RENEWABLE ENERGY IN NIGERIA

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RENEWABLE ENERGY IN NIGERIA

F ^INAL R ^EPORT

For

E MBASSY OF THE R EPUBLIC OF K ^OREA

D ^ECEMBER 21, 2015

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Acknowledgement

We express our profound gratitude to the Embassy of the Republic of Korea, under the able leadership of Ambassador Noh Kyu-duk, for giving the Centre for Renewable Energy Technology (CRET) this opportunity to conduct this study. We also received excellent support and cooperation from:

 Mr. Dae Sup Lee, Economic Counsellor, Embassy of the Republic of Korea

 Mr. Jung Sang-Hoon, Korean International Cooperation Agency (KOICA)

 Uchenna Ohanu, Researcher, Embassy of the Republic of Korea.

We thank Professor Adebiyi Daramola, Vice-Chancellor of the Federal University of Technology, Akure (FUTA) and the entire management of FUTA for the institutional support we received while conducting this study.

Professor Olurinde Lafe Director

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General Overview

About This Study

The current state of the energy sector in Nigeria was the subject of this study. The comprehensive study included an inventory of Nigeria’s fossil and renewable energy resources. Total energy demand and the capacity of the existing infrastructure to deliver required power to all regions were studied. We

examined the past, current and future energy policies as these impact efforts to solve the nation’s energy problems. We recommended practical approaches to harnessing Nigeria’s renewable energy sources. We also discussed the best opportunities for Korean companies to succeed in the Nigerian energy sector.

The report contains CRET’s analysis of the collected information and our recommendation for how Korean companies can best tap into the enumerated opportunities for investment in renewable energy projects in Nigeria.

Our Recommendation for Korean Companies

We identified a number of strategic opportunities for Korean companies to play active roles in the Nigerian renewable energy sector. These opportunities include:

 Installation of distributed power plants using different types of renewable energy resources.

There are several opportunities to invest in small hydro power plants. However, we believe power plants based on photovoltaic solar panels and those using biomass as fuel offer the quickest path to a heathy Return on Investment (ROI).

 Fuel cells provide a clean way of converting Nigeria’s enormous natural gas resources into electricity. At least one Korean conglomerate has global advantage in this area.

 Manufacturing of renewable energy products.

 Construction of energy efficient buildings.

 Road vehicle transportation. This will involve the sale/local production of all-electric vehicles and hybrid vehicles powered by electric and international combustion engines (ICE).

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About Nigeria

Figure 1 shows the geographical map of Nigeria with the 36 states and the Federal Capital Territory.

Figure 1: Geographical Map of Nigeria

 Population (2015 Estimate): 182,202,000

 Total Area: 923,768 km²

 Land Coverage: 910,835 km²

 Water Coverage: 12,933 km²

 Perimeter: 4,047 km

 Coastline: 853 km

 Arable Land: 38.97%

 Permanent Crops: 3.46%

 Total Renewable Water Resources: 286.2 m³

Nigeria is a well-endowed country. The country has a healthy GDP despite the poor infrastructural base in all key sectors (power, transportation, housing etc.). According to Trading Economics¹: “The Nigerian economy grew by 2.84 percent year-on-year in the third quarter of 2015, following a 2.35

1 http://www.tradingeconomics.com/nigeria/gdp-growth-annual

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percent expansion reported in the previous period. The oil sector, accounting for nearly 11 percent of total production rebounded while services sector growth slowed. Quarter-on-quarter, GDP increased by 9.19 percent, following a 2.57 percent growth in the previous period. GDP Annual Growth Rate in Nigeria averaged 5.91 percent from 2005 until 2015, reaching an all-time high of 8.60 percent in the fourth quarter of 2010 and a record low of 2.35 percent in the second quarter of 2015. GDP Annual Growth Rate in Nigeria is reported by the Central Bank of Nigeria. “

Figure 2 shows the six geo-political zones of the country consisting of the North-West, North-Central, North-East, South-West, South-South and South-East.

Figure 2: Nigeria's Geopolitical Zones

Figure 3 is the current layout of Nigeria’s 330KV Power Distribution Grid. The susceptibility of the entire power architecture any fault anywhere is quite obvious. Figure 4 shows what the current grid would look like if it were to be scaled to handle 10,000MW capacity.

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Figure 3: Nigeria’s 330KV Power Distribution Grid. Source – Transmission Company of Nigeria, 2013

Figure 4: Nigeria’s 330KV Power Distribution Grid for Wheeling 10,000MW. Source – Transmission Company of Nigeria, 2013

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Figure 5: Nigeria’s 330KV Power Distribution Grid for Wheeling 16,000MW. Source – Transmission Company of Nigeria, 2013

Figure 6 depicts how electricity is sold to the 11 Power Distribution Companies (DISCOS).

Figure 6: Coverage Zones for Power Distribution Companies. Source – Nigerian Electricity Regulatory Commission

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Energy Situation in Nigeria

Figure 7 is the projected energy demand up to Year 2050. The projection accounts for different categories of energy usage.

Figure 8 is the projection of electricity generation, from different sources, up to Year 2050.

Figure 8: Projected Electricity Generation in Nigeria. Source: Report - The Nigeria Energy Calculator 2050. Published by the Energy Commission, March 2015

Figure 7: Projected Energy Demand. Source: Report - The Nigeria Energy Calculator 2050. Published by the Energy Commission, March 2015.

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Figure 9 is the projected on-grid and off-grid electricity demand until Year 2035.

Figure 9: Projected On-Grid & Off-Grid Electricity Demand. Source: Report by the Nigerian Energy Support Programme (NESP), The Nigerian Energy Sector - an Overview with a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification, 2nd Edition, June 2015.

