An Insight Into Renewable Energy Transition Trends and The Efforts of The Nigerian Government- Legal Framework Affecting Investment.

ABSTRACT

The drive for renewable energy utilization in Nigeria can be traced back to the 1970s oil shock. During the crisis, Nigeria earned significant sums of money from oil, but it also faced soaring inflation and a disregard of other sectors of the economy. The ‘oil windfall’ inflation affected the prices of basic goods and services in local markets, especially energy services. The price hike eventually resulted in reduced energy availability and supply for domestic use.

At the time, thermal energy, which included petroleum and hydroelectricity, was the primary source of power generation. However, with key global accords such as the Kyoto Protocol and Paris Convention, the world began turning away from fossil-based fuels.

This spurred the country into making considerable efforts in diversifying its energy sources to include other forms of renewables present in the country. Prior to this point, Nigeria had converted to gas as its primary source of electricity generation, and its reliance on it had exacerbated the country’s energy dilemma. 

The global shift towards renewables has necessitated significant efforts from the Federal Government to create a conducive environment for the investment and utilization of the renewable energy resources available within the country. 

This chapter takes a look at the Global disposition towards renewable energy within the past decade, including  developmental efforts of the Nigerian government in establishing an attractive legal and regulatory framework to promote its transitional efforts, including infrastructure achievements and hindrances to a total transition to a renewable energy economy.  

INTRODUCTION

The global energy sector has seen a significant shift from the exploitation and investment in fossil-based fuels, towards other alternative forms of energy. This transformation is mostly due to the long-term environmental impact of petroleum exploration and production. To this end, renewable energy sources are being adopted by both countries and industries as the preferred source of energy.

 Renewable energy means energy sources that are readily available and non depleting. They are typically referred to as alternative energy sources to crude oil. Examples include Solar energy, Wind, Hydro Power and Biomass Fuel. Part of the structural objective of key industry players and countries in the Oil and Gas sector has been to focus on investment opportunities in the renewable energy sector.

Owing to this, there has been considerable pressure on the Nigerian government to adapt to the current trend and ensure there is a sufficient regulatory framework for the investment into renewable energy and other alternatives to crude oil production present in Nigeria.

GLOBAL DISPOSITION TOWARDS RENEWABLE ENERGY

An appreciation of the long-term effect of burning fossil-based fuels, especially crude oil, has led to a global gravitational pull towards other forms of energy. Currently, over 200 countries have made commitments to reduce their greenhouse emissions which is a major factor in global warming^. With this apparent transformative change in the energy market, it would seem Investors and companies are becoming aware of the inevitable redundancy of crude oil in a few years to come. 

Since the early 1990s, world institutions have been debating and demanding aggressive steps to slow the rate of climatic and environmental degradation. Negotiations, talks, and treaties have been held to determine how to transition to renewable energy sources. These are the events that gave birth to the two relevant agreements that have had the most impact on energy around the world. The Kyoto Protocol was followed by the Paris Agreement.

In 1997, the Kyoto Protocol was proposed and adopted. The Protocol was created to serve as practical guidance in accomplishing the goals of the United Nations Framework Convention on Climate Change.. The protocol during the time it came out, was signed by about 83 member countries as at the time the protocol was adopted. In 2020, that amount increased to about 192 participating countries, Nigeria inclusive.  The broad objective was to set individual country targets and set achievable metrics on how to transition a member country’s economy away from fossil-based fuels and reduce greenhouse gases emission. The structure for the Kyoto Protocol can be summarized as follows:

• Establishing a binding commitment amongst parties. 
• Requirement of parties to prepare policies and measures for the reduction of greenhouse gases in their respective countries.
• Take steps in ensuring the impact of petroleum exploration are minimized on developing countries by establishing was termed “an adaptation fund for climate change”
• Audit and Review of the action plan 
• Enforcement of Compliance through establishing a Compliance Committee 

Along the line, a few countries like Canada and the United States withdrew from the protocol while many others failed to ratify the second commitment plan. Nonetheless, the year 2015 witnessed a breakthrough in climate change efforts in the form of the Paris Agreement. On the 12th of December 2015, 191 countries came together at a convention in Parties to sign the famous Paris Agreement which sought to improve on the Kyoto Protocol and set more stringent action plans in transitioning from fossil-based fuels to more renewable forms of energy. Nigeria of course was a signatory to the agreement. 

