- 1: Main Sources of Fuel for Cooking Kerosene Figure A- 1: Nigeria Electrical Energy Production26.6 (in million kWh)

Gas 1.11 Source Percentage Charcoal 0.84 Fuel wood 69.8 Kerosene Electricity 26.6 0.52 Gas Crop residues/sawdust 1.11 0.09 Charcoal 0.84 Animal waste 0.07 Electricity 0.52 Crop residues/sawdust Others 0.09 0.84 Animal waste 0.07 Source:Others Federal Ministry of Environment 2014 brochure0.84 on Scaling-up Renewable Energy Development 9n Nigeria, Source: Federal Ministryquoted of fromEnvironment National 2014 brochureBureau on of Scaling Statistics-up Renewable Energy Development 9n Nigeria, quoted from National Bureau of Statistics

FIGURE A – 1: Figure A- 1: NIGERIANigeria Electrical ELECTRICAL Energy Production ENERGY (in millionPRODUCTION kWh) (IN MILLION KWH)

Source: UN data base [62] Source: UN data base [62]

20141121_Energy Sector Study_NESP Publication draft_v2.docx

Source: UN data base [62]

20141121_Energy Sector Study_NESP Publication draft_v2.docx ANNEX 4 159

TABLE A – 2: ELECTRICITY PRODUCTION AND CONSUMPTION FOR 2001 AND 201173 IN GWH Nigeria Bangladesh Brazil Indonesia Production from 2001 2011 2001 2011 2001 2011 2001 2011 Coal 0 0 0 780 11163 12379 37713 81000 Oil 1099 4271 1172 2101 15818 14796 19627 42305 Gas 8455 17113 15227 40308 9921 25095 26220 37090 Biofuels 0 0 0 0 8980 32235 8 198 Waste 0 0 0 0 0 0 0 0 Nuclear 0 0 0 0 14279 15659 0 0 Hydro 5909 5650 993 872 267876 428333 11655 12419 Geothermal 0 0 0 0 0 0 6031 9371 Solar PV 0 0 0 0 0 0 0 1 Solar thermal 0 0 0 0 0 0 0 0 Wind 0 0 0 0 35 2705 0 0 Tide 0 0 0 0 0 0 0 0 Other sources 0 0 0 436 556 0 0

Total 15463 27034 17392 44061 328508 531758 101254 182384 Imports 0 0 0 0 37854 38430 0 0 Exports 0 0 0 0 -6 -2544 0 0 Domestic supply 15643 27034 17393 44061 366356 567644 101254 182384 Energy industry own use 442 774 977 2476 11154 2333 3710 6882 Losses 5987 2581 2413 4528 56628 8752 13024 16672 Final consumption 9034 23679 14002 37136 298575 456748 84520 159867 Industry 1987 3931 6017 21096 139406 209390 35593 53575 Transport 0 0 0 0 1200 2700 33340 0 Residential 4608 13568 6186 11956 73770 111971 33340 65884 Commercial and public services 2439 6180 1174 2474 71804 112227 15587 38608 Agriculture / forestry 0 0 392 1133 12395 21460 0 0 Fishing 0 0 0 3 0 0 0 0 Other non-specified 0 0 0 474 0 0 0 0

73 Source: [IEA; 2013]

ANNEX 4 160

Figure A- 2: Fuel Prices in Nigeria74 FIGURE A – 2: FUEL PRICES IN NIGERIA74

* benchmark lines: green=US price; grey=price in Spain; red=price of Crude Oil

74 Source: Energypedia

20141121_Energy Sector Study_NESP Publication draft_v2.docx ANNEX 4 161

TABLE A – 3: GENERATION PROFILE [31] Maximum daily Ave. Gen. Peak generation energy Total energy Total energy Year availability (MW) (MW) generated (MWh) generated (MWh) sent out (MWh) % Losses 2007 4,156.19 3,599.60 75,372.00 23,186,542.92 22,255,754.83 8,25 2008 4,232.61 3,596.90 79,897.05 21,597,413.28 21,041,043.67 9,05 2009 4,825.17 3,710.00 82,652.37 20,893,432.80 20,329,451.42 8,41 2010 4,212.70 3,804.30 85,457.49 25,020,297.11 24,362,423.46 9,98 2011 (Jan -Oct) 4,328.42 4,054.20 90,315.27 22,585,507.64 22,001,560.26 9,32

