A new novelty is being experienced in the power sector with the introduction of embedded power generation scheme which is intended to help solve power problems in the country.
With the introduction of the scheme electricity provision would be available for those, especially industries and companies through special arrangement between suppliers (generators) of power and consumers under an agreed term which would have structured out a tariff plan that would be satisfactory to all the parties involved.
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, state and local government respectively.
The operative guidelines for the scheme is at this point time is being finalised by the regulatory authority, the National Electricity Regulatory Commission (NERC). This interventionist scheme has the potential to bridge the gap being experienced currently in the power sector.
The tariff under which the scheme, it is expected, would not follow the regular tariff pattern in which N12 is charged per kilowatt hour. As a matter of fact, the expected tariff under this scheme is expected to be between N24 and N30 per kilowatt hour for it to be economically viable according to experts.
Nigeria can benefit tremendously from the initiative when put in place. It can help bridge the gap in terms of electricity supply in the country as it has done in advanced countries like Germany. Countries like Germany, United Kingdom and a host of other developed countries had at one time or the other engaged in such interventionist approach to boost electricity supplies when the need arises. Interestingly, its outcome has been of tremendous impact to their economy.
In lieu of the monumental benefits that can be derived from such scheme, the German government decided to throw its weight behind the scheme. Micheal Derus, consul general of the German embassy, described embedded generation as very important to the nation’s economic development. Derus however urged Nigerians to embrace the scheme at a recently organized seminar on renewable energy with the embedded generation as the focus recently.
With embedded generation in view, it is expected that the country should be able to achieve its national aspiration of 20,000 megawatts within a short time and reduce technical losses because of proximity to networks system and also deepen electricity market.
If the scheme takes off smoothly distribution companies would have access to power supply, more cash flow as more customers would be ready to pay for a regular and steady electricity supply. It is therefore very cheering that Eko Electricity Distribution Company is planning to achieve 1000 megawatts of electricity through such a laudable programme. This would be done in phases to achieve 1000 MGW between now and 2020.
There is a gas pipeline facility in place already by Gaslink, one of the off-takers of the gas supply from Nigeria Gas Company (NGC). With respect to gas for electricity generation, this is an investment opportunity for businessmen who have resources to put in place small plants.
It is an opportunity for them to key into the programme since the arrangement is going be between a maximum three parties. It would be easy for either of the parties to be paid for the services it had rendered thereby reducing unnecessary bureaucracy.
Already, a Power Purchase Agreement (PPA) arrangement has been entered into by some interesting parties that have kick started the scheme. This is good because the service would faster to execute. Similar schemes already exist in some areas just that it required regulatory backing for them to be consummated, especially in some estates across the country.
While the efforts of NERC must be commended, it must however be stated that it must remove all restrictions, bureaucratic bottlenecks that would discourage would be investors. All hands must be on deck to move the power sector forward in order for the economy to attain the desired goals of creating employments and other sundry benefits.
Brent Hampton, former vice-President services, and Project Eko Electricity Distribution Company (EEDC) emphasised that tariff from the embedded generation should as high as N30/kwhr,as against the current N12/kwhr from the grid.
He bemoaned the mindset of electricity customers who he explained have conditioned their mind sets to the facts that electricity would not improve soon, saying that parts of the challenges the company is facing are lack of human capacity and dilapidated networks system which required considerable investments, and limited gas supply.
Another stakeholder, Dolapo Kukoyi of Detail Commercial Solicitors, argued that with embedded generation in view, Nigeria should be able to achieve its national aspiration within a short time, reduce technical losses because of proximity to networks system and deepen electricity market.
She said with the embedded generation in place, distribution companies would have access to power supply, more cash flow as more customers would be ready to pay for regular and steady electricity supply.
If the scheme is to achieve the desired result, NERC must do everything possible to ensure that the implementation of the embedded power generation scheme takes off with little hitches. Even though this kind of arrangement is not new to a lot of advanced countries where the importance of having uninterrupted power supply is taking for granted. It is high time the country begins to take advantage of this type of innovation because of it inherent benefits.
Olusola Bello
