The Case for Renewable Energy:Renewable Energy A Key To Nigeria’s Power Problems.

Donald Ikenna OFOEGBUProgram Coordinator (PFM), Economist/Researcher Centre for Social Justice, Abuja

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outline• Food for thought

• The world today

• Nigeria’s energy stance: facts and figures

• Investments and challenges in Nigeria’s power supply

• Outcomes so far.

• The choice of coal as a source of power generation:what is wrong

• The renewable energy sources as a key to Nigeria’smany problems. Benefits.

• Thank you.

Food for thought

WORKING ECONOMY

WITH PEACE:- more investment

- full employment

-increase output

WORKING SECTOR: AGRICULTURE,

MANUFACTURING,

SERVICES

Energy = Power

The start of

eradicating

an idle mind

and poverty

is first by

ensuring the

availability

of

sustainable

energy

supply.

An idle mind & Poverty are the products of the absence of power

Without sustainable power supply, we cannot end poverty and its cohorts.

The World Today• Rising Economic inequality: few rich and more hunger poverty

• Rising global conflict; war and terrorism

• Drop in the international crude oil prices

• Climate change and its adverse effects; natural disasters, rising water levels, floods, desertification, food shortage, rising and unpredictable temperatures and weather.

• Massive energy shift from traditional fossil to clean renewable energy Rising discuss to tackle the global

warming. Championed by USA, Germany, Australia, Canada, Islands,

etc

Carbon tax and penalties. Signing deals and green treaties to cut down the use of fossil fuel. USA and China

are already in.

Commercial break through renewable energy technologies.

innovative Solar street lights, solar cars in Japan, China, Brazil, Germany, etc. Electronic cars .i.e. Tersla motors (Detroit, USA) with 40,000 electric cars in 2014, to increase to millions every

year. Solar aircraft; the Solar Impluse 2; the first solar-powered plane to be able to fly for several days and nights

without a drop of fuel.

NIGERIA’S ENERGY STANCE: FACTS AND FIGURES

• Rate of unemployment : 23.9% in 2011 ↑38% in 2013 and likely to

increase by 2% in 2014; with the chunk coming from the rural area. {NBS Q4, 2013}

• In April 2014, MOF: No fewer than 5.3mn youths are jobless;while 1.8mn graduates enter the labour market every year. This

figure is believed to be a conservative estimate of the actual numberof unemployed youths in the country, as earlier statistic released by

the NBS, the number of jobless Nigerian are about 20.3million.

• Nigeria, other SSA economies grow by 4.5%, Poverty remains

high {World Bank Report 2014}

NIGERIA’S ENERGY STANCE: FACTS AND FIGURES (cont)

7,500 MW

Current installed

Generation capacity

FGN intends to generate 10,000MW by 2016

and 12,500MW by 2017. {MOP, 15 Jan, 2015}

Hopes: Nigeria has the objective of being one of the

world’s top 20 economies by 2020 .

Federal Government has a target of 40,000MW by the year 2020.

NIGERIA’S ENERGY STANCE: Bitter facts and Truth (cont)

• Currently the grid starts collapsing at 5,500MW, and grid expansion is a costly and long-term project.

• Nigeria will need almost 200,000MW in 2030 (as calculated by

the Energy Commission of Nigeria).

How do we fix 20,000Mw in 2020 into the 5,500Mw capacity Grid?

Where will this Electricity come from, besides the gas thermals & hydro plants? Coal, Firewood, Generator,

abi na Kerosene?

INVESTMENTS AND CHALLENGES IN NIGERIA’S POWER SUPPLY

• Nigeria’s crude oil production dropped by 17,300 barrels per day from 1.919 millionbarrel per day it recorded in November 2014 to 1.902 million barrels per day in theDecember 2014.

• About 35million barrels of the country’s crude oil remained unsold at the internationalmarket as at December 2014. Unfortunately, Asian countries, which Nigeria turned to when the United

States stopped buying Nigeria’s crude oil due to the shale boom, now prefer Angolan grades.

