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PROJECT TOPIC AND MATERIAL ON A SEMINAR ON THE POTENTIALS OF THE MINI-GRID AS A DRIVER OF THE NIGERIAN ECONOMY NNAMDI AZIKIWE UNIVERSITY, AWKA.
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Nigeria is a country with a population of over 170 million; it is rightly the most populous country in Africa and the eighth most populous country in the world. According to the United Nations, one in six Africans is Nigerian. It is a regional power, listed among the “Next Eleven” economies, and a member of the Commonwealth of Nations. Nigeria’s Gross Domestic Product (GDP) was revised in 2013. As a consequence of the re-basing, the estimate for Nigeria’s
GDP in 2013 was revised upward from 42.4 trillion Naira to 80.2trillion Naira ($500 billion), an 89% increase. But for over two decades, Nigeria has experienced problems in the area of electricity generation, transmission and distribution. The extent of this is underlined by the fact that Nigeria is the largest purchaser of standby electricity generating plants in the world. (Braimoh and Okedeyi 2010). The population growth rate is projected to be between 2.5 and 2.7% per annum in the next 20 years. The population of Nigeria is therefore forecast to potentially grow to 310 million by 2035.
From the forgoing, we could say, in informal terms, that Nigeria is beginning to have an impressive resume when it comes to population and economical growth. But has this growth been reflected in the electric power sector of Nigeria? Well to answer that, let’s take a look at the data gathered by the IEA showing the electricity generation in (GWH) in Nigeria and compare this with her peer developing economies like India and South Africa for the past twenty years.
Fig1.0 Electricity generation (GWH) in Nigeria since 1992
The figure above shows the historic development of electricity generation in Nigeria and of the prior mentioned peer countries. It can be observed that Nigeria performed worst of the five countries in terms of absolute electricity generation. Over a 20 year period, there was an increase of 93% in mainline generating capacity in Nigeria. By contrast, Indonesia ramped up its electricity production by 372% and Bangladesh even by 451%. As a result, Bangladesh generated almost twice as much electrical energy in 2012 as Nigeria did. From this, we can see a need for us Nigerians especially us in the electrical engineering field to explore alternative cutting edge technology in the power sector for efficient service delivery. But what could be said about the Nigerian power sector, how was the power sector operated so that this poor result was a consistent reoccurrence? Let’s take a brief walk into time to understand the Nigerian power sector before Privatization and probably get to see why the power institution was in serious want.
1.2 OVERVIEW OF THE NIGERIAN POWER SECTOR
Electricity generation in Nigeria has it date back to 1896 when two small generating sets were installed to serve the then Colony of Lagos. The total capacity of the generator used then was 60kW. The maximum demand was even lesser than the 60kW generated. It was fifteen years after England has been experiencing power supply that this occurrence happened in Nigeria.
In 1946, the Nigerian government electricity undertaking was established under the jurisdiction of Public Works Department (PWD) to take over the responsibility of electricity supply in Lagos State. By an Act of Parliament in 1951, the Electricity Corporation of Nigeria (ECN) was established, and in 1962, the Niger Dams Authority (NDA) was also established for the development of Hydro Electric Power. However, a merger of the two was made in 1972 to form the National Electric power Authority (NEPA). Since ECN was mainly responsible for distribution and sales and NDA was created to build and run generating stations and transmission lines, the primary reasons for the merging the organizations were:
For over twenty years prior to 1999, the power sector did not witness substantial investment in infrastructural development. During that period, new plants were not constructed and the existing ones were not properly maintained, bringing the power sector to a deplorable state. In 2001, generation went down from the installed capacity of about 5,600MW to an average of about 1,750MW, as compared to a load demand of 6,000MW. Also, only nineteen out of the seventy-nine installed generating units were in operation.
The National Electric Power Authority was a vertical-integrated utility responsible for the power sector in Nigeria. And between 1970s and 1980s, NEPA developed new generating capacity in both hydro and thermal power. NEPA was solely responsible for the generation, transmission and distribution of electricity until year 2005 the unbundling and the power reform took place under the administration of President Olusegun Obasanjo whereby the organization’s name was changed to Power Holding Company of Nigerian (PHCN). In March 2005, when President Olusegun Obasanjo signed the Power Sector Reform Bill into law, private companies were given opportunities to participate in electricity generation, transmission and distribution. The deregulation of PHCN was to consists eleven distribution companies (DISCOS), six generating companies (GENCOS), and one transmission company (TRANSCOS). TRANSCO was to be under the control of the Federal Government. It is to be noted that the establishment of PHCN was to cater for the lack of inefficiency of NEPA, and to improve power system in Nigeria. On August 8, 2005, the peak generation was 3774 MW out of the available generation of 4000MW. This improvement was said to be as a result of the participation of the private investors and rehabilitation of generating plants. By 2010, however, five years into the latest reform, very little restructuring had been undertaken, and available generation capacity was less than 4,000 MW (a figure largely unchanged since the 2005 reforms), for a population of over 150 million, as at the time, the largest on the African continent.
