Impacts of electricity subsidy removal on renewable energy security utilization in Nigeria 2023-2026
DOI:
https://doi.org/10.64171/JSRD.5.3.67-76Keywords:
Electricity subsidy removal, Renewable energy adoption, Energy transition, Electricity pricing, Energy policyAbstract
The removal of electricity subsidies in Nigeria would have a profound impact on the adoption of renewable energy sources, energy affordability and consumer behaviour. This study investigates the effects of the discontinuation of subsidies on the consumption of renewable energy, focusing on consumer reactions, investment patterns, and electricity prices. The study uses a mixed-methods approach including consumer surveys, key informant interviews, and time-series econometric analysis to assess the effects of subsidy reductions on renewable energy adoption and electricity demand. According to the results, the average electricity cost has increased by 65% for industrial users and 50% for residential consumers. This has resulted in a decline in power consumption and a rise in interest for alternative energy solutions. However, despite a 25% increase in solar photovoltaic (PV) capacity since 2020, widespread use of renewable energy is still hampered by economic restraints and regulatory barriers. The study emphasizes the need for targeted policy initiatives that include financial incentives, stronger regulatory structures, and social protection measures to benefit low-income customers. Lessons from the world show that to encourage investment in renewable energy and maintain the affordability of electricity, structured incentives must be incorporated into subsidy reform. “While the analysis points to challenges in reducing power subsidies, it additionally points out the opportunity to accelerate Nigeria’s transition to a more sustainable and resilient energy system. Public-private partnerships need to be improved, off-grid solutions need to be expanded to fully take advantage of subsidy reduction.
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