Promoting massive renewable energy by benjamin

Promoting Massive RE projects towards achieving SD in Nigeria 1

Promoting Massive Renewable Energy (RE) Projects

towards achieving Sustainable Development in Nigeria

By

Taiwo Benjamin

Master’s Student in Sustainable Energy

Carleton University, Canada


Abstract

This paper evaluates the possibilities of attracting private investors into renewable energy

industry to foster massive RE projects and thereby contribute to the country’s energy mix within

a short period of time. The contribution of renewable electricity to the national grid can begin to

be realizable from one month to three years depending on the type of RE technology and the

capacity in context. For example, the average lead time for solar PV project is usually in the range

of one month to three years at most (Independent Electricity System Operator, 2015) . This

indicates how quickly the RE can have immense impact on the country’s energy sector. A number

of RE resources in the country and the major challenges for their penetration into the market were

examined. In the research, it was discovered that the Federal Government of Nigeria has a good

policy in place and that the country has enormous RE resources that can be tapped into for

electricity. However, there seems to be no effective policy tools to drive the implementation of the

intention of the government in this regard. The purpose of this research therefore is to evaluate the

various successful RE policy tools used in other countries and recommend the one that could be

most viable in the Nigerian context. Three policy tools were examined: Feed-in-tariff, renewable

portfolio standard (RPS) and renewable energy independent power producer procurement

programme (REIPPPP). REIPPPP is the reviewed version of the feed-in tariff program such that

it encourages competitive bidders of private power producers to offer lower cost-based prices for

the renewable energy they supply to the grid. Meanwhile, the feed-in tariff does not require any

competition than for the government to pay a regulated cost price based on the cost of generation

of each technology to eligible renewable electricity generators for the renewable electricity they

supply to the grid. The REIPPPP proves to be the best effective tool being “the most successful

public-private partnership in Africa in the last 20 years” (Anton Eberhard, Joel Kolker, James


Leigland, 2014). The success of the policy instrument was evaluated based on three criteria; the

programme management factor by attracting high number of private investors and achieving lower

tariff for RE technologies, the programme design factor by boosting renewable electricity

contribution to the national grid within four years and programme market factor by increasing jobs

creation and tremendous economy growth. The parallel implication to Nigeria context when such

policy approach is adopted was also considered. The research suggests that the rising pressing

demand for electricity in the country will drive the success of the policy tool even beyond South

African success story.

1.0 Introduction

Energy is the bedrock for the socio-economic and overall development of every nation.

According to the Royal Dutch Shell CEO and 2011 Energy Community Leader Peter Voser,


“Without heat, light, and power, you cannot build or run the factories and cities that provide goods,

jobs and homes, nor enjoy the amenities that make life more comfortable and enjoyable” (World

Economic Forum, 2012 page 2). In other words, the quantity of energy consumption in any country

is proportional to the economic activity and development of such country. Energy drives the

economic sectors of any country such as the industrial, transportation, residential, commercial

sectors. Furthermore, the three main drivers for energy demand in any society are population,

technology and economic activity (International Institute for Applied Systems Analysis, 2015).

Population happens to be the controlling factor as it is the agent of change that determines the level

of demand from both technology and economic activity. This can be related directly to the

demographic trend and human development index obtainable in such society. As a developing

country, Nigeria is the seventh-most populous country in the world with approximately 177 million

people; it produces a total electrical power supply of 3,655.12MWH/H which is insufficient to

meet its social and economic needs of approximately 12,800MW as at July 8th, 2015 (Federal

Ministry of Power, 2015). However, in a bid to attain a reliable, quality power supply, Nigeria

handed over the electricity industry (distribution and generation companies) to private

organizations through the implementation of deregulation policy (Atakulu, 2014). Currently,

Nigeria generates its electrical power supply from three major sources, which are natural gas

(80%), coal (2%) and hydro (18%) (Atakulu, 2014). By the year 2020, the power supply sources

projection in the country due to the recent reform is estimated to be 70% Natural gas, 20% Hydro,

5% coal and 5% renewables (Atakulu, 2014), showing incessant dependence on fossil fuels.

