There is a new renewable energy boom sweeping across Africa and Nigeria is not actively participating in it despite its huge energy needs.
South Africa, Kenya and to a little extent Ghana have all emerged as leaders on renewable energy including solar, wind, hydro and geothermal.
Kenya plans to triple its electricity generation up to about 6000 megawatts in the next five years and more than 90 percent of the planned output is to come from renewable sources.
South Africa (SA) in April named preferred bidders for the fourth round of a series of renewable energy projects that will add about 1,000 megawatts (MW) to its power grid.
About 5 percent of SA energy supply comes from renewables now.
Nigeria has the ingredients for a vibrant solar energy market—including sunny weather and a growing consumer need.
However an obstacle to growth in demand for solar power is the high upfront capital cost of a full solar power system, which deters many SMEs, according to the Economic Intelligence Unit (EIU).
“Partial risk guarantee schemes could encourage more solar developers to enter the market and improve competition and therefore prices, “the EIU said in its most recent report on Nigeria.
“While the cost of solar energy has halved globally, in Nigeria it is twice as expensive as in Kenya because of the weak infrastructure, lack of expertise and an underdeveloped market.”
The EIU also notes that importing solar panels is difficult and a powerful generator lobby infringes the customs certification process, while a lack of expertise in designing and maintaining systems is also problematic.
Kenya currently runs a geothermal power development corporation which invites tenders from private investors bid and is establishing a wind power farm likely to be the largest in Africa with a capacity of 350 megawatts of power under a public-private partnership.
In Ethiopia, expansion of the Aluto-Langano geothermal power plant will increase geothermal generation capacity from the current 7 MW to 70 MW.
The expansion project is being financed by the Ethiopian government (10 million dollars), a 12 million dollar grant from the Government of Japan, and a 13 million dollar loan from the World Bank.
In Nigeria the power regulator NERC has proposed a number of incentives such as a guaranteed market for renewables, simplified licensing process, land access and a feed-in- tariff, to promote investments in renewable energy.
“In order to promote investment in the area of renewable energy, NERC had the feed-in-tariff which is designed to enable producers of renewable energy sell their power to the grid at considerably higher prices than those of conventional means such as gas, hydro or coal powered plants,” Sam Amadi, Chairman of NERC said.
Another incentive proposed by NERC that has been approved and already in effect is the complete import duty waiver for parts required for power generation.
Despite the incentives not much progress has been made in the form of renewable energy output in Nigeria
Another major problem for renewable energy growth in Nigeria is that financial institutions need technical assistance to help them appraise credit requests from solar companies, which they currently lack.
Greater credit flows would substantially boost the solar technology market, according to stakeholders.
Nigeria is a not a major player in renewables even as the industry continues to become more important globally.
The share of non-fossil fuels as a percentage of global energy consumption reached an all-time high of almost 14 percent, with the shares of hydro (6.8%), nuclear (4.4%) and renewable power (2.5%) all increasing, according to data from the most recent BP Statistical Review of World Energy report released on June, 2015.
“The relative resilience of non-fossil fuels meant that they provided a bigger contribution (67 Mtoe) to global energy growth than fossil fuels (55 Mtoe) for the first time for over 20 years, other than when the world economy has been in recession,” said BP’s Group chief economist Spencer Dale.