BUILDING SUSTAINABILITY AND RESILIENCE IN NIGERIA’S OFF-GRID ENERGY SECTOR
Chisom Okoye* and Ify Malo*
The Nigerian Rural Electrification Agency has plans to build 10,000 viable Mini Grids by 2023 as part of its rural electrification strategy with the aim of adding an additional 3,000MWs to the grid. This is great news for the estimated 90+ million Nigerians that remain un-electrified or have their electrification needs unmet by the grid. This Mini Grid push by the REA is billed to serve 300,000 households and 30,000 local businesses and increase the country’s energy access and electrification targets exponentially. This is obviously great news, however, underpinning this push to increase access and electrification targets should be the need for building resilience and sustainability into these systems to follow the exponential growth that is likely to occur when these plans and targets take root.
Resilience can be defined as being about people, plans, processes that build sustainability in systems and processes and places in a way that ensures growth and absorbs shocks with little disruptions. In Nigeria, nowhere has the notion of resilience been more required than in our electricity sector. For decades, Nigeria un-electrified population has increased and hovers between 80 -90million people. This poses one of the greatest energy access challenges in the world particularly because of decades of billion dollar investments on the grid in past years, failing to deliver the required improvements in the electricity sector. Yet, the country’s off-grid population continues to increase concurrently with the country’s annual population growth. The issues besieging Nigeria’s electricity sector can be defined as both economic and structural and is straddled by the human and political factor and can be categorized into three buckets namely:
- Aging power assets.
- Huge supply deficit (long period of generation capacity stagnation).
- Lack of adequately trained professionals and technically skilled manpower in generation, transmission and distribution and also in the areas of management, regulatory and policy framework.
The lack of electricity has impacted about every formal and informal sector in Nigeria – from business, to health and education and even the environment. It is in recognition of this that the Nigerian government reformed the entire electricity architecture mainly through a privatization reforms which were concluded in 2014 in a bid to tackle the inefficiencies and inability to provide the power need for the country. Today the effects of climate change on the national grid impacts the ability of the grid to operate and generate electricity at an optimum. This means that the required amount of electricity for Nigeria’s current population will not be served solely by grid-based power alone, and that decentralized renewable energy (DRE) modalities are beginning to gain not just prominence but seen as a viable socio-economic growth strategy by the Nigerian government. This suggests the need for more investment in resilience structures to ensure the sustainability of the DRE sector and that the emerging Nigerian off-grid sector is not beset by similar issues to those of the grid system.
For the growth of the Nigerian renewable energy sector to be sustained, there is the need for a coalition of stakeholders to begin to build resilience into the plans, targets and projects targeted at the Off-Grid sector. This is even more important as the country has launched an aggressive mini-grid strategy with plans to deploy 10,000 mini grids by 2023. To be able to achieve this, while the 2016 Mini Grid Regulation by the Nigerian Electricity Regulatory Commission (NERC) is a great start; and the REA’s policy direction in driving Rural Electrification through Mini Grids has meant that the decentralized renewable energy sector is at a positive tipping point. What we need now is to build sustainability into these plans and projects to ensure that it builds, contains, and improves on the capacity needed to ensure a resilient and sustainable DRE sector. Even more important is to learn from the same issues that bedevilled our grid system and ensure that the DRE sector is not limited by it. One way to do so is to get ahead of the expected human capital challenges by ensuring that we address the issues of capacity for the DRE sector right from the start.
