How to Incentivize Nigerians to Imbibe Energy Conservation Culture

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Last week, during the Monthly Power Stakeholders’ meeting held in Maiduguri, Minister of power, works and housing, Mr. Babatunde Fashola, stressed the need for Nigerians to learn to conserve energy for stable power supply to be achieved in the country. I totally agree with Mr. Fashola because every effort to increase generation and transmission capacity in the country will continually be undermined by the high level of wastage currently existing in our system. However, I feel that simply educating the populace about energy conservation/efficiency will not accomplish the desired goal, the same way advising employees to be diligent without incentivizing hard work will not yield much fruit. The truth is that, most rational human beings respond to one kind of incentive or the other, whether monetary, or just the good feeling of having done a noble thing. There is always an incentive that prompts people to action. So what kind of incentives will get Nigerians to conserve energy? Below is a brief discussion on proactive steps the government can take in nudging the citizenry towards imbibing a culture of energy conservation. These points are not exhaustive in any way, but will definitely be a good start in making our electricity system much more efficient.

Effective metering: In a situation where consumers receive outrageous bills on a monthly basis even when they had power supply only for a couple of hours in a day, such consumers will not be necessarily driven to switch off their light bulbs when leaving for work in the morning. Currently, a huge population of consumers still receive estimated monthly bills as prepaid meters are yet to be disseminated adequately and existing meters are seldom read monthly. Therefore, getting all hands on deck to fix these metering issues, curb theft and ensure every single consumer is accurately billed is the first critical step that must be taken in order to encourage energy conservation. No one will need to be taught about minimizing their energy usage when their bills reflect their actual consumption except such a person is a moneybag or the electricity is dirt cheap, which leads to the next point.

Cost-reflective tariffs: Mr. Fashola noted during the meeting last week that “Driving through Damboa road we saw not a few shops with their electricity bulbs still switched on at 11:00am; that is energy being wasted where it is not needed and can be put to good use.” The truth is that the owners of those shops will never do that if their shop was located in New York City where they would have to pay up to 27 US cents (about 84 Naira) per kwh (1 Kwh will light a 100 Watt bulb for 10 hours). When consumers are made to pay for the true costs of generating and distributing power, they will come to understand that keeping a light bulb on when not in use is like pouring petrol away in the gutter or flushing money down the drain. I am of the opinion that the recent court ruling annulling the 45% increase in electricity tariffs, further hinders the possibility of making the system efficient. In order to move forward, we must address the anomalies in the tariff regime that do not allow the consumers pay the true cost of supplying electricity.

Phase out high energy appliances: Last May, Dr. Anthony Akah, the Acting head of NERC (Nigerian Electricity Regulatory Commission), stated that the agency is considering a ban on the importation and manufacturing of high energy consuming electrical appliances and equipment. This is a positive step that must be acted upon by the government as quickly as possible. Already, many Governments (even Zambia) around the world have passed measures to phase out/ban the manufacture, importation or sale of regular incandescent light bulbs for general lighting in favor of more energy-efficient lighting alternatives.

In a statement late last year, Mr Goodluck Enyinnaya, Secretary, Board of Trustees, Electricity Consumers Association of Nigeria (ECAN), said Nigeria loses N8.7 billion yearly because many electricity consumers use incandescent bulbs. Instead of simply maintaining status quo, Government should incentivize consumers to adopt compact fluorescent lamps (CFLs) which use 75% less energy and lasts up to ten times longer than normal incandescent lights and LED (light-emitting diode) bulbs which use between 75-80% less energy and lasts 35 to 50 times longer than incandescent lighting. Even if we can’t do an outright ban, at the very least, higher import tariffs should be placed on highly inefficient products to discourage consumers from purchasing them while allowing lower tariffs/duty free importation for energy efficient products and appliances.

Pursue efficiency ratings and labels: Adopting energy efficiency ratings similar to the Energy Star rating, which originated in the US and has been adopted by Australia, Canada, Japan, New Zealand, Taiwan, and the European Union, will also go a long way. Last time I checked the Energy Star program had saved up to $362 billion on utility bills and reduced GHG emissions by 2.5 billion tonnes since it was introduced in 1992. Currently, we understand that NERC is partnering with the Standards Organization of Nigeria (SON) on a proposed energy efficiency rating labelling for all electrical appliances and equipment manufactured or imported into the country to enable consumers pick the energy-efficient ones. This is a low cost initiative that should be rolled out without much delay.

Implement modern codes and standards: Recently, the Building Energy Efficiency Guidelines was launched and steps are already being taken to harmonize it with the National Building Code. Efforts should be intensified to ensure that this becomes a reality and does not get trapped in bureaucratic bottlenecks.

Walk the talk: Government must live by example, hence concerted efforts should be made to make government offices and buildings more energy efficient. We understand that, government ministries, departments and agencies (MDAs) currently owe over N93bn in legacy debts to Discos. There is a huge opportunity in reducing the electricity cost of MDAs and as NERC has stated there is empirical evidence that a well-articulated and implemented energy efficiency program can reduce electricity costs by at least 30 per cent. The implementation of NERC’s new programme aimed at optimizing energy usage in government offices and buildings using demand side management measures should be fast tracked. Showcasing the results achieved will then serve as a model to drive awareness among the populace.

After implementing the steps above, further down the road we can begin to look into incentivizing utilities to drive energy efficiency, creating enabling environment for Energy Service Companies (ESCOs), introducing financing mechanisms and so on.

 

*Koye Alaba is an Associate at GreenMax Capital Advisors, a transaction advisory firm focused on the clean energy space.

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