The ultimate goal is to replace fossil fuel with renewable energy due to greenhouse gas

emissions that accompanies fossil fuel’s exploration, production and distribution. These emissions

include nitrogen oxides, sulfur dioxides, volatile organic compounds, ozone, particulate matter,


mercury, and carbon monoxide, which cause air pollution leading to climate change (Z. Smith

and K. Taylor, 2008). The impact of climate change is happening now around the world and having

real consequences on people’s lives. The environmental concern is that it could lead to tipping

points meaning that the continuous dependence on fossil fuels could cause permanent destruction

to the natural world, such as mass extinction of species, including humans. A good example is the

recent drop in oil price from $100 to $67.31 per barrel (The No.1 Oil Price Source, 2014) as at

December 4, 2014 which many suggest it is a blip on a reflection of many moving away from oil.

In fact, Nigeria has adjusted its oil benchmark twice in less than two weeks in reaction to this

change in oil price from $78 to $73 and to $65 per barrel (The Premium Times, Nigeria, 2014)

having a negative impact on the country’s economy. This may mark the tipping point with oil.

In addition, an increase in demand of fossil fuels will mean an increase in gas flaring and

oil spillage. According to the United States Energy Information Administration report, (2013)

“Nigeria flares the second largest natural gas in the world, following Russia” which accounts for

ten percent of the total amount flared globally. As a result, gas flaring and oil spills have caused

terrific environmental pollution to Niger-delta (the oil and gas region of Nigeria). The pollution

has damaged air, soil, and water, leading to losses in arable land and decreases in fish stocks (U.S.

Energy Information Administration, 2013).

However, despite the fossil fuel energy account for 80% of Nigeria energy mix, it is still

unrealistic at this point to envision a complete replacement of fossil fuel and meet the energy

demand of the country. Therefore, promoting renewable energy projects in the country will

complement the energy mix and address the rural area energy problem of the country. This paper

evaluates the various renewable energy potential in Nigeria (which are solar, wind, Hydropower),

the opportunities and challenges of their diffusion into the Nigerian market. Also, various effective


policies used in other countries were considered but REIPPPP used in South Africa, the most

developed African country was observed to be the best because of the success within a very short

period. Furthermore, lessons and benefits of the adoption were also discussed. Recommendation

based on this analysis is suggested to be considered in the Nigerian context for developing

sustainably.

2.0 Renewable Energy Resources in Nigeria

Renewable energy resources can be classified as a subset of sustainable energy because

they provide energy that meets the needs of the present without compromising the ability of future

generation to meet their own needs. Examples of renewable energy are solar energy, wind energy,

biomass, geothermal energy, hydropower, and tidal energy. Renewable energy resources exist in

many countries, while other energy sources, like oil and coal are concentrated in a limited number

of countries. Also, renewable energy projects can either be explored as a large scale production

or small scale production. Renewable energy technologies are suited for both developed and

http://en.wikipedia.org/wiki/Renewable_energy

http://en.wikipedia.org/wiki/Solar_energy

http://en.wikipedia.org/wiki/Wind_energy

http://en.wikipedia.org/wiki/Geothermal_energy


developing countries, and urban or rural areas. RE can substitute fossil fuels in four distinct areas:

electricity generation, hot water/space heating, motor fuels, and rural (off-grid) energy services

(Renewable Energy Policy Network for the 21st Century, 2010). This paper focuses on RE for

electricity generation. Nigeria has large reserves of RE resources ranging from biomass to solar,

wind and hydropower (Table 1) (Abubakar S. Sambo, 2009). If utilized, these reserves have the

potential to provide the solution to the erratic electric power supply confronted by the country. The

utilization and potential of each RE technology will be discussed subsequently to establish the

viability of RE resources in Nigeria.

(Source: Sambo 2009 ECN)

http://en.wikipedia.org/wiki/Electricity_generation

http://en.wikipedia.org/wiki/Solar_hot_water

http://en.wikipedia.org/wiki/Space_heating

http://en.wikipedia.org/wiki/Motor_fuel

http://en.wikipedia.org/wiki/Stand-alone_power_system


2.1 Solar Energy

Solar energy is a technology with the concept of capturing heat energy from sunshine. It is

utilized through any one of the following three methods: solar thermal systems, photovoltaic (PV)

and central solar power systems (International Energy Agency, 2014). The solar thermal system

is mostly used in buildings to capture solar energy actively or passively. The passive solar thermal

heating involves strategic placement of windows in buildings to capture optimum solar energy and

transmit daylight (Z. Smith and K. Taylor, 2008), while active solar heating uses collectors to

capture solar energy. The heat generated from this source is usually transmitted to a liquid medium.

