The micro grid model of the Nigerian Electricity Regulatory Commission (NERC) being considered for nationwide implementation will end lingering concerns of industrial consumers by the next two years, Sam Amadi, NERC chairman, has said.
Amadi revealed this on Wednesday during an electricity consumer forum convened by NERC in Abuja to have various commercial and industrial customers publicly express their concerns over what they called “rising energy cost and insufficient supply of grid power.”
The model, known as embedded generation, refers to any power that is sourced from smaller modular generators directly connected to the distribution network or customer loads.
“Micro grid clusters remain the solution to efficient and affordable power supply to industrial clusters at cost that is reflective of tariff rates,” the NERC boss told the forum.
The forum was widely attended by representatives from power generation companies (Gencos) and those from the eleven power distribution companies (Discos) in the country, as well as, industrial and residential consumers among many other stakeholders in the Nigerian Electricity Supply Industry (NESI).
As part of its regulatory mandate under the Electric Power Sector Reform Act (EPSRA, 2005), NERC approved the Multi Year Tariff Order (MYTO) 2.1 on January 1, 2015, with an upward review of energy tariffs, except for residential consumers whose tariffs were exempted from any further increase for a minimum period of six months.
Since the implementation of the new tariff regime, NERC has received several complaints from commercial and industrial customers, ranging from disparities in regional tariffs through high charges by Discos to low voltage from the grid.
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The Power Sector Reform Act empowers the commission to ensure full commercialisation of the NESI through cost reflective tariffs, but should be fair, affordable and reasonable.
However, “the huge capacity gap which currently exists in the NESI cannot be bridged with public finance alone,” Amadi insisted.
Globally, power generation and supply are hugely dependent on critical variables, such as currency exchange rates, gas supply, generation capacity and inflation.
Nigeria, being largely a mono-economic nation, depending on crude oil exports to fund domestic needs, including energy supply, remains vulnerable to changes in global crude oil prices.
In June 2014, the price of Brent crude was up around $115 per barrel before crashing down by more than half to $49 per barrel in January 2015.
However, crude prices are now valued at $59.96 per barrel.
Another major problem faced by the country in respect of electricity supply is pipeline vandalism, which impacts negatively on gas-fired power stations and has largely been blamed for power outages around the country.
In January 2015, the Trans-Forcados oil pipeline was vandalised, resulting in what the Federal Ministry of Power described as “the third of such incidents within a space of 17 days.”
As a result of these challenges, the country’s current power generation capacity of 4,600MW has decreased to 3,617MW.
