Difference between revisions of "Key Challenges and Opportunities in the Nigeria Energy Sector"

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This article is written by Charlotte Remteng, Muhammad Bello Suleiman, Chiamaka Maureen Asoegwu and Chysom Nnaemeka Emenyonu as part of the requirements for the Open Africa Power Fellowship Programme 2021. It is a sub-section of the publication, [[Country Project Nigeria]].
 
This article is written by Charlotte Remteng, Muhammad Bello Suleiman, Chiamaka Maureen Asoegwu and Chysom Nnaemeka Emenyonu as part of the requirements for the Open Africa Power Fellowship Programme 2021. It is a sub-section of the publication, [[Country Project Nigeria]].
−
+
 
 
== Nigeria Energy Situation ==
 
== Nigeria Energy Situation ==
−
+
 
 
* [[Nigeria Electricity Sector|Evolution and present situation of power system]]
 
* [[Nigeria Electricity Sector|Evolution and present situation of power system]]
 
* [[Policy and Regulatory Framework for Energy in Nigeria|Policy and regulatory framework]]
 
* [[Policy and Regulatory Framework for Energy in Nigeria|Policy and regulatory framework]]
Line 8: Line 8:
 
* [[Regulations and Business Models for Energy Access in Nigeria|Specific regulation and business models for each electrification mode, cooking, and other energy access-related activities. Successes and shortcomings]]
 
* [[Regulations and Business Models for Energy Access in Nigeria|Specific regulation and business models for each electrification mode, cooking, and other energy access-related activities. Successes and shortcomings]]
 
* [[Energy Projects in Nigeria|Existing major energy projects in Nigeria]]
 
* [[Energy Projects in Nigeria|Existing major energy projects in Nigeria]]
−
+
 
 
__TOC__
 
__TOC__
−
+
 
 
== Key Challenges ==
 
== Key Challenges ==
 
The following are some challenges in Nigeria’s energy sector;
 
The following are some challenges in Nigeria’s energy sector;
−
+
 
 
The Nigerian power sector experiences many broad challenges related to electricity policy enforcement, regulatory uncertainty, gas supply, transmission system constraints, and major power sector. A recent study of the Nigerian energy sector (GIZ 2015) observed that the national grid is characterized by a poor voltage profile of the network and constrained by limited control infrastructure. Overloaded transmission lines and high technical and non-technical losses are regular features. It is evident available generated power falls short of the load demand in Nigeria primarily due to ever-increasing energy demand resulting from an increasing population; this is a clarion call for diversification into other forms of renewable energy sources to alleviate the inadequacies of power generation
 
The Nigerian power sector experiences many broad challenges related to electricity policy enforcement, regulatory uncertainty, gas supply, transmission system constraints, and major power sector. A recent study of the Nigerian energy sector (GIZ 2015) observed that the national grid is characterized by a poor voltage profile of the network and constrained by limited control infrastructure. Overloaded transmission lines and high technical and non-technical losses are regular features. It is evident available generated power falls short of the load demand in Nigeria primarily due to ever-increasing energy demand resulting from an increasing population; this is a clarion call for diversification into other forms of renewable energy sources to alleviate the inadequacies of power generation
−
+
 
 
Despite the transformations in the power sector, the Transmission and Distribution (T&D) sector is still laden with several challenges ranging from limited transmission capacity of 6000MW, high technical and non–technical losses power losses, vandalism and needless power theft, corruption in power management, ineffective distribution planning method (no redundancy), inaccurate metering system, inadequate, old and dilapidating T&D infrastructure, Poor voltage stability, Inadequate coverage, aged and inadequately trained personnel, Radial Transmission Lines with insufficient redundancies to meet up with N-1 contingency criterion. In summary, the major problems identified are:  
 
Despite the transformations in the power sector, the Transmission and Distribution (T&D) sector is still laden with several challenges ranging from limited transmission capacity of 6000MW, high technical and non–technical losses power losses, vandalism and needless power theft, corruption in power management, ineffective distribution planning method (no redundancy), inaccurate metering system, inadequate, old and dilapidating T&D infrastructure, Poor voltage stability, Inadequate coverage, aged and inadequately trained personnel, Radial Transmission Lines with insufficient redundancies to meet up with N-1 contingency criterion. In summary, the major problems identified are:  
−
+
 
−
-     It is funded solely by the Federal government whose resource allocation cannot adequately meet all the requirements;  
+
-       It is funded solely by the Federal government whose resource allocation cannot adequately meet all the requirements;  
−
+
 