An example of such a system is hot water heaters (Z. Smith and K. Taylor, 2008).

The second method of utilizing solar energy is through photovoltaic (PV). A PV system

involves the conversion of solar energy directly into electricity with the use of semiconducting

materials that exhibit photovoltaic effects (Z. Smith and K. Taylor, 2008). The energy generated

can be used for various types of applications. PV systems do not require any moving parts or liquid

or environmental emission during operation. The International Energy Agency (2014) reported

that the global PV market has grown to at least 36.9GW from 29GW in 2012. Asia leads with over

59% of the global PV market. The top 10 countries are China, Japan, India, Australia (Asia-Pacific

countries) and Germany, Italy, United Kingdom, Greece and Romania (European countries) and

one country in the Americas region (USA) (International Energy Agency, 2014).

The third method of utilizing solar energy is the Central Solar Power (CSP) system. This

method involves the use of lenses or mirrors and tracking systems to focus an amount area of

sunlight onto a small beam to generate steam, which is then used to run turbo generators (Z. Smith

and K. Taylor, 2008). CSP can involve large scale thermal storage. The 377MW Ivanpah Solar

Electric Generating System (ISEGS) installation is the largest concentrated solar power plant in

http://en.wikipedia.org/wiki/Ivanpah_Solar_Power_Facility


the world, located in the Mojave Desert of California (Ivanpah Solar Electric Generating System,

2014). These three technologies are already being used around the world to meet energy needs;

therefore, it is a viable option for most countries with abundant sun lights.

Nigeria lies on the equator, with abundant sunshine all year round. There are two main

seasons in the country: the dry season lasting from October to March, and the rainy season lasting

from April to October (Oji et al, 2012). In the north, it is hot and dry and the rainy season extends

between April and September. In the south, it is hot and wet and the rainy season extends between

March and December. From December to March there is a long dry season (Oji et al, 2012).. These

seasons makes Nigeria suitable for solar power projects. Nigeria receives an average annual total

solar radiation that varies from 3.5 kW m−2 day−1 in the coastal latitude to 7 kW m−2 day−1 along

the semi-arid areas in the far North and average sunshine hours estimated at 6 hours per day

(Oyedepo O. S., 2012). The implication is that if solar collectors or modules were used to cover

1% of Nigeria’s land area of 923,773 km2 with average solar radiation level of about 5.5 kWh m−2

day−1, it is estimated to generate 1850 × 103 GWh of solar electricity per year. This is over one

hundred times the current grid electricity consumption level in the country which shows how

viable the technology could be (Oyedepo O. S., 2012).

Furthermore, solar power can be used off-grid (without being connected to the main or

national electrical grid) for rural electrification. Likewise, the power generated from the

technology can be connected to the national grid depending on the size and design of the power

plant. Moreover, solar power on a large scale production is distinct because it requires less land

compared to other energy sources such as biomass, large-scale hydro (dams) and coal technology

to produce the same amount of energy (Z. Smith and K. Taylor, 2008).

http://en.wikipedia.org/wiki/Mojave_Desert

http://en.wikipedia.org/wiki/Electrical_grid


2.2 Wind Energy

Wind energy uses wind turbines to produce electrical energy. There are two types of wind

turbines: the horizontal axis wind turbines (HAWT) and the vertical axis wind turbine (VAWT).

The HAWT are parallel to a propellant while VAWT are like eggbeaters. The HAWT are

commonly used commercially compare to VAWT because they are more efficient (Z. Smith and

K. Taylor, 2008). According to the World Wind Energy Association (WWEA), the world wind

capacity has reached 336,327MW with 17.6GW added in the first half of the year 2014 (The

World Wind Energy Association , 2014). This result showed that the wind energy production was

around 4% of total worldwide electricity usage which is growing rapidly (The World Wind Energy

Association , 2014). Asia, the new leader that has the most wind energy installed capacity, had

36.9% of the globally installed capacity overtaking Europe the former leader. China in East Asia

is the largest single wind market, adding 7.1 GW in six months; this is significantly more than the

same period of the previous year, when 5.5GW were erected. China accounted for 41 % of the

world market for new wind turbines. Also, over 83 countries around the world use wind power to

supply their electricity grid (WWEA, 2014). The WWEA (2014) predicted 360GW expectation by

December, 2014. This shows the capability of wind energy contribution to the world’s energy.

