NERC prescribes micro-grid power generation for industrial clusters

THE Nigerian Electricity Regulatory Commission (NERC) has urged manufacturers to embrace micro-grid power generation model for industrial clusters, to ensure cost effective and reliable electricity for production.

   Already, NERC has unfolded plans to engage industrial clusters to form Special Purpose Vehicles (SPV) that can procure additional power dedicated to their respective industrial clusters.

  NERC Chairman, Sam Amadi said at a NERC stakeholders’ forum in Abuja that  “although our regulatory interventions are leading to licensing of independent power producers who have financial and technical capabilities to generate more megawatts, we expect that it will take a couple of years before we see significant increase in available capacity, because of the lead time required to construct and commission power plants.

   “The good news is that NERC has started to provide framework for dealing with this challenge. A few years ago, we issued a regulation authorising embedded generation and independent distribution of electricity. 

  “The embedded generation regulation allows an independent power producer to embed power within the network of the local distribution company without going through the trouble of connecting to the transmission network. This allows distribution companies to procure small power and dedicate it to ring-fenced customers who could pay slightly higher price for 24/7 electricity supply.”

  On the SPV, Amadi said the initiative would encourage adequate power supply to industries.

   He explained: “Industries within a cluster can form an SPV and build equity and secure financing to construct 10 megawatt plant that will sell power to the local distribution company to serve exclusively to them. This ensures that they have relatively cheaper grid power and also secure sustainable business model for the supply of electricity. This initiative further increases the energy available for the local distribution company to supply to residential.

   “NERC wants to promote this model as an answer to the acute shortage of electricity we will continue to experience until bulk trader procured power enters the market and NIPP power plants deliver their full capacity. We want to mobilize all industrial clusters in Nigeria to generate embedded power through a sustainable and market based business model that mobilizes resource quicker and more efficiently.

  “We have to retool the old model of capacity growth through grid-based large power plants. Nigeria can champion a new model through micro-grids that leverage on available local feedstock and local financing through low-risk self-help. We have successfully tried this model in community development. It can succeed in electricity generation.”