−
-     It is yet to cover many parts of the country  
+
-       It is yet to cover many parts of the country  
−
+
 
−
-       Some sections of the grid are outdated with inadequate redundancies as opposed to the required mesh arrangement;  
+
-        Some sections of the grid are outdated with inadequate redundancies as opposed to the required mesh arrangement;  
−
+
 
−
-     The Federal government lack the required fund to regular expand, update, modernize and maintain the network;  
+
-       The Federal government lack the required fund to regular expand, update, modernize and maintain the network;  
−
+
 
−
-     There is regular vandalization of the lines, associated with a low level of surveillance and security on all electrical infrastructure;  
+
-       There is regular vandalization of the lines, associated with a low level of surveillance and security on all electrical infrastructure;  
−
+
 
−
-     The technologies used generally deliver very poor voltage stability and profiles;  
+
-       The technologies used generally deliver very poor voltage stability and profiles;  
−
+
 
−
-     The transformers deployed are overloaded in most service areas;  
+
-       The transformers deployed are overloaded in most service areas;  
−
+
 
−
-     Inadequate of spare parts for urgent maintenance; and
+
-       Inadequate of spare parts for urgent maintenance; and
−
+
 
 
The distribution system is also confronted with a multitude of problems. Access to the grid presently stands at only 40% of the population. Even the available electricity capacity is insufficient to meet the existing power needs of less than 40% who have access to the national grid. electricity demand is presently far more than the generation and the transmission
 
The distribution system is also confronted with a multitude of problems. Access to the grid presently stands at only 40% of the population. Even the available electricity capacity is insufficient to meet the existing power needs of less than 40% who have access to the national grid. electricity demand is presently far more than the generation and the transmission
−
+
 
−
-     Poor utilization of existing assets and deferred maintenance;  
+
-       Poor utilization of existing assets and deferred maintenance;  
−
+
 
−
-     Delays in the implementation of new projects;  
+
-       Delays in the implementation of new projects;  
−
+
 
−
-     Lack of sustained, sound, and the practicable relationship between the Federal Government and other stakeholders particularly the JV international oil companies and the Independent Power Producers (IPP).
+
-       Lack of sustained, sound, and the practicable relationship between the Federal Government and other stakeholders particularly the JV international oil companies and the Independent Power Producers (IPP).
−
+
 
 
== '''Further Information''' ==
 
== '''Further Information''' ==
 
'''Generation'''
 
'''Generation'''
−
+
 
 
'''Table 11:''' Opportunities in the Generation Sub-sector
 
'''Table 11:''' Opportunities in the Generation Sub-sector
 
{| class="wikitable"
 
{| class="wikitable"
Line 54: Line 54:
 
|1.
 
|1.
 
|Captive Generation
 
|Captive Generation
−
|-     Off-Grid
+
|<nowiki>-       Off-Grid</nowiki>
−
+
 
−
-     Power Consumed by Generating entity
+
-       Power Consumed by Generating entity
−
+
 
−
-     > 1MW
+
-       > 1MW
−
+
 
−
-     No Distribution Infrastructure is required
+
-       No Distribution Infrastructure is required
−
+
 
−
-     Permit required from  NERC
+
-       Permit required from  NERC
 
|NERC Captive Power  Generation Regulation
 
|NERC Captive Power  Generation Regulation
 
|-
 
|-
 
|2.
 
|2.
 
|Embedded Generation
 
|Embedded Generation
−
|-     Plant directly  connected to the distribution network.
+
|<nowiki>-       Plant directly  connected to the distribution network.</nowiki>
−
+
 
−
-     > 1MW
+
-       > 1MW
−
+
 
−
-     Power sold directly  to DisCo through bilateral contract.
+
-       Power sold directly  to DisCo through bilateral contract.
−
+
 
−
-     Licence required from  NERC
+
-       Licence required from  NERC
−
+
 
−
-     Good for a cluster  of customers e.g. Industrial Estates
+
-       Good for a cluster  of customers e.g. Industrial Estates
 
|NERC Regulation on  Embedded Generation
 
|NERC Regulation on  Embedded Generation
 
|-
 
|-
 
|3.
 
|3.
 
|IPP Off-grid
 
|IPP Off-grid
−
|-     Plant is not  connected to the national grid.
+
|<nowiki>-       Plant is not  connected to the national grid.</nowiki>
−
+
 
−
-     Power is sold to  an off-taker (Commercial or residential) through a bilateral contract.
+
-       Power is sold to  an off-taker (Commercial or residential) through a bilateral contract.
−
+
 
