Though a multidimensional subject; socioeconomic growth in Nigeria and the larger West Africa has one major determinant: Energy. The broad consensus among global experts is that a lack of access to reliable electricity at affordable prices is a key impediment to socioeconomic growth. This status quo, combined with the growing population and accompanying increase in energy demands, necessitates timely action.
Being the largest economy in Africa by a wide margin does not come without regional responsibilities. And they are not lost on Nigeria, because the nation has blazed a developmental trail for regional economies. Today, the precedents it sets will be consequential to the entire subcontinent, particularly West Africa, as the global discourse on climate actions, sustainability and energy security picks up.
In 2020, the electrification level in Nigeria stood at 55.4% — only marginally higher than that of West Africa (52.6%). The lack of access, which is pronounced in rural areas, is well documented, but the same cannot be said about its knock-on impact on education, healthcare, employment, etc. For example, the dearth of refrigeration and cold-chain capabilities have exacerbated food scarcity, while the healthcare sector is devoid of much-needed diagnostic tools.
But this is not to say the region lacks energy resources; in fact, studies suggest that Africa has unparalleled energy potential. As resources are concentrated in a few countries with limited harnessing capacity, electricity remains a privilege for nearly half the regional population. However, while greater access to electricity in its current form could address a few challenges in the short term, it is not viable for the long haul.
Electricity is not without its problems
As electricity is inherently 3–4X more efficient than other energy sources, the drive to increase its accessibility is understandable. We at Schneider estimate the share of electricity in the global energy mix to grow from 6% today to at least 40% by 2040. However, our focus is not only on higher electrification but also on the means of electricity production — which is currently dominated by energy- and carbon-intensive thermal plants.
The production of electricity through thermal power plants runs counterproductive to the growing sustainability imperative of reducing carbon emissions. In Nigeria, thermal processes account for a whopping 78% of the total electricity production. So, when we strategize electrification today, there is a pressing need to factor in the aforementioned priorities — accessibility, reliability, and affordability — as well as sustainability.
Why Electricity 4.0 is the answer
Like Industry 4.0 — the evolutionary phase that saw greater integration between the physical and digital worlds — Electricity 4.0 posits a more-electric, more-digital world that gives more and wastes less. From renewables-led production to fully digitalized electric grids for reliable dispatchability, Electricity 4.0 represents a step change from conventional electricity. This is to say, it is not a superficial but a structural shift — one that requires all stakeholders to move from conventional ways toward a sustainable one.
This shift is so paramount and critical that we at Schneider phrased it as Electricity 4.0. Also, the “zero” in Electricity 4.0 connotes a zero-waste, zero-emissions, and zero-carbon future. This re-envisioning of electricity entails two primary tasks: Renewables adoption and digitalization.
Globally, there is a visible shift toward renewables. We estimate the contribution of renewable sources, such as solar and hydro, to electricity production to increase six folds by 2040. Nigeria, and the larger West Africa, must be aligned with this energy transition. Systemic strengths such as hydropower — which currently accounts for about 22% of Nigeria’s electricity production — must be harnessed at scale. A study published in nature.com suggests that if renewables contribution is scaled to 50% by 2030, the resulting electricity could be at least 10% cheaper compared to the one produced by thermal plants. So, it complements affordability.
As far as accessibility and reliability are concerned, the role of initiatives such as the Nigeria Electrification Project (aimed at providing access to remote areas) and the West African Power Pool (grid interconnection for balanced energy security) will be key.
Digitalization catalyzes the shift to Electricity 4.0
Nigeria has the potential to generate 12,522MW of electricity from its existing plants but is currently unable to dispatch beyond 4,000MW — which constitutes a short supply. The gap is owed to significant waste and inefficient processes that have gone unchecked for a long time.
Existing systems must be digitalized through IoT and analytics solutions/retrofits, which can provide insights pertaining to inefficiencies, excessive energy usage, and faulty equipment. By acting on insights, practitioners can unlock savings in energy and maintenance costs and reduce carbon emissions, which have strong implications for affordability and sustainability.
In a few case studies with Schneider’s EcoStruxure — an IoT-led, plug-and-play, open, interoperable architecture platform — we registered up to 80% reduction in engineering costs and time, up to 75% reduction in maintenance costs, and up to 50% reduction in carbon footprint, on average, across sectors.
The nuanced, data-driven understanding can also open opportunities to add renewables to the mix and rationalize the adoption of IoT sensors and smart devices across the electricity value chain. The digitalization of grids, in particular, has a direct bearing on reliable “dispatchability” to remote, rural areas.
Digital grids allow integration with renewable sources and enable decentralized bi-directional power transfers. Operators can monitor such grids centrally, detect inefficiencies immediately, perform proactive maintenance, and ensure optimal performance. So, electricity can be dispatched efficiently and equitably while the entire ecosystem benefits through increased transparency.
Digital grids, thus, make a compelling case for incorporation in crucial initiatives such as the Nigeria Electrification Project and the West African Power Pool. If pursued through multi-stakeholder participation and political will, the road to 100% electrification will be smooth and lead to sustainable socioeconomic development.
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