By Bonface Orucho, bird story agency
Nigeria’s new energy bill, which updates the Electric Power Sector Reform Act of 2005, crucially encourages greater private sector involvement in power generation.
Over 70% of Nigeria’s current energy originates from non-renewable sources, and nearly 100 million citizens lack access to power. The new law promises to counter both trends.
According to Ivie Ehanmo, an energy law expert, the law consolidates all laws relating to energy supply, streamlining the industry and promoting the growth of a competitive power market.
“Under a competitive electricity market, customers are able to exercise control over the choice of their electricity provider and their respective electricity consumption patterns,” she explained.
By aligning consumption with price signals, the law also aims to promote demand response mechanisms and drive efficiency, emulating the ideal market scenario.
Private-sector participation in clean energy generation has been identified as a key driver for African countries to meet their Nationally Determined Commitments, and the law is seen as the answer to unlocking private-sector investments in electricity generation in Nigeria.
According to the African Development Bank’s Africa Energy Outlook 2023, the private sector needs to generate investments at an annual growth rate of over 36% until 2030 to bridge Africa’s climate financing gap of approximately US$213.4 billion annually.
Sustainable Energy for All, which helps the UN track its sustainable development goals (SDGs), Nigeria will require US$410 billion in private sector investment between 2021 and 2060 to achieve its net-zero targets by 2060.
The new legislation grants states, companies, and individuals the authority to generate electricity, subject to certain conditions and power limits.
A similar bill introduced in South Africa in 2022 has transformed the country’s energy investment pipeline. According to Ferial Haffajee, writing in the country’s Daily Maverick, an amendment to the energy regulation act has resulted in some 100 new energy projects representing 10,000 MW of new electricity generation and over R200 billion (just over US10 billion) in private investment.
With the new bill and in a move to accelerate investments into renewables, power generation license holders in Nigeria are obligated to fulfil renewable energy generation obligations as prescribed by the regulating authority, NERC.
Those obligations require that companies engaged in electricity generation either exclusively generate power from renewable sources, purchase renewable energy, or demonstrate their commitment to transitioning to renewables through other means.
In addition to the legislative changes, Nigeria is witnessing a surge in private financing tools that support renewable energy generation.
Notable among these efforts is the collaboration between Global Energy for People and Planet (GEAPP) and Chapel Hill Denham (CHD), which has established the Energy Transition & Access Facility for Africa.
This dedicated fund of US$50 million aims to support distributed renewable energy projects in Nigeria. CHD has set an ambitious goal of mobilizing US$1 billion for clean energy projects in Nigeria and Africa by 2030.
According to the Renewable Energy Roadmap, Nigeria seeks to have about 60% of the country’s energy demand supplied from renewable sources by 2060.
This story was originally published by bird story agency