A new study by Climatescope, a clean energy country competitiveness index, shows majority of 2014 clean energy investment and activity occurred in 55 developing nations, including Nigeria.
According to a global assessment released two days ago, Nigeria climbed several places up the ranking, particularly because it had a higher amount of investment in 2014 than the year before. It had the only other clean energy financing outside of Kenya and South Africa above $100 million in 2014, for 40 mega watts (MW) of small hydro.
The report however observed that this has not yet translated into serious investment in renewables. It said; “The country has no operating grid-connected renewable energy projects except for hydro. However, there are many small scale (<50kW) solar PV mini-grid and rooftop PV projects distributed across the country built with small loans issued by the Bank of Industry and other lenders”.
However, it noted that following the elections, the government has proposed changes which will maintain the momentum on renewables and energy-efficiency policy development that would make the sector much more attractive to investors.
It said; “In May 2015, the Nigerian Federal Executive Council approved the National Renewable Energy and Energy Efficiency Policy (NREEEP). The NREEEP does not contain hard numbers. Rather, it mandates which instruments (FiTs, energy targets, etc.) will be applied.
Following the enactment of the NREEEP, the relevant energy ministries have started the work required to produce a quantitative document of targets and tariff rates called the National Renewable Energy Action Plan (NREAP). Local players and ministers expect the NREAP to be made available to power producers in 2016 as Nigeria’s first ever renewable energy-specific policy.
Nigeria currently has a target for 40GW of installed power capacity by 2020, of which 10% must come from renewable energy. Under the Multi-Year Tariff Order 2 (MYTO2), it also has a FiT set by the Nigerian Electricity Regulatory Commission (NERC) and underwritten by the government-backed electricity trader the Nigerian Bulk Electricity Trading Company (NBET).
New draft regulations for the country’s feed-in tariff were published in July 2015. They introduce another renewable energy target: for some 1GW of grid renewable power by end-2018, reaching 2GW two years later. That also acts as a cap on the available capacity under the FiT, while individual projects are limited to 30MW, with technology-specific caps for overall PV, wind, hydro and biomass capacity.
Other crucial differences that make the FiT more attractive: it will be denominated in US dollars rather than Nigerian naira, and FiT rates will be fixed for the duration of the power purchase agreement (i.e. 20 years) rather than reviewed every five years.”
The new policy drive is expected to make Nigeria become a more serious player on the Climatescope index in future years.