• FGN exported 140.79million barrels or 1.53mbd of crude oil during the third quarter of

2014, according to CBN in its latest economic report. This represents decline by 1.46mbd

or 131.4 million barrels. Refines 0.45mbd or 41.4million barrels for domestic

consumption.

• Nigeria is the 2ndNation after Russia in Gas flaring.

Nigeria’s gas reserves are the 7th largest in the world and the largest in Africa with anestimated 187 trillion cubic feet (tcf) of proven gas reserves. Unproven reserves might be asmuch as 600 tcf.

40 per cent of Nigeria’s gas is ASSOCIATED GAS as it comes out of the ground together withthe oil. Nigeria has been burning much of this gas directly at the oil wells, thereby wasting11%- 45% of all associated gas since oil exploration began in the 1950s. The amount of gasflared would fetch roughly $2.5 billion each year.

INVESTMENTS AND CHALLENGES IN NIGERIA’S POWER SUPPLY (cont)

• The optimal harnessing of Nigeria’s electrical has been an acute challenge over the lastthirty years due to several challenges, which include pipeline vandalism, lack of funds,insufficient meters, gas prices and increase in tariff.

• Funding: The power sector is a highly capital intensive industry. Nigerian banks provided70% of the funds in loans and equity of the N404 billion paid for the power assets.

Estimated $4.28 billion required capital expenditure and rehabilitation expenditure:Having acquired PHCN subsidiaries, the Bureau of Public Enterprises Director-Generaldeclared that the Distribution Companies (Discos) would be required to spend a total of$357.7million in 2013 alone. Of the $357.7million:– Abuja Disco would be expected to invest $36.6 million;– Benin, $24.3 million;– Enugu, $27.2 million;– Ibadan, $43.86 million;– Jos, $22.75 million;– Kaduna, $29.96 million;– Kano, $30. 38 million.– Eko Disco, $45.2 million;– Ikeja, $58.74 million;– Port Harcourt, $25.5 million; and– Yola, $13 million.

FGN Allocation to MOP from 2009-2014 = N561, 966,033,615 (N561.97billion)

Capital infrastructural provisions, maintenance and replacement = 95.77% or (N538.18billion)

Recurrent non-debt expenses = 4.23% (≈N23.79billion) .

Of the Recurrent 51.47% was for personnel cost, and 34.25% for the overhead running cost.

The Tables shows the appropriation and utilization overtime for the ministry of power: (BIR, 2009-2014)

INVESTMENTS AND CHALLENGES IN NIGERIA’S POWER SUPPLY (cont)

Table 1: Budgetary Allocation to the Ministry of Power 2009 - 2014

year Total Allocation Recurrent Exp. Capital Exp. Personnel cost Overhead cost

2009 99,590,157,726 4,965,947,715 94,624,210,011 2,731,658,148 2,234,289,568

2010 152,159,093,860 4,476,519,477 147,682,574,383 2,101,832,918 2,374,686,559

2011 91,022,993,260 3,776,270,911 87,246,722,349 2,334,990,899 1,441,280,012

2012 78,416,140,484 2,951,452,110 75,464,688,374 1,986,133,906 965,318,204

2013 77,565,547,652 4,217,589,189 73,347,958,463 3,087,047,496 1,130,541,693

2014 63,212,100,633 3,397,810,244 59,814,290,389

Total 561,966,033,615 23,785,589,646 538,180,443,969 12,241,663,367 8,146,116,036

Table 2: Capital Budget Utilization for the Ministry of Power

Year

Appropriated

Capital Exp.