TABLE A – 4: LICENSEES OF THE NERC, JANUARY 201475 Name Type Place MW Ikorodu Industrial Power Ltd Embedded Ikorodu, Lagos State 39 Generation Island Power Limited Marina, Lagos State 10 Total 49 African Oxygen & Industrial Gases Limited Ikorodu, Lagos State 19 Akute Power Limited Lagos Water Corporation 13 CET Power Projects (Ewekoro) Wapco Ewekoro,Ogun State 6 CET Power Projects Ltd. Tinapa, Cross River State 20 CET Power Projects Ltd. Nigerian Breweries Ltd., Iganmu, Lagos 5 CET Power Projects(Sagamu) WAPCO Sagamu, Ogun State 7 ContourGlobal Solutions (Nig) Ltd NBC Bottling Plant, Ikeja 10 ContourGlobal Solutions (Nig) Ltd NBC Bottling plant, Apapa 4 ContourGlobal Solutions (Nig) Ltd NBC Bottling Plant, Benin 7 Coronation Power and Gas Limited Sango Otta 20 DIL Power Limited Cement factory, Ogun State 114 Energy Company of Nigeria Limited Nestle,Agbara, Ogun State 3 Ewekoro Power Ltd Ewekoro, Ogun State 13

Ilupeju Power Limited Generation Off-grid Academy Press, Ilupeju 2 Income Electrix Limited NPA, Port Harcourt , Rivers State 6 PZ Power Company Limited PZ Cussons Aba Factory, Abia State 4 Shoreline Power Company Limited Lafarge Wapco,Sagamu, Ogun 9 Tower Power Abeokuta Limited Abeokuta, Ogun State 20 Tower Power Utility Limited Ota Industrial Estate, Ota, Ogun State 20 Unipower Agbara Limited Unilever, Agbara, Ogun St. 6 Wedotebary Nigeria Limited Kuru, Jos 5 Total 313

75 Source: [36] ANNEX 4 162

TABLE A – 4: LICENSEES OF THE NERC, JANUARY 201475 Name Type Place MW Afam Power Plc Afam, Rivers State 987 Agbara Shoreline Power Limited Agbara, Ogun 100 Alaoji Generation Co. Ltd (NIPP) Alaoji, Abia State 1,074 Anita Energy Limited Agbara, Lagos State 90 Azura Power West Africa Limited Ihovbor Benin, Edo State 450 Benin Generation Company Limited Ihonvbor, Edo State 450 Calabar Generation Company Limited Calabar, Cross Rivers State 561 Century Power Generation Limited Okija, Anambra State 495 Delta Electric Power Limited Oghareki, Etiope West LGA 116 DIL Power Plc Obajana, Kogi State 135 Egbema Generation Company Limited Egbema Imo State 338 Egbin Power Plc Egbin, Lagos State 1,320 Eleme Petrochemical Company Limited Eleme Complex, P.H. Rivers 135 Energy Company of Nigeria (NEGRIS) Ikorodu, Lagos State 140 Enersys Nigeria Limited Ado-Ekiti, Ekiti State 10 Ethiope Energy Limited Ogorode, Sapele, Delta State 2,800 Farm Electric Supply Ltd Ota, Ogun State 150 First Independent Power Co. Ltd Omoku, Rivers State 150 First Independent Power Co. Ltd Trans-Amadi, Rivers State 136 First Independent Power Co. Ltd Eleme, Rivers State 95 Fortune Electric Power Co. Ltd Odukpani, Cross River State 500 Gbarain Generation Company Limited Gbarain, Bayelsa State 225 Geometric Power Ltd Aba, Abia State 140 Geregu Generation Company Limited Geregu II, Kogi State 434 Geregu Power Plc (BPE) Geregu, Kogi State 414 Generation On-grid Hudson Power Limited Warawa, Ogun State 150 Ibafo Power Station Limited Ibafo, Ogun State 200 Ibom Power Ltd Ikot Abasi, Akwa Ibom State. 190 ICS Power Ltd Alaoji, Abia State 624 Isolo Power Generation Limited Isolo Lagos State 20 AES Nigeria Barge Limited 270 JBS Wind Power Limited Maranban Pushit, Mangu, Plateau State 100 Paras Energy & Natural Resourc- Ogijo, Ogun State 96 es Development Limited Sapele Power Plc Sapele, Delta State 1,020 Shell Petroleum Dev. Co. Ltd Afam VI, 642 Shiroro Hydro Electricity Plc Shiroro, Niger State 600 Supertek Nig. Ltd Akwete, Abia State 1 Ughelli Power Plc Ughelli, Delta State 942 Westcom Technologies & Energy Services Ltd. Sagamu, Ogun State 1,000 Zuma Energy Nigeria Ltd (Gas Plant) Ohaji Egbema,Owerri,Imo 400 Zuma Energy Nigeria Ltd(Coal Plant) Itobe, Kogi State 1,200 Supertek Electric Limited Ajaokuta, Kogi State 500 ContourGlobal Solutions (Nig) Ltd NBC Bottling Plant, Benin 7 Total 19,407

