Nigeria, known as the “Giant of Africa,” boasts a rich cultural tapestry and abundant natural resources. Yet, the nation’s energy sector is at a crossroads, brimming with challenges and opportunities. In this blog post, we embark on a journey through Nigeria’s current energy landscape, unveiling key insights, governmental initiatives, and a glimpse into the future—all from the perspective of a data analyst. A fragmented approach to data collection due to the absence of clear national digitalisation and data strategy for the energy sector will continue to be a challenge for decision-makers, investors, and researchers.
Key Metrics and Statistics
Let’s commence our exploration with some critical data points. Nigeria is home to over 206 million people, cementing its status as one of the world’s most populous nations.
Notably, in 2020, biofuels and waste emerged as the predominant energy sources, constituting approximately 75.7% of the nation’s total energy supply. Oil (14%) and natural gas (9.7%) followed suit.
Turning our gaze to electricity generation, natural gas took the lead, contributing 76.2% to the mix, closely trailed by hydroelectric power at 23.7%.”
Turning our gaze to electricity generation, natural gas took the lead, contributing 76.2% to the mix, closely trailed by hydroelectric power at 23.7%. Solar photovoltaic, while promising, accounted for a modest 0.13%. However, despite a burgeoning demand for electricity, Nigeria grapples with a stark reality—only 60% of its populace enjoys access to this essential resource.
Nigeria, despite its oil wealth, grapples with power generation challenges. The current capacity is around 16,384 MW. In 2021, electricity demand soared to 31.2 TWh, with 36.4 TWh of electricity generated. Surprisingly, Nigeria exports a portion of its electricity, such as 2.3 TWh to Benin and Niger in 2019, with Togo also among its export destinations.
Challenges and Issues
The Nigerian energy sector confronts a formidable array of challenges, echoing across generation, transmission, and distribution. This is evident in the unmet energy demand, security concerns, inefficiencies, outdated infrastructure, and revenue losses due to technical, commercial, and collection issues.
In the backdrop, aging power plants and insufficient investments have led to unreliability and inefficacy in the electricity supply. Financial constraints further strain the sector, with substantial debts owed to power generation (GENCOs) and distribution companies (DISCOs). These challenges underscore the need for structural reforms and strategic interventions.
Government Initiatives
Acknowledging the need for transformation, the Nigerian government has embarked on several initiatives, including the Power Sector Recovery Program (PSRP). This comprehensive program aims to revitalize infrastructure, expand electricity access, and attract private sector investments.
A notable development in 2023 is the passage of the Fifth Alteration Bill No. 33, granting states the authority to venture into electricity generation. This decentralization signifies a significant shift in Nigeria’s energy landscape, potentially invigorating local participation.
Future Outlook
Despite the sector’s tribulations, a ray of hope illuminates Nigeria’s energy future. Ongoing reforms and investments are poised to enhance reliability and accessibility. The burgeoning adoption of renewable energy, particularly solar power, holds the promise of a sustainable and environmentally conscious path forward.
Anticipate heightened investments in the energy sector, with a pronounced focus on renewables. The horizon portends reduced power outages and extended electricity access, improving lives and catalyzing economic growth.
In the quest for a comprehensive understanding of Nigeria’s energy landscape, it’s crucial to acknowledge the evolving role of renewable energy sources. With the government’s commitment to achieving 30% renewable energy in the energy mix by 2030, we witness a paradigm shift towards cleaner, more sustainable energy solutions.
With the government’s commitment to achieving 30% renewable energy in the energy mix by 2030, we witness a paradigm shift towards cleaner, more sustainable energy solutions.”
Solar power projects are gaining traction across the country, offering a glimmer of hope for a future powered by clean, renewable energy. However, for this transformation to reach its full potential, hurdles such as policy barriers, market distortions, and quality control issues must be addressed.
To wrap up this piece, here are my final thoughts. Nigeria’s energy panorama, while intricate, is ripe with prospects. As we traverse this dynamic landscape, guided by data and analysis, we unveil a nation poised for change. Stay tuned for our forthcoming “Biannual Energy Sector Report (August 2023),” where we delve deeper into this pivotal sector, providing invaluable insights into its evolution.
Thank you for embarking on this journey through Nigeria’s energy realm, and we eagerly await the opportunity to share more in the future.
This piece was written by Daniel Sadeko. Daniel is an Energy Systems Analyst Intern at Waterhouse Analytics. For more visit www.waterhouseai.com.
