REAN has been established to see renewable energy including solar, hydro, biomass and wind contributing 40% of the Nigeria’s national energy mix by 2030.
However, for this ambitious target to come into realisation, there has be a scheme that will push for its success.
South Africa’s renewable energy independent power producer procurement programme (REIPPPP) has set an example in this regard.
In correspondence with ESI Africa, the association’s President Segun Adaju and executive secretary, Godwin Aigbokhan, unpacked how REAN intends to implement its set goal.
Renewable Energy Association to follow suit
The association’s officials stated that Nigeria will follow in the footsteps of South Africa’s REIPPPP, “The next round of award of power purchase agreements (PPAs) for solar independent power producers (IPPs) will be through a competitive procurement/tender process.”
The REAN’s executives stated that government believes that it has a role to protect the interest of Nigerians and that through the auction route it can get the best tariffs, attract investment, protect consumers and improve the availability of electricity.
The officials revealed to ESI Africa that a tariff rate of $0.06 is being targeted as a result of the IFC backed project in Zambia, where a low $0.06 tariff was agreed.
“But will such a tariff be realistic, achievable and sustainable in Nigeria where costs for investors are different to those in Zambia?
“As Nigerian electricity consumers, we would be very happy if the tariff is $0.06 but as realists and investors are unsure if such a target will be attractive enough to investors given the cost of doing business in Nigeria,” they said.
According to Adaju and Aigbokhan, Zambia consistently ranks better than Nigeria on indices like the World Bank’s Ease of Doing Business Ranking and the World Economic Forum’s Global Competitiveness Index.
“That said, we wish the government of Nigeria and the Bulk Trader the best of luck in the competitive tender process, and hope that if an investor does win a competitive procurement bid at $0.06-0.10, they will not seek a revision afterwards.”
With regards to supportive policies and regulation from government to ensuring the uptake of renewable energy projects by IPPs in Nigeria.
The REAN’s executives said: “We must give this current government credit. It is the first Nigerian government to take renewable energy (RE) as a serious component of the energy mix, and it has included clear targets under the RE Action plan for 30% of the nation’s energy mix to come from RE by 2030.”
In October, the Nigerian Electricity Regulatory Commission announced its approval for the draft mini-grid policy, which is currently undergoing a series of reviews with stakeholders.
On the question of investment in the renewables sector in the country, due to the absence of a projects database in the country and diversity of the sector, REAN could not state the exact figure at the moment.
However, this is the kind of the information gaps that the association is hoping to bridge.
“In the on-grid RE segment of our sector, we estimate that investments made by 14 project owners for the development stages of their projects are between $3-5 million.
“In total, $2-2.5 billion in investment is expected in the engineering, procurement and construction stage, and the next stage of competitive procurement should see significantly larger investments in the sector,” they concluded.