Power Generation & Energy Usage Power

 Electricity Demand: 24.4GW

 Total Installed Power Capacity: 12.07GW

 Available Installed Power Capacity: 6.84GW

 Actual Generation Capacity (July 2015): 4.06GW (from hydro and gas/thermal power plants) Figure 10 depicts the post privatization structure of the power sector.

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Figure 10: Post-Privatization Power Sector Structure. Source - GOPA-International Energy Consultants GmbH

Figure 11 is the transaction structure of the Transmission Company of Nigeria.

Figure 11: Transaction Structure for Transmission Company of Nigeria. Source - GOPA-International Energy Consultants GmbH

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Figure 12 shows the locations where power is currently generated for the national grid.

Figure 12: Power generation locations in Nigeria. Source - Nigeria Power Guide Vol. 3, Detail Commercial Solicitors, 2015

Electricity

o Per Capita Energy Consumption: 149kWh per year o Household Electricity Consumption: 570kWh per year

o Population Without Electricity: 99 million (Total Population Base=180 million) o Overall Electrification Rate: 45%

o Urban Electrification Rate: 55%

o Rural Electrification Rate: 35%

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Table 1: National Electricity Generation Profile. Source - Report by the Nigerian Energy Support Programme (NESP), The Nigerian Energy Sector - an Overview with a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification, 2nd Edition, June 2015.

The above table shows numbers that appear to be anomalies, such as “Maximum Peak Generation (MW)” being less than “Average Generation Availability (MW)”. An excellent explanation was given by NESP² (2015): “The existing fleet of power plants is a mix of plants built before the 1990’s and plants built (or being built) since the mid-1990’s. Since the older thermal power stations suffer considerably from poor maintenance, the available generating capacity was just under 6,200 MW in 2012 and has risen to 6,840 MW in 2015. However, unavailability of gas, breakdowns, water shortages and grid constraints severely limit the power plant performance, which means that despite an increase in the available installed capacity over the last years, only between 3,000 MW to 4,500 MW are actually being generated (the highest peak generated ever in Nigeria was 4,517.6 MW on December 23, 2012). Up to 2,700 MW of power generation capabilities are regularly lost due to gas shortage, up to 500 MW are lost due to water management, while several hundred megawatts are regularly lost due to line constraints.”

The Maximum Peak Generation has remained below 5,000 MW for year 2015 because the fundamental problems bedeviling the national power systems have remained largely unsolved. These include natural gas delivery constraints to the gas-thermal power plants, sub-par water resource management at the hydro-power plants and persistent losses through the dilapidated transmission/distribution lines.

Typical of the challenges to the national power grid is this May 26, 2015 publication³, captioned “Why Power System Collapsed”, in a national newspaper. According to Mainstream Energy Solutions Ltd, the concessionaires of Kainji and Jebba Power Plants, the Power System Collapse, which affected the Federal Capital and other parts of the country, was “caused by a breakdown at Jebba Hydro Electric Power Station”. The publication noted: “An informed source disclosed that scarcity of gas resulted in a lack of capacity to sustain grid of thermal power plants.”

2 Nigerian Energy Support Programme (NESP), The Nigerian Energy Sector - an Overview with a Special Emphasis on Renewable Energy, Energy Efficiency and Rural Electrification, 2^nd Edition, June 2015.

3 http://www.ngrguardiannews.com/2015/05/why-power-system-collapsed/

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Figure 13: Nigeria's Energy Consumption Profile. Source - International Energy Agency (IEA)

Figure 14: Nigeria's Energy Consumption Compared to Peer Nations. Source - International Energy Agency (IEA)

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Table 2: Nigeria's Household Electrification by States. Source – Nigerian National Bureau of Statistics.

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Nigerian Energy Resources Fossil Fuel

Oil

 Crude Oil Reserve: 37.14 billion barrels

 Crude Oil Production: Average 1.8-2.4 million barrels per day

 Years of Extraction Remaining: 42 years

 Nigeria accounts for 22% of African production and 2.6% of total crude oil production

 Light, sweet quality of the Nigerian crude makes it a preferred gasoline feedstock Gas

 Natural Gas Reserves: 5.2 trillion cubic metres

 Natural Gas Production: 43.2 billion cubic meters per year

 Years of Extraction Remaining: 120 years

 Energy Production: 23,047GWh

 7th largest reserves in the world

 Largest natural gas in Africa

 About 1/3 of production is consumed locally

 Produced Liquefied Natural gas (LNG) is exported mainly to the United States of America

 75% of the gas consumed is for power generation Wood

 Percentage of Nigeria's population that depends on fuelwood for cooking and other domestic uses:

60%

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Renewable Energy

Table 3: Nigeria's Renewable Energy Potential. Source: Energy Commission of Nigeria

Table 4: NERC Licenses for Renewable Energy

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Solar

Figure 15: Nigerian Insolation Map. Source: SOLAR GIS

 Potential Production Capacity (if 1% of Nigeria’s 923,768 km² land area is covered with current photo-voltaic panels with 15% solar conversion efficiency)

o Energy: 207,000GWh per year o Power: 1,428GW

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Table 5: Solar power systems under development. Majority of these plants are still early stage and most are just completing the requisite Environmental Assessment approval. Source: Federal Ministry of Environment.

