First Power Nigeria Limited, promoter of the first embedded power plant in the country, is working with some prospective buyers on pricing as the test phase of the 13.02 megawatts (MW) electricity plant begins. According to a power industry source, the testing of the plant commenced a few days ago with diesel being used as the major fuel to power the plant for now.
The source, however, told BusinessDay that gas supply from Gaslink Nigeria Limited, a subsidiary of Oando, would reach the plant by the end of October. Chinedu Nebo, minister of power, is said to have visited the plant last week and expressed his eagerness to see that electricity from the plant was hooked to the national grid. This is coming on the heels of recent efforts by the Nigerian Electricity Regulatory Commission (NERC) to ensure that the gaps in power supply in the country are bridged through embedded power generation.
The plant being constructed by First Power has two generators with a capacity of about 7.5 MW and 5.5 MW, respectively, and is located within the precincts of the Transmission Company of Nigeria (TCN) at Ijora Olopa, Lagos, adjacent to old Ijora power plants. The plant which was scheduled to be completed within five months has met the target. The dual-fuel generator plant, which is capable of using gas and diesel alternately, has a guaranty uptime of 95 percent.
BusinessDay gathered that business concerns that want to partner with First Power by way of getting power supply from the company are making moves that may eventually be consummated into a power purchase agreement (PPA). Embedded power generation refers to power generation which consists of smaller modular generators using a variety of generation technologies such as solar, wind, biomass, diesel, low fuel oil (LPFO), high fuel oil (HPFO), crude oil and small hydro.
It is a useful means of dedicating power to high net worth customers as well as state and local governments. This is an interventionist scheme that has the potential to bridge the gap being experienced currently in the power sector. The tariff arrangement in this scheme is going to be different from the prevailing tariff currently being operated by the electricity distribution companies (Discos) across the country. While consumers currently pay N12 per kilowatts hour, analysts say the tariff regime for embedded power should be in the region of N24 and N30 per kilowatts hour, noting that this is the only way the scheme can be successful and attract investors.
Imamuddeen Talba, head of renewable energies, research and development, NERC, explained that embedded generation would be connected to a distribution network operated by Discos licensed by NERC. Talba outlined conditions for such connection to include maximum generation, metering and cost. “Section 62 of the Electric Power Sector Reform (EPSR) Act 2005 states that permit is needed for generation of 1MW and above, except captive power which is strictly used for personal consumption,” he said. The NERC boss said the commission would soon introduce competitive charges which would ensure that power generated anywhere could be sold to any part of the country using the infrastructure of various companies. He stressed that NERC had agreed in principle that all customers to be supplied from embedded generation would be required to pay higher tariff.
Dolapo Kukoyi of Detail Commercial Solicitors said with embedded power generation in view, Nigeria should be able to achieve its national aspiration within a short time, reduce technical losses because of proximity to network systems and deepen the electricity market. With embedded generation in place, he said, distribution companies would have access to power supply and more cash flow as more customers would be ready to pay for regular and steady electricity supply.
Olusola Bello