−
-     Good for a cluster  of customers e.g. Housing estates, industrial customers, large installations  of telco equipment
+
-       Good for a cluster  of customers e.g. Housing estates, industrial customers, large installations  of telco equipment
−
+
 
−
-     There may be a  need to invest in distribution infrastructure
+
-       There may be a  need to invest in distribution infrastructure
−
+
 
−
-     Requires Licence from  NERC
+
-       Requires Licence from  NERC
 
|
 
|
 
|-
 
|-
 
|4.
 
|4.
 
|IPP On-grid
 
|IPP On-grid
−
|-     Generation plant is connected to the grid
+
|<nowiki>-       Generation plant is connected to the grid</nowiki>
−
+
 
−
-     Power is evacuated to  the National grid.
+
-       Power is evacuated to  the National grid.
−
+
 
−
-     Suitable for large  scale projects
+
-       Suitable for large  scale projects
−
+
 
−
-     Requires PPA with the  Bulk Trader (NBET)
+
-       Requires PPA with the  Bulk Trader (NBET)
−
+
 
−
-     Subject to capacity  need & system constraints.
+
-       Subject to capacity  need & system constraints.
−
+
 
−
-     Requires a license  from NERC
+
-       Requires a license  from NERC
 
|NERC Generation  Procurement Regulations.
 
|NERC Generation  Procurement Regulations.
 
|-
 
|-
 
|5.
 
|5.
 
|Embedded Independent  Electricity Distribution Network (IEDN)
 
|Embedded Independent  Electricity Distribution Network (IEDN)
−
|-     For areas where there  is presently no distribution network.
+
|<nowiki>-       For areas where there  is presently no distribution network.</nowiki>
−
+
 
−
-     Will connect to  existing DisCo to be able to distribute power
+
-       Will connect to  existing DisCo to be able to distribute power
−
+
 
−
-     Possibility of  ring-fencing a section of willing paying customers of a DisCo
+
-       Possibility of  ring-fencing a section of willing paying customers of a DisCo
−
+
 
−
-     DisCo will be  responsible for the installation and management of electricity meters
+
-       DisCo will be  responsible for the installation and management of electricity meters
 
|
 
|
 
|-
 
|-
 
|6.
 
|6.
 
|Rural Off-Grid (IEDN)
 
|Rural Off-Grid (IEDN)
−
|-     Isolated IEDN in a  rural area not connected to any licensed distribution or transmission  network.
+
|<nowiki>-       Isolated IEDN in a  rural area not connected to any licensed distribution or transmission  network.</nowiki>
−
+
 
−
-     Rural area is defined  as an area
+
-       Rural area is defined  as an area
−
+
 
−
o Situated over 10KM  from the boundaries of an urban area or city
+
o   Situated over 10KM  from the boundaries of an urban area or city
−
+
 
−
o With less than 20,000  inhabitants
+
o   With less than 20,000  inhabitants
−
+
 
−
o   At least 20KM away  from the nearest existing 11KV line.
+
o   At least 20KM away  from the nearest existing 11KV line.
−
+
 
−
-     Will require to  purchase power from a Generating Company through bilateral contract.
+
-       Will require to  purchase power from a Generating Company through bilateral contract.
−
+
 
−
-     Can seek financial  support from the Rural Electrification Fund (which at present is  non-operational).
+
-       Can seek financial  support from the Rural Electrification Fund (which at present is  non-operational).
−
+
 
−
-     Requires a license  from NERC
+
-       Requires a license  from NERC
 
|
 
|
 
|-
 
|-
 
|7.
 
|7.
 
|Urban Off-Grid IEDN
 
|Urban Off-Grid IEDN
−
|-     IEDN in an urban area  but not connected to any licensed Transmission network
+
|<nowiki>-       IEDN in an urban area  but not connected to any licensed Transmission network</nowiki>
−
+
 
−
-     Separate tariffs to  be approved by NERC
+
-       Separate tariffs to  be approved by NERC
−
+
 
−
-     Electricity Meters installation and management responsibility of the investor
+
-       Electricity Meters installation and management responsibility of the investor
−
+
 
−
-     Requires License from  NERC
+
-       Requires License from  NERC
 
|
 
|
 
|-
 
|-
 
|
 
|
 
|
 
|
−
|-    
+
|<nowiki>-      </nowiki>
 
|
 
|
 
|}
 
|}
−
+
 
−
+
 
 
'''Transmission'''
 
'''Transmission'''
−
+
 
 
'''Investment Opportunities in the Transmission network'''
 
'''Investment Opportunities in the Transmission network'''
−
+
 
 
The transmission network system requires a significant amount of investment for expansion of wheeling capacity, improving reliability, stability and reducing transmission losses.
 
