Nigeria has set a bold target for its electricity sector, aiming to provide electricity access to over 90% of its population by 2030, with renewable energy accounting for more than 30% of the country's electricity generation. To assess the feasibility of achieving this goal, the hbs (Heinrich Böll Stiftung) supported a research initiative. Here is the summary of the research findings.
Solving the Power Crisis
Policymakers in Nigeria recognize the detrimental impact of the electricity crisis on the country's economy. They now face the crucial task of making informed decisions to ensure sustainable electricity access for all Nigerians.
To address this challenge, the Nigerian government has established three ambitious targets for the electricity sector to be achieved by 2030. These targets are closely interconnected and require a comprehensive approach.
Firstly, the government aims to provide electricity access to 90% of the population, encompassing both urban and rural areas, as outlined in the Sustainable Energy for All Action Agenda (SE4ALL).
Secondly, Nigeria is committed to achieving a 30% share of renewable energy in its energy mix. This goal is outlined in the SE4ALL agenda and the Renewable Energy and Energy Efficiency Policy plan (REEEP). The plan includes the generation of approximately 9,000 MW of on-grid power from renewable sources, including medium- and large-scale hydropower dams.
Lastly, in alignment with the Paris Agreement, Nigeria has committed to reducing carbon emissions from the power sector and other economic sectors by 2030. The most ambitious target aims to limit emissions from the power sector to below 300 MtCO2e (million tons of carbon dioxide equivalent) by 2030.
The Possibilities of Meeting Energy Sector Targets
With support from the Heinrich Boell Foundation in Nigeria, a comprehensive study was conducted to evaluate the feasibility of achieving Nigeria's 2030 targets for electricity access, renewable energy share, and carbon emissions reductions. The study encompassed a thorough analysis of published data, policy documents, and extensive consultations with experts and policymakers in the sector.
To assess Nigeria's prospects of realizing its vision for the electricity sector by 2030, the researchers developed three distinct scenario pathways. These scenarios offer valuable insights into the country's potential to meet the three targets by considering various policy measures that Nigeria may adopt over the next decade. These pathways provide a framework for understanding the different policy options and their potential impacts on Nigeria's ability to achieve its ambitious electricity goals.
Status Quo Scenario: This scenario represents a pessimistic outlook where minimal changes are made to policies and historical trends persist. The sector experiences sluggish transformation, with limited investments in both on-grid and off-grid electricity. The absence of new policies and regulatory improvements hinders progress, resulting in a weak enabling environment. Coordination across the value chain is poor, and investment risks remain high.
Small Change Scenario: In this scenario, moderate improvements are observed in the sector, including increased investments, government policies, and a broader enabling environment for electrification. However, the pace of investment in grid transmission and gas pipeline networks remains slow. The expansion of decentralised and renewable energy markets faces delays, and the implementation of quality standards remains inadequate. While some improvements are made in coordination between stakeholders, there are still limitations in overall coordination and alignment.
Green Transition Scenario: This scenario presents the most favorable outcome, assuming full implementation of existing government plans, leading to a significant transformation of the sector. The government actively supports the development of both on-grid and off-grid generation, attracting substantial private-sector investments. Financial incentives are provided for on-grid projects, and distribution companies undergo restructuring to enhance sector liquidity. The off-grid sector receives strong support, and there is an emphasis on data collection and coordination across the value chain through active collaboration between the government and investors.
Energy Demand and Supply by 2030.
To accurately assess the feasibility of Nigeria meeting its targets, certain assumptions were taken into consideration based on the potential energy demand and supply by 2030. Based on numerous interviews of experts, the researchers assigned different demand and generation capacity assumptions to each scenario
Electricity Demand Assumption - The assumptions on potential energy demand are derived from estimated population growth and the “Multi-Tier Framework” for energy access developed by The World Bank . Following United Nations estimates, the study assumes that Nigeria’s population will grow at an annual rate of 2.5%.
Electricity Supply Assumption - Supply assumptions are built upon an evaluation of the investments that are currently planned in the power sector, their likely success rates and the potential scale-up of off-grid renewables by 2030. For example, the Green Transition scenario assumes that there will be a total of 10 GW of natural gas installed capacity by 2030.
Simulating Nigeria’s Energy Sector Targets
These fundamental assumptions were combined with experts’ opinion on the sector’s development and hard data gathered to build a computer model. This model simulates Nigeria’s targets on electricity access, renewables and carbon emissions under the three different scenarios. You can find further information about the model as well as the full data set here.
The simulation shows that under the Green Transition scenario, Nigeria can achieve all three targets on electrical access, emission reductions and renewable energy share.
However, under the other two scenarios, Nigeria is unable to meet its electrification and renewable energy access targets, and up to 50% of the population could remain without electricity. Though the simulation shows a slight increase in access to renewable energy under these two scenarios, this is insufficient and only as a result of renewable energy products becoming cheaper over the years and not necessarily the result of any government intervention.
Under the Green Transition scenario, the simulation showed that over 235 million people (90% of Nigeria’s population in 2030) get access to electricity, with over 88 million using sustainable off-grid solutions. The scenario predicts that Nigerians will install millions of standalone solar systems, equivalent to around 35MW of capacity by 2030. The on-grid share of renewables reaches 15% of the energy mix, without large hydropower. If one includes large hydro dams, the renewables share increases to 19.3%.
What have we learned
The study's findings emphasize that Nigeria has the potential to achieve its electricity, renewable energy, and emissions targets by adopting a green transition scenario that encompasses both off-grid and on-grid solutions.
In the off-grid sector, the study reveals that sustainable off-grid solutions have the capacity to provide electricity access to 88 million Nigerians by 2030. However, this would require an unprecedented scale and speed of transition in the off-grid sector. Key factors for success include redirecting financial investments from grid-connected projects to off-grid systems, coordinating grid expansion plans with off-grid solutions, and enhancing standards and skills in the sector.
In the on-grid sector, the study projects a substantial increase in electricity access through a green transition scenario. Approximately 28% of Nigeria's electricity would come from natural gas, 5% from hydro, and 4% from utility-scale solar. However, achieving this would necessitate various improvements in funding, policies, and the enabling environment. Crucially, Nigeria may need to restructure its distribution companies and reassess electricity tariffs to support the transition.
Nigeria needs to develop its economy and it needs to do so in a climate-friendly manner, and sustainable electricity is fundamental to reaching Nigeria’s development goals. This study has shown that Nigeria can reach those goals, but certain measures (as indicated by the study in detail) need to be implemented such as;
1. Strongly reducing investment risks through finance and policy measures.
2. Rapidly shifting financial flows from grid-connected investments to off-grid systems.
3. Enhancing coordination across the value chain with active collaboration between government and investors.
4. Getting a better understanding of the market for back-up generators, their costs and impacts.
- Making Nigeria’s next climate/emission plan (NDC) more ambitious for the power sector and better aligned with other development and economic goals.
This study can help relevant stakeholders forge better electrification strategies, capacity expansion and emission mitigation plans (including an upcoming update of its Nationally Determined Contribution), as well as support policy and investment decisions.
 “The Multi-tier Framework (MTF) was designed in 2015 under the SE4ALL initiative providing a new definition and metric energy access that is broader than binary metrics, which takes into account the quantity and quality of energy being accessed. The framework has proven to be a useful tool for measurement, goal-setting, investment prioritization, and tracking progress”