Clean energy technology could be referred to as an umbrella term for producing power without having negative environmental impacts, such as the release of greenhouse gases like carbon dioxide. Clean energy is also renewable, including wind power, some hydro resources and solar-powered energy generation. In other terms, clean energy technologies are renewable, less environmentally invasive ways of powering the global community and, thus, have become an important tool to ensure clean energy substitution.
A mix of electricity-generating technologies characterizes most electricity systems. The general pattern is a mix of fossil fuel and renewable energy, with the former dominant. However, the trending climate change concerns have forced most countries to use renewables and more clean energy technologies to reverse the dominance of fossil fuel technologies in their generation mix while attaining to meet net-zero carbon emissions targets in the coming decades. New energy forms (renewables) are making notable entries into the global energy mix, and Nigeria is no exception. To meet electricity demand in rural and semi-urban areas that are underserved and unserved, government and donor agencies are promoting off-grid electricity supply based on renewable energy. Undoubtedly, the world needs to rely more on sustainable energy resources, and clean energy technologies are critical in achieving this transition. However, some barriers hinder Nigeria’s adoption of these clean energy technologies. They include:
- Financial and Economic Barriers:
The high initial capital expenditure (CAPEX), economic status, transaction costs, and availability of subsidies and incentives hinder Nigeria’s large-scale adoption of clean energy solutions. High investment costs remain a significant barrier to implementing sustainable clean energy solutions in Nigeria. Also, the lack of credit facilities to purchase clean energy technologies and high-interest rates on these credit facilities limit the development of clean energy solutions. Very few private and public financial institutions are willing to provide loans for clean energy technologies or renewable energy projects in Nigeria, often provided at double-digit interest rates.
- Absence of Guarantees:
In Nigeria today, no institutions provide guarantees such as partial risk guarantees (PRGs) or partial credit guarantees (PCGs) for clean energy technology investors or developers of renewable energy projects. This has impeded the deployment of large-scale renewable energies in Nigeria.
- Technical Barriers:
These include inadequate technologies and infrastructure necessary to support these clean energy technologies. People are unwilling to import these clean energy technologies for fear of failure due to the absence of trained personnel to maintain, train and operate these structures. Another major infrastructural challenge to adopting renewable energy solutions in Nigeria is the lack of physical facilities for transmission and distribution networks due to their high cost of purchase or importation. Hence, many consumers opt for fossil fuels because they are readily available, affordable, and reliable.
- Social-Cultural Barriers:
This is often a result of a lack of awareness and knowledge of renewable energy technologies. This lack of information and awareness creates a market gap that results in higher risk perception for potential renewable energy projects. The general perception is that renewable energy technologies are not yet mature technologies, hence are only suited for niche markets and, as such, will require a heavy subsidy to make them work. Many Nigerians, especially in rural areas, are uneducated and prefer to stick to the status quo of their energy source.
- Regulatory and Political Barriers:
In Nigeria, the coordination between government Ministries and agencies responsible for rural and renewable energy development is weak and rather complex. The lack of policies and regulations favouring the development of clean energy technologies can hinder its large-scale adoption. Also, political bureaucracy and the failure of policymakers to implement measures to attract private investors limit its large-scale adoption.
These challenges could be tackled in the following ways:
- To increase the viability and adoption of large-scale clean technology solutions, the huge capital expenditure must be driven down through the Government provision of tax holidays of up to 5 years to renewable energy companies and potential investors for mini-grid development. Renewable energy companies should be exempted from paying the current Corporate Income Tax of 30% as the huge levy negatively impacts the viability of large-scale projects. VAT and Import Duty exemption concessions should be given to importers of renewable energy components to drive down the prices of these components, especially solar. Also, debt financing should be made available to investors at single-digit interest rates. These recommendations will optimally drive down the high initial CAPEX. Furthermore, grant facilities should be provided to finance this large-scale renewable energy deployment to reduce the high energy production costs, further increasing electricity customers’ willingness to pay.
- Development banks should be brought on board to provide guarantees for these renewable energy companies and potential investors on behalf of the government. This will boost the confidence of the private investors to throw in their hats into the massive deployment of these renewable energy projects, thus eliminating any fear of risk guarantee and issues of payment.
- The technical barriers can be addressed by fostering capacity building. Human and institutional capacity building at all levels would be required to sustain the scientific, engineering, and technical skills relevant to Nigeria’s design, development, fabrication, installation, and maintenance of clean energy technology. Further, only certified licensed personnel from accredited institutions should be allowed to carry out renewable energy installations around the country.
- Awareness of the opportunities offered by renewable energies and their technologies by public and private sectors is essential in bridging that information gap among end users, especially in rural areas and curbing the social-cultural barriers to renewable energy development. There is, therefore, a need for the dissemination of information on renewable energy resource availability, benefits, and opportunity to the general public in order to raise public awareness and generate activities in the area. Such a process is paramount to building public confidence and acceptance of clean energy technologies. Providing information to selected stakeholder groups like investors can help mobilize the financial resources needed to promote renewable energy technology projects.
- It is imperative that there are well-defined rules, legislation, roles, and responsibilities of various stakeholders along every stage of the energy flow from supply to end-use are key elements of the overall policy framework needed to promote clean energy technologies. These would eliminate every form of political or regulatory controversy.