DIVERSIFYING ELECTRICITY

GENERATION MIX AND MITIGATING

CHALLENGES

Dr. Abdussalam Yusuf

DGM, Planning, Research & Strategy
NERC

1
Introduction
• Energy security, energy diversification and sustainability are central
theme of national energy discuss in developing countries.
• Energy diversification implies having as many resources as are viable
play a role in the country’s fuel use/energy supply system to ensure
• Security of supply
• Adopt the most optimal supply mix
• Create opportunity for the development of all viable resources

2
 Diversifying Energy Mix

• The energy mix of a country depends on:

• Available resources
• Energy demand
• Cost implications
• Environmental factors
• Government policies- to support energy efficiency, CRT, private sector investments
• Extant Regulatory landscape
 Nigeria’s Energy Mix
• Current energy mix (on-grid/off-grid) consists of
• Gas-fired thermal plants
• Large hydropower
• Solar power

• Potentials
• On-grid solar through solar farms (northern region)
• Biomass (southern region)
• Wind (across country)
• Small hydropower
• Geothermal
• Tidal power
• Hydrogen
• Nuclear energy
 The Energy Trilemma Index

Adequacy of supply?

Is it environment friendly?
Is it affordable?

Each country may respond differently to the above questions

depending of where it sits in the energy ladder
Where do you sit on the Energy Ladder?

Environmental Sustainability
mitigating and avoiding
potential environmental harm
and climate change impact

Energy Equity universal access to reliable,

affordable, and abundant energy
for domestic and commercial use

Energy Security capacity to meet current and future

energy demand reliably, withstand and
bounce back swiftly
 The Vision of Net zero emission
Emission
Emission
sources
Emission sinks
Emission
sources
sinks

2023 2060 7
Barriers to Green Energy
• political instability, regulatory uncertainty, currency risk, low investor returns, an unproven
business model and unreliable cash flows.
• Sometimes the perception of risk is linked to a lack of sound investor knowledge of the market
Risk Perception

• Investments in low income energy markets are often longer term, higher risk, and generate a
lower financial return.
Short-term finance vs • Commercial investors are reluctant to spend time building the relationships and market
demand required to generate a decent return
long terms project • The depositors money are not suitable for long term loan needed by minigrid

• start-ups need smaller fund sizes and less bureaucracy than is typical of international funds
Investment size and who want to avoid the high transaction costs of funding many small projects.
transaction costs • Hence, the need for some aggregators to bundle up many small projects, thus lowering overall
financing costs or helping to obtain finance

• Funders are looking for proven business models and bankable business plans, showing a clear
Low quality business understanding of risks and mitigation measures.
plans & unproven • Renewable energy power still need to prove their business model and to demonstrate
business models scalability and replicability
Promoting Renewable Energy: Electricity Act
2023
• The Electricity Act 2023 provides, among others, the following
• Promotion of renewable energy to enhance its contribution to Nigeria's
energy mix.
• Simplify licensing and fees for renewable energy service companies.
• Establish regulations to promote renewable energy grid connectivity and
distribution.
• mandate TSP, ISO, distribution licensees to provide open access for
integration renewable energy into the grid and distribution network.
• Set standards Power Purchase Agreements in respect of renewable
electricity.
• Enforce Renewable Purchase and Generation Purchase Obligations

9
Policies to Promote Renewables
• Renewable Portfolio Standard
• Renewable Energy Certificate
• Feed-In Tariff
• Net metering

10
Regulatory Framework for promoting green
power
• In line with the Electricity Act 2023 the Commission is already working on
a range of regulatory instruments, including
• Feed-in-Tariff (FiT) for small capacities
• Net metering for very small capacities
• Competitive auction for large capacities
• The objectives of the FiTs system are to:-
• facilitate resource mobilization by providing investment security and market
stability for investors in RES-E
• reduce transaction and administrative costs by eliminating the conventional
bidding processes
• encourage private investors to operate the power plant prudently and efficiently
so as to maximize its returns.
11
Competitive Procurement
• Procurement framework
• Reduce development costs such as
• Shallow connection cost
• Special Transmission corridor
• Grid strengthening
• Location of suitable recourse sites
• Priority grid access (open access)
• Build Redundancy in evacuation route to ensure n-1 reliability

12
 Nigeria’s commitment to net zero
emission-Power Sector
• Moving away from diesel/petrol generators
• Expansion of gas generation capacity to establish baseload capacity
• Ramp up of renewables-backed electrification
• CAPEX to ramp up generation ($270Bn), T & D ($135Bn)
• Switch to 90% renewables might save $121Bn
• $23Bn investment opportunity based on current in-country programs
Lets enrich the debate
• The energy trilemma debate should now include emission per capita
and emission cap per capita rather than emission per country
• Emission budgeting will allow some headroom for developing
countries
• In order to enjoy the clean future we must be allowed to survive the
present
• This will remove constraints on the drive for improved energy access
by the developing countries and the guilt associated with using
indigenous resources such as clean coal technology

14
• Today the competition is not much between Self generation and grid
power
• The grid power from all viable resource is better and more sustainable
than small gen-sets that dominate supply mix today

15
THANK
YOU

16