N

Released Sum

N

Cash Backed Sum

N

Utilized Sum

N

% of

Cash

backed

Utilized

% of

Appropriated

Sum Utilized

2009 94,624,210,011 39,599,212,715 39,599,212,715 10,143,106,694 25.6 10.7

2010 147,682,574,383 70,125,900,227 70,072,273,560 47,509,039,026 67.8 32.1

2011 87,246,722,349 61,147,181,783 61,147,181,783 58,530,660,168 95.7 67.1

2012 75,464,688,374 52,031,992,739 41,102,240,127 39,550,991,519 96.2 52.4

2013 73,347,958,463 49,213,422,043 49,213,422,043 39,554,121,008 80.4 53.9

AVERAGES 95,673,230,716 54,423,541,901 52,226,866,046 39,057,583,683 73.15 43.26

TOTAL 478,366,153,580 272,117,709,507 261,134,330,228 195,287,918,415 83% 50%

According to an investigation by SweetCrude in 2013, PHCN collects about:

N1.04trillion annually from households in Nigeria,

N2.074trillion annually from Micro Small &Medium Scale Enterprises (MSMEs),

N2.86billion from the 22 federal airports and

N3.4billion from banks and other large scale enterprises. (Vanguard 27th May 2013)

According to the investigation, the FG through the PHCN is fleecing Nigerians of about N3.41trillion

($19.6billion) annually through outrageous electricity bills, which is not commensurate with the amount of

power supplied to consumers.

-The metering gap in Nigeria’s electricity sector is put at about 2.8 million by the Nigerian Electricity Regulatory

Commission (NERC). FG offers commitment to an initial N33 billion soft term credit line to support the metering

plans of the distribution companies in Nigeria’s electricity supply industry.-THISDAY Newspaper (15th August, 2014)

-The N3.41 trillion earned by PHCN annually is 114.47% higher than the N1.59trillion budgeted for capital

expenditure in 2013 and 40.9% higher than the N2.42tilllion budgeted for the recurrent expenditure.

-Households pay an average of N3,000 monthly as electricity bill, whether there is power or not for the month

-MSMEs pay an average of N10,000 monthly, Bank branches pay an average of N45,000 per month, while Big

business pay an average of N100,00 per month.

Despite the huge sums, generation generated by the PHCN annually, complains of inadequate funding and lack of

funds to ensure the execution of projects to enforce steady power supply still persist. This is an evidence of bad

governance in the system.

INVESTMENTS AND CHALLENGES IN NIGERIA’S POWER SUPPLY (cont)

Outcome so far:• 2015 Budget: Power, Petroleum Ministries To Spend N214m On Generator Fuel, Maintenance

• Presidency, Office of the Secretary to the Government of the Federation and their parastatals tofuel cars, generators with N815.4m.

• According to the National Electricity Regulatory Commission (NERC), Nigerians spend aboutN796.4billion on fuel to generate electric power every year.

• The Centre for Management Development reveal that an estimated 60 million Nigerians investabout N1.6 trillion to purchase and maintain standby generators annually

• Not only do these generators cost a fortune for installation, fuelling and maintenance are very high(adding to increased cost of production). The cost of generator proliferation has an exceptionallyhigh level of CO2 emissions and noise creation; Generator fumes comprise a lethal cocktail ofpoisonous and environmentally unfriendly gases, including carbon monoxide and other noxiousproducts produced from incomplete combustion of hydrocarbon fuels notably petrol (gasoline),diesel or a mixture of petrol and engine oil. Exposures to such combustion engines (silent killers)have been associated with a range of health effects, including lung cancer, chronic obstructivepulmonary disease (COPD), low birth weight, cataracts, pneumonia, and tuberculosis

• More people depending on firewood and kerosene stoves. The WHO estimates that breathing

kerosene fumes is the equivalent of smoking two packets of cigarettes a day and two-thirds of adult

females with lung cancer in developing nations are non-smokers, but cooking mothers – WHO (FuelFor Life: Household Energy & Health).

• Indoor air pollution by Kerosene fumes kills 1.5m people per year.- D Light (2014)

The choice of coal as a source of power generation: what is wrong?

In the quest for sustainable power supply, the choice of energy

source must consider the environment & human health.