Research carried out by Agbetubi, Akinbullre, Abdulkareem and Awosope (2012) showed

the availability of energy from wind and its potential in Nigeria (Baba M. T et al., 2014). In table

2 below, the approximated greatest energy realistic for a 25m diameter wind turbine with an

efficiency of 30% at 25m height was found to be around 97MWh/year for Sokoto, 50 MWh/year

for Kano, 25.7 MWh/year for Lagos and 24.5 MWh/year for Port Harcourt (Oyedepo, 2014).

These four Nigerian stations mentioned are an extract of the twenty-two stations highlighted in

Table 2. The implication is that Nigeria has a vast opportunity for utilizing wind for electricity


generation. This is especially true in the northern part of the country, the mountainous parts of the

central and eastern states, and also the offshore areas, where wind is abundantly available

throughout the year (Oyedepo, 2014). Up to now, the wind energy resources in Nigeria are yet to

be harnessed.

Table 2. Wind Energy Density Estimations At 25m Height

S/N Station Mean wind

speed at

25m level

Monthlymean

wind Energy

Yearly wind

Energy

Yearly Wind energy

from a wind Energy

turbine in KWh/year

m/s kWh kWh 10m

Blade

Diamete

r

25m Blade

Diameter

1 Benin City 2.135 2.32 27.86 2,187.81 13,673.78

2 Calabar 1.702 1.12 13.42 1,053.69 6,587.53

3 Enugu 3.372 7.83 93.91 7,375.75 46,097.96

4 Ibadan 2.620 4.15 49.78 3,.909.79 24,436.19

5 Ilorin 2.078 1.23 14.73 1,157.06 7,230.57

6 Jos 4.430 16.05 192.64 15,129.60 94,559.98

7 Kaduna 3.605 9.91 188.88 9,36.81 58,355.08

8. Kano 3.516 8.57 102.86 8,078.61 50,491.28

9 Lagos (Ikeja) 2.671 4.36 52.32 4,099.78 25,682.52

10 Lokoja 2.235 2.60 31.21 ,451.23 15,320.17

11 Maiduguri 3.486 8.42 101.01 7,933.61 49,583.17

12 Minna 1.589 1.05 12.60 989.60 6,185.01

13 Makurdi 2.689 4.44 53.27 4,183.51 26,148.85

14 Nguru 4.259 14.48 173.74 13,645.19 85,284.42

15 Oshogbo 1.625 1.07 12.81 1,006.60 6,288.09

16 P.H. 2.640 4.17 49.98 3,925.48 24,533.88

17 Potiskum 3.636 9.44 113.25 8,894.35 55,591.46

18 Sokoto 4.476 16.47 197.68 15,525.75 97,035.94

19 Warri 2.027 2.02 24.20 1,.900.66 11,879.15


20 Yelwa 3.360 7.76 93.13 7,314.88 45,714.59

21 Yola 1.824 1.45 17.34 1,361.88 8,511.75

22 Zaria 2.891 5.32 63.88 5,017,26 31,357.02

Total 134.23 1,680.5 120,078.9 790,548.39

(Source: Agbetuyi et al, 2012 page 598)

Wind energy produces almost no greenhouse gas emission. The process of production is

low-energy intensive and is the most cost effective of all RE technologies which makes it to be the

most qualified to compete with the conventional fossil fuel dominated market (Z. Smith and K.

Taylor, 2008). However, despite its economic viability, the initial investment is still very high

compared to fossil-fueled generators. Also, Wind turbines cause noise pollution generated by the

rotor blades, deaths of birds and bats, and aesthetic impacts for people living close to them (Wind

Energy Development Programmatic EIS, 2015). These are mostly the driver for its social

opposition called NIMBY (“Not in my backyard”). NIMBY is the opposition by area residents to

a proposal for a new development in their geographical location because it is close to them.

Nevertheless, the wind energy capacity is growing all around the world with technologies designed

to overcome its limitations.

2.3 Hydropower

Hydropower is derived from the energy of falling or running water, usually a river. The

technology converts the potential energy of water to mechanical work (shaft rotation) and

eventually to electrical energy through the coupling of the rotating shaft to a suitable generator.

Hydropower can either be produced on a large or small scale. For large scale production, an

impoundment dam is built on a river which channels water into a reservoir (Z. Smith and K.

