• Thursday, July 18, 2024
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NERC approves deal for 450MW electricity from Zungeru Plant

NERC approves deal for 450MW electricity from Zungeru Plant

The Nigerian Electricity Regulatory Commission (NERC) has approved the procurement of 450 megawatts (MW) of electricity from the newly completed Zungeru Hydro Electricity Generation Company Limited.

The decision, which was issued by Commission Order No. NERC/2024/044 on “Transmission System Dispatch Operation, Cross-Border Supply and Related Matters,” aims to keep the hydropower plant in Zungeru, which does not currently have any off-takers, from shutting down.

The commission acknowledged the sub-optimal grid dispatch concerns on the national grid, partially caused by low generation levels, in an order signed by Musiliu Oseni, NERC’s vice chairman.

Read also: Can FG suspend transfer of electricity regulatory functions from NERC to states?

As frequent disruptions are necessary to maintain grid imbalances, these difficulties have affected the ability of electricity distribution companies (DisCos) to provide constant service to end-users.

On May 15, the Zungeru Hydro Electricity Generation Company finished its preliminary capacity tests, exhibiting an average 600MW generation capacity. However, without contractual agreements with off-takers, the company had planned to shut down the plant following the capacity test.

“To avoid this, the regulator has decided to keep the power plant operational and ensure it continues to contribute to the grid, thereby improving service delivery to Nigerian electricity consumers,” the directive stated.

NERC granted a special dispensation allowing the Independent System Operator (ISO) of the Transmission Company of Nigeria (TCN) to manage the settlement for power-wheeled from Zungeru for an initial period of 105 days starting from May 16, 2024.

The directive read, “Given the overriding public interest, the Commission has granted a special dispensation that permits the Independent System Operator of the Transmission Company of Nigeria to assume responsibility for the administration of settlement for power wheeled from ZHEGC for an initial period of 105 days commencing from 0.00Hrs of the 16th May 2024.”

To address current system imbalances, NERC directed the TCN-ISO to enter into an interim energy sales agreement with Zungeru for up to 450MW of energy. This agreement, effective from May 16, 2024, to August 31, 2024, is designed to further strengthen grid management.

“For every settlement cycle following the commencement of the agreement, ZHEGC shall invoice the Market Operator for capacity and energy based on the metered energy generated as contained in the Final Settlement Statement,” the directive stated.

It also said the NESI-SSL shall pay the Market Operator the full value of ZHEGC’s energy invoiced to the DisCos for onward payment to ZHEGC in line with the terms of the interim energy sales agreement.

The Zungeru power plant, located on the Kaduna River near Zungeru in Niger State, is Nigeria’s second-largest hydroelectric plant with a capacity of 700MW, generating 2.64 billion kilowatt-hours annually. This meets nearly 10 percent of the nation’s domestic energy needs, second only to the Kainji Dam.