- Cutting Manufacturing Costs With Renewable Energy Solutions
With the impact of energy costs on the productive sector becoming unbearable, exploring clean, sustainable alternative energy source has become attractive to operators in the value-chain industry, especially if they hope to remain competitive in the global market.
Indeed, estimates from the Manufacturers Association of Nigeria (MAN) showed that operators spent about N63 billion on providing alternative power to their production plants in the first half of 2016, with collated data for the second half showing a triple-fold rise in the figure due to higher energy costs within the period.
According to operators, such huge costs are not sustainable for businesses considering the operating environment where locally produced goods have to compete with imported and smuggled products.
Making a case for renewable energy in industrialisation plan, former Director General, United Nations Industrial Development Organisation (UNIDO), and former United Nations Under-Secretary General and the Special Representative of the Secretary General on Sustainable Energy for All, Dr Kandeh Yumkella, stated that Nigeria had in time past missed several revolutions that could enhance economic prosperity.
According to him, having missed the industrial, agric and information Technology revolution, Nigeria cannot afford to miss the green energy revolution considering the gaps unmet in terms of energy demand.
He explained that many countries are already developing products and machinery that can work efficiently using direct current (DC) unlike the alternate current (AC) devices presently depending on the national grid or other alternative sources like gas and fossil energy.
While the cost of energy for manufacturers had risen from N25 billion in 2014 to N58.82 billion in 2015 and further in 2016, operators explained that power takes up between 30 and 40 per cent of total expenditure, especially now that there are other challenges like the foreign exchange.
The MAN report showed that manufacturers are now resorting to the use of energy purifiers and boosters such as UPS and Inverters to boost the poor quality of electricity supply by the electricity distribution companies.
Similarly, power outages on daily average of electricity supply from DISCOs remained stagnant at six times per day across MAN industrial zones just as was recorded in 2016.
Manufacturers use mostly gas and Low-Pour Fuel Oil (LPFO) to power their operations, but gas is cheaper, though its supply has been irregular.
Also, the operators spend $8 each per square metre of gas, which is now expensive on the back of dollar scarcity, while small and medium manufacturers use diesel and fuel to power their generators.
To address these challenges and further increase access to clean, cheap and reliable electricity to customers on and off the national grid, the Bank of Industry (BoI) has unveiled its N1 billion Solar Energy Fund for Micro Small and Medium Enterprises in the country.
The Acting Managing Director/ Chief Executive Officer, BoI, Waheed Olagunju, who made the announcement in Lagos, said it was important to support the provision of sustainable and reliable energy for the MSMEs.
Indeed, the bank had in 2015, commenced with the provision of long-term financing for the installation of off-grid solar home systems in six communities in a pilot phase, as part of its Renewable Energy Partnership with the United Nations Development Programme.
This, he explained, was why the BoI decided to provide the Solar Energy Fund to the MSMEs.According to him, the BoI is already playing an active role in lighting up and powering Nigeria through the provision of solar energy solutions for rural communities, having successfully deployed solar solutions worth N240 million in six off-grid communities in Niger, Osun, Gombe, Anambra, Edo and Kaduna states, under its pilot scheme.
He said: “These communities with an average of 200 homes each previously had no access to electricity, but since the provision of clean, reliable and sustainable solar electricity, the lives of the indigenes of these communities have changed significantly.”
Olagunju explained that the provision of solar electricity in the communities had reduced energy costs, created more micro businesses, improved healthcare and quality of education, and generally provided a new lease of life for indigenes of the otherwise unserved communities.
He said: “This initiative is being replicated in other rural communities in collaboration with our development partners, United Nations Development Programme and relevant state governments, and it is now being scaled up to provide energy for the MSMEs across the country, commencing with the N1 billion Solar Energy Fund.”
He said the BoI, being a Development Finance Institution, was able to come up with highly concessional funding solutions with interest rate as low as seven per cent and equally flexible terms and conditions.
“This also explains why the BoI is able to partner with the UNDP under which we are able to access increased level of financial support that peaked at $1.2 million last year. Blending the grant with the BoI’s debt financing enables us to charge low interest rate,” Olagunju added.
He explained that the projects would be implemented in collaboration with eight solar energy project developers, who had been carefully selected through a competitive and transparent process.
“They will be responsible for implementing the solar projects by providing the MSMEs with solar solutions using appropriate business models,” he added.
Across the globe, manufacturers are increasingly developing new ways of using renewable energy to strengthen clean energy competitiveness in various industries.
Stakeholders believe the manufacturing industry must increase its energy efficiency and reduce the energy utilization of its processes in order to be competitive, while reducing fossil fuel use and greenhouse gas emissions.
South Sudan Launches First-Ever Oil and Gas Licensing Round
South Sudan’s Ministry of Petroleum (MoP) officially launched the country’s first-ever oil and gas licensing round in Juba on Wednesday; Hosted by the MoP and attended by industry executives and international stakeholders, the event signifies an historic moment in the country’s budding oil and gas sector; The launch precedes the country’s highly anticipated national energy conference, South Sudan Oil & Power 2021, organized by Energy, Capital & Power and taking place at the Crown Hotel in Juba on the 29th-30th June.