S/N SOLAR ENERGY PROJECTS STATE CAPACITY

(MW)

PROPONENT

1 PVGRID - TIED GENERATOR SYSTEM AT ATAKUMOSA WEST LGA OSUN 50 ROOK SOLAR INVESTMENT LTD.

2 EVER POWER SOLAR POWER PLANT AT MANCHOK,KAURA LGA KADUNA 50 QUAINT GLOBAL ENERGY LTD.

3 SOLAR FARM PROJECT AT NJUMTILO,MAIDUGURI BORNO 200 BORNO STATE GOVERNMENT

4 SOLAR FARM AT KADO KADUNA 59 SYNERGENT POWERSHARE NIG LTD

5 SOLAR INDEPENDENT POWER PROJECT , AT GANJUWA BAUCHI 100 NIGERIAN SOLAR CAPITAL PARTNERS 6 ANJEED KAFANCHAN POWER AT ZIPAK,KAFANCHAN,JAMA'A LGA KADUNA 50 ANJEED INNOVA LIMITED

7 SOLAR PHOTO-VOLTAIC POWER GENERATION PROJECT AT YABO LGA SOKOTO 50 GEO ENVIRNMENTAL SERVICES

8 SOLAR FARM PROJECT AT KANKIA KATSINA 30 KASTINA STATE GOVT

9 JAPANESE GRANT SOLAR POWER PLANT AT LOWER USMAN DAM FCT,ABUJA 0.9 FED .MIN . OF POWER .ABUJA . 10 ON -GRID SOLAR POWER GENERATION AT USMAN DISTRICT FCT,ABUJA 200 99EFFECTS ENERGY LTD 11 PHOTOVOLTAIC SOLAR FARM PROJECT AT KANKIA KATSINA 20 KATSINA STATE GOVERNMENT 12 SOLAR PROJECT AT DANMARKE,BUNGUDU LGA ZAMFARA 75 SPGSPOWER LIMITED 13 SOLAR POWER PLANT ,PANYAM DISTRICT ,MANGU LGA PLATEAU 50 CT COSMOS LTD

14 SOLAR FARM AT RIKO,JIBIYA LGA KATSINA 10 SINOSUN INVESTMENT LIMITED 15 SOLAR GENERATION PLANT IN DAMATURU YOBE 1000 GOPAINT’LENERGY CONSULTANT 16 PHOTO VOLTAIC POWER PLANT IN DUKPA/WUNA,GWAGWALADA FCT,ABUJA 100 LR-AARONPOWER LIMITED

17 SHIRORO SOLAR POWER PROJECT AT SHIRORO LGA NIGER 300 NORTH SOUTH POWER COMPANY LTD 18 SOLAR POWER PLANT AT ABULE OLOKUTA VILLAGE ,IREWOLE OSUN 50 ROMIX ENERGIES LTD

19 SOLAR POWER PLANT IN LAMBA VILLAGE,BAKURA LGA ZAMFARA 150 PVBAKURA LIMITED 20 SOLAR POWER PLANT AT USO,OWO LGA ONDO 25 CECUSAFE LIMITED

21 SOLAR FARM AT GUSAU,GUSAU LGA ZAMFARA 50 SINOSUN INVESTMENT LIMITED 22 SOLAR PANELLED POWER PROJECT ,KEFFI LGA NASSARAWA AVENSOL SOLAR POWER NIG.LTD

23 SOLAR FARM AT KIRU LGA KANO 40 BRAVOS ENERGY RESOURCES

24 SOLAR PROJECT IN KANKIYA LGA KATSINA 125 NOVA SOLAR 5FARMS LTD

25 SOLAR ENERGY PROJECT IN UDI LGA ENUGU 1200 MOTIR SEASPIRE ENERGY NIGERIA LTD

26 SOLAR PLANTS IN DUTSE LGA JIGAWA NOVA SCOTIA POWER DEV LTD

27 SOLAR POWER PLANT (OROCERAM),ISOKUN OLOPAN,ILORIN SOUTH KWARA 150 OROCERAM LIMITD 28 SOLAR POWER PLANT (OROCERAM),DOBWA JERE PAIKO LGA NIGER 150 OROCERAM LIMITD

29 SOLAR POWER PLANT IN DUTSE LGA JIGAWA 75 PASDUTSE LTD

30 SOLAR POWER PLANT IN HADEJIA LGA JIGAWA 75 PASHADEJIA LTD

31 SOLAR ENERGY PROJECT AT GWAGWALADA AREA COUNCIL FCT,ABUJA SUPER SOLAR NIGERIA LTD. 32 SOLAR POWER PROJECT AT GWAGWALADA AREA COUNCIL FCT,ABUJA 100 ENERLOG LIMITED

33 SOLAR POWER PROJECT IN YABO SOKOTO 100 KVKPOWER NIGERIA PVTLTD

34 SOLAR POWER PLANT IN KANKIA LGA KATSINA 80 PAN AFRICA SOLAR LIMITED 35 SOLAR POWER PLANT AT LAMBAN VILLAGE,BAKURA LGA ZAMFARA 300 BAKURA ENERGY LIMITED 36 SOLAR PLANT IN ONYI,KOKONA LGA NASARAWA 50 AFRINGIA POWER LIMITED

37 SOLAR POWER PLANT AT NUMAN ,NUMAN LGA ADAMAWA 35 HILL CREST ENV.MANAGEMENT COY LTD .

38 RENEWABLE ENERGY AT OWO LGA ONDO 10 GOTTPOWER LIMITED

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Wind

Table 6: Wind Power Systems under Development. Source - Federal Ministry of Environment

S/N WIND ENERGY PROJECTS CAPACITY

(MW)

PROPONENT

1 WIND POWER PROJECT AT VWEI KURU,JOS PLATEAU STATE. 100 JBSWIND POWER LTD 2 WIND IN COASTAL AREA PROJECT IN LEKKI TOWN,LAGOS STATE PRICEWATER HOUSE

COOPERS LTD

3 WIND FARM POWER PLANT AT LAMBA,RIMI LGA,KATSINA STATE 10 FED.MIN. OF POWER

4 WIND FARM PROJECT AT ADO EKITI 8.5 ENERSYS NIG LTD

5 KATSINA WIND FARM 10 FED.MINISTRY OF POWER

6 CGCNIG.LIMITED LOCATED AT PLOT 674CADZONE, ALONG

LUGBE EXPRESSWAY ,FCTABUJA

CGCNIGERIA

Figure 16: Nigerian Wind Speed Map. Source - Nat Met Department

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Figure 17: 3D Wind Speed Map of Nigeria. Source – Ministry of Science and Technology

Hybrid Solar-Wind

Table 7: Hybrid Solar-Wind farm under Development. Source - Federal Ministry of Environment.