75 Source: [36] ANNEX 4 163

TABLE A – 5: NERC LICENSEES FOR OFF-GRID POWER GENERATION Licensee Site Location Capacity Agbara Shoreline Power Limited Ikorodu, Lagos State 19.0 MW Alaoji Generation Co. Ltd (NIPP) Lagos Water Corporation 13.0 MW CET Power Projects Ltd. Wapco Ewekoro, Ogun State 6.0 MW CET Power Projects Ltd. Tinapa, Cross River State 20.0 MW CET Power Projects (Sagamu) Nigerian Breweries Limited, Iganmu, Lagos 5.0 MW ContourGlobal Solutions (Nig) Ltd WAPCO Sagamu, Ogun State 7.0 MW ContourGlobal Solutions (Nig) Ltd NBC Bottling Plant, Ikeja 10.0 MW ContourGlobal Solutions (Nig) Ltd NBC Bottling plant, Apapa 4.0 MW Delta Electric Power Limited Sango Otta 20.0 MW DIL Power Plc Cement factory, Ogun State 114.0 MW Energy Company of Nigeria Plc Nestle, Agbara, Ogun State 3.0 MW Farm Electric Supply Ltd Ewekoro, Ogun State 12.5 MW Gbarain Generation Company Limited VI, Lagos nn MW Income Electrix Limited Academy Press, Ilupeju 2.0 MW Island Power LImited NPA, Port Harcourt, Rivers State 6.0 MW Sapele Power Plc PZ Cussons Aba Factory, Abia State 4.0 MW Supertek Electric Limited Lafarge Wapco, Sagamu, Ogun 9.0 MW Tower Power Utility Limited Abeokuta, Ogun State 20.0 MW Transmission Company of Nigeria Ota Industrial Estate, Ota, Ogun State 20.0 MW Wedotebary Nigeria Limited Unilever, Agbara, Ogun St. 6.0 MW Westcom Technologies & Energy Services Ltd. Kuru, Jos 5.0 MW Total 305.5 MW ANNEX 4 164

TABLE A – 6: NERC CLASSIFICATION FOR DISCO PRICING Customer Classification Description Remarks Residential R1 Life-Line (50 kWh) A consumer who uses his premises excl. as a residence R2 Single and 3-phase R3 LV Maximum Demand R4 HV Maximum Demand (11/33 KV) A consumer who uses his premises for any purpose other than exclusively as a residence or as a Commercial factory for manufacturing goods C1 Single and 3-phase C2 LV Maximum Demand C3 HV Maximum Demand (11/33 KV) Industrial A consumer who uses his premises for manufacturing goods including welding and ironmongery D1 Single and 3-phase D2 LV Maximum Demand D3 HV Maximum Demand (11/33 KV) Customers such as agriculture and agro-allied industries, water boards, religious houses, govern- Special ment and teaching hospitals, government research institutes and educational establishments. A1 Single and 3-phase A2 LV Maximum Demand A3 HV Maximum Demand (11/33 KV) Street lighting S1 Single and 3-phase

TABLE A – 7: ENERGY CONSUMPTION BY SOURCE (KTOE, 2011)FEHLER! TEXTMARKE NICHT DEFINIERT Primary Final Primary Final Primary Final Primary Final Primary. Final Energy Con- Energy Con- Energy Con- Energy Con- Energy Con- Supply sumption Supply sumption Supply sumption Supply sumption Supply sumption Energy source Nigeria Bangladesh Brazil Indonesia South Africa Coal 20 20 912 698 15431 8296 31476 11214 98477 16676 Crude Oil 6012 0 1534 0 97992 0 49807 1704 20489 0 Oil Products 6525 10858 3324 3964 11035 1000209 22786 62720 572 24321 Natural Gas 8027 1351 16614 6890 22887 12744 34761 16650 3794 1631 Nuclear 0 0 0 0 4081 0 0 0 3519 0 Hydro 486 0 76 0 36837 0 1068 0 177 0 Geothermal, 0 0 0 0 653 420 16112 0 82 72 solar, etc. Biofuels 97255 94682 8836 8836 77912 56939 52998 52266 14526 10638 and Waste Electricity 0 2036 0 3194 3086 39280 0 13749 -264 17790 Total 118325 108947 31294 23581 270028 217889 209009 158301 141372 71127 toe per capita 0.73 0.67 0.21 0.16 1.37 1.11 0.86 0.65 2.79 1.41 ANNEX 4 165