South Sudan’s Ministry of Petroleum (MoP) officially launched the country’s first-ever oil and gas licensing round in an inaugural event on Wednesday in Juba. Focused on accelerating exploration and production at new and existing blocks, and promoting the country as a competitive investment destination, the event signified an historic moment in the country’s competitive oil and gas sector.
The event was officially launched by Hon. Puot Kang Chol, Minister of Petroleum, where presentations were given by Hon. Awow Daniel Chuang, Undersecretary, MoP and Hon. Athian Ding Athian, Minister of Finance and Economic Planning, with closing remarks by H.E. James Wani Igga, Vice-President and VP of the Economic Cluster, TGNU. With emphasis placed on political improvements, the improved legal framework, and the ongoing acquisition of new data, the launch has reaffirmed the country’s commitment to advancing the sector.
“Oil licensing is a proof of stability and progress in South Sudan. These blocks are part of a vision for lasting peace in the country and we want to open up the energy sector for investment. The Ministry of Petroleum has identified new exploration blocks with potential hydrocarbons for investors, operators, and other parties. We are inviting genuine investors and as mentioned in our Petroleum Act, we will try our best to be transparent,” stated Hon. Puot Kuang Chol.
“It is high time for us to help maximize the natural resources we have, and I applaud the MoP for what they are doing. The oil industry has had its ups and downs, but it is about time that these resources benefit the community, and everyone gets their rightful entitlement of the development that is taking place in South Sudan,” stated Hon.. Athian Ding Athian.
The newly launched licensing round aims to attract international investors and partners to help expand South Sudan’s exploration initiatives. Built against a backdrop of peace and stability, the new licensing round aims to attract investors, while ensuring sustainable developments and community benefits.
“Certainly, one can say with confidence that South Sudan is doing well in maintaining peace and implementing peace agreements. For the first time we can really promote investment. The country needs to rigorously enforce transparency and good governance. We need accountability to improve. I am glad that with this new licensing round, the whole country will benefit,” stated H.E. James Wani Igga.
Additionally, the launch meticulously outlined the licensing process and schedule, providing insight into new and available blocks, technical capabilities and data. By detailing crucial analytical data and information to assist operators and investors, the launch emphasized that South Sudan is officially open for business, and accordingly, is welcoming investors to its competitive sector.
“Most of the areas being licensed had previously not been explored properly in terms of seismic data due to complications from the war. In 2019, we contracted PETROTECH to help with the data. The absence of data previously made it difficult to conduct licensing rounds, however, this licensing round today allows South Sudan to conduct a transparent tendering process with trustworthy data that is available,” stated Hon. Awow Daniel Chuang.
According to the MoP, the Ministry will use stringent criteria in its facilitation of the bid evaluation and investor selection process. With the offered blocks falling between longitudes 25 and 36 and between latitudes 4 and 11, and the size of blocks ranging between 4,000 and 25,000km², the licensing round is expected to be highly competitive. Additionally, the MoP is emphasizing the role of Nilepet in facilitating growth across the industry.
“If you look at the producing blocks today, the percentage of Nilepet has gone to 10% equity. We want investors but we also want to promote the capacity of Nilepet as the national oil company,” continued Hon. Puot Kang Chol.
The newly launched licensing round will be expanded on at the South Sudan Oil & Power (SSOP) 2021 conference, organized by Energy Capital & Power and endorsed by the Ministry of Petroleum. The Ministry will unpack the exploration of new blocks, existing blocks and will explain how it will further explore already producing areas.
Taking place at the Crown Hotel in Juba on the 29th-30th June, SSOP 2021 is expected to drive investment, promote engagement, and accelerate growth within South Sudan’s oil and gas sector.
Brent Crude Oil Crosses $75 Per Barrel as Global Demand Recovers
Crude oil prices sustained bullish runs amid rising demand for global oil and likely delay in Iranian crude supply to global oil market.
Brent crude oil, global benchmark for Nigerian oil, rose above $75 a barrel for the first time since 2019 on Tuesday as global investors remained bullish across the board.
Brent crude rose 26 cents or 0.4 percent to $75.16 a barrel as of 7 am Nigerian time on Tuesday.
The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.
“The market sentiment stays strong with improved outlook for global demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities, adding that a rally in Asian stock markets is also helping boost risk appetite among investors.
Global shares extended their recovery on Tuesday, with Asian markets bouncing from four-weeks lows as investor focus on economic growth partly offset worries about the U.S. Federal Reserve raising rates sooner than expected.
BofA Global Research raised its Brent crude price forecasts for this year and next, saying that tighter oil supply and recovering demand could push oil briefly to $100 per barrel in 2022.
Investors are looking to weekly U.S. inventory data as crude oil stockpiles have fallen for four weeks, said Toshitaka Tazawa, analyst at commodities broker Fujitomi Co.