SOLAR AND WIND ENERGY PROJECTS CAPACITY (MW) PROPONENT

SOLAR-WIND FARM AT ATACHIDA TOWN,WURNO LGA,SOKOTO

STATE.

50 FALMATA AND HINNAI NIG. LTD.

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Hydropower

According to the Energy Commission of Nigeria:

The total exploitable large scale hydropower potential of Nigeria is estimated at over 14,120 MW, capable of producing 50,832 GWh of electricity annually. Only about 13.50% the nation’s large hydropower potential has been developed. The Small hydropower potential of Nigeria is estimated at 3,500 MW of which only 60.58 MW which represents about 1.70% had been developed. There is the urgent need to develop Small Hydropower Plants for provision of electricity for the rural areas and remote settlements. In Nigeria, hydropower generation capacity accounts for a significant part of the total grid electricity generation mix; and electricity production capacity from hydropower

sources was 19.5% of total grid power generation capacity in Nigeria in 2012.

Figure 18: Location of Major Dams in Nigeria. Sources: Natural Earth, African Development Bank

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Figure 19: Location of Small Dams in Nigeria. Source - UNIDO

 Large Hydro Potential: 11.25GW

 Small Hydro Potential: 3.50GW

 Installed Capacity of 3 Large Hydro Power Plants:

o Kainji: 760MW o Shiroro: 600MW o Jebba: 570MW

 Annual Energy Production: 5,659GWh

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Table 8: Hydropower Projects under Development

4 This date will be pushed back on account of court actions preventing the construction phases, according to:

http://www.hydroworld.com/articles/2014/12/nigeria-s-us-1-3-billion-700-mw-zungeru-hydroelectric-project- deals-with-challenges.html

S/N POWER STATION CAPACITY (MW) COMPLETION

YEAR

1 Zungeru, Niger State 700 2017⁴

2 Mambilla, Taraba State 3,050 2018

3 Gurara I, Niger State 30 2014

4 Gurara II, Niger State 360 N/A

5 Itisi, Kaduna State 40 N/A

6 Kashimbilla, Taraba State 40 2015

7 Kano, Kano State 100 2015

8 Zamfara, Zamfara State 100 2012

9 Kiri, Adamawa State 35 2016

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Biofuels

 2015 market demand for fuel ethanol (at 10% blending ratio with gasoline): 1.3 billion litres.

 Projected 2020 market demand for fuel ethanol (at 10% blending ratio with gasoline): 2.0 billion litres.

 Projected 2020 market demand for biodiesel: 900 million litres

 Primary Solid Biofuels: 4,528,544GWh per year

 Energy from Biofuels and Waste: 108,142GWh per year

Biofuels energy projects under development are shown on the Table below.

Table 9: Bio-fuels Energy Projects under Development. Source - Federal Ministry of Environment

S/N BIO FUELS ENERGY PROJECTS PROPONENT

1 NNPCBIOMASSFUELS PROGRAMME (PLANTATION PROJECT) 2 AUTOMOTIVE BIOMASS ETHANOL PROGRAMME AT AKURE NNPC 3 INTEGRATED SUGARCANE PLANTATION AND ETHANOL DISTILLERY PLANT IN BURUKU,BENUE

STATE

NNPC 4 INTEGRATED SUGARCANE PLANTATION AND ETHANOL DISTILLERY PLANT IN AGASHA,BENUE

STATE

NNPC 5 AUTOMOTIVE BIOFUEL PROGRAMME AT EBENEBE ANAMBRA STATE NNPC 6 INTEGRATED PALM OIL BASED BIODIESEL ON 25,000HA LAND SIZE IN IKOM CALABAR,CROSS

RIVER STATE

RENEWABLE ENERGY

DIVISION NNPC 7 CASSAVA-BASED ETHANOL PROCESSING FACILITY IN EKU/ABRAKA/KOKORI IN ETHIOPE LGA

IN DELTA STATE

LIFEWAY ETHANOL

REFINERY LTD. 8 AGRO-FORESTRY JATROPHA CURCAS PLANTATION DEVELOPMENT PROJECT. THRESHOLD BIOFUEL

ENERGY COMPANY LTD. 9 180,000LPDCASSAVA ETHANOL AND 100TPDCASSAVA STORAGE /FLOUR FACTORY AT

IYAMERE IKOLE LGA,EKITI STATE.

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Biomass

Figure 20: Nigeria's residual waste from agricultural crops. Source: Simonyan, K.J. & Fasina, O., “Biomass resources and bioenergy potentials in Nigeria,” in: African Journal of Agricultural Research, Vol. 8(40), Oct. 2013, pp. 4975-89



Amount of fresh animal waste produced in Nigeria every day: 227,500 tons.

