The Federal Government has announced plans to secure a total investment of $122.2bn to diversify the country’s energy sources, reduce dependence on the national grid, and enhance the overall stability and sustainability of the nation’s energy infrastructure.
The amount to be raised between 2024 and 2045, representing 21 years, is to ensure energy diversification from the current electricity sources of hydropower and gas-fired thermal plants.
It aims to diversify energy sources by incorporating hydrogen, solar photovoltaic technology, biomass, wind, gas projects combined with carbon capture, utilisation, and storage technologies, nuclear, solar (concentrated solar power), and bioenergy.
This investment proposal was disclosed in the newly released 2024 Nigeria Integrated Resource Plan and the National Integrated Electricity Policy obtained exclusively on Sunday.
It also explained that $192m would be incurred over five years between 2024 to 2028 to boost transmission capacity nationwide.
The new policy documents, awaiting approval from the Federal Executive Council, seek to create a holistic framework for the implementation of the Electricity Act, address transitional challenges, integrate with other energy policies, and detail renewable energy strategies, amongst others.
Currently, Nigeria’s electricity comes mainly from gas-fired and hydroelectric power plants. Approximately 80 per cent of on-grid electricity in the country is generated from gas-fired plants, with the remainder predominantly generated from hydroelectric facilities.
Although the country’s installed electricity generation capacity is about 13,000 megawatts, the available capacity supplied is significantly lower, averaging about 4,200MW.
The significant gap between nominal capacity and capacity connected to the grid is due to various operational inefficiencies, maintenance issues, and gas supply constraints, primarily precipitated by financial constraints.
However, the document noted that the new policy will promote the utilisation of more renewable energy sources to reflect a more environmentally sustainable energy mix for electricity generation in the country.
The report said the government aims to provide a national grid that will deliver security of supply and reduction in loss of load expectation starting at 100 hours/year in 2024 and decreasing to a final value of 24 hours/year in 2035, plus a requirement that spinning reserves be set at the value of 900MW.
The report read, “The annual investment costs required for the NIRP scenario to 2045 shows that investments are expected to pick up in the early years, rising to $2bn by 2030. From then onwards, they stay within a range of $4bn to $8bn per year until 2040.
“Most of the investment is required in the later years, increasing to $14bn-$15bn in 2044 and 2045. By 2045, a total of $122bn will be required to diversify energy sources to the national grid.”
A breakdown showed that the largest expenditure would be allocated to solar photovoltaic technology, with a substantial investment of $56bn, followed by hydroelectric power projects, which will receive $39bn, but didn’t include its source of financing.
Additionally, $16bn will be dedicated to natural gas projects, while $6bn will be invested in gas projects combined with carbon capture, utilisation, and storage technologies to mitigate carbon emissions and $3bn for energy storage initiatives.
The plan aims to reach a total of 194 gigawatts installed capacity, consisting of 111 gigawatts inclusive of storage by 2045 from 11 gigawatts in 2024 and 83 gigawatts from renewable energy sources.
On improving the transmission network, investment costs included in the model are minimal (~$1bn), but this did not reflect the critical role of transmission, which shapes the least cost-generation investments.
It said the national transmission network remains heavily constrained by outdated equipment and a relatively high technical loss rate of seven to nine per cent.
“It has been assumed that these network costs, which total $192m, will be incurred over five years between 2024 to 2028, which is when the projects will reach completion,” the report stated.
In the National Integrated Electricity Policy document, it was revealed that the targets for achieving universal electrification and phasing out self-generation by 2030 are no longer feasible and have been extended to 2035.
This adjustment comes in light of the challenges faced in the distribution sector, which has not seen the same progress as the generation sub-sector.
The report highlights that despite improvements in power generation, the distribution network continues to struggle, leading to a lack of creditworthiness.
It added that delaying the goal by five years could result in an additional $29bn in costs and an increase of 90 million metric tonnes of CO2 emissions.