The transmission network system requires a significant amount of investment for expansion of wheeling capacity, improving reliability, stability and reducing transmission losses.
−
+
 
 
The Private Sector investment will be required in the following areas to achieve the goals of the electric power reform program of the government. Transmission Network expansion;
 
The Private Sector investment will be required in the following areas to achieve the goals of the electric power reform program of the government. Transmission Network expansion;
−
+
 
−
-     Dualization of critical lines to create redundancy;
+
-       Dualization of critical lines to create redundancy;
−
+
 
−
-     Relief for congested segments of the grid;
+
-       Relief for congested segments of the grid;
−
+
 
−
-     Replacement of old & broken down lines & equipment
+
-       Replacement of old & broken down lines & equipment
−
+
 
−
-     Modern asset management & operational processes
+
-       Modern asset management & operational processes
−
+
 
−
-     Efficient Project management practices
+
-       Efficient Project management practices
−
+
 
−
-     Vegetation management;
+
-       Vegetation management;
−
+
 
−
-     Human capacity development
+
-       Human capacity development
−
+
 
−
-     Local manufacture of components.
+
-       Local manufacture of components.
−
+
 
−
-     Implementation of the Super Grid concept (approx. cost of $5bn)  
+
-       Implementation of the Super Grid concept (approx. cost of $5bn)  
−
+
 
 
'''Nigeria’s Nationally Determined Contributions (NDCs)'''
 
'''Nigeria’s Nationally Determined Contributions (NDCs)'''
−
+
 
 
Nigeria's Intended Nationally Determined Contributions (NDCs) aim to ensure economic and social development by growing the economy at 5 percent a year, improving the standard of living, and ensuring access to electricity for all;
 
Nigeria's Intended Nationally Determined Contributions (NDCs) aim to ensure economic and social development by growing the economy at 5 percent a year, improving the standard of living, and ensuring access to electricity for all;
−
+
 
−
⮚   Work towards ending gas flaring by 2030.
+
⮚    Work towards ending gas flaring by 2030.
−
+
 
−
⮚   Work towards off-grid solar PV of 13GW (13,000 MW).
+
⮚    Work towards off-grid solar PV of 13GW (13,000 MW).
−
+
 
−
⮚   Promote the use of efficient gas generators.
+
⮚    Promote the use of efficient gas generators.
−
+
 
−
⮚   Increase energy efficiency by 2 percent per year (30 percent by 2030).  
+
⮚    Increase energy efficiency by 2 percent per year (30 percent by 2030).  
−
+
 
−
⮚   Promote transport shift from private cars to public buses.  
+
⮚    Promote transport shift from private cars to public buses.  
−
+
 
−
⮚   Improve and modernize the electricity grid.
+
⮚    Improve and modernize the electricity grid.
−
+
 
−
⮚   Implement economy-wide energy efficiency.
+
⮚    Implement economy-wide energy efficiency.
−
+
 
−
⮚   Build efficient gas power stations.
+
⮚    Build efficient gas power stations.
−
+
 
−
⮚   Adopt and disseminate a climate-smart agriculture.
+
⮚    Adopt and disseminate a climate-smart agriculture.
−
+
 
−
⮚   Reduce transmission losses.
+
⮚    Reduce transmission losses.
−
+
 
−
⮚   Promote the use of renewable energy
+
⮚    Promote the use of renewable energy
−
+
 
 
'''General'''  
 
'''General'''  
−
+
 
 
Improved power sector management and governance would help to reduce outages and transmission losses. Failure to do so would impede industrial growth and would mean continued high levels of use of polluting backup generation. Reducing bioenergy use across all sectors would bring several benefits, not least because its use is strongly linked to deforestation and air pollution (IEA, 2019)
 
Improved power sector management and governance would help to reduce outages and transmission losses. Failure to do so would impede industrial growth and would mean continued high levels of use of polluting backup generation. Reducing bioenergy use across all sectors would bring several benefits, not least because its use is strongly linked to deforestation and air pollution (IEA, 2019)
−
+
 
 
= References =
 
= References =
−
 
 
* Awogbemi, O. and Komolafe, C.A. 2011. Potential for sustainable renewable energy development in Nigeria. Pacific Journal of Science and Technology 10(1): 161-169
 
* Awogbemi, O. and Komolafe, C.A. 2011. Potential for sustainable renewable energy development in Nigeria. Pacific Journal of Science and Technology 10(1): 161-169
 