Taylor, 2008). The water is then directed to the turbine installed in the dam, which is connected to

electric generators. Such that as the water spins the turbine, the generators produces electric


energy. While the small scale production (usually production less than 50MW electricity) does not

require structures like a dam, it utilizes the flow of water to spin turbines and generate electricity

(Z. Smith and K. Taylor, 2008).

Conversely, large scale hydropower plants have a longer plant life span compared to other

RE technologies and lower operating cost (Z. Smith and K. Taylor, 2008) while the small scale

technology is more viable for low-energy intensity. Small scale technologies are less expensive to

construct which makes it cost effective for countries that cannot afford large scale types. They can

also be used in remote areas that lack connection to the national grid (Z. Smith and K. Taylor,

2008).

Hydropower is produced in at least 150 countries and accounts for 16% of the global

electricity generation (Worldwatch Institute, 2014). In 2010, China was the largest

hydroelectricity producer, with 721 terawatt-hours of production. In Nigeria, the current

hydropower installed capacity is 1930MW (Sambo, 2009). Meanwhile, according to the data in

Table 1, a large scale hydropower reserve was estimated as 11,250MW and small scale as

3,500MW. These reserves when explored will contribute substantial amount of electricity to the

country’s current electric power capacity. However, despite the growing capacity of hydropower

around the world, there are still some limitations that need to be surmounted. Dams installed on

the river intercept the flow of water and harm ecosystem. Also, large dams and reservoirs often

displace people and wildlife (Worldwatch Institute, 2014). An example is the three Gorges dam

that flooded and displaced some 1.3million people (Handwerk, 2006).

After considering the various renewable energy resources in Nigeria, it is obvious that

government intervention is essential towards promoting RE diffusion into the Nigerian market. In


summary, the hitches for RE technologies penetration mentioned above revolve around financial

and social barriers that can be addressed by strategic well-structured public policies. The next part

of the research essay will evaluate policies that can promote renewable energy penetration in

Nigeria.

3.0 Policy Considerations

Renewable energy sustenance and growth depends mainly on government intervention

through a variety of policies to stimulate the market penetration of feasible technologies. These

policies can be classified into market-based policies and non-market based policies (Z. Smith and

K. Taylor, 2008). Market-based policies are policies that use markets, price, and

other economic variables to provide incentives for polluters to reduce or eliminate negative

environmental externalities (Z. Smith and K. Taylor, 2008). Examples are green energy market

development, centralized bidding system, green certificate and net metering. Non-market based

policies include feed-in tariffs (FIT), renewable energy portfolio standards, financial and tax

incentives (Z. Smith and K. Taylor, 2008).

In 2003, the Nigerian Federal Government approved the National Energy Policy (NEP) to

articulate the sustainable exploitation and utilization of all energy resources. After which they

came up with the Renewable Energy Master Plan (REMP) in 2006 with the following objectives:

expanding access to energy services to Nigerians, raising the standard of living (especially in the

rural areas), stimulating economic growth, employment and empowerment, increasing the scope

http://en.wikipedia.org/wiki/Market_(economics)

http://en.wikipedia.org/wiki/Price

http://en.wikipedia.org/wiki/Economy

http://en.wikipedia.org/wiki/Economic_incentive

http://en.wikipedia.org/wiki/Externality


and quality of rural services, including, schools, health, services, water supply, information,

entertainment and stemming the migration to urban areas, reducing environmental degradation and

health risks, particularly to vulnerable groups such as women and children (Sambo, 2009). From

2003 to date there has been no substantial progress made in this regard because the contribution

of RE to the total energy mix is still small. There has not been any effective policy tool to drive

the change anticipated by the Federal Government (Oyedepo, 2012). The following section

explores some policy instruments that can aid the realization of renewable energy technologies

penetration in Nigeria by drawing lessons from best practices all around countries in the world.

