The Act offered investment opportunities to especially the private sector operators as government attempts to navigate the turbulent wave along the route to addressing the power sector intractable crises.
In the face of mounting environmental concerns and the need to combat climate change, nations worldwide are embracing energy transition plans aimed at shifting from traditional fossil fuel-based energy systems to cleaner and more sustainable alternatives.
This energy transition is not just an environmental necessity but also a strategic economic and social endeavour.
The effectiveness of energy transition plans hinges on the presence of strong legal structures that facilitate investment, manage risks, ensure consumer protection, and foster collaboration between stakeholders.
The Nigeria’s Electricity Act Amendment Bill, 2024 (“the Electricity Act Amendment Bill”), is a key legislation which holds the potential to shape Nigeria’s energy landscape and drive its transition towards a sustainable future.
The Role of Legal Frameworks in Energy Transition: A Nigerian Perspective
On August 24, 2022, the Federal Government of Nigeria launched its Energy Transition Plan (ETP) designed to tackle the dual crises of energy, poverty and climate change and reach net-zero status by 2060, while also providing energy for development, industrialization, and economic growth.
The ETP outlines a strategic roadmap to achieve substantial reductions in emissions within five (5) key sectors: Power, Cooking, Oil and Gas, Transport, and Industry. The ETP is currently undergoing careful planning, with emphasis on securing financing and supporting public-private partnerships to guarantee its effective implementation.
Creating a cohesive regulatory framework for energy transition requires alignment of energy policies at national, regional, and international levels. This alignment not only facilitates smoother transitions to renewable energy sources but also enhances market efficiency and fosters international collaboration to address common energy challenges.
Regulatory bodies like the Nigerian Electricity Regulatory Commission (NERC) play a key role in shaping the energy sector’s regulatory environment. NERC’s regulations govern licensing, tariff structures, and quality of service standards, with a growing emphasis on facilitating renewable energy adoption and grid modernisation.
On a broader policy level, the Energy Commission of Nigeria (ECN), established by the Energy Commission of Nigeria Act 1979 (as amended), plays a crucial role in formulating and implementing energy policies. The ECN spearheads strategic planning and coordination efforts for national energy policies, contributing to the overarching objectives of energy transition and sustainability.
The trio also highlighted key areas while Assessing Nigeria’s Electricity Act, 2023.
Innovations in the Electricity Act, 2023 include the Promotion of Renewable Energy: A mandate for the promotion of electricity generation from renewable sources such as solar, wind, hydro, and biomass. It outlines mechanisms to incentivise investment in renewable energy projects and streamline the integration of renewable energy into the national grid.
These provisions include tariff terms extending up to 20 years to ensure standardised Power Purchase Agreements (PPAs) and facilitate investment returns.
The Act also noted Private Sector Participation.
Recognising the importance of private sector participation in energy infrastructure development, the Electricity Act, 2023 encourages private investment across the electricity value chain. It provides clear guidelines for licensing, operation, and investment in power generation, transmission, and distribution facilities, among others.
Assessing Private Sector Participation In Renewable Energy Space
Mrs. Anita Nana Okuribido, President Women In Renewable Energy Association, WIRE, in a detailed discussion with our correspondent shared insights into what the association is looking at achieving to help Nigeria achieve her aim in the energy transition initiative.
Okoribido, said with the objective of attracting both domestic and foreign investments, the Electricity Act presents attractive investment opportunities within Nigeria’s power sector.
This she said include renewable energy projects.
According to the president, there are huge opportunities in solar, wind, hydroelectric, and biomass projects with incentives like feed-in tariffs and tax benefits surely abound.
On power generation, she said private sector participation in conventional and renewable power generation through issuance of licenses for projects above 1MW is definitely a game changer.
Okoribido, also stressed that even in the Transmission and Distribution Infrastructure, investments in transmission lines, substations, distribution networks, and smart grid systems is very key and very germaine.
In addition to that she added that mini-grids and off-grid solutions will escalate establishing mini-grids and deploying off-grid solutions for remote areas which in her calculation will improve lives in rural communities.
Also, in the manufacturing and equipment supply, broader implementation of the Act will promote local content and economic development.
To safeguard investors’ interests in the power sector, the Act guarantees asset protection, the right to sell or transfer a licensee’s undertaking in the event of revocation of licenses, or compensation in the event of any forceful takeover in the interest of national security, the women group leader explained.
The Act also offers a range of incentives, like tax incentives to investors in the power sector.
The Association’s Standpoint
Okoribido thus stressed that as energy experts, greenpreneurs and researchers in the green space, women with applied scientific interest particularly Women in Renewable Energy Association which she is the founder and CEO can find tremendous opportunities for professional growth in the green energy sector.
She stated that rooted in their communities, WIRE-A Members in the 774 Local Government Areas of Nigeria can also play a vital role as green ambassadors, Leaders and Consumers in building confidence in the use of clean energy technologies such as Clean cook stoves, SHS and other green devices for Agricultural Development to enhance energy and food security.
She believes that the Act marks a significant milestone in Nigeria’s power sector reform journey adding that with its comprehensive reforms, the Act sets the stage for a brighter and more sustainable future.
It addresses the challenges of inadequate infrastructure, inefficient frameworks, and limited private sector participation, paving the way for improved electricity provision to millions of Nigerians.
As the Act comes into effect, it is crucial for stakeholders, investors, and industry players to familiarise themselves with its provisions, engage with regulatory bodies, and seize the opportunities it presents.
Collaboration between the public and private sectors will be vital in driving the successful implementation of the Act and realising its vision for a more efficient, reliable, and sustainable power sector, added Okoribido.