TABLE A – 8: MYTO II, WHOLESALE GENERATION PRICES Prices in (N/MWh) 2012 2013 2014 2015 2016 Successor Gas Power Plants 9,563 10,257 12,140 13,172 14,296 New Entrants Gas Power Plants 10,743 11,534 13,520 14,665 15,910 New Entrant Coal Plants 25,106 27,024 29,097 31,559 34,232 Successor Large Hydro Plants 4,898 5,290 5,715 6,174 6,671 Small Hydro Plant 23,561 25,433 27,456 29,643 32,006 Land Mounted Wind Power Plant 24,543 26,512 28,641 30,943 33,433 Solar Power Plant 67,917 73,300 79,116 85,401 92,192 Biomass Power Plant 27,426 29,623 32,000 34,572 37,357 ANNEX 5 166

Addresses and Contacts of Relevant Stakeholders for the Study

No. Organisation Name Position 1) ECN Eleri Adeola I. (Mrs.) SSO (RE Dept) 2) ECN Nafiu Tijjaini Senior Scientific Officer 3) ECN Prof. Eli Jidere Bala Director General/CEO 4) ECREEE Dr. Afolabi Otitoju Consultant 5) EU Frank Okafor Programme manager 6) FME Abdulrahman Bashir 7) FME Iniobong Abiola-Awe (Mrs.) Assistant Director (Dept. of Climate Change) 8) FMLHUD Arc. Simon Abashie Asst. Director 9) FMLHUD Engr. Julius S. Olurinola DD (Elect) 10) FMP Prof. Chinedu O. Nebo Minister of Power 11) FMP Edward Micah M. Elect. Engr. I 12) FMP Engr. T.T. Aliyu Head (TS & IS) 13) FMP Faruk Yusuf Yabo 14) FMP Kalu Ukoha Special Assistant to the Honourable Minister of Power 15) FMP Kunle Olowosejeje 16) FMP Temitope O. Dina Assistant Programme Coordinator FMP-NESP 17) FMST Olusuyi Ekundayo SSO (R/E) 18) FMWR Dibia Pamela (Mrs.) Assistant Director (Dams and Hydropower) 19) FMWR Dr. E.A. Adamu Director Dams and Reservoir Operations 20) FMWR Engr. N.D Madu Dams and Reservoir Operations 21) FMWR Engr. Z. O. Akinjogbin Assistant Director (Dams and Hydropower) 22) ICEED Ewah Eleri Clean Energy Teamleader 23) ICRC Chichi Izuwah Executive Director Engr. 24) ICRC Odili Onu Infrastructure Officer 25) Jatropha Crowners Processors and Maj. Gen. J.A. Omosebi President Exporters Association of Nigeria 26) NABDA Dr. Oby C. Onia Director 27) NABDA Hilili Johnson M. Asst. Chief Scientific Officer 28) NBET Abimbola Joy Ojo Power Planning and Procurement Analyst 29) NBET Bunu Bukar Baba Power Contract and Power Procurement 30) NBET Longe Yesufu Alonge Head Power Contract and Procurement 31) NBS Jimoh Iboh Exe Desk Officer 32) NBS Oyegbade Azeez Raji Head (Energy & Environment Statistics Desk) 33) NERC Imamudden Talba Renewables, Research & Development Head Renewable Energy Desk 34) NERC Yusuf A. O. SM, RE & RD 35) NIAF Adam Molleson 36) NIPC Barbara Great PO 37) NIPC Shaibu Enejo SO 38) NNPC Agube. B.B. Manager Operations / CDM, Renewable Energy Division 39) PTFP Engr. Clement Adeyinka Oke Head Performance monitoring team Fuel to Power ANNEX 5 167

Addresses and Contacts of Relevant Stakeholders for the Study

No. Organisation Name Position 40) PTFP Engr. Reynolds Beks Dagogo-Jack Chairman

41) PTFP Rosemary I. Idem Technical assist. (Coordination Office of the Chairman) 42) REA Ayang Ogbe Director Planning

43) REA Engr. C. Y. Longstar SM, Planning 44) RMRDC Engr. Emmanuel I. Kwaya AD 45) RMRDC I. I. Ismail SSO 46) SON Engr. John O. Achukwu Director Operations 47) SURE-P Dr. Olu Olasode Technical Advisor to Chairman 48) TCN Engr. Olisa M. Okoli GM (HSE) 49) UNDP Etiosa Uyigue 50) UNIDO Alhaji Mustapha Project Manager 51) UNIDO Donald Adgidzi Small Hydro Officer 52) USAID Imeh Okon 53) USAID/WINROCK REEEP / Segun Adaju President/CEO Blue Ocean of Nigeria The Nigerian Energy Support Programme (NESP)

The Nigerian Energy Sector - an Overview with a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification

November, 2014

Implemented by