• Wednesday, February 28, 2024
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The opportunities and barriers to sustainable on-grid power generation in Nigeria

Grid power drops 20% as debts hamper gas supply

Introduction

The Nigerian national grid is currently being operated by the Transmission Company of Nigeria (TCN) with the mandate of evacuating energy from various Generation Companies (GenCos) to the consumers through the Distribution Companies (DisCos). This mandate involves transmitting the existing contracted capacity of 4,000MW to over 12.6 million registered customers, according to the Nigerian Electricity Regulatory Commission (NERC) 2022 second-quarter report. The contribution of hydro-power with a cumulative capacity of 2,040 MW and gas/steam power with a cumulative capacity of about 11,743MW has been the only mix driving the electricity market. Efforts are being made to introduce other sources to improve the market’s capacity, reduce the carbon footprint and reduce the country’s energy cost. The Federal Government and the regulators are expected to be at the forefront of this sustainability conversation.

Background

The Nigerian Electricity Supply Industry (NESI) comprises various stakeholders. These include the GenCos, the government-controlled TCN, the DisCos, the Nigerian Electricity Regulatory Commission (NERC), and the National Bulk Trading Company (NBET). These stakeholders are jointly responsible for operationalizing the electricity market in Nigeria. One of the key driving factors of the market is the energy mix viz-a-viz the cost of the commodity and the ever-growing demand from the customers. This has necessitated the need for improving the grid’s capacity; currently, the available metrics of the market indicate an installed generating capacity of 13.014GW, a peak wheeling capacity of 8.1GW and a national demand forecast of 19.798GW. These metrics show a huge gap between the industry’s performance and the expected delivery.

The current grid performance reflects the challenges facing the NESI. These challenges stem from under-investment over the years, especially around the operational aspect of the sector. The inability of the DisCos to be efficient has also denied the NESI of its intent to be financially sustainable, which would guarantee re-investment in the sector’s infrastructure. Policy inconsistency has also had a debatably adverse effect on the NESI. In addition, the generating sub-sector having an 85 per cent gas plant composition contributes to the continuous environmental degradation.

Read also: The politics of census and unemployment data in Nigeria

The impact of global warming on the environment, which has necessitated the need for clean, environmentally friendly energy sources, has also altered the prevalence of traditional gas-fired power in the grid. The Federal Government of Nigeria (FGN), to ensure the country is compliant with the new energy direction that is sustainable and investment friendly, launched the Energy Transition Plan (ETP). The ETP highlights the scale of effort required to achieve the country’s 2060 net zero targets whilst also meeting its energy needs.

After that, the Climate Change Act 2021 was passed, and an Energy Transition Implementation Working Group (ETWG) was established. The ETWG is chaired by Vice President Yemi Osinbajo, comprises several key ministers and is supported by an Energy Transition Office (ETO).

Analysis

A stable grid connection and power supply directly impact any population’s quality of life. The reliability, quality and predictability of power supply address customers’ needs towards aligning their activities to feeding from the grid. This will galvanize a better business climate for the industry operators with an improved financial state. The second benefit is the transition away from diesel generators, which account for the bulk of current generation capacity, to a clean, efficient, cost-effective electricity market.

Investment in power generation to bridge the demand gap in the NESI can be achieved through strategic investment in renewables such as solar photovoltaic (PV) plants. For example, the solar PV plants awarded by NBET with a cumulative power generation capacity of 1250MW, the 3000MW Mambila hydro plant, the 1650MW Makurdi hydro plant, etc. In addition to expanding power transmission and distribution infrastructures, these will ensure a climate-friendly grid with adequate generation capacity and reduced cost due to marginal cost implications in the long run.

Key to the factors driving the sustainability of the grid is the investment requirement which the FGN has shown the desire to invest an average of $10 billion annually on this intention. Others are the availability of the resources required for driving the generation plants, such as high solar irradiance across the northern part, effective wind speed within the country’s coastal plains and availability of dimmable waterways.

The ETP has also identified the next course of actions required to upscale the grid stability with specifics including:

  • Streamlining existing and new government-related energy transition initiatives
  • Fundraising towards the implementation of the ETP
  • Conduction of studies around such as:
  • PV integration study conducted by the GiZ in 2016/2019 with reviews from UKNIAF/Nextier aimed at providing the best approach to onboarding the PV power parks to the grid. This also will require deeper studies around the preferred entry voltage and locations, reliability and other transient characteristics to guarantee a smooth injection and a stable network thereafter.

Conclusion

A stable and sustainable grid is possible through the collaboration of the various stakeholders across the energy, science and water resources industries. These concerted efforts will reduce the adverse effects of climate change, such as desertification, flooding, poor health, food insecurity and infrastructure damage. Adopting clean energy will also reduce the cost of power as the onboarding of renewable energy generators will significantly reduce end-user tariffs.

The government have set the ball rolling with the ETP, which has a robust action plan for its implementation going forward.