3.1 A Feed-in tariff (FIT) is an energy supply policy focused on supporting the development of

new renewable energy projects by offering long-term purchase agreements for the sale of RE

electricity (Couture et al, 2010). It focuses on three provisions which are guaranteed access to the

grid: stable, long-term purchase agreements (typically, 15-20 years) and payment levels based on

the costs of RE generation (Couture et al, 2010). Feed-in Tariff is the most widely used policy in

the world for promoting renewable energy technologies. Over fifty countries use this policy and

have made tremendous success overtime particularly with solar power technology. In countries

including those in the European Union (EU), FIT policies have led to the deployment of more than

15,000 MW of solar photovoltaic (PV) power between year 2000 and the end of 2009 (Couture et

al, 2010). In Germany, as a result of FIT policy, an approximate 24,700MW photovoltaic power

has been installed as at the end of year 2011 which accounted for approximately 3% of their

national electricity supply (Fulton & Capalino, 2012). The main benefit of FIT is that it drives

market growth by providing developers long-term purchase agreements for the sale of electricity

generated from RE sources which in turn lead to sustainable job creation, increased economic and

export market opportunities, and the expansion of innovative RE technologies. However, one


major consideration to note in FIT implementation is the quality of the administrative team because

they must set prices accurately and carry out periodic review. Their decisions directly affect the

investors’ interest and confidence in the program (Erwin, 2011). The challenge is that if the price

is set too high, it can enhance inefficient entry, while if the price is too low, it can attract

insufficient capacity. Therefore, the price control has to be closely monitored.

3.2 Renewable Portfolio Standard (RPS): RPS mandates that utilities operating within a state or

country must provide a designated amount or percentage of power from renewable sources as a

portion of their overall provision of electricity (Rabe, 2006). The process is that certified

renewable energy generators earn certificates for every unit of electricity they produce and can sell

these along with their electricity to supply companies. Supply companies then pass the certificates

to some form of regulatory body to demonstrate their compliance with their regulatory obligations.

RPS policy is widely used by several countries such as Australia, Britain, Italy, Poland, Sweden,

Belgium, Chile, the district of Columbia and as well as 22 states of 50 states of United States of

America (US) (Rabe, 2006). RPS offers great opportunities such as economic development

benefits which have been seen growing in many U. S. as significant job and investment

opportunities arises from industries expanding their base of renewable energy. Nonetheless, one

of the barriers observed with the policy is that it does not favor one source over another which

removes the level playing field originally intended in the policy as some renewable energy sources

are more expensive than another (Rabe, 2006). Consequently, one could envision a transformation

whereby a well-intended effort to alter RPSs to cater for differential treatment for varied sources

may lead to the complexity of the policy tool and increase the cost of implementation (Rabe,

2006). However, RPS is still a feasible option to consider in promoting renewable energy

technologies in Nigeria as the benefits outweigh the challenges.

http://en.wikipedia.org/wiki/Units_of_measurement


3.3 Renewable Energy Independent Power Producer Procurement Programme (REIPPPP):

Finally, the REIPPPP policy tool employed by South Africa has been described as “the most

successful public-private partnership in Africa in the last 20 years” (Anton Eberhard, Joel Kolker,

James Leigland, 2014). REIPPPP is the improvement on the renewable energy feed-in-tariff

embarked upon by the South African Government in 2009. The REIPPPP mechanism encourages

competitive bidders to offer lower prices but prevent low-balling while providing enough

incentives for market entry by renewable energy suppliers (Eberhard et al, 2014). Low-balling are

bids with unrealistic low tariff offers. The grid-connected renewable energy independent projects

are guaranteed long-term purchase agreements at the awarded tariff rate. In fact, in the event of

transmission limitations, Eskom, a publicly owned national power utility, is responsible to pay the

contractors the supposed amount even when no electricity is supplied into the grid. This actually

takes care of any tendency for the contractor to rush out of the business (Eberhard et al, 2014).

The two-year period (2009 – 2011) that REFIT was introduced by the Federal Government did not

experience any single megawatt of power addition or the implementation of a practical

procurement process and even the required contracts were never negotiated or signed (Eberhard

et al, 2014). Meanwhile, within two years of introducing REIPPPP, a wide variety of domestic and

international project developers, sponsors and equity shareholders had shown interest. Seventy-

nine renewable energy projects from independent power producers (IPPs) have been approved by

the South African Department of Energy as part of the REIPPPP totaling 5,243MW (Joemat-

Patterson, 2015) . Meanwhile, a total of 4,322MW have been accomplished within four years

(Joemat-Patterson, 2015). This is equivalent to approximately 10% of the South African electrical

power supply of 240, 300GWh/annum (Department of Energy Republic of South Africa, 2009).


