‘Natural gas-fired generation may soon dominate Nigeria’s energy market’
Graham Christie, a trained electrical engineer with experience spanning over three decades, is the General Manager of Cummins Energy Solutions Nigeria. In this interview with FEMI ADEKOYA, he explains how the need for cleaner and cheaper energy is driving the switch to natural gas generators, even as pipeline infrastructure is widening and awareness of compressed natural gas (CNG) is growing in Nigeria.
How would you assess the Nigerian business environment compared to other markets that you have worked in?
The Nigerian market has changed since my first time to Nigeria in 2000, when the customers need for diesel product, was “what do you have in stock. I’ll take it” to in 2008 “how efficient is it in fuel? and do you have spares?” The market has developed even further, since 2014 – we are finding customers asking for total life cycle costing, the most suitable application to their consumption patterns and placing a very strong emphasis on Aftermarket Support.
This is also a big advantage of gas generators, which offer a much lower life cycle cost as compared to diesel generators. Moreover, with Waste Heat Recovery installations, for hot or cold applications, the total gas generator efficiency goes beyond anything diesel could achieve and drastically reduces the resultant payback time on the capital cost of the equipment. Nigeria is very much falling in line with the rest of the world on this.
There is a transition from diesel to gas. What benefits do gas generators offer compared to diesel sets?
The majority of private industries in Nigeria today operate on diesel generators for their power requirements due to the unavailability of natural gas. However the rate of switching to natural gas generators is very fast, as both the pipeline infrastructure is widening and awareness of compressed natural gas (CNG) is growing in Nigeria. Firms such as Powergas are leading the CNG development in Nigeria, trucking natural gas directly to customer sites not connected to the pipeline. Analysts forecast that natural gas fired generation is likely to dominate the market given the clear financial savings.
The fuel cost of natural gas is approximately one third of diesel today. Moreover, energy comprises up to 35 per cent to 40 per cent of heavy manufacturer’s total operating cost, significantly impacting competitiveness and industrial growth. Besides simply the cost saving, there are significant environmental benefits to operating on natural gas such as reduced carbon and nitrogen emissions.
Cummins invested over $735 Million in 2015 in Research and Development, directed towards both improvement of existing product range and new product development. So as you can imagine Cummins is regularly developing new products and services.
Among the gas generator category, the latest ‘game changer’ is the new 1540 KW high efficiency Osprey engine. It is one of the most efficient gas generators on the global market – delivering up to 44 per cent electrical efficiency and 45 per cent mechanical efficiency, further driving cost savings for our customers. The Osprey was launched in Nigeria in March and is receiving strong market feedback.
Energy is a major barrier to Nigerian economic growth, what is Cummins doing in the area of power generation to improve the power situation in Nigeria?
Yes reliable and cost effective electricity is certainly a barrier to economic growth in Nigeria. Cummins is committed to increasing the population of gas generators in Nigeria, which will generatea steady supply of electricity, while utilising domestic natural gas – which has significant positive spill over benefits, such as local employment and global technology transfer to Nigeria.
Our sister organisation, Cummins Power Generation Nigeria, is the IPP arm of Cummins in Nigeria – owning and operating approximately 100 MW of power plants across the country that are operational today. All service and maintenance is done in house by Cummins trained engineers and operators to ensure strong uptime (over 99% power availability).Today we are also expanding into larger grid connected projects – with PPAs signed to build720 MW of gas-fired power plants across West Africa over the next two to three years.
What is innovative about Cummins Energy Solutions’ main offering in the market?
Cummins Energy Solutions Nigeria is the official Cummins Nigeria gas distributor and Aftermarket service support centre for gas generators. We install 40 KW to 2000 KW single gas generators or multiple sets in industrial, commercial and residential applications and offer more value to our customers throughout the life cycle of the engine, offering full turnkey power plants, 24 hour operations and maintenance on site, remote monitoring, synchronisation and load management systems and performance guarantees for generator uptime.
Our gas service and aftermarket team is the best in country – our generators delivered over 99 per cent power availability to customers on average throughout 2015.
Cummins Energy Solutions Nigeria also has an active projects team that seeks to reduce customer energy costs outside of the generator room. We install waste heat recover systems, distribution upgrades, efficient lighting systems and other innovative energy solutions.
Considering concerns often raised about JV structure, how has Cummins Energy Solutions Nigeria waded through this structure?
The JV (Joint Ventures) was developed in 2013 between Cummins Power Generation, a subsidiary of Cummins Inc., and Gentec Energy, the exclusive Cummins Nigeria gas distributor since 2001 – founded by Deepak Khilnani. It is an effective marriage as Cummins offers a wide breath of product, technology and global process support, while Gentec has a deep understanding of the Nigerian gas market and an entrepreneurial approach to customer energy solutions. The JV partners also co-invest in gas fired IPP projects in Nigeria, Kenya, Belgium, Spain and India. Cummins Energy Solutions Nigeria operates as an independent company with active Board representation from both shareholders.
Cummins has the highest population of gas generators installed in Nigeria and is the leader in total energy solutions. There are nearly 200 gas generators in Nigeria, with an installed capacity of 262 MW. Cummins gas generators are particularly suited to ‘off grid’ applications, also known as ‘island mode’, as they can handle larger load spikes – making them very suitable for heavy industrial applications. Traditional gas generators were built for grid synced applications and can only handle approximately 10 per cent load spikes, whereas Cummins engines can withstand up to 40per cent. In fact Cummins’ second largest gas market globally is Nigeria after Russia.
What CSR initiatives do Cummins get involved with in Nigeria?
CSR is very important to us. We support five NGOs around Lagos: Little Saints Orphanage, Motherless Babies Home, Heart of Gold Children’s Hospice, Primary Health Centre and Mankind Charity. All provide great work, offering food, shelter, education, basic sanitation services, physiotherapy and medical services such as anti-cancer drugs and vaccinations to thousands of less privileged Lagos citizens. We also support the local communities in areas around our power plants – in full support of the governments Local Content Plan.
Our Foundation committee is run in a professional way to ensure the best possible social returns– we believe financial support is just one step towards positive social impact. Active management and engaged volunteers on site are critical success factors. Our employees frequently volunteer in activities such as basic construction work, conducting tours around Lagos of heritage sites and cultural centres, musical performances and fun activities to engage the children.
Protecting the environment is key. What environmental standards do Cummins work towards?
Cummins technology and values are both steered towards long-term sustainable growth. That means developing products and services that ensure a cleaner, healthier and safer environment. Cummins enforces strict quality, international compliance and environmentalcontrol across the full production and distribution value chain.
For example, Cummins Cogeneration Technology captures waste heat from the generator and converts it into either steam or cooling for industrial purpose or additional electricity generation, without consuming any extra fuel. This drives the overall generator efficiency up to 84% – delivering both a very cost effective and environmentally friendly energy solution. Cummins Energy Solutions has installed waste heat recovery applications for Nigerian Bottling Company in Lagos, Inditex (Zara) in Spain and various greenhouses in Belgium – enabling farmers to grow crops all year round.