|Engr (Mrs) Bahijjatu Abubakar, National Coordinator,
Renewable Energy Programme
Renewable energy has been sold as the energy source of the future for sustainable development, but it was not until 2003 that the Nigerian government approved renewable energy as part of its national energy policy. For renewable energy to take off and add to national development in Nigeria, policymakers must create incentives for entrepreneurs to make money in the sector.
The energy policy stated that the nation shall continue to engage extensively in the development of electric power with the goal of making reliable electricity available to 75 percent of the population by 2020, as well as to ream the energy mix for generating electricity.
Following the energy policy, a renewable energy master plan was formulated in 2006, with an understanding for achieving sustainable development, and a gradual move from a monolithic fossil-fuel economy to one driven by an increasing share of renewable energy in the national energy mix. The master plan also stressed the need for exploiting renewable energy in quantities and at prices that will promote the achievement of equitable and sustainable growth.
Energy sources can be classified into renewable and non-renewable. Almost all energy consumed in Nigeria comes from non-renewable energy sources —– coal, natural gas, and oil. Renewable resources include solar(sunlight and sun heat orgeothermal), wind, biomass -wood fuel, willow coppice, waste, and agricultural products and residues such as straw, hydropower – waves, underwater current and flowing water from higher ground and bio-fuels (ethanol and bio-diesel).With vast renewable energy resources, a national energy policy, a national renewable energy master plan, Nigeria is still far behind in renewable energy development and usage. Why?
The whole debate of renewable development and subsidies and the related calls for free market supremacy, should be influenced by the basic historical fact that energy subsidies have been constant in most countries of the world. Even free-market champion, United States, gives its major oil companies tax breaks, subsidies the Obama administration would like to end if it has its way.
Historically, most energy subsidies have gone to developing fossil-fuel resources. Over time, the oil and gas industry has profited from tax breaks compared to the renewable industry.
It is imperative that for renewable energy to have a place in the energy mix, there must be incentives to make above-normal profits that attract investment.
Energy subsidy is transfer of economic resources by the government to consumers or producers of a good or service. A result of such incentive is boost to production or consumption of a commodity over what it would otherwise have been. However, critiques of energy subsidies believe otherwise.
They say subsidies distort markets and discourage investments. Some have argued that subsidies exist where Government fails to implement programs to internalize uncontrolled environmental costs in energy markets. Others argue that Government regulation creates a subsidy when it fails to set electricity prices equal to the marginal cost of production.
A review of renewable energy subsidy in most economies of the world suggests that its usage has contributed to social and economic development. It has created incentives such as security of power supply, environmental improvement, employment and social benefits, among others.
To achieve economically attractive growth of renewable energy sources in Nigeria, a balanced and timely mobilization of all technologies is of great importance. Such mobilization depends on technical potential, actual costs, cost reduction potential, and technical maturity.
Studies and reports have shown that, renewable subsidies have begun to create economic rent and thus incentivise faster development and deployment than would have otherwise occurred. For years, criticism of renewable energy was cost. It was alleged to be too expensive compared with energy based on traditional fuels like coal, oil, and natural gas.
There has been evidence that the experience curve is showing signs of lower costs driven by government subsidies, new technology and renewed development interest. While renewable energy still can’t compete with fossil fuels on price, the margins are narrowing, particularly since oil and gas prices have been rising.