The increasing demand for power in Nigeria, has seen an increase in the surge of investors and developers in the DRE sector. This certainly puts some pressure on the availability of human capacity. The Nigerian Electricity Supply Industry (NESI) lack of adequately qualified manpower has been a subject of numerous assessments and reports, some of which have been reviewed by experts in the sector. Yet, the fact remains that to address the skills and human capital gaps, there must be a coordinated approach in order to ensure that the decentralized renewable energy movement succeeds and is sustained. The DRE industry needs to ensure that as she builds her local market; that standardized training, certification processes that equip local communities to better prepare them for the influx of new and innovative technologies is taken into account. It is clear that total dependence on government is not the way forward. The IEA on this issue says, “It transcends the boundaries of traditional government departments”. It is therefore necessary for private companies, civil society organisations; Faith based organisations, Developers, Media, International Donor Agencies and policy makers to form an ecosystem approach for ensuring the sustainability of this sector. This is why Power For All’s Decentralized Renewable Energy Human Capital Campaign is important because it takes an eco-system approach to building resilience by focusing on the people who run the systems.
The two determining factors impacting sustainability and resilience in the DRE ecosystem; are Human Capital and Finance. Resilience as we said earlier, is about people. Therefore, a lot of emphasises needs to be placed in building local man-power development. Any huge dependency on international human capital can limit sustainability, because the predominance of foreign talent impacts finance as such skills, knowledge and techniques are hardly ever passed down to locals. As DRE technologies are improving, and advancing so too should the systems and the people employed accelerate to enable them manage these changes and processes and ensure little down time in DRE electricity supply. The need to train and build people to run these systems, and to partake in policies and planning cannot be overemphasised. The private sector is taking giant steps in ensuring that locals are empowered, as there are now two RE training academies in Kaduna and Osun State. Access to finance is another major challenge the off-grid sector currently faces. Local banks and donor agencies need to be willing to fund part or all of off-grid projects. The dependence on foreign investors, though available, is not sustainable. There is a need to make soft finances available locally for resilience in the DRE sector either via public finance sources (infrastructure bonds), private sector finance (green bonds) or from development and investment banks.
To ensure coordination in the DRE ecosystem, the IEA states that the formation of interdepartmental committee or working groups that bring together key players to share relevant information and take actions on sustaining the sector is important. A leading DRE sector organisation, Power for All, has launched the first ever DRE taskforce in Nigeria which focuses on five (5) key areas: zero duties and waivers, consumer awareness in the DRE sector, support to REAN on standardization and certification, data collaboration in the DRE sector and simplifying payments for the DRE sector. Each of these five working groups are focused on building human capacity, addressing gaps in the system and focused on empowering the local eco-system to remove bottlenecks and ensure long term sustainability.
For instance, the DRE Task-force, is aiming to drive long term resilience for the sector by looking at implementing Zero Duties and Waivers. The off-grid sector cannot thrive if private companies have to pay an arm and a foot to get their products into the country. This will impact foreign investments and increase the cost of projects and ultimately service delivery. The Task force also seeks to build Consumer Awareness in order to achieve commercial value for DRE products and educate the consumer on the effect of these products/technologies on their livelihoods and general wellbeing. The Taskforce also looks to simplify payment for the DRE technologies and services. Presently, the off-grid sector in Nigeria is centred on rural electrification. This working group focuses on coming up with policies that support and make end user payment easy especially for those in rural communities. Developers and investors need to be guaranteed that communities can pay for the power provided to them. There is the issue of Standardization and Certification to support the Renewable Energy Association of Nigeria (REAN) to address both the issue of sub-standard products and services. The idea is to collaborate with other relevant government and none government agencies to ensure that developers, installers, and practitioners in the sector are certified and follow global standards. The last working group in the taskforce is focused on developing credible data within the DRE sector – a crucial metric for investments, for planning and for understanding the impacts on our society.
On a final note, resilience in the Nigerian DRE sector requires proper tracking of Energy Access Dividends and how this impacts the social-economic sector. How does the off-grid sector affect education, health care, employment and other key societal values? Are there laws that govern these data sharing? How does this impact the nations’s bottom-line and help with future economic planning. What is clear is that the Decentralized Renewable Energy sector in Nigeria is certainly off to a great start with promising growth but there is collective responsibility in ensuring that our people, our home, and our nation Nigerian is prepared in a very strategic and robust way to benefit from the benefits of the off-grid sector. That is building resilience in the sector.