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Decentralised Renewable Energy as Magic Wand to Electricity Access

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renewable energy
  • Decentralised Renewable Energy as Magic Wand to Electricity Access

With multi-national oil companies looking more to the international market, where projects are huge and leaving the domestic gas market gasping for oil, Nigeria’s power sector doesn’t seem to be getting off the woods just yet.

Nigeria’s electricity power sector is largely dependent on gas. Low gas availability, occasioned largely by poor pricing, transportation infrastructure and a market that is skewed largely in favour of exports, has continued to plague Nigeria’s power sector over the years. This has, in turn, made a huge mockery of efforts to provide efficient and reliable electricity to the country’s large population.

Government spoke recently of a renewable energy plan. While there is limited information on actual implementation strategies, stakeholders are pointing to a new untapped possibility for solving Nigeria’s age-long energy crisis.

To improve electricity access, guarantee rural economic development and generally demystify supply, experts are pushing for Nigeria to pay attention to decentralised renewable energy (DRE).

At the forefront of this campaign is the Power for All Initiative, championed by international energy policy expert, Ify Malo and the newly formed Renewable Energy Association of Nigeria (REAN).

A renewable energy specialist, Dotun Tokun, described the concept as a world of untapped potentials. Tokun, who is the promoter of Solarmate Engineering Ltd., said: “DRE for rural Agribusiness, with proper financing plan is a win-win situation. Land for the panels would not be a problem. It will increase productivity of the plants, prevent/reduce rural to urban migration and provides gainful employment. Not forgetting the positive impact of renewables on the environment.”

On how renewable energy could become the game changer in Nigeria’s energy revolution, the Campaign Director for Power For All in Nigeria and Co-founder of the Clean Tech Hub, Ifeoma Malo, explained: “Nigeria’s current grid capacity is able to generate about 12,000 megawatts and yet, only 5,000 megawatts is actually available to meet the needs of the country’s teeming population. This means that about 60 percent of Nigerians lack access to the grid. This gap between demand for electricity and available supply means that many Nigerian businesses and home owners are into widespread self-generation of power for their commercial, industrial and residential uses.

“Furthermore, with an ageing grid system, several Nigerians connected to the grid face extensive power outages, due to low reliability. Therefore, the use of diesel fueled generators, as an alternative to the grid and kerosene lamps for the rural poor are still widespread and compensate for the lack of electricity supply across the country. The increased militancy on oil and gas pipeline means that there will be increasingly low reliability to generate power from the grid.

“However, there is another path-way that is cheaper, simpler and more sustainable to get electrified in Nigeria. That is decentralised renewable energy, which specifically involve mini-grid systems and stand-alone home systems. These systems are easy to deploy – usually within a six-month time frame; and the costs for the end user, especially when spread over time, are comparable to both grid based electricity connections. Decentralised Renewable Energy is certainly cheaper than the diesel and kerosene alternatives that many Nigerians currently deploy in their self-generation efforts.

“The market for decentralised renewables in Nigeria is at the cusp of a major take off. However, some of the market enablers for this market to truly emerge are yet to be in place. Despite little incentives from the government for private investor participation, we have seen increased interest and projects targeted at this market.

“There are several programmes and projects springing up in several rural and peri-urban communities across Nigeria, either as pilots or commercial ventures and are increasing, especially in urban centres across the country. These projects are funded either with capital from grant donors or through commercial partnerships, including bank loans and credit facilities. The projects range from stand-alone home systems (SHS), mini grid systems, and solar home appliances, such as, lamps and cooking stoves. Yet, for this market to scale up and meet the latent demand for electricity across the country, there has to be the right enabling policies and market incentives. It is also important to have clear targets and timelines for the decentralised renewable energy sector and broad support by stakeholders.

“This is why the preparations for the emergence of an industry association to help catalyse a collective voice for the sector is one of the most important things happening in recent times. This industry association aims to be a reputable umbrella association, supporting and enabling the sustainable growth of the renewable energy sector throughout Nigeria. The mission of the association is to promote all forms of renewable energy technologies into the mainstream of the Nigerian economy and lifestyle by emphasising the need for quality and best practices in the sector for the benefit of members, consumers and other stakeholders. The association also seeks to facilitate information dissemination, formulate proposals for improvements in the renewable energy sector and make recommendations to the responsible governing and policy authorities, amongst the other stated goals. We believe that decentralised renewable energy will play an important role in meeting these objectives, and help to activate and support the market in sustainable ways, particularly as this sub-sector is the quickest and cheapest way to grow the renewable energy industry and market overall.”

On ways to accelerate renewable energy rates and penetration, she called for the integration of rural access with decentralised renewable energy development.

“With the high demand for electricity amongst urban and rural dwellers, and with Nigeria having one of the best solar radiation rates in the world, achieving rural access electrification is a quick win, using decentralized renewable energy,” she explained. “With several countries in East Africa, such as, Kenya, Tanzania, and Uganda, already leading the way in deploying decentralised renewable energy to increase and optimise their electrification rates, particularly in rural communities, Nigeria cannot afford to be left behind. Although, financing the sector remains a challenge, the government, with active stakeholder participation, can make policies and build partnerships with the private sector to subsidise the cost of financing such projects in rural Nigeria to solve the country’s energy challenge.”

On his part, Segun Adaju, President of the Renewable Energy Association of Nigeria (REAN), said the opportunity for decentralised renewable energy is so huge that it has become hard to ignore.

He said: “It is clear that Nigerians have a choice—either to continue with the old pathway to electrification through on-grid methodologies, which has kept electricity access rates static for many years now, or choose a new path, which involves making decentralised renewable energy main stream to meet improved electrification rate. As many Nigerians, especially the growing workforce of the country, buoy by the teeming youth population depend on electricity to make ends meet, it is clear that turning around our current economic crisis, while growing and contributing to the GDP of the country, is dependent on deploying decentralized renewable energy. The time to gain independence from blackouts is now. The time to act is now, and decentralised renewable energy provides the way forward.”

Indeed, stakeholders are making a strong case for Nigeria to scale up the deployment of renewable energy solutions in the country through improved market incentives.

Among other things, they are asking for the abolition of VAT and import duties on renewable energy components brought into the country for projects.

 

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

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Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

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Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

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Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

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Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

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