Nigerian Gas Investment to Bolster Power Generation: Power Minister Joins AEW 2024

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Amid efforts to bolster investment in power generation, Nigeria’s Minister of Power, Adebayo Adelabu, will speak at the continent’s largest energy conference – African Energy Week (AEW): Invest in African Energy. Taking place November 4-8 in Cape Town, the event will provide insight into the country’s recently implemented Electricity Act, strategies for advancing gas-fired power generation and the advantages of investing in Nigeria. 

Nigeria has instituted several legislative reforms in the past year aimed at promoting investment in the power sector. These include the granting of unfettered powers to sub-national to develop electricity markets within their jurisdictions and the implementation of the Electricity Act 2023, which introduces features such as market liberalization, broadened regulation and a more coherent policy framework to mitigate operational and systemic risks. Now, Nigeria is inviting investors to support the development of the sector, capitalizing on untapped gas and renewable energy to bolster access to electricity. AEW 2024 will facilitate engagement in this area, introducing power producers and technology providers to Nigerian opportunities.

AEW: Invest in African Energy is the platform of choice for project operators, financiers, technology providers and government, and has emerged as the official place to sign deals in African energy. Visit www.aecweek.com for more information about this exciting event.

Faced with supply challenges, Nigerian President Bola Tinubu identified power generation and reform as one of the country’s top priorities for 2024. The government aims to achieve universal access to electricity by 2030, underscoring a wealth of opportunities for foreign power players. Currently, the country has 22 grid-connected generating plants, of which nine are account for 80% of the total power generation. Yet, at a total generating capacity of 11,053.6 MW, infrastructure falls short of the peak 19,798 MW demand for power. This challenge is expected to only exacerbate unless significant investment is made into the sector.

From 2024-2026, power demand is forecast to grow 7% per year, reaching 45,662 MW by 2030. To ensure the country is capable of meeting this demand, the government established an inter-ministerial committee in 2024 to identify strategies for ramping-up gas supply for generating plants. An Energy Transition Plan was launched in 2022, which recognizes the critical role gas will play in increasing access to electricity while lowing emissions in the energy industry.

With these, developments are already kicking off across the market. Notably, the $2 billion Egbin Phase II project is expected to start commercial operation in 2024. An expansion of the existing 1,320 MW facility, phase two will add a further 1,900 MW to the grid. Supermajor TotalEnergies also announced plans in 2024 to redirect previously-flared gas towards domestic power generation while construction began on a 1.35 GW gas-fired power plant in 2023. The project is being developed by technology company GE Vernova. Additionally, the 181 MW Geometric Power plant in Abia State will be commissioned in February 2024.

In total, natural gas accounted for approximately 75% of power generated on the national grid in 2023, and with 200 trillion cubic feet of proven natural gas resources, the industry is set to contribute even further to power generation in the near-future.

“Natural gas will not only significantly improve energy access in Africa by providing an affordable, accessible and long-term generation solution but will bolster industrialization and economic growth. By directing investments towards gas-fired power generation, Nigeria stands to lead the way towards a gas-based economy and investors should take advantage of the competitive opportunities present in the market,” states NJ Ayuk, Executive Chairman of the African Energy Chamber.

Notwithstanding opportunities for gas-generated power, Nigeria’s total exploitable hydropower potential is approximately 14,120 MW – capable to produce 50,832 GW of electricity annually. Significant investments are being made in the sector as well as in solar, made feasible through forward-looking policy such as the Electricity Act 2023.

Efforts to increase renewable-based power generation have seen promising results. The World Bank approved the Nigeria Distributed Access through Renewable Energy Scale-Up in December 2023, aimed at providing 17.5 million people with access to electricity in Nigeria. The country also granted 13 new power generation and distribution licenses in Q3, 2023 while a Hydropower station at Tiga Dam was brought online that same year. Off-grid provider Sun Africa signed a $10 billion agreement with the government in late 2022 aimed at generating clean and reliable electricity through solar power. During AEW: Invest in African Energy 2024, engagement between Minister Adelabu and power developers is likely to see new projects kick off.