 The Agreement set specific long-term goals for the reduction of hydrocarbon emission and they are as follows: 

• substantially reduce global greenhouse gas emissions to limit the global temperature increase in this century to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees;
• review countries’ commitments every five years;
• provide financing to developing countries to mitigate climate change, strengthen resilience and enhance abilities to adapt to climate impacts.

To further show commitment, each member country produced a “Nationally Determined Contribution” (NDC) setting out clear timelines, plans and projections for reducing hydrocarbon emission. Since the Paris Agreement, there also emerged a corporation targeted at accelerating the achievement of 100% clean energy which a sizable number of counties have signed up to known as the RE 100. 

This convention has undoubtedly had a ripple effect on the energy market. Owing to how seriously world powers and companies have taken to ensuring compliance with the agreement and meeting set targets, the Global investment trend in the energy industry witnessed a considerable shift.

Global Investment Trend in the Energy Industry. 

A forecast from The International Energy Agency reports that between 2019 and 2024, there will be a 50% increase in the renewable-based power capacity across the world^. As a responsive action, investors have begun employing and contributing resources that would foster their shift from crude oil.  The transition process has been a steady one albeit not as fast as international organizations such as the UN would hope.

For Oil Companies, the pressure to reduce crude oil involvement has been mounting and so both companies and countries have been diversifying their investment portfolio into forms of energy different from crude oil.  The private sector is not left out of the transition as data reflects more privately-owned companies joining the RE100. Companies such as Facebook, Apple & Microsoft are spare heading the commitment with a sign of an increase in the coming years. 

Highlighting investment trends around the world, Global Trends in Renewable Energy Investment 2020 (GTREI), reports that renewable energy capacity, with the exclusion of large hydro, grew by a record 184 gigawatts (GW) in 2019. This was a 12% increase above the new capacity added in 2018. Furthermore, the number of RE100 members appears to be growing, with countries with the highest revenue signing up to be bound by the RE 100’s accountability requirements. Even in countries that have established lower or no limits, obvious steps are being taken to invest more in non-hydrocarbon energy.

The GTREI reports that in 2019, there was a higher investment rate in renewable energy by developing countries than developed ones. An aggregate of $152.2 billion was committed in comparison to $130 billion for developed countries. The most significant investment in renewable energy has however been from the UAE, with financing the Solar sector by $4.3 billion through investment in the AI Maktoum IV solar thermal and photovoltaic complex located in Dubai^. 

In the transport industry, there has been a visible shift in the target of companies operating within the industry to transition from internal combustion engines to electric vehicles. As an example, The Norwegian government has placed a 5-year target on ending the sale of new internal combustion engine cars. Other countries like Israel, Denmark, Sweden, Netherlands, Iceland have set a 10-year target to achieve a similar status in the transport industry. 

About 72 countries each invested more than $1 billion in ‘new renewables’ for the last decade. Venture capital and private equity investment in renewable energy rose 22% to $3 billion. Solar investment was the most attractive, enjoying a $1.8 billion VC/PE investment. Closely followed by wind, $529million. 

Summarily, the GTREI reports that from 2010 through 2019, an estimated $2.7 trillion was invested in renewables (except for large hydro) globally. This data shows that this was more than three times the equivalent amount invested in 2000-2009.  Biomass energy witnessed financing of $123billion, while small hydro investment totalled an estimate of $45billion, biofuels $28billion, geothermal $20billion with major investment concentrating in wind energy, about $1.1 trillion was invested in renewables with Solar energy being the most invested in.

An estimate of $1.4 trillion was put into solar emerging by various countries.  Countries that invested the most in renewable energy as of 2019 include China, Japan, South Korea and the US with China leading with a total of $818billion investment. In Europe, an estimate of $719.4 billion was pumped into renewables which is $300 billion more than was invested by the US. With the UK and Germany being the major renewable energy heavy players ($183.4 billion and $126.5 billion respectively). Africa and the Middle East were also not left behind in the investment trend.

Countries like Egypt, Kenya, South Africa, Morocco and UAE have significantly financed the renewable energy sector with the UAE ($4.3 billion invested in the AI Maktoum IV solar thermal project). UAE’s solar thermal is reported to be the largest financed solar project with equity pulled from across the world- China’s Silk Road Fund, 3 Emirati lenders, five Chinese banks, UK’s Standard Chartered Bank and Natixis in France.   

