Economic Implications of Renewable Energy Transition in Nigeria

The energy system worldwide is undergoing transition to renewable energy (RE) due to concerns over depletion and environmental impacts of fossil-fuel sources, energy security, as well as the volatile nature of crude oil prices. In Nigeria, the need to support this transition is underpinned by the deplorable state of Nigeria's electricity sector which is marred by electricity shortage, domination of fossil-fired systems, struggling power infrastructure and bad governmental influences, among others. The transition to RE is to be considered a viable solution to the aforementioned problems because it encourages decentralised generation which makes room to bypass the bottlenecks in Nigeria's current electricity system. However, the transition to RE in Nigeria has been slow due to policy inconsistencies as noted by the REMP policy document in 2005. In reality, RE transition is complicated because it demands multidisciplinary approach to address social, economic, and environmental issues. Thus, this study is undertaken to analyse the economic implications of RE transition in Nigeria by linking the effect of macroeconomic factors such as investments and energy costs, industrial competitiveness, energy efficiency (EE), GDP changes, employment, income level and standard of living on the progress of transition. Afterwards, the result of the analyses is used to develop a set of criteria useful in measuring the progress of the proposed RE transition. Lastly, some inputs are made towards the sustenance and intensity of the transition process.