Nigeria’s targeted electricity generation and supply by 2025: 25 GW
Nigeria’s power renaissanceSeptember 14, 2021
Nigeria is endowed with a wealth of oil, gas, hydro and solar resources, exhibiting the largest economy in sub-Saharan Africa. However, limitations in its power sector greatly constrain its potential growth. Gaps in the sector are being addressed via new initiatives such as the National Mass Metering Program (NMMP).
With 25 active power plants and five hydropower dams, Nigeria has an installed power generation capacity of around 12.5 GW. Yet on most days, less than 5.5 GW of electricity is dispatched and reaches the end user. This is clearly insufficient for a country that counts more than 200 million inhabitants.
Low electrification rates have given way to 43% of Nigerians lacking energy access, and those who do face constant power cuts that represent a yearly burden of more than USD 26 billion – equivalent to around 2% of the country’s GDP. Nigeria’ electricity access deficit leads the ranks worldwide.
Over recent years the country’s power sector has improved thanks to its partial privatisation. But the sector still faces many challenges: the lack of policy enforcement, regulatory uncertainty, gas supply shortages, transmission system constraints (i.e. ATC&C losses), non-reflective tariffs and a culture of non-payment. These have all kept the sector from reaching operational efficiency and commercial viability.
Given this huge potential and numerous setbacks, the Ministry of Power is dedicating efforts to rolling out a true “power revolution” in the country, aiming to harness efficiencies, spur sustainability and power the nation forward.
POWER RENAISSANCE: In August 2020, the government announced it had secured USD 6.15 billion for infrastructural development projects across the entire power value chain, among them the USD 2.3-billion Presidential Power Initiative. These will enable the country to achieve 25 GW of electricity generation and supply by 2025.
The government is also confident the country will reach a 75% electrification rate by that same year, as it addresses the major hurdles the sector faces. In addition, the Ministry of Power has made efforts to improve the distribution of electricity by supporting Nigeria’s 11 private DisCos. In October 2020, the NMMP was rolled out to eradicate estimate billing, cushion the impact of the Service Reflective Tariff on consumers and bridge Nigeria’s metering gap.
From here, the Nigerian Electricity Regulatory Commission (NERC) has appointed 99 different meter manufacturers, importers, vendors and installers to help DisCos cater prepaid meters to around 6.5 million customers. Phase 0 of the NMMP has already provided 750,000 metres, which put Nigeria at a total of 1,092,399 metered clients. Moreover, Phase 1 is set to further boost metering rates by delivering up to 4 million more.
Another pioneering reform has been the historical upwards review of electricity tariffs. In light of a looming recession, NERC issued an order to hike electricity prices starting in January 2021, aiming to achieve a constant, stable and cost-reflective electricity supply nationwide. As a result, Nigerians have experienced an average 75% increase regardless of their band.
This move was deemed necessary due to illiquidity issues strangling DisCos, which has had a domino effect across the power industry. “DisCos are unable to reinvest in improving their distribution networks because electricity prices are too low to obtain margins, and also due to the lack of metering systems,” Chiedu Ugbo, managing director and CEO of Niger Delta Power Holding Company, told The Energy Year. “This is bound to change thanks to the implementation of more cost-reflective tariffs and the NMMP rollout.”
Lastly, exploiting gas-to-power has become a priority for the government, which aims to engender a gas-based economy by 2030. However, there are 124 power generation licences held by investors who seem to have taken a “watch and wait” approach until the business environment is more conducive.
In addition, there are roughly a dozen idle power plants, many of which are nearly finalised. Industry heads are calling for their re-activation through the supply of natural gas. The construction of the AKK pipeline and the surge of mini-LNG and CNG are potential solutions to revive many of these power stations, especially in the north, thereby triggering economic development.
ALTERNATIVE SOLUTIONS: Despite the upgrade and development of Nigeria’s conventional power network, it still presents numerous limitations. The government is now catalysing the off-grid market to increase electricity access to underserved locations. For example, the Rural Electrification Agency (REA) is driving the Solar Power Naija programme, which aims to install 5 million solar-based connections, grant energy access to 25 million Nigerians and create 250,000 jobs.
The first tranche of this scheme was rolled out in April 2021, with A-Solar Systems and Niger Delta Power Holding Company providing 100,000 solar system installations in Jigawa state. This exemplifies the eagerness to exploit Nigeria’s solar potential, which has been estimated at 427 GW. With only 28 MW of installed solar capacity, the country intends to establish 10,000 solar mini-grids by 2023 and reach 500 MW of installed capacity by 2025.
“Renewables, specifically solar power systems, provide a veritable means to increase energy access due to the low-cost nature of the setup, as well as their flexibility as compared to grid extension,” Nigerian Minister of Power H.E. Engr. Sale Mamman told The Energy Year.
Hydropower is also set to acquire more importance in years to come. As of today, Nigeria produces 2.06 GW from hydropower, but it could potentially generate more than 14 GW. In this regard, the government is now developing the 3.05-GW Mambilla Hydroelectric Plant, to be completed in 2025. Likewise, mini-hydro is also becoming a tangible solution, with the REA looking at how to incorporate this model into the agricultural space.
Other renewable energy projects involve the recently completed 10-MW wind farm in Katsina State. This all feeds into Nigeria’s Renewable Energy Master Plan, which is set to increase the supply of clean electricity, reaching 25% of the mix by 2025 and 30% by 2030.