The investment data provided by GTREI puts things into perspective on how much the world is taking the energy transition seriously. Countries with an understanding that crude oil may become redundant due to reduced demand are putting strategies in place to ensure their economy does not suffer a pitfall when crude oil does. 

In Nigeria, the investment in renewable energy is considered novel and quite low. Although the government projects to invest about $3billion, it still needs to pump melore equity to finance projects for a sizable chunk of the renewable energy sector. Recently, a private company in Nigeria was able to raise $20million in an equity financing round held in 2019, Another private company, “Haven hill” was able to secure financing of about $.4.3Million for its solar mini-grid project development. Furthermore, there is the hydroelectric Mambilla power project in collaboration with the US estimated to be worth about $5.6 Billion. This goes to show the vast potential for renewable energy investment in Nigeria. 

Interestingly, India which is Nigeria’s major crude oil buyer has recently made moves indicating its new preference for renewables by securing for of the largest VC/PE deals in renewable energy worth $1.4 billion. Also, countries in Africa are currently cancelling projects centered around fossil-based fuels and instead focusing on renewables. Egypt, for example, halted a massive coal project in October 2019 and is now considering adding 500MW of renewable capacity. The federal government of Nigeria therefore must move quickly and capitalize on the country’s vast renewable energy resources.

Presence of renewable energy in Nigeria.

Nigeria is a nation blessed with a huge resource of crude oil, owning the world’s sixth-largest crude oil reserve, estimated at 36.2 billion barrels. In that blessing also lies what can be argued to be a curse for the country. Because of the abundant discoveries of oil in various parts of the country, there has become heavy reliance on Oil export as the major source of revenue for the country. Oil contributes to approximately 20% of GDP, 95% of export earnings, and 85% of budgetary revenues. This is why Nigeria is often vulnerable to economic shocks. The overreliance on Fossil Fuels might sooner than expected become a pitfall for the country if measurable steps are not taken to align the country with the global shift towards renewable energy and gas investment.

Luckily, Nigeria is equally a country blessed with other forms of energy.  From possessing one of the finest Gas resources to an abundance of other forms of renewable energy such as Solar, Water, biomass etc. Unfortunately, the country seems to be consciously focused on a resource that is subject to depletion and redundancy. According to the Department of Petroleum Resources, the previous regulatory agency in Nigeria, the country has approximately 50 years before the depletion of its Oil resources. 

Despite Nigeria’s large oil reserves, the country is still unable to meet OPEC’s requirement to produce 1.5 million barrels per day. Furthermore, because the country is overly reliant on fossil fuels, it is unable to meet its energy demands. A shift to renewable energy therefore would boost the country’s earning potential. It is consequently necessary to examine the various sources of alternative energy to crude oil-based energy that are available in Nigeria.

Types of renewable energy present in Nigeria

Solar Energy

Solar energy is the form of energy obtained from the sun. The energy is converted by what is known as Photovoltaic cells or in the alternative, solar terminal concentrators. Nigeria a country blessed with an incredible amount of sunshine year in year out,  is expected to get roughly 7.0kWh/m2/day (25.2MJ/m2/day) in the extreme north and approximately 3.5kWh/m2/day (12.6MJ/m2/day) at coastal latitudes. If the Conversion of this amount of energy was handled efficiently, Nigeria would have a convertible solar energy source of about 1.50 × 1018 J. It will take an equivalent of 258.62 million barrels of crude oil to produce that amount of energy, which when calculated is almost the current amount of barrels being produced monthly in Nigeria today^. 

Wind

Energy from Wind requires the use of wind turbines to convert heavy wind flows to a usable energy source. Certain regions in Nigeria enjoy more wind energy than others. The Northern region especially with its mountainous topography, and certain areas in the South and riverine areas. Enugu, Owerri, and Onitsha have annual mean wind speeds of 5.42, 3.36, and 3.59 m/s, respectively, and annual mean power densities of 96.98, 23.23, and 28.34 W/m2, respectively. Ngala et al report that there lies a cost-benefit for the investment and use of wind as a source of energy to convert to electric supply.

It was also demonstrated that the mean annual value of the most likely wind speed for Enugu, Owerri, and Onitsha, respectively, is 5.47, 3.72, and 3.50 m/s, whereas the respective annual value of the wind speed carrying the most energy is 6.48, 4.33, and 3.90 m/s.