 Annual biomass from animal waste: 61 million tons

Table 10: Waste-to-Energy Projects under Development. Source - Federal Ministry of Environment

WASTE TO FUEL ENERGY PROJECTS PROPONENT

RENEWABLE (GREEN)ENERGY WASTE/MANAGEMENT PROJECT AT UBIMA,RIVERS

STATE

SIAT NIGERIA LTD (SNL) 60MWWASTE -TO-ENERGY POWER PLANT AT IKORODU HIGHLAND NIG LTD

GREEN ENERGY PRODUCTION SYSTEM- WASTE REDUCTION PRODUCTION AT

BENIN/SAPELE RD.

PRESCO PLC

BIO-FUEL (BIOMASS AND WASTE)INJECTION PROJECT AT SHAGAMU,OGUN STATE. WAPCO

Nigeria’s vast waste-to-energy potential remains largely untapped. Economic potentials and investment opportunities in Waste-to-Energy projects are outlined under the section: Best Strategy for Korean Companies in Nigeria.

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Fuel Cell

The development of fuel cell in Nigeria is still at an early stage. As shown below in the Table, the most significant effort to-date is the 200MW capacity hydrogen fuel cell under development in Ekiti State.

Table 11: Hydrogen Fuel cell under Development. Source - Federal Ministry of Environment

FUEL CELL (HYDROGEN) ENERGY PROJECTS PROPONENT

200MW POWER GENERATION [ELECTRICITY POWER PROJECT] AT ADO -EKITI ,EKITI STATE JATDIGITAL SERVICE NIG.LTD

According to AllAfrica⁵, writing about renewable energy potential in Nigeria: “The Renewable Energy Master Plan (REMP), indicated specific areas of investment for prospective investors, namely: Small- hydro: 600 MW in 2015 and 2, 000 MW by 2025; Solar PV: 500 MW by 2025; Biomass-based power plants: 50 MW in 2015 and 400 MW by 2025; Wind: 40 MW for wind energy by 2025.”

Furthermore, AllAfrica revealed that Nigeria’s Renewable Energy Resources noted: “HQMC Korea Company Limited, signed a memorandum of understanding with the Federal Government to invest up to

$30 billion to build a 10,000MW solar power plant in Nigeria over several years “

5 http://allafrica.com/stories/201505190876.html

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Primary Energy Supply Resource Distribution

Figure 21: Nigeria’s primary energy supply distribution. Source: CRET 0%

4% 6% 1%

89%

Primary Energy Supply Resource Distribution

Coal Oil Products Natural Gas Hydro Biofuels & Biomass

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Challenges in Nigeria’s Energy Sector

The following are the challenges faced by Nigeria’s energy sector:

 Inadequate power generating capacity

 Lack of multiplicity of energy sources. There has been over reliance on a few hydropower stations and gas power plants.

 Antiquated national power grid that has been poorly maintained for several years.

 Over centralized operations and management as the sector was controlled by the Federal Government.

Sambo⁶ (2009) listed the following major challenges for the sector:

 Despite the installed petroleum products refining capacity of 44 Despite the installed petroleum products refining capacity of 445,000 barrel/day and electricity generation capacity in excess of 6,000 MW, Nigeria imports over 70% of its petroleum products requirement while Nigeria electricity supply is inadequate at just about 3,000 MW.

 Coal and renewable energy resources are grossly underutilized in the country despite their availability in reasonable quantities.

 Huge investment is required to upgrade and expand our power generation, transmission and distribution systems, which government alone cannot provide in view of other pressing demands of the economy.

 Good potentials exist in the upstream business in the off-shore, on shore, and inland basins of the country, as well as in the downstream oil and gas business. Similar potentials exist in the power sector.

 The level of utilisation of the nation’s huge renewable energy s huge renewable energy resources is rather too low.

6 Sambo, Abubakar S., The Place of Renewable Energy in the Nigerian Energy Sector, Paper presented at the World Future Council Workshop on Renewable Energy Policies, Addis Ababa, Ethiopia, 10^th October, 2009. Accessed at http://www.area-

net.org/fileadmin/user_upload/AREA/AREA_downloads/AREA_Conference_09/Presentations/Nigeria_RENEWABL E_ENERGY_MASTERPLAN.pdf

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Current Policy, Strategy and Major Issues

The Energy Commission of Nigeria (ECN) is⁷ “charged with the responsibility for the strategic planning and coordination of national policies in the field of energy.” Therefore, the following positions on

Nigeria’s current policy, strategy and major issues (policy evaluation) on energy and renewable energy in Nigeria, were derived from information garnered from ECN.

Nigerian Renewable Energy Policy Summary

i. To encourage the diversification of sources of energy supply through renewable energy, and as such improve the energy security of the country;

ii. To ensure the development of the nation's renewable energy resources and energy efficiency opportunities for the achievement of national energy security and an efficient energy delivery system with an optimal energy resource mix.

iii. To guarantee increased contribution of renewable energy and energy efficiency productive activities to national income.

iv. To guarantee adequate, reliable and sustainable supply of energy at appropriate costs and in an environmentally friendly manner, to the various sectors of the economy, for national

development.

v. To guarantee an efficient and cost effective consumption pattern of energy resources.

vi. To promote increased investments and development of the energy sector industries with private sector leadership.

vii. To enhance technological development through increased domestic manufacturing of renewable energy and energy efficiency components;

viii. To ensure a comprehensive, integrated and well-informed energy sector plans and programmes for effective development.

ix. To foster international co-operation in energy trade and projects development in both the African region and the world at large.

x. To promote research and development in, and adoption of, sustainable low carbon and clean energy technologies to mitigate environmental pollution and climate change.

xi. To promote gender sensitivity and special attention to rural energy needs.

xii. To promote efficiency, conservation and carbon management best practices in the nation’s energy supply chain.

xiii. To ensure effective coordination of national renewable energy and energy efficiency planning, programmes and policy implementation.

xiv. To stimulate growth in employment generation through an expanded renewable industry;

xv. To promote rapid expansion of renewable-based electricity market through cost reducing supply side and demand side incentives.

xvi. To develop regulatory procedures that are sensitive to the peculiarities of renewable energy based power supply;

xvii. To create stable and predictable investment climate in renewable energy and energy efficiency market;

xviii. To provide effective protection of electricity consumers through effective regulation;

xix. To reduce household and outdoor air pollution as well as contribute to the abatement of greenhouse gas emissions, and thus contribute to improved health and overall social development.

