Power Supply: stakeholders advocate micro grid system for industrial clusters

• Concerns Over Discos, TCN’s Ability To Deliver 10, 000mw

The recent proclamation by President Muhammadu Buhari that Nigeria would achieve 10, 000mw of electricity generation in three years is raising fresh concerns in the sector.

Achieving the target may not be a problem, but the ability of the nation’s electricity Distribution Companies (DISCOs), and the Transmission Company of Nigeria (TCN), to evacuate generated power is the real headache. There are also huge concerns over how to accelerate expansion of critical TCN evacuation capacity.

Despite government assurances, The Guardian learnt that TCN currently has 7, 000mw of wheeling capacity, but line congestion limits the system to only about 5, 500mw.

At a keynote address he delivered at the opening of the National Economic Council’s retreat held in Abuja recently, Buhari said the poor state of power supply in the country has remained a butt of jokes among Nigerians, promising to change the story. He regretted that although the power sector has been privatised, it has yet to show any improvement in the quality of service.

While concerns mount over distribution and transmission infrastructure, it is not immediately clear how government hopes to achieve its desire, especially considering the hydra-headed problem of gas supply.

The nation’s electricity distribution companies say that if the Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola is to make any headway, he must tackle among others, the challenges being faced by the Transmission Company of Nigeria (TCN).

There are also suggestions for Nigeria to decongest the national grid by approving the operation of embedded generation.

Embedded Generation is based on a regulation developed by the Nigerian Electricity Regulatory Commission (NERC), which enables DISCOs to procure power delivered to them directly from local independent power plants, thereby bypassing technical difficulties associated with the national grid.

Worried by the challenges with the national grid, manufacturers are currently awaiting President Buhari’s approval of its proposal for a policy on direct electricity supply to factories and industrial users.

The Manufacturers Association of Nigeria (MAN), the apex body of Nigeria’s industrialists, is expecting government to enact a new law that would make it possible for individuals and corporate organisations to also generate power and supply directly to industrial clusters across the country. MAN considers this option as the enduring way to ensure adequate power supply and boost productive activities.

The association has also called on the Presidency to approve the report of a joint committee of MAN and the Nigerian electricity regulatory Commission (NERC), which proposed micro grid electricity scheme for the nation’s industrial clusters.

President of MAN, Frank Udemba Jacobs, who spoke in an interview with The Guardian in Abuja, during the week, recalled that MAN and NERC had jointly developed a proposal on how to use micro grids to supply direct electricity to the industrial clusters.

He called on the Ministry of Power, Works and Housing to expedite action on the proposal with the Presidency as part of government’s support to returning the manufacturing sector to its pride of place.

“What we are saying is that government should come up with a policy for individuals and corporate bodies to generate their own electricity and sell to the public, or sell to the industrial clusters. This is the way we can best ensure power supply to our industrial clusters, since they can’t get enough from the national grid,” he said.

Jacobs decried the increasing cost of electricity generation by manufacturers, and called on government to consider the association’s proposal as the immediate solution to the problem, noting that electricity supply to the sector has continued to witness a downward trend.

“The situation is still bad. The power from the national grid has not improved. Majority of our members still generate their own power. That is quite expensive. Everything is still the same way.

“Micro grid is the best way to go, since we know we have problem with our transmission lines. They really need to be refurbished. Micro grid that allows individuals and corporate bodies to generate and sell within their vicinity is the best way to go and I think that we are working towards that.”

Emphasising the need for government to approve embedded power system as recommended by MAN, he said,  “Power constitutes 40 per cent of our cost of production and therefore,any initiative or innovation that will assist us in reducing this amount will be highly welcome.

“That is why we are highly excited about this development. The idea of micro grid for industrial cluster initiative is a very good one. We have a number of industrial clusters in the country. Our major challenge is electricity. I am sure that if we can come up with legal framework and policy framework on how to utilise micro grid to generate power for these clusters, our cost of production will surely go down and become more competitive in the international market.”

“The current transmission challenges is unrelenting despite a three-year management contract offered Manitoba Hydro International of Canada for direct control of the daily operations of TCN, which will include major functions, such as, Market Operator (MO) and System Operator (SO), among others,” he said.

Manitoba is expected to revamp TCN in order to achieve technical and financial adequacy, in addition to providing stable transmission of power without system failure.

Many industry watchers have since expressed doubt in Manitoba’s ability to accomplish its tasks, despite a one-year extension last year.

Former chairman of NERC, Ransome Owan, had previously expressed cautious optimism over the ability of TCN to wheel generated electricity from the generators to the distributors.

Said he: “Currently, when new power plants come online, the ability for TCN to transmit the power to load demand centres would approach breaking point. This is unnerving because of the challenges that would be imposed on generators of power. Their power plants would not be dispatched at 100 per cent of capacity. And, according to the power purchase agreements that are on the basis of take or pay, when a power plant is ready to supply power and the buyer can’t take it, the generator would get paid the capacity cost because it was ready, willing and able to do so. This is because it has spent money to make that capacity available for the off-taker— the Nigerian Bulk Electricity Trader.

“At this point, it is somewhat suspect how long the Bulk Trader could pay for uncollected power and unseen revenue, even though, it is backed by government and other credit enhancements, such as partial risk guarantee from the African Development Bank and the World Bank. Regardless, it would result in stranded benefits and impoverish consumers. And that makes us all poorer.”

Noting that there is a transmission solution, he said, “The transmission grid is a highway to move electricity. It has lanes just like motor/roadways that can become toll roads. As power generation increases as expected in the country, the few existing lanes or transmission lines will become very congested and that would slow the movement of electricity further, just like normal traffic jams in cities.”

He, therefore, called on government to open the commercial space and allow private sector to collaborate with TCN and construct and extend the grid and share in the toll fees approved by the regulator for flowing power to end-users.

But government is optimistic of revamping the transmission infrastructure to meet up with the upcoming generation expansion. But how to raise the required financial resources to execute the required interventions in the nation’s transmission infrastructure is what is yet to be unveiled.

According to Fashola, “Our first priority is to get contractors to finish ongoing transmission contracts to enable us transport the electricity being generated to the DISCOs to distribute. Our second priority is to ask the governors to help us identify and enumerate their most populous industrial and commercial clusters, where manufacturing, fabrication, welding and related productive work is going on, especially by small businesses and to see how we can use the existing legal framework to attract embedded power supply to these people, who must be ready to pay for the power.”

On efforts to boost transmission, he said, “We have identified a total of 142 projects, of which 45 are at 50 per cent level of completion, while about 22 can be completed within a year.”

According to the minister, about N40b would be needed to complete over 22 major transmission projects across the country, admitting however, that the existing budgets for TCN could hardly do much.

On their part, the DISCOs have assured of their capacity to wheel the expected 10, 000 MWs.

Executive Director of the Association of Nigeria Electricity Distributors (ANED), Sunday Oduntan, assured Nigerians that the DISCOs have capacity to distribute the 10, 000mw as proposed by the government.