Hydroelectricity

Hydroelectricity is the energy derived from harnessing the energy potential available in the power of flowing water/ water in motion. Through the use of hydropower technologies, the energy derived from the forceful flow of water is converted to electricity as a form of energy.  Professor John-Felix Akinbami, Professor of Energy Planning, Management, and Climate Change at the Centre for Energy and Research Development, believes that Nigeria’s projected hydroelectric power potential is somewhere around 8,824 MW, with an annual electricity generation capacity of more than 36,000 GWh. This includes 8,000 MW of large hydropower technology and 824 MW of small hydropower technology. The implication is that just a small amount of Nigeria’s hydroelectricity potential has been realized, with 76 per cent and 96 per cent of resources, respectively, still untapped.

Moving towards Renewable Energy Investment in Nigeria.

Nigeria is blessed with enough renewable energy to sustain the economy when a complete overhaul from crude oil is made. However, this cannot happen on its own. To attract investors, the country must ensure these resources sought to be exploited are made economically attractive for investors.

Because Renewable Energy is relatively new and rowing around the world, there lies an opportunity for Nigeria to develop a commercially favorable market, competitive enough to allow for scalable investment patterns. Shifting from crude oil to renewable energy is achievable if the proper legal and regulatory as well as fiscal framework is established by the government. 

CURRENT POLICIES GOVERNING RENEWABLE ENERGY IN NIGERIA

It has been established that there are sufficient forms of renewable energy in Nigeria. Hence, for the country to fully exploit these resources, there must be adequate policies, legislation and regulation set up to create an impressive investment and development structure. 

Nigeria became a signatory to the Paris Agreement in 2015 and subsequently submitted its Initially intended Nationally Determined contribution. In the proposal, Nigeria proposed to reduce carbon emission by an unconditional 20% and a conditional 40% reduction. The key measures for achieving this are set forth below:

• Work towards ending gas flaring by 2030 
• Work towards Off-grid solar PV of 13GW (13,000MW) 
• Efficient gas generators 
• 2% per year energy efficiency (30% by 2030) 
• Transport shift the car to bus 
• Improve electricity grid 
• Climate-smart agriculture and reforestation

Important to note that as of the 27^th May 2021, Nigeria submitted an updated NDC in compliance with Article 4.2 of the Paris Agreement highlighting a significant update of increasing its commitment to reduce carbon emission from 40% to a 45% commitment conditional on international support by 2030.

Before the agreement, the country had been making steady efforts in weaning the economy away from heavy crude oil reliance. In 2006, a Renewable Energy Master Plant (REMP) was formulated. Visible in the plan were short-, medium- and long-term goals to be carried out in the implementation of other sources of energy; solar, wind, hydroelectricity etc.  The REMP was unfortunately not approved by the Federal Executive Council until 2015 after it was revised and redeveloped into what is now known as the Nigerian Renewable Energy and Energy Efficiency Policy (NREEEP).

The objective of the NREEEP is to provide adequate structure for harnessing the country’s renewable electricity in a bid to surpass the renewable energy electricity goal set by ECOWAS 2020. The NREEEP expects to increase the power output of the country by at least 2,000MW by 2020. The two main agencies charged with regulating the industry as provided for by the NREEEP are The Ministry of Power and the Energy Commission of Nigeria, (ECN).

The NREEEP hoped to harness and increase the production of energy from 3,800MW to 68,000MW by 2020. The increase was expected to aid in the development of the county, increase international trade and investment and generally, alleviate poverty in the country. This is 2021 however and a lot of these targets are yet to be met, power generation is still 189 Watts per household.

RENEWABLE ENERGY TRANSITION TREND IN NIGERIA

A major challenge for a developing country like Nigeria, which has relied heavily on crude oil as a source of revenue almost since its independence, is realizing that this resource is subject to redundancy and that the inevitability of this occurrence is occurring at a faster rate than the country is prepared for. Fortunately for the country, there is an opportunity to shift the paradigm toward renewable energy while also preparing the economy for the renewable energy sector.