The advantages and challenges of REIPPPP can be classified into three categories:

programme management factors, programme design factors and market factors. The programme

management factor focuses on the management team capacity and establishing a formal institution

for continuity. The proper administration and avoidance of corruption were essential values of the

management team that were observed to drive the interest of private business and investors to the

programme. Also, due to the competition among bidders of REIPPPP, after the first two rounds

the tariff dropped significantly (Chaponda et al, 2014). REIPPPP offers rational profit to

developers using the provision part in REFIT-like. Also, after the three successful rounds of the

bidding process for the programme, the challenge of sustainability poses the need to build

structural capability within the institution (Eberhard et al, 2014).

For the program design factors, in the first round bid, the size of the local renewable energy

market was formerly overestimated which resulted in a low number of bidders. Afterward, the size

was reasonably adjusted and resulted in the increase of bidders in the second and third round.

However, in comparison to other countries such as Brazil, the REIPPPP bid cost is high and serves

as a major barrier for small and medium scale entrepreneurs, although the profit margin that exists

between bid costs and project values was not tiny (Eberhard et al, 2014).

In terms of program market factors, REIPPPP has attracted considerable attention from the

international private sector. Also, the long term projects that emanate from the program added to

RSA capital market. In total, REIPPPP has attracted the injection of $14 billion of investment into

South Africa market which have led to job creation, local content benefits, local community

development and boosted economy (Chaponda, 2014). Table 3 below shows the number of jobs

and local content percentages created by different technologies in the different rounds. The total

number of temporary construction jobs and operations jobs created in the three rounds from the


solar PV, wind and Concentrated Solar Power were approximately 20,000 and 35,000 respectively.

However, jobs estimated really depend on the assumptions being made in terms of how these jobs

are being estimated.

Table 3: REIPPPP Economic Development Outcomes Technology Round 1 Round 2 Round 3

Solar PV

local content %

local construction jobs

local operations jobs

38.4

53.4 53.8

2381

6117

2270

3809

2119

7513

Wind Energy

local content %



27.4

1810

2461

48.1

1787

2238

46.9

2612

8506

Concentrated Solar Power

local content %



34.6

1883

1382

43.8

1164

1180

44.3

3082

1730

Sourced from South Africa’s Renewable Energy IPP Procurement Program: Success Factors and

Lessons, 2014 report on page 27


One key difference between Renewable energy IPP programme and other policies is the

fall in tariffs of the various renewable projects bided for as the rounds increases. The main driver

for the continuous drop is been ascribed to the keen competition of the bidders. For example,

figure 1 shows the wind tariff price nominal continuous reduction from the capped competitive

bid to the second round of the bid. This has also been observed in the third and fourth round of

the program. Therefore, the REIPPPP has proved to be more effective than the other policy tools

in context.

Figure 1 – The Wind Tariff prices variation on different bidding round windows

(Source: Pickering, 2015 Globeleq)


4.0 BENEFITS OF PROPOSED POLICY ADOPTION IN NIGERIA

Complement Energy Mix: As at July 8th, 2015, Nigeria generates approximately

3,655.12MWH/H power supply (Federal Ministry of Power, 2015). This power supply is

apparently insufficient to meet the electric power demand of the country which is estimated as

12,800MW (Federal Ministry of Power, 2015). If within four years, the REIPPPP has resulted to

the generation of 4, 322MW to the South African energy mix. Therefore, it is evident that the

adoption of REIPPPP approach will make immense contribution to the Nigeria energy mix.

Increase Economy: Nigeria’s revenue is 70% dependent on oil sector and 30% on non-oil sector

(Okogu, 2014). Nigeria suffered from the price and production drop in 2014 as it directly dwindle

the economy and contributed to the devaluing of the country’s currency from #160/$ to about

#200/$ as at December 17, 2014 (Abioye, 2014). Dr. Bright Okogu, Director-General of the

Budget Office of the Federation highlighted the setback faced by the country as a result of the

reduction in oil production from 2.38 mbpd (million barrels per day) to 2.2 mbpd and the oil price

fall from $114pb (per barrels) to approximately $60pb in 2014 (Okogu, 2014). This initiated the

theme given to the 2015 budget as “A Transition Budget” (Okogu, 2014). The implication of the

theme is for the country to focus on increasing the non-oil revenue and efficiently manage

expenditure. Therefore, the proposed policy is very appropriate and timely to be considered by the

Government at this challenging period of the country. Tina Joemat-Petterson, Minister of Energy,

South Africa categorically expressed that Renewable Energy IPPs programme has contributed

R168 billion (#2,777 billion) to the country’s economy within the period of four years (Joemat-


Patterson, 2015). This however clearly indicates the potential of such policy’s contribution to the

economy when adopted by the Government.