U.S. crude stocks were expected to drop for the fifth consecutive week, while distillate and gasoline were seen rising last week, a preliminary Reuters poll showed on Monday.
“The oil prices are expected to hold a firm tone amid expectations that fuel demand will pick up quickly along with economic recovery in Europe and the United States,” Tazawa said.
The price gap between the world’s two most actively traded oil contracts narrowed to its lowest in more than seven months, demonstrating that U.S. oil output is still in the COVID-19 doldrums with the market likely to remain undersupplied.
Negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election.
Raisi on Monday backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting U.S. President Joe Biden, even if Washington removed all sanctions.
“The lower probability of Iranian crude oil returning to the market due to the new hardline president is also supporting the market,” Fujitomi’s Tazawa said.
Majority of New Renewables Undercut Cheapest Fossil Fuel on Cost
The share of renewable energy that achieved lower costs than the most competitive fossil fuel option doubled in 2020, a new report by the International Renewable Energy Agency (IRENA) shows. 162 gigawatts (GW) or 62 per cent of total renewable power generation added last year had lower costs than the cheapest new fossil fuel option.
Renewable Power Generation Costs in 2020 shows that costs for renewable technologies continued to fall significantly year-on-year. Concentrating solar power (CSP) fell by 16 per cent, onshore wind by 13 per cent, offshore wind by 9 per cent and solar PV by 7 per cent. With costs at low levels, renewables increasingly undercut existing coal’s operational costs too. Low-cost renewables give developed and developing countries a strong business case to power past coal in pursuit of a net-zero economy. Just 2020’s new renewable project additions will save emerging economies up to USD 156 billion over their lifespan.
“Today, renewables are the cheapest source of power,” said IRENA’s Director-General Francesco La Camera. “Renewables present countries tied to coal with an economically attractive phase-out agenda that ensures they meet growing energy demand, while saving costs, adding jobs, boosting growth and meeting climate ambition. I am encouraged that more and more countries opt to power their economies with renewables and follow IRENA’s pathway to reach net-zero emissions by 2050.”
“We are far beyond the tipping point of coal,” La Camera continued. “Following the latest commitment by G7 to net-zero and stop global coal funding abroad, it is now for G20 and emerging economies to match these measures. We cannot allow having a dual-track for energy transition where some countries rapidly turn green and others remain trapped in the fossil-based system of the past. Global solidarity will be crucial, from technology diffusion to financial strategies and investment support. We must make sure everybody benefits from the energy transition.”
The renewable projects added last year will reduce costs in the electricity sector by at least USD 6 billion per year in emerging countries, relative to adding the same amount of fossil fuel-fired generation. Two-thirds of these savings will come from onshore wind, followed by hydropower and solar PV. Cost savings come in addition to economic benefits and reduced carbon emissions. The 534 GW of renewable capacity added in emerging countries since 2010 at lower costs than the cheapest coal option are reducing electricity costs by around USD 32 billion every year.
2010-2020 saw a dramatic improvement in the competitiveness of solar and wind technologies with CSP, offshore wind and solar PV all joining onshore wind in the range of costs for new fossil fuels capacity, and increasingly outcompeting them. Within ten years, the cost of electricity from utility-scale solar PV fell by 85 per cent, that of CSP by 68 per cent, onshore wind by 56 per cent and 48 per cent for offshore wind. With record low auction prices of USD 1.1 to 3 cents per kWh today, solar PV and onshore wind continuously undercut even the cheapest new coal option without any financial support.
IRENA’s report also shows that new renewables beat existing coal plants on operating costs too, stranding coal power as increasingly uneconomic. In the United States for example, 149 GW or 61 per cent of the total coal capacity costs more than new renewable capacity. Retiring and replacing these plants with renewables would cut expenses by USD 5.6 billion per year and save 332 million tonnes of CO2, reducing emissions from coal in the United States by one-third. In India, 141 GW of installed coal is more expensive than new renewable capacity. In Germany, no existing coal plant has lower operating costs than new solar PV or onshore wind capacity.
Globally, over 800 GW of existing coal power costs more than new solar PV or onshore wind projects commissioned in 2021. Retiring these plants would reduce power generation costs by up to USD 32.3 billion annually and avoid around 3 giga tonnes of CO2 per year, corresponding to 9 per cent of global energy-related CO2 emissions in 2020 or 20 per cent of the emissions reduction needed by 2030 for a 1.5°C climate pathway outlined in IRENA’s World Energy Transitions Outlook.
The outlook till 2022 sees global renewable power costs falling further, with onshore wind becoming 20-27 per cent lower than the cheapest new coal-fired generation option. 74 per cent of all new solar PV projects commissioned over the next two years that have been competitively procured through auctions and tenders will have an award price lower than new coal power. The trend confirms that low-cost renewables are not only the backbone of the electricity system, but that they will also enable electrification in end-uses like transport, buildings and industry and unlock competitive indirect electrification with renewable hydrogen.
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