The Energy Commission of Nigeria ACT

Nigeria passed the Energy Commission of Nigeria Act (the “ECN Act”) in 1979 to regulate and develop renewable energy. The Energy Commission of Nigeria is established by the ECN Act to coordinate research on alternative energy sources. The Commission is in charge of strategic energy development planning and coordination, as well as performance monitoring. The Act vests in the commission, amongst others, the responsibility to investigate, suggest and manage all relevant energy policies to the federal government for implementation.  The Act however has little direct impact on the energy sector in the country.

The Renewable Energy Master Plan

A specific policy on the development of renewable energy was also introduced in 2005, known as the Renewable Energy Master Plan. The REMP provided an action plan for the Development of Renewable energy in the County. 

The master plan established a target of renewable energy accounting for 10% of total energy consumption in Nigeria by the end of 2025. This is hoped to be accomplished by diversifying the generation of power (which is currently primarily generated by gas) to solar PV, wind, hydro, and biomass. The REMP aimed for an increase in installed capacity of 500 MW for solar PV, 40 MW for wind energy, 600 MW in 2015 and 2,000 MW by 2025 for small hydro, and 400 MW for biomass by 2025.

In terms of a legal and fiscal framework for renewable energy development, the Plan recommended the establishment of a special renewable energy fund to carry out the projects, as well as a moratorium on import taxes for renewable energy technology, including tax breaks and customs duty exemptions.

The REMP envisioned a gradual but steady shift away from reliance on hydrocarbons as Nigeria’s principal source of energy and income. It attempted to use particular stages of development in achieving these goals, such as the short term (2005-2007), medium-term (2008-2015), and long term (2016-2025). (Renewable Energy Master Plan, 2005). Crude oil is predicted to play a prominent role in the country’s economic development in the short term, with an energy transition from crude oil to a less carbon-intensive economy expected in the medium term.

The master plan has projected, among other things, the following precise objectives (Renewable Energy Master Plan, 2005):

• Expanding access to energy services and raising the standard of living, especially in the rural areas; 
• Stimulating economic growth, employment and empowerment;
• Increasing the scope 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;
• Improving learning, capacity-building, research and development on various renewable energy technologies in the country; and 
• Providing a road map for achieving a substantial share of the national energy supply mix through renewable energy.

Implementation of the REMP however faced imminent roadblocks such as Technological barriers, proper regulatory framework, political interference and quality control supervision

Renewable Electricity Policy Guideline (REPG)

In 2006, the Federal Government introduced a Renewable Electricity Policy Guideline (REPG). The REPG outlines Nigeria’s goal for renewable electricity through policy guidelines and the construction of mechanisms for the use of renewable energy resources in electricity generation. According to its mission statement, the policy is focused on “the achievement of accelerated sustainable development through an increased share of renewable electric power to the national electricity supply.”

To meet the country’s electrical demand, the REPG advises using renewables for electricity production. REPG establishes the Renewable Electricity Trust Fund to assist renewable electricity and the use of small-scale renewables in rural electrification. The REPG focused on utilizing renewable electricity production. Some of its proposed policies include:

• Expand electricity generating capacity to meet national economic and social development goals;
• Encourage the diversification of sources of electricity supply through renewable energy, and as such improve the energy security of the country;
• Increase access to electricity services nationwide, especially in rural areas;
• Stimulate growth in employment generation through an expanded renewable electricity industry;
• Enhance technological development through increased domestic manufacturing of renewable electricity components; 
• Stimulate competition in the delivery of renewable electricity; 
• Promote rapid expansion of the renewable-based electricity market through cost reducing supply-side and demand-side incentives. 

• Develop regulatory procedures that are sensitive to the peculiarities of renewable energy-based power supply; 
• Create stable and predictable investment climate in renewable electricity market; 
• Provide effective protection of electricity consumers through effective regulation; and 
• Reduce household and outdoor air pollution as well as contribute to the abatement of greenhouse gas emissions, and thus contribute to improved health and overall social development.

National Renewable Energy and Energy Efficiency (NREEEP)

The National Renewable Energy and Energy Efficiency (NREEEP) was introduced in 2015. The policy took into cognizance the difficulty in meeting the electricity needs of the country through the available grids alone. Therefore, to aid the use of renewables for electricity generation, NREEEP provides for the use of “mandatory or voluntary renewable portfolio standards, power production tax credit, feed-in tariff, bidding, net-metering and tax incentives for renewable energy projects”.

