Transitioning to Renewables in Nigeria: What are the Lessons Learnt from years of Oil and Gas Exploration and Production?

Nigeria’s energy mix has been evolving in recent times with gradual incorporation of renewables in the country’s energy ecosystem. This evolution is particularly taking place in the value chain of energy production, which has hitherto been dominated by fossil fuel production and exploration.

Considering the fact that the dynamics of country’s energy ecosystem has been mainly influenced by the oil and gas sector, there is likelihood that the evolving renewable energy industry would face similar challenges which the oil and gas industry has faced. It is on this note that article highlights valuable lessons which renewable energy industry can learn from the oil and gas sector.

One of the issues that has plagued Nigeria’s oil and gas industry is the issue of resource management. Over the years, there has been growing occurrence of resource exploitation in Nigeria, especially in the Niger Delta region. This has cumulated in oil spills, displacement of means of livelihood for oil and gas producing communities, agitations for resource control by locals for their beneficiation and tensed relationship between oil and gas and locals resulting in militancy amongst other dire consequences.

This depicts a situation where effective resource management becomes a focal point that needs to be considered in areas where renewable energy infrastructure would be installed.

Abandoned fishing boats sit on the ground as crude oil pollution covers the shoreline of an estuary in B-Dere, Ogoni, Niger Delta, Nigeria. Photo credit: Bloomberg/Contributor

Particularly, it is common practice that installation of solar farms (such as community solar farms) and wind turbines require land allocation which can lead to competition. In places like northern Nigeria where land is required for agriculture, ranching and other activities, allocating these lands to renewable energy infrastructure installation may result in conflict issues with locals if not managed well.

In such instances, the perennial conflict being witnessed in Niger Delta can become commonplace. In fact, there is a school of thought that the insurgency currently witnessed in northern Nigeria can be attributed to issues of resource management as applies to the current mineral exploitation taking place in the region.

Along this line, it is therefore sacrosanct for players within the evolving renewable energy industry to extensively consult with local communities so as to secure their buy-in before projects are situated in their locality. Specifically, the pitfall where oil and gas companies prioritize interaction with government institutions during acquisition of land and form of resource for infrastructure installation should be avoided.

This is important as this pitfall is one of the drivers of the limited buy-in by local communities into oil and gas projects in communities. If this is done, it becomes easy to navigate the complex layer of interactions with diverse communities during the projected widespread installation of the necessary infrastructure.

Another issue faced by the oil and gas industry is its reliance on foreign technology and manpower until recent times where local content is being gradually prioritized. The technology driving the oil and gas sector is largely imported, thereby subjecting the sector to international market volatilities, which therefore limit prevent local players from developing solutions that can drive down cost. Learning from this, the renewable energy sector needs to focus on the development of home-grown solutions that would limit its reliance on imported technologies, at this infant stage of the industry.

This would afford the opportunity to drive the emergence of low-cost renewable energy infrastructure, especially in cases where there are right incentives put in place by the government. This perspective is substantiated by the classical case of the Chinese renewable energy industry, that boasts one of the cheapest renewable energy infrastructures in the world.

Finally, the regulatory framework of the oil and gas sector is one that has struggled to react to the realities of the oil and gas sector of the country. For instance, the anchor legislation of the oil and gas industry–Petroleum Industry Act 2021–took about two decades before it began law, costing the sector billion of dollars in losses. Drawing inference from this, the evolving renewable energy sector needs to be abreast of the changes that should be made in the forms of legislations and regulations, that would maximize its potentials.

This could be in the form of up-to-date incentives that would support growth such as Feed-in-Tariffs, power purchase agreements, net metering policies and clear renewable energy targets for both short-term and long-term plans. In summary, in no way are these lessons exhaustive. Instead, this article only provides direction to areas which policymakers and industry players should look, to ensure that the evolving renewable energy does not make the same mistakes which the oil and gas sector made in Nigeria

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