The choice of coal as a source of power generation: what is wrong? (Cont)

Nigeria’s Coal reserve = 360 metric tonnes

Predicted to generate up to 30% of the nation’s electricity need for 20-30 years,

@ What Cost?August 2014, Dangote Cement plc announced planned to invest $250m (N40billion) investments in coal-fired plant imported from South

Africa for its plants in Obajana, Ibeshe and Gboko; to generate 30MW of electricity. Dangote cement plc was reported to have placed import order of 30,000 tonnes of coal into Nigeria from South Africa.

World Energy Resources; 2013

Survey: the current share of

coal in global power generation is over 40%, but it

is expected to decrease in the coming years.

China alone uses as much coal as the rest of the world; and invariably embraces all

associated cost that emanates from the use of

coal.

COST: Many have limited

the cost estimation for power generation to the price of plant

setting, maintenance and operation, too many remain left out when the social and

opportunity cost are not factored into the estimation. Among the social cost is the

health impact of coal.

The choice of coal as a source of power generation: what is wrong? (Cont)

Today coal is the most dirty and outdated energy source. Technology of

clean coal and carbon trapping/storage is yet to prove

effective and has its own adverse risk

Source: Coal ‘s Assault on Human Health

Coal is the least efficient of the fossil fuels when

comparing the amount of energy gained against the CO2 released (which is a

major Greenhouse Gas that explains global warming;

coal is the main contributor to climate disruption)

At every stage from mining, transportation, storage,

combustion, and disposal of post-combustion wastes,

coal development is a threat to human and

environmental health.

The combustion of coal is the largest contributor to the human-made increase of CO2 in the atmosphere.

Electric generation using coal burning

produces approximately

twice the Greenhouse Gasses per

kilowatt compared to generation

using Natural Gas

The choice of coal as a source of power generation: what is wrong? (Cont)

Burning coal also releases numerous toxic chemicals and particulates, which can exact a cost on

a country's population in terms

of reduced life expectancy and increased health

costs Coal-fired power plants that sell electricity to the grid

produce more hazardous air pollution in the U.S. than any

other industrial pollution sources, and over 386,000 tons of air pollutants are

emitted from over 400 coal plants in the U.S. per year

According to the report, pollutants

from coal adversely affect all major

organ systems in the human body and contribute to 4 - 5 leading causes of

death in the United States.

Alaska, one of the largest states in USA with abundant coal, does not rely on coal

as a primary fuel source. Instead, they increasingly looking for cleaner sources of energy to replace fossil fuels; they are

facing increase pressure to develop coal only for foreign

export

Particle pollution from coal power plants is estimated to

kill approximately 13,000 people a year.

The choice of coal as a source of power generation: what is wrong? (Cont)

According to records of the Union of Concerned Scientists, in an average year, a typical coal

plant (500 megawatts) generates the following amounts of air pollutants:

3.7 million tons of Carbon Dioxide (CO2): an amount

equivalent to chopping down 161 million trees. CO2 pollution is theprincipal human cause of global warming and climate change.

10,000 tons of Sulfur Dioxide (SO2), which causes acid

rain and forms small airborne particles that can cause lung damage,heart disease, and other illnesses.

10,200 tons of Nitrogen Oxide (NOx), equivalent to half

a million late-model cars. NOx leads to formation of smog, whichinflames lung tissue and increases susceptibility to respiratory illness

500 tons of small airborne particles (particulatematter), which can cause bronchitis, reductions in lung function,

increased hospital and emergency room admissions, and prematuredeath

The choice of coal as a source of power generation: what is wrong? (Cont)

220 tons of Hydrocarbons, which contribute to smog formation.

720 tons of Carbon Monoxide (CO), which causes headaches and

places additional stress on people with heart disease.

170 pounds of Mercury. 1/70th of a teaspoon of mercury deposited in a

25-acre lake can make the fish unsafe to eat. Mercury also causes learning disabilities, braindamage, and neurological disorders.

225 pounds of arsenic, which leads to cancer in 1 out of 100 people who

drink water containing 50 parts per billion.

114 pounds of lead, 4 pounds of cadmium, and othertoxic heavy metals. These toxic metals can accumulate in human and animal

tissue and cause serious health problems, including mental retardation, developmentaldisorders, and damage to the nervous system.

