Global electricity consumption continues to increase, leading to an increase in the average amount of electricity consumed per person (per capita electricity consumption), according to the U.S. Energy Information Administration’s (EIA) International Energy Statistics.
Electricity is used most commonly in buildings for lighting and appliances, in industrial processes for producing goods, and in transportation for powering rail and light-duty vehicles. Nearly all of the increase is attributable to growing electricity consumption in developing countries outside the Organization for Economic Cooperation and Development (OECD).
But unfortunately, the situation is not the same in Nigeria as the consumption has stagnated at about 4000megawatts for several years because of infrastructure deficiencies. This has been responsible for many industries becoming moribund, small and medium scale business dying and leading to increased number of Nigerians being thrown out of jobs.
A lot of industries that would have increased the consumption of electricity have no access to it and because of this have to depend on their own generation.
Responding to this development, Joy Ogoji, executive secretary of the Electricity generating companies (GENCOs) simply described the Nigerian situation as a ‘reverse progression’.
In a paper she had earlier made available to BusinessDay, she said the optimization of Nigeria’s potential to become one of the world’s largest economies will remain just an aspiration without the electricity required to pursue aggressive industrialization, including the revitalization of moribund local industries.
Capacity utilization in any market is often used as a measure of productive efficiency. Average production costs tend to fall as output rises – so higher utilization can reduce unit costs, bringing about a more competitive market which makes plants financially viable.
The NESI should therefore focus on maximizing capacity utilization, so as to achieve lowered power generation costs and in the process address the existing excess capacities.
Therefore, optimizing generation capacity, that is, utilising what is existing or getting the most out of what is available, which in other words means consuming what is available and recovering unavailable capacities (about 13,000MW) calls for critical evaluation of some market determinants.
A wide variety of determinants affect the investment decision in power generation. First of all, the state of the market in the power sector acts as a determinant of whether or not generation capacity should increase or be optimized.
The market is faced with financial, operational, construction, market, macroeconomic, contract and regulatory risks. Given that decisions about investments in power generating capacity depend on expected returns and costs, the illiquid state of the NESI in addition to the fact that all plants are performing below optimum does not encourage the discourse of capacity utilization at all.
Increases in per capita electricity consumption reflect possible changes in the composition of the economy, such as shifts to more energy-intensive industries, and changes in service demand, such as growing demand for air conditioning and appliances
The increase in consumption from these factors is partially offset by efficiency measures, such as more efficient lighting. Regionally, per capita electricity consumption in a number of countries has been affected by outsourcing energy-intensive industries to other countries.
Growth in global electricity consumption is related to economic growth, but the relationship differs, depending on the country. Per person economic growth can occur independently of growth in per person electricity usage in countries with large, developed economies; largely satisfied residential electricity demand; and relatively smaller portions of economic growth coming from industrial production. Producing a service with greater economic value does not necessarily require any more electricity than a lower-value service.
In countries with rapidly growing residential electricity consumption and growing energy-intensive activities, electricity use tends to more closely correspond to growth in economic activity.
Per capita electricity growth in the economies of less-developed non-OECD countries has more than doubled between 2000 and 2017, compared with a nearly flat trend in the economies of more developed OECD countries.
The report says that at the national level, average per capita electricity consumption values can mask the large variation within a country.