The policy’s major focus was on “this policy will focus on hydropower, biomass, solar, wind, geothermal, wave and tidal energy power plants and co-generation plants for energy production, as well as the improvement of energy efficiency as an additional source of energy” The policy also recognized the importance of state and local government involvement in its transition to renewable energy efforts. “State and local government level units responsible for renewable energy and energy efficiency matters.

This policy encourages the establishment of required connections between the federal and state governments in order to develop renewable energy and energy efficiency policies, frameworks, and programs, as well as to carry out some of the programs at the federal, state, and local levels.”

The overall objective of this policy is summarized as follows:

1. To ensure the development of the nation’s energy resources, with diversified energy resources options, for the achievement of national energy security and an efficient energy delivery system with an optimal energy resource mix.
2.  To guarantee an adequate, reliable, affordable, equitable and sustainable supply of renewable energy at cost-reflective and appropriate costs and in an environmentally friendly manner, to the various sectors of the economy, for national development.
3.  To accelerate the process of acquisition and diffusion of technology, managerial expertise and indigenous participation in the renewable energy and energy efficiency sector industries, for stability and self-reliance.
4.  To guarantee efficient, location-specific and cost-effective consumption patterns of renewable energy resources and improved energy efficiency.
5. To promote increased investments and development of the renewable energy and energy efficiency sector, with substantial private sector participation.
6. To ensure a comprehensive, integrated and well-informed renewable energy and energy efficiency sector, with plans and programmes for effective development.
7.  To foster international co-operation in trade and project development, in the ECOWAS, African Region and the World at large.
8.  To successfully use the nation’s abundant energy resources to promote international cooperation.
9.  To bring abundant electricity access to almost half of the Nigerian population that is currently electricity abstinent, including more sustainable provisions for domestic use and cooking. 
10. To develop the nation’s renewable energy and energy efficiency resources through the establishment of an appropriate financing mechanism that supports private investment in the sub-sectors.
11. To ensure effective coordination and collaboration among all players in renewable energy and energy efficiency activities in Nigeria

In addition, NREEEP aims at increasing electricity access to at least 75% by 2020 and 90% by 2030 with no less than 10% renewable energy component in the energy mix.

Although the NREEP is an important policy guideline in the transition efforts of the Federal Government to Renewable energy, it suffers a major challenge of implementation as there is no specific renewable energy extant law to enforce the objectives in the policy. For example, while the NREEEP calls for the establishment of a sovereign guarantee to support renewable-sourced power, it doesn’t go into detail on how this mechanism will be implemented. There is thus a limit to the effectiveness of NREEEP in solving the challenges of renewable energy development in Nigeria. 

Nigeria Electricity Policy (NEP)

The NEP was the first collation of energy policies to affect all forms of energy in Nigeria; oil and gas, electricity and solid minerals. The Policy was introduced in 2005 and sought to utilize all available energy resources in the country to increase trade and investment.  Since 2005 when the NEP was introduced, a lot of changes have taken place in the energy industry such as a shift towards renewable energy.

This necessitated a review in 2013 and more recently in 2018. With the essential guiding principles that energy is critical to national development goals and that the government plays a key role in providing an enabling environment for achieving the nation’s energy issues, the NEP postulated the following objectives to curb the overdependence on oil.

The policy objectives may be summarized as follows:

i. To ensure the development of the nation’s energy resources, with diversified energy resources options, for the achievement of national energy security and an efficient energy delivery system with an optimal energy resource mix.

ii. To guarantee increased contribution of energy productive activities to national income.

iii. To guarantee an adequate, reliable and sustainable supply of energy at appropriate costs and in an environmentally friendly manner, to the various sectors of the economy, for national development.

iv. To guarantee an efficient and cost-effective consumption pattern of energy 

resources.

v. To accelerate the process of acquisition and diffusion of technology and 

managerial expertise in the energy sector.

vi. To promote indigenous participation in energy sector industries, for stability 

and self-reliance.

vii. To promote increased investments and development of the energy sector 

industries with private sector leadership.

viii. To ensure comprehensive, integrated and well-informed energy sector plans and programmes for effective development.

ix. To foster international co-operation in energy trade and projects development 

in both the African region and the world at large.

x. To successfully use the nation’s abundant energy resources to promote 

international co-operation.

xi. To promote research and development in, and adoption of, sustainable low carbon and clean energy technologies to mitigate environmental pollution and climate change.

xii. To promote gender sensitivity and special attention to rural energy needs.

xiii. To promote efficiency, conservation and carbon management best practices in the nation’s energy supply chain.

xiv. To ensure comprehensive and up-to-date availability of energy sector data and information.

xv. To ensure effective coordination of national energy planning, programmes and policy implementation.