7 Source - http://www.energy.gov.ng/

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xx. To ensure strategic market transformation from sales of inefficient energy-consuming products to massive sales of energy efficient appliances in Nigeria.

National Policies on Hydropower

In Nigeria, hydropower has the following classification:

 Micro schemes: ≤ 500 kW

 Mini Schemes: 500 < Mini ≤1 MW

 Small Hydropower: 1 MW < Small ≤30MW, and

 Large hydropower: > 30 MW.

Policies

i. The nation shall fully harness the hydropower potential in the country for electricity generation.

ii. The nation shall pay particular attention to the development of the small, mini and micro hydropower schemes for the growth of the rural economy.

iii. The nation shall exploit hydropower resources in an environmentally sustainable manner.

iv. The nation shall actively promote private sector and indigenous participation in hydropower development.

v. The nation shall support Research and Development activities for local adaptation of hydropower plant technologies.

Objectives

i. To increase the contribution of hydropower to the total electricity supply mix.

ii. To extend electricity to rural and remote areas, through the use of small, mini and micro hydropower schemes to promote economic activities.

iii. To pursue hydropower production in an environmentally friendly and sustainable manner that minimizes the adverse impacts on the environment, ecosystem and population.

iv. To attract private sector investments into the hydropower sub- sector.

v. To develop local manufacturing capabilities for hydropower technologies.

Strategies Short-Term

i. Promoting and supporting R & D activities on hydropower exploitation for increased indigenous participation in the planning, design and construction of hydropower projects.

ii. Establishing more hydro-meteorological stations across river basins.

iii. Updating data on all rivers, identifying possible locations for hydropower projects and facilitating detailed survey of the potential SHP sites.

iv. Organizing sensitization workshops, seminars and enlightenment programmes on the roles of SHP in rural development.

v. Introducing tax reductions, soft loans, grants, bilateral concessional funding to encourage private investments and public-private partnerships in the development of hydropower projects.

vi. Putting in place a framework for power purchase agreement between owners of SHP, the grid and users.

vii. Exploiting the multifunctional use of hydropower infrastructure (e.g. flood control, water supply, electricity generation, recreation, etc.).

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viii. Ensuring that State Rural Electricity Boards incorporate small-scale hydropower projects in their agricultural, industrial and economic development plans.

ix. Supporting cutting-edge research and the development of mitigation techniques and

technologies to reduce or eliminate adverse impact of hydropower development and operation on the ecosystem.

Medium-Term

ix. Reviewing, improving and continuation of short-term strategies.

x. Establishing local training institutions to produce skilled manpower in hydropower technology.

xi. Integrating capacity building in the procurement of hydropower projects to encourage technology transfer to indigenous personnel.

xii. Encouraging the private sector establishment of Indigenous Manufacturing Industries for hydropower equipment and accessories.

Long-Term

ix. Reviewing, improving and continuation of medium-term strategies.

National Policies on Solar

Policies

i. The nation shall aggressively pursue the integration of solar energy into the nation's energy mix, which should be based on the established potentials and available technologies nationwide.

ii. The nation shall keep abreast of worldwide developments in solar energy technology and utilization to adopt global best practices.

iii. The nation shall utilize solar energy resources where it is more cost effective and advantageous.

iv. The nation shall support the establishment of local manufacturing industries for solar energy conversion technologies and applications.

v. The nation shall effectively harness solar energy resources and integrate them with other energy resources.

vi. The nation shall promote the use of efficient solar energy conversion technologies, such as use of photo-voltaic and concentrated solar panels for power generation.

vii. The nation shall promote solar energy generation for productive use.

Objectives

ii. To develop the nation's capability and capacity in the utilization of solar energy.

iii. To use solar energy as the main energy option in rural and peri-urban areas with higher solar energy potential.

iv. To develop the market for solar energy technologies and services.

v. To develop local manufacture capabilities for solar energy conversion technologies.

i. Intensifying research and development in solar energy technology and applications.

ii. Intensifying human and institutional capacity building in solar energy technologies and applications.

iii. Providing adequate incentives to suppliers of solar energy products and services.

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iv. Providing adequate incentives to local manufacturers for the production of solar energy systems and accessories.

v. Introducing measures to fast-track the development of local solar energy industries.

vi. Setting up extension programmes to popularize solar energy technology and solutions to the rural and peri-urban communities.

vii. Providing fiscal incentives for the installation of solar energy systems.

viii. Pursuing aggressive mass campaign and advocacy on the use of RE as alternative energy sources.

ix. Developing and enforcing standards for solar energy technologies, products, services and processes.

Medium-Term

i. Reviewing, improving and continuation of short-term strategies.

ii. Setting up and maintaining a comprehensive information system on available solar energy resources and technologies.

iii. Putting in place measures to leverage funding from international agencies and countries that promote the use of solar energy.

Long-Term

iv. Reviewing, improving and continuation of medium-term strategies.

