Nigeria’s Renewable Energy Laws And Regulations And The Race To Achieve Lasting Economic Growth

Energy Generation in Nigeria

The importance of energy cannot be overemphasised, as it is an essential component for the economic and socio-political development of every country. The national fabric is woven via the interconnected network of activities mainly dependent on energy. Energy is therefore vital to the improvement of quality of life and standard of living within a geographical entity. 

 

Apart from energy generation from fossil fuels, Renewable Energy (RE) has gained momentum in the Energy sector. We generate RE from natural sources or processes such as solar, wind, water, biomass[1] which are constantly replenished[2]. This source of energy generation and distribution is environment-friendly, as it produces lower emissions of carbon[3].  The predominant sources of RE in Nigeria are wind, solar, water and biomass. These energy sources have not been sufficiently harnessed for domestic and industrial consumption[4]. RE is a viable means to grow the economy as it promises a sustainable and consistent supply of energy. This will aid the health and educational sectors, diversifying the energy supply, creation of jobs, and advancing the ease of doing business. 

Legal Framework of Renewable Energy in Nigeria.

The legal framework of RE in Nigeria commenced with the Energy Commission of Nigeria Act.[1] The Act established the Energy Commission of Nigeria[2] which plans and co-ordinates the national policies in the field of energy[3],  monitors the performance of the energy sector in the execution of government policies on energy[4] and makes recommendations for the exploitation of new sources of energy[5]. To this end, the Commission developed the National Energy Policy (NEP) 2003, from which the Renewable Energy Masterplan was drafted.  The NEP provides succinct guidelines on the utilisation of RE for energy production, utilisation, financing, research, development, training, planning and implementation in Nigeria. Other RE policies include Renewable Electricity Policy.

Guidelines 2006, National Renewable Energy and Energy Efficiency Policy 2015, National Renewable Energy Action Plans (NREAP) 2016.

The Electric Power Sector Reform Act (EPSRA)[1] established the Nigerian Electricity Regulatory Commission (NERC)[2] to create, promote and preserve efficient industry and marketing structures, and also to ensure the optimal utilisation of resources for the provision of electricity services[3]. The NERC is also empowered to make regulations prescribing all matters which are necessary or convenient to power generation in Nigeria[4]. In pursuance of this power, the Regulations for Feed-in Tariff for Renewable Energy sourced in Nigeria 2015 was enacted. The essence of this objective is to boost power supply, develop, promote and harness the RE resources of the country and encourage greater participation in power generation from renewable energy technologies, by providing investment security and market stability for investors[5]. The Regulation also envisages that by the end of the year 2020, 10% of the national energy supply shall be from renewables[6]. Additionally, electricity distribution companies (DISCOs) shall source at least 50% of their procurement from renewables.[7]

It is without a doubt that the production, distribution and sustainability of RE would involve the l acquisition and transfer of technology between foreign investors and local partners. To this end, the provisions of the National Office for Technology Acquisition and Promotion Act[8] and Nigerian Investment Promotion Commission Act[9] would be applied.

Additionally, the Federal Competition and Consumer Protection Act 2019 (FCCPA), has ample provisions for consumer protection to ensure that consumers obtain the best value of their money for the services delivered. It also guides against monopoly and unhealthy competition amongst players in an industry. The provisions of the FCCPA, along with similar sector-specific provisions of the EPSRA,[1] will ensure that the energy sector as it relates to the RE is well regulated to ensure fairness and consumer satisfaction.

Renewable Energy as a Means to a Sustainable Economy

RE is a viable means of growing the economy as well as stimulating growth and development of other sectors of the economy. RE also promises a sustainable and consistent supply of energy which will aid the health and educational sectors, diversifying the energy supply, creation of jobs,

advancing the ease of doing business, increase foreign participation, enhancement our technological advancement, boost the GDP and ultimately secure the confidence of the citizenry in the ability of the government to deliver on its promises.

To advance the sustainability of the economy through RE, we suggest the following policies and business strategies: 

  1. Ease of doing business in relation to renewable energy technologies. This could be achieved by the reduction of tariffs and an increase in incentives for items like solar panels, wind turbines, amongst others. 
  2. As with all types of contracts, the inevitability of disputes is certain. The swift and amicable resolution of these disputes has a direct and indirect implication on commerce in Nigeria. The direct implication being the disgruntled Parties, terminated contract and a pause in RE development. The indirect implication, which has a far-reaching effect on the Nation, is the unwillingness for foreign participation in the Nigerian RE development, as disputes are bound to happen, the untimely resolution of same halts and destroy businesses.  To this end, it is advised that Parties provide for dispute resolution clauses in contract (preferably Arbitration) and the Courts should be open and willing to recognise same as binding between the Parties. 
  3. Reviewing the current legal, regulatory and policy framework on RE in Nigeria to meet up with the fast-growing innovative trends of RE.
  4. Implementation of a “Clean Energy Incentive Tax Rebate”. This will be a policy by the government for high-end energy consumption companies (manufacturing, industrial, etc.), who can confirm that a certain percentage (perhaps 30% or more) of their energy consumed was obtained from RE. In such instances, they would be eligible to have a tax rebate as determined by the government and its regulatory agencies. 
  5. Private-Public Partnership (PPP) to train and equip individuals with the necessary skills for the advancement of RE Technologies in Nigeria 

Conclusion

The natural resources to be utilised in the generation of RE is well in abundance in Nigeria. All that is needed is the proper use of natural, human, and industrial resources to actualise the vision of the country in generating the needed amount of power, protection of the environment and growth of the economy. The adequate harnessing of RE through innovation will stimulate the advancement of the legal framework and judicial precedent on RE in Nigeria.

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