Summarily, The NEP emphasized measures for exploring Renewable Energy resources such as gathering information on emerging technologies, stimulating Renewable Energy research and development, and prioritizing the feasibility of these resources.

Electric Power Sector Reform Act

The EPSR Act which was passed in 2005 repealed the Electricity Act and the National Electric Power Authority Act. The EPSR brought about significant reform in the electricity sector. It amongst others provides access to private sector funds, reduces electricity generation and transmission losses, and promotes sustainable cost pricing for electricity. The Act promotes a competitive and liberalized power market in Nigeria by breaking the monopoly of the state-owned utility industry. It deconstructs the pre-2005 power structure into vertically unbundled sectors in preparation for the liberalization of the electricity market. The EPSR Act establishes the Nigerian Power Regulatory Commission (NERC) as the exclusive electricity regulator. The NERC is in charge of establishing rates and granting licenses for electric power operations. The ESPR through NERC also introduced a feed-in tariff regulation (“REFiT”) to promote electricity generation from renewables. The REFiT is an economic instrument designed to encourage investment in renewable energy generation in Nigeria. The goal of REFiT is to attract investments for 2000MW of solar, wind, biomass, and small hydroelectric power by 2020. Unfortunately, the EPSR is focused majorly on electricity utilization and makes no inadequate provision for the other forms of renewable energy resources present in the country.

It is clear to see that Nigeria’s renewable energy ambitions are consistent with globally accepted renewable energy objectives, however, these policies do not appear sufficient enough to make for a broad and viable Investment sector.

LIMITATIONS AND FAILINGS OF NIGERIA’S EXISTING ENERGY POLICY

Despite the importance of renewable energy resources, Nigeria lags far behind in utilizing its enormous available resources. A major reason for this is a lack of a sufficient legislative framework to guide both investors and the government in their infrastructure development. Although emerging legislation such as the EPSR Act is a step in the right direction, they do not particularly promote all forms of renewable energy resources. The EPSR Act establishes legal parameters for promoting the growth of electricity infrastructure rather than the development of the renewable energy sector as a whole. No Act or legislation governs major aspects of renewable energy development, such as the funding structures, fiscal framework, generation, production, and transmission rules, administration and support mechanisms, and environmental considerations. 

The most recent legislation in the energy sector in Nigeria, the Petroleum Industry Act 2021 which had been tagged by industry players as a “game-changer” failed to take into account the huge dearth in the legal framework for renewables. There was hope that the legislation unlocks the vast potential for renewable investment within the country. But alas, its focus remains on fossil-based fuels and the improvements therein only seem like a push when the country is desperately in need of a leap. Uma Outka correctly describes the legal barriers to renewable energy development as either the absence of an affirmative law to assist renewable energy development or the “existing law fashioned in support of a pre-renewables energy sector.”  

The fundamental issue is that Nigerian law has not kept pace with the country’s ambitions for renewable energy.” The lack of a legal framework to guide energy policies, as Omorogbe properly pointed out, is the bane of renewable energy in many African countries. ” This is because any government’s inability to establish the proper legal framework would not only “lead to a distorted legal environment, but will also result in a policy failure: Without legislation, energy policy is ineffective.”

CONCLUSION

The Renewable Energy Sector in Nigeria remains a fresh fertile ground, with no proper fiscal and regulatory framework. While it may seem like the right time to take advantage of this, it would also present as a high-risk venture for investors, as a lack of a proper legal framework leads to volatility. Considering all of these reasons, the extant Acts are unlikely to serve any further meaningful purposes in terms of Nigeria’s renewable energy transition. Nigeria must enact legislation committed to and successfully supporting the promotion of renewable energy. The law in question can be either comprehensive in the form of a new law or partial in the form of revisions to the current electricity/energy law.  The proposed Act ought to specify the modalities and conditions for incorporating renewable energy-sourced power and ensuring a smooth transition from a predominantly fossil-fuel energy regime to a greener energy regime based on renewable energy sources. This will go a long way toward creating a well-planned, sustainable energy sector.