Energy Commission of Nigeria
The Electricity Act 2023 was signed into Law in June 2023; it repealed and replaced the Electric Power Sector Reform Act of 2005. The act provides for private sector investments in the power sector and, the role of renewable energy and energy efficiency in the electricity space in a way that significantly enhances the sustainability efforts of Nigeria. It gives strong legal backing to the previous efforts, Nigeria’s Nationally Determined Contributions (NDC, 2021) and Nigeria’s Energy Transition Plan (ETP, 2022).
The two national documents and others before them have awakened and strengthened the national sustainability consciousness; there is a boom of efficient lighting and solar stand-alone systems nationwide implemented by governments and individual citizens. The development partners like the GIZ, UNDP, and UNIDO, among others, execute programmes on industrial energy efficiency, building efficiency code, ISO 50001 EnMS adoption and certifications, etc. Today, EV mass transit buses and cabs and CNG and LPG buses are being integrated into the transport systems in Nigeria. Though much are being done, however, compared with the targets of NDC and ETP, a concerted, focused, and systematic approach is paramount for meaningful sustainability. That is why the Electricity Act 2023 is apt and may be a game-changer if diligently implemented.
The Electric Power Sector Reform Act 2005 focused primarily on unbundling the single-structure electricity industry into generation, transmission, and distribution, with private sector participation in the generation and distribution segments and the market regulated by an independent regulator. While consolidating the gains of the previous reform, one of the objectives of the Electricity Act is integrating and increasing the contribution of renewable energy in the electricity mix, granting power to the sub-national governments to regulate the industry, and opening up the space for active and wider participation of the private sector in the Nigerian electricity supply industry.
The Electricity Act 2023 makes adequate provisions on regulations, facilitation, and incentives for the private sector-led renewable energy industry; for instance:
- Part XVII of the Act is on Renewable Energy, and it covers codes, standards, regulations, and certifications; monitoring and enforcement; marketing and trading of electricity from RE; embedded generations; mini-grids; off-grids; and integration of RE into the national grid and distribution network.
- Section 113 promotes the distribution and supply of electricity from all RE sources, and Section 80 (1) in particular obligates the regulator and the ISO to promote the generation of electricity from RE sources.
- Section 80 (2) gave preference to embedded generation, hybrid generation, co-generation, & the generation of electricity from RE sources in granting licenses; it also directed the simplifying of licensing procedures for renewable electricity businesses.
- Section 128 (f) provides the framework to support the development and utilization of RE sources and an enabling environment to attract investment in rural electricity, to promote productive use of RE and improve access to electricity using RE technology.
- In section 143, the Act mandated the use of the Rural Electrification Fund to support renewable electrification projects.
- Section 166 (1) mandated the Ministry of Finance and its relevant agencies to introduce such tax incentives necessary to promote and facilitate the generation and consumption of energy from RE sources in accordance with the provisions of the Industrial Development Act or such other fiscal policy framework to foster such tax reliefs that would incentivize RE in Nigeria.
Implementation of the Electricity Act 2023 will definitely increase the percentage of the RE in the energy mix, consequently impacting positively on all three sustainability components: the environment, social, and governance. In my opinion, for this to happen, the following actions are necessary:
- The provisions of the Electricity Act need to be activated; hence, the organized private sector associations must work with the government to identify priority provisions and work out the implementation modalities, and get the concerned government agencies to issue circular(s) or gazette the provisions. Without this, the progress will be slow.
- Mini-grids and higher capacity solar projects should be on the IPP model, where the IPP trade the electricity throughout the lifespan of the project;
- Restructuring government appropriations and other forms of RE project financing with emphasis on more MW capacity and project lifespan (MWh) per unit cost, Naira;
- Minimizing loan financing of RE public projects, the government should create frameworks to enable the private sector to access loan easily and at fair interest rates, and payback arrangements should be business-friendly.
The article is written in his personal capacity and carries his personal views
