Positioning the Nigerian economy for energy transition

TODAY, Kenya has the largest windfarm in the whole of Africa. Technology in Europe has advanced to include renewables such as;floating solar PV’s, electric cars, hydrogen fuels used to refine oils and “biorefineries” able to produce a new generation of high-quality biofuels, Opportunities and demand exist for interested investors to go into refining of petroleum products in Nigeria. Likewise, much is to be copied from the UK legislative framework for the decommissioning of oil and gas installations.  The challenge for energy transition is the laws and policies currently geared towards the exploration, exploitation and production of gas to foster economic development. Also, on the international scene, the United States withdrawal from the 2015 Paris Agreement on climate change mitigation.


The question is, does Africa need gas to complement renewable energy? The Nigerian electricity sector is dominated by gas, though there is a growing market for off-grid solar and wind electricity. As highlighted, the development of gas electricity strategies is the main thrust of Nigerian Nationally determined contributions. The reverberation of this dominance is that it enjoys the benefits of experience making it attractive to investors by subsidizing the market in the sector in comparison to off-grid solar electricity. Thus, in many African countries, gas policiesare being reviewed, legislations are being put in place, not to diminish the sector but to strengthen government’s take, state participation, taxation regulations, and local content regulations.

The use of renewable energy in the power sector has not been promoted, despite Nigeria’s abundant renewable energy potential. Using the law to integrate renewable energy into the Nigerian power sector will promote energy security and access, a clean environment and economic development.This article argues that the benefits of renewable energy outweigh the negative environmental and social impacts of oil and gas. It posits that creating a law for the promotion of renewable energy in the power sector will enhance the benefits of renewable energy. Therefore, there should be affirmative law to support renewable energy and provide for a framework for ensuring that other laws do not constitute barriers to the deployment of renewable energy in the power sector.

There are obstacles to greater levels of investment in renewable energy projects, particularly in emerging markets like Nigeria. This includes the challenges of scale, accurate costing, location and accessibility, that need to be addressed; as well as the political and legal challenges, including taxation and government reluctance to provide clear political support for renewable energy projects.A highly devolved governance structure and supportive national frameworks affords stage governments authority and autonomy over a much wider range of functions of low-carbon integration. The regulatory framework is not clear, which inevitably affects what legal opinion is given to clients. We need to support more energy companies and organization to invest in Nigeria.In the business of roof top solar, there has been power purchase agreement PPA signed more than two years ago, and nothing has come out of it.

In conclusion, the world is moving towards renewables, and banks do not want fossil fuels on their balance sheet, granted that natural gas is a greenerfuel. There should be no conflict between investing in renewables and in hydrocarbons; with subsidized prices and rising domestic energy consumption Nigeria can liberate oil and gas for LNG export markets, improving the economics of renewables projects domestically. Finding petroleum in a frontier province does not always lead to instant wealth.  High oil revenue dependence subjects the economy to fluctuations of an increasingly volatile oil and gas markets. Therefore, the way out of the resource curse will be through diversification of the economy. In the long run, the main challenge for many oil exporting countries like Nigeria is economic diversification as it is the ultimate safeguard against the energy transition.

  • Timitimi, an energy lawyer, is founder of the civil society organisation, Grengo Energy


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