Lagos will build a $400m waste-to-energy plant

From the newsletter

The Lagos State Government plans to build a $400 million Waste-to-Energy plant in nearby Epe to tackle the state's waste and energy problems. The plant is set to be delivered through a private sector-led design, build, finance and operate model. This comes after the unbundling of the national electricity market, allowing state governments to generate their own power.

• The project aims to provide a long-term solution to dwindling landfill capacity and insufficient power supply. It will generate electricity for up to two million homes and businesses.

• Nigeria joins a growing list of countries converting waste into energy. They include South Africa, Ethiopia and Ivory Coast, which all recently announced their first grid-connected waste plant.

More details

• Nigeria's largest city, Lagos, with a population exceeding 20 million, produces approximately 15,000 metric tonnes of solid waste daily, the highest in West Africa. However, only about 4,000 to 7,000 tonnes of this waste are collected. This collected waste could serve as valuable feedstock for the Waste-to-Energy Plant in Epe, which is just a short distance from Lagos.

• Nigeria's power grid is one of the worst in Africa, suffering frequent blackouts due to poor grid infrastructure. While the total installed capacity is around 13,000 MW, the average available capacity for distribution is much lower, often around 4,500 MW. This disparity leads many Nigerians to rely on private generators, which are estimated to provide an additional 40,000 MW of power.

• The impact of this unreliability is high, especially for large-scale companies that need a reliable power supply. Relying on fossil fuels, which have always faced supply deficits in Nigeria, and the removal of subsidies makes it expensive. Recent electricity developments seek to liberalise the market to allow Independent Power Producers (IPPs) to sell electricity to clients directly.

• Many states have already rolled out other renewable energy-based power plants. Katsina State is leading with a mix of wind, solar, and hydro projects, including a 10 MW wind farm and a new 10 MW solar farm. Other states like Kano, Jigawa, and Cross River are also seeing significant development in solar mini-grids and other renewable energy initiatives.

• With the market opening up, there's a growing need for reliable power. Many other African cities are looking into generating their own power. Ethiopia has established the Reppie plant, which processes 1,400 tonnes of waste daily, providing electricity for over 30% of the city's households. Egypt plans to set up a 30 MW plant in Giza to process 1,200 tonnes of waste daily. Other cities like Cape Town are pursuing both WtE and other renewables like solar, with an 8 MW solar project currently under construction.

• The economics of WtE projects are not yet clear in Africa due to the type of waste generated, which is often not sorted. However, it has worked successfully in countries like Sweden, which has performed so well that it imports waste. This is because of strong supportive policies and regulations, such as a ban on landfills, and the development of necessary WtE infrastructure and incentives to support recycling.

• WtE technology is still developing and lacks sufficient funding for research and development. Currently, its Levelised Cost of Energy (LCOE) is higher compared to solar power. However, WtE could become competitive in regions experiencing high wholesale energy prices, substantial landfill taxes, and dense populations. A key benefit of WtE is its capacity to deliver stable, baseload power, which is crucial for the reliability of Africa's often fragile electricity grids and can offset its higher cost.

Our take

• Africa's urban population is set to double to 1.4 billion by 2050, growing at 3.5% annually. This rapid urbanisation and changing consumption habits will increase waste production, which can serve to generate power for the immediate urban areas' needs. 

• The increasing population density in urban areas also creates a concentrated demand for reliable and affordable electricity. WtE can help address this by providing a stable, localised power source, directly contributing to energy security in these growing urban hubs. 

• While WtE power plants are costly, their economic viability is enhanced by multiple revenue streams, including tipping fees for waste disposal and the sale of carbon credits. And more so, capturing methane from waste can save billions of dollars in economic damage associated with climate change impacts, a factor often overlooked in traditional levelised cost of energy comparisons.