Due to emergency power situation of the country, and the opportunity for private investors to participate in the sector, the genealogy of Independent Power Producers (IPPs) started from these scenarios. The first Nigeria’s IPP was established in 1999 by the Lagos State Government, the Federal Ministry of Power & Steel and NEPA. As of 2012, three large-scale IPPs produce approximately 25 percent of Nigeria’s electric power, with the balance provided by the Power Holding Company of Nigeria (PHCN) and State governments, viz. About 1,000 MW (IPPs) and 3,000 MW (non-IPP), respectively.8 9 The introduction of IPPs has been gradual (dating to 1999), but according to the ‘Road Map’, the private power component will more than double in less than five years, including via the country’s sale of its generating assets. Given the significant imminent change, a clear understanding of past experience with IPPs is paramount. It was initially stated that the PHCN is unbundled into eighteen successor companies. Strategically, the objectives of the reform include (i) the transfer of management and financing of successor companies operations to the organized private sector; (ii) the establishment of an independent and effective regulatory commission to oversee and monitor the industry; and (iii) focusing the FGN on policy formulation and long-term development of the industry. This will lead to (i) increased access to electricity services; (ii) improved efficiency, affordability, reliability and quality of services; and (iii) greater investment into the sector to stimulate economic growth. However, the unbundling leaves the Federal Government with three hydro and seven thermal generating stations with a total installed capacity of about 6,852MW, with available capacity of 3,542MW (as of 31st July 2010). Each entity had been incorporated as a single-asset generating company; a radial transmission grid (330kv and 132kv), owned and managed by the Transmission Company of Nigeria (TCN), with the responsibility of undertaking the system operation and market settlement functions, respectively as well as eleven distribution companies (33kv and below) that undertake the wires, sales, billing, collection and customer care functions within their area of geographical monopoly.
There are mainly two major power generating system that’s has been explored in Nigeria, they are hydro power and fossil fuel. Fossil fuel as in gas fired power plants which are mainly located at the southern part of the country close to the oil producing zones. A consequence of this is the constant instability of power generation due to gas supply constraints such as pipeline vandalism, which is the main inhibitor of the generating capabilities of the plants; leading to a stagnated growth of the power sector over the years as seen in the graph above. Other forms of power generations are either non-existent or have not been explored fully. Below is a map showing the power generating sites in Nigeria.
Fig 1.1 Power generation sites in Nigeria.
1.3 ELECTRIFICATION RATE IN NIGERIA
“…Nigeria can only achieve the desired increase in generation with a balanced blend of on-grid and 0ff-grid power projects…” (Financial Nigeria limited, opportunities for the mini-grid solutions in the Nigerian power sector)
As depicted in fig 2, the Nigerian power supply system has been encumbered by the geographical concentration of generation facilities in the South-South and the related difficulties innate in the transmission system with high losses and load shedding. It has also been burdened with geographical challenges. Electrical energy has to be carried to smaller towns over long distances and through forests without proper protection – and with a high number of illegal connections and all the attendant problems of billing. This has also led to an uneven distribution of electricity between the areas with high proximity to the national grid and the areas, especially the rural areas, which are farther from the grid. According to a recent report, Nigeria has an overall electrification rate of about 45% (Nigerian power baseline report- nesistats.org). Access to electricity in the rural areas is about 35% and about 55% in the urban areas. It has been estimated that developing economies would need about 1,000MW per million people to meet their electricity demand. Invariably, Nigeria would require more than 160,000MW to achieve the desired electricity generation capacity. The government plans to achieve an overall electrification rate of 75% by 2025, as emphasized in the “Vision 20:20” and the draft Rural Electrification Strategy and Plan [Federal Ministry of Power; 2015].
From the last two sections, this paper has been able to identify some pressing issues, these issues need to be addressed if the “vision 20:20” is to be realized. Some of them are;
The gas problem: since a majority of the power plants are gas fired, measures need to be put in place to checkmate these gas supply constraints.
Inadequate transmission infrastructure: “the existing transmission system is only capable of delivering about 5,300MW (out of the total installed capacity of 12,522MW) of power to DISCO trading points. This is as a result of Nigeria’s current weak transmission infrastructure which is majorly radial, which means that it’s a single path of transmission with a power source at one end. This implies that any fault in the path could potentially lead to a collapse of the transmission network. The issue with transmission has been estimated to reduce the power generation capacity by a total of 263MW. Although, the transmission company of Nigeria have plans underway to upgrade to a capacity of 11,000MW by 2020 (subject to proper funding and completion of projects planned for implementation); the transmission infrastructure in its current state, without an upgrade and improved technology, is unable to accommodate the estimated increase in generation by 2020” (financial Nigeria magazine).
Given the above issues, amongst others, it is imperative that whilst they are being resolved, we should look at viable alternative solutions for increasing power generation that would hopefully be somewhat isolated from some of the issues raised above. This brings us to the main aim of this paper; the off grid solution, or the mini-grid. So in the next sections we will be going forward to discuss what the mini-grid is all about.