Coal ash, the hazardous waste that remains after coal is burned, can also contain:

Chromium, which can cause stomach ulcers, anemia, and stomach and lung cancers;

selenium, which in excess can cause impaired vision or paralysis; and boron, which can

cause eye, nose, and throat irritation, or in large amounts damage to testes, intestines, liver,kidney, and brain. All of these effects can eventually lead to death.

Nigeria should consider engaging in renewable energy sources. Nigerians

(Federal, States, and Local Governments; as well as citizens and estate developers) must beopen minded, innovative, emulate and import experiences of other clean renewable countries.For instance:

-China in an effort to cut its use of coal has by far the world's biggest wind energy capability inthe world. (Global Wind Statistics 2013} China has a total capacity as at end 2013 of91,424MW, USA 61,091MW, Germany 34,250, Spain 22,959MW, India 20,150MW, UnitedKingdom 10,531MW, Italy 8,552MW, France 8,254MW, Canada 7,803MW, and Denmark4,772MW.

-In Solar usage, estimated for 2013, Germany has the highest total photovoltaic peak powercapacity of 139,031MWp, China 18,100 MWp, Italy 17,928MWp, Japan 13,600MWp, USA11,933MWp, Spain 5,340MWp, France 4,673MWp, UK 3,375MWp, Australia 3,121MWp andIndia 2,180MWp.

-The IEA PVPS Report Snapshot of Global PV 1992 – 2013 shows that Germany has a totalinstalled capacity of 35.5GW of PV system, China 18.3GW, Italy 17.6GW, Japan 13.6GW, USA12GW, Spain 5.6GW, France 4.6GW, Australia 3.3GW, Belgium 3GW and UK 2.9GW.

THE RENEWABLE ENERGY SOURCES AS A KEY TO NIGERIA’S MANY PROBLEMS

Nigeria has more Sun, Wind, Biomass, Water deposits for small hydro plants; all it takes to engage renewable than these countries.

THE RENEWABLE ENERGY SOURCES AS A KEY TO NIGERIA’S MANY PROBLEMS

RENEWABLES HAVE BECOME AFFORDABLE as

prices for solar equipments have fallen by 80%. Small

hydro turbines come cheaper than solar: UNIDO

has calculated that a community of about 2,250

people needs to invest N200m to get a 150kW

installation. After such a one-off investment, the

turbine would run for the next 50 years – and the water is free of charge –(UNIDO | United Nations Industrial Development

Organization)

If Nigeria transits to off grid renewable we stand to gain: a savings of $1.4bn a year, get rid of

basically 2.3bn liters of kerosene , 1.3bn candles, 314million batteries (not even accounting the

environmental effects and spills of the batteries when disposed in waters given the leaks and

toxics. With a payback period of 14months, it will take away 17million barrels of crude oil out of the

system save 6.4million tonnes of carbon dioxide emitted, annually, which is equivalent of takin

away 1.6million car buses off the road. And the annual savings per household is $66 a year.-

Nathanel. N (UNIDO, 2014)

RENEWABLES CREATE JOBS. more than fossil energies do. The oil industry has created less than 50,000 jobs in Nigeria. In Germany,

400,000 jobs in the renewable energy sector compare with less than 200,000 jobs in the conventional energy sector. Nigeria can create many

more jobs than Germany, where solar radiation is as low as in Alaska.

THE RENEWABLE ENERGY SOURCES AS A KEY TO NIGERIA’S MANY PROBLEMS

THE RENEWABLE ENERGY SOURCES AS A KEY TO NIGERIA’S MANY PROBLEMS

No Nation serious about bettering the lives of her population depend on just thermal & hydro for power

generation alone.

To achieve sustainable power supply, a decentralized or better still diversified power source is key.

Renewable energy & energy efficiency have been recognised as d twin pillars of energy security

Nigeria's quest for self sufficiency in food production may be marred by the negative effects of climate change on

agriculture. We must act against adverse climate change not add to it.

Thank you.