NESG, Heinrich Boll Foundation study finds gas, hydro most competitive energy sources for Nigeria

A new study by the Nigerian Economic Summit Group (NESG) and the Heinrich Boll Foundation on comparison of cost of electricity generation in Nigeria has found that from an investor’s perspective, large scale hydropower and natural gas are the most competitive technologies for electricity generation in Nigeria.

Using the concept of levelised costs, these energy sources costs on average 0.05 to 0.07kWh, while solar costs 0.20kWh, diesel generators 0.30kWh and petrol 0.60kWh says the researchers led by Maria Yetano Roche, supported by Nnanna Ude and Ikenna Donald-Ofoegbu.

“In practice, hydropower projects in Nigeria generally lead to higher costs than expected and as a result the investment pipeline (including those into renovation of existing dams) is rather slow.

“With regards to gas-powered electricity, combined cycle gas turbines are gradually taking over the inefficient single cycle turbines and it is expected that this will be a major source of Nigeria’s future electricity mix,” said the research document made available to BusinessDay.

The study debunks the notion that renewable are high-risk investment despite recent technological and policy innovations. “This study counters the prevailing view by providing evidence that renewable energy is competitive today and in the mid-term in Nigeria, and more so when the costs to society are considered.

Stakeholders in the Nigeria’s electricity sector on June 22, discussed the report at the NESG Renewable energy round table held at Eko Hotels and Suites, Lagos.

Laoye Jaiyeola, CEO of NESG who gave the opening remarks said that renewables have become a veritable option for delivering power to Nigeria through home-grown innovative solutions.

Jaiyeola further said that the roundtable was part of organisation’s advocacy effort to change the narrative around difficulty in scaling renewable energy investments in Nigeria at a time when costs of renewables are seeing a decline.

The discussion focused on funding for renewable energy especially offgrid utility scale and rooftop solar, deeper utilisation of biomass and challenges to collecting refuse and processing for power.

It was agreed that creative financing measures along with retooling policy framework are required to drive renewable energy adoption in the country.

They concluded that the societal cost of power through fossil fuels have become too enormous. The release of carbon into the atmosphere has serious repercussions for flora and fauna, further worsening pollution concerns.

In his keynote address at the occasion, Felix Matthes, research coordinator for energy & climate policy at Oeko Institut, a research institute on sustainable future based in Europe, said the focus of policy and investments should be getting the value chain on the ground and creating workable business models.

“This will require structural changes and appropriate regulatory and market arrangements that calls for improving generation technologies and making them more decentralised.

“There should also be changes to the structure of costs, and structure of players to make them more diverse investors and operators with smarter financing approaches that will projects bankable and reduce investment risks.

Matthes further said that structures of grids would need to evolve to new spatial patterns, creating new roles of self-generation, transmission and distribution. It will also include new mini and micro grids as well as super grids structures.

ISAAC ANYAOGU