As Nigeria grapples with an overwhelming energy demand that has skyrocketed beyond 98,000MW for a population tipping over 200 million, the stark reality of the nation’s energy crisis is laid bare—over half of the population is ensnared by the lack of reliable electricity. In stark contrast to the formidable installed capacity of 12,522MW, the reality is a power infrastructure crippled by rampant outages and grave inefficiencies. Despite the infusion of resources into ambitious initiatives like the National Integrated Power Projects and sweeping privatisation efforts, the anticipated surge in energy provision remains an unrealised dream. However, the Nigeria Liquefied Natural Gas on Bonny Island paints a different picture—one of self-sufficient power generation and substantial community contributions, pointing to the latent potential of a decentralised energy generation approach. A replication of this model, bolstered by comparable incentives, could propel an array of Nigerian industries to the forefront of the energy sector, satisfying their consumption needs and supplementing the national grid.
This presents a golden opportunity for policymakers in Nigeria to recalibrate the role of the industrial sector within the national energy agenda. The landmark ratification of Nigeria’s Electricity Act (Amendment) of 2024 marks a legislative milestone, offering new powers to states, businesses, and individuals for electricity generation, transmission, and distribution. The earmarking of a portion of GENCOs’ operational expenditures for the uplift of host communities is indicative of a seismic shift towards a more equitable and community-centric energy generation model.
Nonetheless, the forward-leaning posture of the Act doesn’t mask the looming challenges. The persistent shortfall in energy access, the underutilisation of Nigeria’s abundant renewable resources, and deep-rooted sector inefficiencies necessitate a strategic re-evaluation. This legislative backdrop amplifies the urgency for a more cohesive, sustainable, and decentralised approach to energy generation. Policymakers are now poised to steer the industrial sector towards embracing plant-to-grid systems, incentivising the amalgamation of renewable energy solutions that could significantly tighten the energy deficiency gap. This strategy ushers in alignment with the national vision of a robust, sustainable, and industrialised future, charting an essential trajectory towards energy sovereignty and economic fortitude.
Plant-to-grid coordination is conceptualised as a revolutionary industrial strategy that recasts manufacturing plants as both energy consumers and producers. It advocates the integration of renewable systems, such as solar PV or wind turbines, into industrial operations. These installations not only cater to the plants’ power needs but also have the capability to contribute surplus energy to the national grid, fostering a mutually beneficial relationship between industrial productivity and energy provision.
The journey to establish plant-to-grid systems in Nigeria is one that involves marrying traditional energy setups with renewable technologies to formulate a multifaceted energy mix. For instance, solar PV units working in tandem with existing gas plants or wind turbines aligned with diesel engines could optimise energy production, steering companies towards the coveted net-zero emissions milestone.
The financial constraints of integrating renewable energy into existing industrial frameworks vary, with illustrative capital costs for solar PV hovering around $1 to $1.50 per watt. This figure encompasses panels, inverters, system components, and installation expenses. Wind projects fluctuate between $1.30 to $2.20 per watt, their costs moulded by turbine design, environmental conditions, and project scale. The addition of smart-grid capabilities, while incurring an extra $0.10 to $0.40 per watt, is indispensable for ensuring a seamless and dynamic interplay between renewable integration and grid demands.
A comparative analysis between the upfront cost per watt and the operational cost per kilowatt-hour (kWh) unravels the narrative of long-term savings. The pre-incentive cost averages between $3 to $5 per watt for fully installed solar systems. Post-incentive, the effective solar energy cost per kWh can drop to $0.06 to $0.08, frequently undercutting prevailing utility rates.
Transitioning to renewable energy offers industrial companies a tangible pathway to offset a significant proportion of their carbon footprint. The operationalisation of net-zero goals hinges on the balance between energy consumption and renewable production, supplemented by carbon offset schemes for residual emissions.
A meticulous technical analysis must take stock of renewable intermittency and existing plant operations’ reliability. Financial scrutiny, on the other hand, zooms in on the return on investment, with the lens focused on operational expenditure savings, additional revenue streams from surplus energy sales, and potential tax benefits.
A conducive policy environment is vital, paving the way for feed-in tariffs that render renewable investments financially attractive and grid contributions economically feasible. The support framework may extend to grants, tax reliefs, and low-interest financing options, significantly lowering the barriers to renewable adoption.
Plant-to-grid coordination is an integral component of Nigeria’s pathway to a sustainable industrial future. It is a strategy that transcends infrastructural enhancement, embodying a redefined approach to energy generation that leverages renewable resources. This model advocates for a synergistic relationship between the government’s investment strategies, green financing opportunities, and industrial innovation. The broader socio-economic impact, including job creation and improved energy access, establishes plant-to-grid coordination as a vital solution for Nigeria and a model for other emerging economies. This vision positions Nigeria at the forefront of green industrialisation, setting a precedent for a sustainable and prosperous future in alignment with global environmental goals.
Lawrence is an MBA candidate at Cornell’s Johnson Graduate School of Management, New York, United States