Job Creation: The implementation of this policy will lead to massive renewable energy projects.

These projects will invariably create both construction and operation jobs for Nigerians. As at

2014, Dr. Aisha Mahmood, the Special Assistant on Sustainable Banking, Central Bank of Nigeria

disclosed that 80 per cent of youths in Nigeria are without jobs. She further expatiated that 56

million youths are either unemployed or underemployed. This alarming statistics is really a

pathetic situation of the country as unemployment can lead to numerous crimes in the society and

even health challenges such as deaths due to cardiovascular diseases and cirrhosis of the liver and

mental illness (Hayes & Nutman, 1981). Therefore, every effort made by the Government to

address the problem will contribute to the reduction of the worrisome and mindboggling

unemployment trajectory. REIPPPP round 1 and round 2 produced an estimated number of 15,358

jobs for the installation of 1049MW of photovoltaic (PV) (University of Cape Town, 2013).

Meanwhile, table 3 above for round 1, 2, and 3 show that about 20,000 construction jobs and

35,000 operations jobs for the three technology in context were created. The actual projected jobs

for a 20year renewable energy projects producing 2GW per year is 360,000 jobs. The adoption of

this policy will lead to the creation of jobs thereby reducing the unemployment rate of the country

especially the youths.

Energy Security: Renewable energy is the future of sustainable energy in the world (Renewable

Energy Policy Network for the 21st Century, 2013). However, there are other areas that need to be

explored in achieving a sustainable energy future such as improvement of energy efficiency and

restructuring energy markets (Renewable Energy Policy Network for the 21st Century, 2013). The

international energy Agency defines energy security as the “uninterrupted availability of energy


sources at an affordable price” (International Energy Agency, 2015). This could be long-term or

short-term energy security. Long-term energy security caters for both economic development and

environmental needs while short-term energy security responds to the sudden changes in the

supply-demand balance of energy supply. To guaranteed energy security for the present and future

of the country, renewable energy is a viable option to be explored. REIPPP is the most successful

policy tool in Africa in the last 20 years that has promoted substantial renewable projects within

the last four years. Also, it has resulted in the reduction of the renewable energy tariff prices as

shown in figure 1 above. For example, between the first and third round of the programme, the

average price offered by solar PV power producers drop from R275 cents (#51.75) per kilowatt

hour (c/KWh) to R88c (#15.92)/KWh while wind prices fell from R114c (#21.90)/KWh to R74c

(#13.97)/KWh. This amounted to about 68% drop for PV bids and 42% drop for wind projects

bids, thereby making energy more affordable for South Africans (Eberhard et al, 2014). The policy

success in South Africa is a bright indicator that it will be successful also in Nigeria once embraced.


Conclusion and Recommendation

The growing transition of the world economy from fossil fuel dependency to renewable

energy sources is of great importance to both developed and developing countries because it

determines the future sustenance of the planet. Therefore every effort made by Nigeria to reduce

greenhouse emission by discouraging continuous dependence on fossil fuels will contribute to the

mitigation of climate change. In this research essay, various RE technologies were examined for

their potential to succeed in Nigeria. The main barriers of RE technology diffusion were also

mentioned and the solution offered in this paper was the intervention by Federal Government of

Nigeria through policies to promote RE penetration.

The three most popular and widely used Renewable energy policies were evaluated. The

renewable energy independent power producer procurement programme (REIPPPP) employed by

south African was seen to be the most effective. REIPPPP was then examined critically; its

benefits, shortcomings, risks and lessons learnt were discussed. REIPPPP shows that with the right

policy and policy tools, renewable energy technologies can diffuse quickly into most developing

countries’ market.

From the facts gathered in this research; Nigeria’s RE potential capacities, the fast success

story and opportunities from REIPPPP, the country’s economic status as the largest economy in

Africa (African Development Bank Group, 2014), and the projected benefits of the policy for the

country, it is highly recommended that Nigerian Federal Government considers the approach of

the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) in

promoting its RE technologies towards attaining sustainable development.


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