National Policies on Biomass

Policies

i. The nation shall effectively harness non-fuelwood biomass energy resources and integrate them with other energy resources.

ii. The nation shall promote the use of efficient biomass conversion technologies.

iii. The nation shall improve measures required to support a greater degree of forest thinning and the enhance collection and use of forest residues.

iv. The nation shall enhance the demand side measures that support the use of biomass for the production of renewable energy.

v. The nation shall set a limit on the amount of biomass use for energy, to ensure that the overall demand can be accommodated alongside other demands for land, for example, food production on biodiversity conservation.

vi. The nation shall undertake the life cycle analysis of all biomass feedstock to determine their relative climate change benefits.

vii. The nation shall undertake a comprehensive mapping of agro-ecological suitability for energy crops for the purpose of obtaining a regional view of production potentials and contribute to decision making on support for handling and/or processing facilities.

viii. The nation shall incorporate waste-to-energy strategy in its overall waste management framework

Objectives

i. To promote biomass as an alternative energy resource especially in the rural areas.

ii. To promote efficient use of agricultural residues, animal and human wastes as energy sources.

iii. To reduce health hazards arising from combustion of biomass fuel.

iv. To focus biomass utilization close to production, for community heating schemes and domestic heating, particularly off the national grid network.

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i. Developing extension programmes to facilitate the general use of new biomass energy technologies.

ii. Promoting R & D in biomass energy technology.

iii. Establishing pilot projects for the production of biomass energy conversion devices and systems.

iv. Providing adequate incentives to local entrepreneurs for the production of biomass energy conversion systems.

v. Training of skilled manpower for the maintenance of biomass energy conversion systems.

vi. Developing skilled manpower and providing basic engineering infrastructure for the local production of components and spare parts for biomass systems.

vii. Promoting of electricity and heat generation from biomass waste.

viii. Mainstreaming waste-to-energy strategy in the overall waste management framework.

Medium-Term

viii. Reviewing, improving and continuation of short-term strategies.

ix. Adopting measures to ensure that biomass is converted to energy in an efficient manner to maximize its benefit while at the same time to ensure that biomass is produced in a sustainable way.

Long-Term

x. Reviewing, improving and continuation of medium-term strategies.

National Policies on Fuelwood

Policies

i. The nation shall promote the use of alternative energy sources to fuelwood.

ii. The nation shall promote improved efficiency in the use of fuelwood.

iii. The nation shall de-emphasize the use of wood as a fuel in the nation's energy mix.

iv. The nation shall intensify efforts to increase the percentage of land mass covered by forests in the country.

v. The nation shall ensure that harvested areas are regenerated.

vi. The nation shall promote the commercial growing of fuel wood and improve energy efficiency in the use of fuel wood.

vii. The nation shall promote energy conservation, efficiency and use of alternative energy sources to fuel wood.

Objectives

i. To conserve the forest resources of the nation.

ii. To greatly reduce the percentage contribution of fuelwood consumption in the domestic, agricultural and industrial sectors of the economy.

iii. To arrest the ecological problems of desert encroachment, soil erosion and deforestation.

iv. To facilitate the use of alternative energy resources to fuelwood.

v. To reduce health hazards arising from fuelwood combustion.

vi. To significantly reduce the quantity of particulate matter and gases emitted from fuel wood utilization, whilst of maintaining the benefit of wood-fuel to ensure sustainability of natural resources.

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vii. To invest in community education/sensitization regarding benefit and disadvantages of using wood for energy.

viii. To ensure that forest greenhouse gas balance is maintained.

i. Cultivating fast growing tree species needed to accelerate the regeneration of forests.

ii. Developing appropriate technologies for the utilization of alternative energy sources to fuelwood.

iii. Developing appropriate efficient wood stoves in the short term.

iv. Encouraging the establishment of private and community woodlots for supply of fuelwood in the short term.

v. Establishing micro-credit facilities for entrepreneurs, especially for women groups, for the establishment and operation of commercial fuelwood lots and the production of renewable energy devices and systems.

vi. Ensuring the availability and effective distribution of alternative energy sources to fuelwood at all times.

vii. Establishing training programmes on the use, maintenance and fabrication of efficient woodstoves and other alternative technologies.

viii. Organizing systematic public enlightenment campaigns on the problems of desertification and soil erosion arising from deforestation.

ix. Ensuring the existence of effective forestry laws to stop the willful felling of trees.

x. Ensuring effective enforcement of the forestry laws.

xi. Disseminating the alternative technologies to fuelwood through extension programmes, pilot plants etc.

Medium-Term

xii. Reviewing, improving and continuation of short-term strategies.

xiii. Increasing the area covered by forest reserves.

xiv. Setting up an effective system of forest regeneration.

xv. Developing an appropriate pricing structure to encourage substitution from fuelwood to alternative fuel types.

Long-Term

xvi. Reviewing, improving and continuation of medium-term strategies.

National Policies on Biofuel

Policies

i. The nation shall improve on the link between the agricultural sector and the energy sector.

ii. The nation shall promote the blending of biofuels as a component of fossil-based fuels in the country as required for all automotive use. The blend shall involve the process of upgrading fossil-based fuels.

iii. The nation shall promote investments in the biofuels industry.

iv. The nation shall grant biofuels pioneer status for an initial 10-year period with the possibility of additional 5-year extension.

v. The nation shall support the emergence of an industry in which substantial portion of feedstock used by biofuel plants will be produced by large – scale producers and out growers.

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vi. The nation shall ensure that biofuel industry benefit from carbon credit.

Objectives

i. To gradually reduce the nation’s dependence on fossil fuels while at the same time creating a commercially viable industry that can precipitate sustainable domestic job.

ii. To gradually reduce environmental pollution.

iii. To firmly establish a thriving biofuel industry utilizing agricultural products as a means of improving the quality of automotive fossil-based fuels in Nigeria.

iv. To promote job creation, rural and agricultural development, and technology acquisition and transfer.

v. To provide a framework capable of attracting foreign investment in the biofuels industry.

vi. To streamline the roles of various tiers of government in order to ensure an orderly development of the biofuels industry in Nigeria.

viii. To involve the oil and gas industry in the development of biofuels in Nigeria.

i. Encouraging integrated (plants and plantations) biofuels operators to set up agricultural service companies to support out-growers scheme.

ii. Mandating biofuel producers to establish public private partnership with biofuels feedstock out-growers.

iii. Facilitating easy market entry for intending biofuel operators through supportive regulations on biofuel activities.

iv. Granting pioneer status-tax holiday to all registered businesses engaged in biofuels related activities.

v. Granting 10-Year import duty waiver for biofuels equipment not produced locally.

vi. Exempting biofuel companies from taxations, withholding tax and capital gains tax in respect of interest on foreign loans, dividends and services rendered from outside Nigeria to biofuel companies by foreigners.

vii. Granting a single-digit interest on a preferential loan to be made available to investors in the biofuels industry to aid the development of large-scale out growers schemes and co-located power generating plants.

viii. Establishing agro-allied industries capable of benefiting from the incentives put in place to foster the development of the agro-allied industry in addition to other incentives.

Medium-Term

ix. Reviewing, improving and continuation of short-term strategies.

x. Establishing a research and development fund to encourage synergy between the

private and public sectors in R and D in which all biofuel companies shall contribute 0.25% of their revenue for research in feedstock production, local technology development and improved farming practices.

xi. Persuading biofuel producers to use auditable feedstock weighing equipment and methodologies as may be prescribed.

Long-Term

xii. Reviewing, improving and continuation of medium-term strategies.

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National Policies on Wind

Policies

i. The nation shall commercially develop its wind energy resource and integrate this with other energy resources into a balanced energy mix.

ii. The nation shall take necessary measures to ensure that this form of energy is harnessed at sustainable costs to both suppliers and consumers in the rural areas.

iii. Apply global best practices in the wind energy resources and the mileage will be of achieving optimum contribution from the area of wind.

Objectives

i. To develop wind energy as an alternative energy resource.

ii. To develop local capability in wind energy technology.

iii. To use wind energy for provision of power to rural areas and remote communities far removed from the national grid.

iv. To apply wind energy technology in areas where it is technically and economically feasible.

i. Encouraging research and development in wind energy utilization.

ii. Developing skilled manpower for provision of basic engineering infrastructure for the local production of components and spare parts of wind power systems.

iii. Training of skilled local craftsmen to ensure the operation and maintenance of wind energy systems.

iv. Intensifying work in wind data acquisition and development of wind maps.

v. Providing appropriate incentives to producers, developers and consumers of wind power systems.

vi. Developing extension programmes to facilitate the general use of wind energy technology.

Medium-Term

vi. Reviewing, improving and continuation of short-term strategies.

vii. Developing local capability through the establishment of local manufacturing in the area of wind energy technology.

Long-Term

viii. Reviewing, improving and continuation of medium-term strategies.

National Policies on Hydrogen

Policy

i. The nation shall integrate hydrogen as an energy source in the energy mix of the country.

Objectives

i. To keep abreast of international trends in hydrogen production and application.

ii. To develop local production capacity for hydrogen.

iii. To ensure hydrogen utilization as a preferred energy source, where possible, on account of its high environmental friendliness.

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i. Encouragement of R and D in hydrogen energy related technologies.

Medium-Term

ii. Reviewing, improving and continuation of short-term strategy.

iii. Development of domestic capacity in hydrogen production and application technologies.

iv. Providing incentives to popularize the use of hydrogen as an energy source.

Long-Term

v. Reviewing, improving and continuation of medium-term strategies.

National Policies on Other Renewables

According to ECN: “Other renewable energy resources, which are not in common usage worldwide, include ocean waves, tidal energy, ocean thermal gradients, and geothermal energy. There is still much more work to be done on these energy resources in Nigeria. They may in future

make contributions to the energy mix of the country.”

Policy

i. The nation shall maintain an interest in other emerging sources of renewable energy.

Objectives

i. To develop a database on the potentials of these emerging energy resources.

ii. To keep abreast of international trends in energy technology development.

iii. To ensure incorporation of any new proven cost-effective energy resource into the energy mix.

i. Gathering information on the development of these emerging technologies.

ii. Encouraging R & D in the technologies of the exploitation of these emerging energy resources.

iii. Prioritizing the level of need, level of technological development and viability of emerging renewable energy resources.

Medium-Term

iv. Reviewing, improving and continuation of short-term strategies.

Long-Term

v. Reviewing, improving and continuation of medium-term strategies.

RENEWABLE ENERGY IN NIGERIA

RENEWABLE ENERGY IN NIGERIA

F INAL R EPORT

For

E MBASSY OF THE R EPUBLIC OF K OREA

D ECEMBER 21, 2015

Table of Contents

Acknowledgement

General Overview

About This Study

Our Recommendation for Korean Companies

About Nigeria

Energy Situation in Nigeria

Power Generation & Energy Usage Power

Electricity

Nigerian Energy Resources Fossil Fuel

Renewable Energy



Primary Energy Supply Resource Distribution

Primary Energy Supply Resource Distribution

Challenges in Nigeria’s Energy Sector

Current Policy, Strategy and Major Issues

Nigerian Renewable Energy Policy Summary

National Policies on Hydropower

National Policies on Solar

National Policies on Biomass

National Policies on Fuelwood

National Policies on Biofuel

National Policies on Wind

National Policies on Hydrogen

National Policies on Other Renewables

F ^INAL R ^EPORT

E MBASSY OF THE R EPUBLIC OF K ^OREA

D ^ECEMBER 21, 2015