* Babatunde, M. A., Shauibu, M. I. (2011).The Demand for Residential Electricity in Nigeria,” Pakistan J. Appl. Econ., vol. 21, pp. 1–13, 2011
 
* Babatunde, M. A., Shauibu, M. I. (2011).The Demand for Residential Electricity in Nigeria,” Pakistan J. Appl. Econ., vol. 21, pp. 1–13, 2011

Latest revision as of 10:17, 5 September 2022

This article is written by Charlotte Remteng, Muhammad Bello Suleiman, Chiamaka Maureen Asoegwu and Chysom Nnaemeka Emenyonu as part of the requirements for the Open Africa Power Fellowship Programme 2021. It is a sub-section of the publication, Country Project Nigeria.

Nigeria Energy Situation

Key Challenges

The following are some challenges in Nigeria’s energy sector;

The Nigerian power sector experiences many broad challenges related to electricity policy enforcement, regulatory uncertainty, gas supply, transmission system constraints, and major power sector. A recent study of the Nigerian energy sector (GIZ 2015) observed that the national grid is characterized by a poor voltage profile of the network and constrained by limited control infrastructure. Overloaded transmission lines and high technical and non-technical losses are regular features. It is evident available generated power falls short of the load demand in Nigeria primarily due to ever-increasing energy demand resulting from an increasing population; this is a clarion call for diversification into other forms of renewable energy sources to alleviate the inadequacies of power generation

Despite the transformations in the power sector, the Transmission and Distribution (T&D) sector is still laden with several challenges ranging from limited transmission capacity of 6000MW, high technical and non–technical losses power losses, vandalism and needless power theft, corruption in power management, ineffective distribution planning method (no redundancy), inaccurate metering system, inadequate, old and dilapidating T&D infrastructure, Poor voltage stability, Inadequate coverage, aged and inadequately trained personnel, Radial Transmission Lines with insufficient redundancies to meet up with N-1 contingency criterion. In summary, the major problems identified are:

-       It is funded solely by the Federal government whose resource allocation cannot adequately meet all the requirements;

-       It is yet to cover many parts of the country

-        Some sections of the grid are outdated with inadequate redundancies as opposed to the required mesh arrangement;

-       The Federal government lack the required fund to regular expand, update, modernize and maintain the network;

-       There is regular vandalization of the lines, associated with a low level of surveillance and security on all electrical infrastructure;

-       The technologies used generally deliver very poor voltage stability and profiles;

-       The transformers deployed are overloaded in most service areas;

-       Inadequate of spare parts for urgent maintenance; and

The distribution system is also confronted with a multitude of problems. Access to the grid presently stands at only 40% of the population. Even the available electricity capacity is insufficient to meet the existing power needs of less than 40% who have access to the national grid. electricity demand is presently far more than the generation and the transmission

-       Poor utilization of existing assets and deferred maintenance;

-       Delays in the implementation of new projects;

-       Lack of sustained, sound, and the practicable relationship between the Federal Government and other stakeholders particularly the JV international oil companies and the Independent Power Producers (IPP).

Further Information

Generation

Table 11: Opportunities in the Generation Sub-sector

Type Features Regulation
1. Captive Generation -       Off-Grid

-       Power Consumed by Generating entity

-       > 1MW

-       No Distribution Infrastructure is required

-       Permit required from NERC

NERC Captive Power Generation Regulation
2. Embedded Generation -       Plant directly connected to the distribution network.

-       > 1MW

-       Power sold directly to DisCo through bilateral contract.

-       Licence required from NERC

-       Good for a cluster of customers e.g. Industrial Estates

NERC Regulation on Embedded Generation
3. IPP Off-grid -       Plant is not connected to the national grid.

-       Power is sold to an off-taker (Commercial or residential) through a bilateral contract.

-       Good for a cluster of customers e.g. Housing estates, industrial customers, large installations of telco equipment

-       There may be a need to invest in distribution infrastructure

-       Requires Licence from NERC

4. IPP On-grid -       Generation plant is connected to the grid

-       Power is evacuated to the National grid.

-       Suitable for large scale projects

-       Requires PPA with the Bulk Trader (NBET)

-       Subject to capacity need & system constraints.

-       Requires a license from NERC

NERC Generation Procurement Regulations.
5. Embedded Independent Electricity Distribution Network (IEDN) -       For areas where there is presently no distribution network.

-       Will connect to existing DisCo to be able to distribute power

-       Possibility of ring-fencing a section of willing paying customers of a DisCo

-       DisCo will be responsible for the installation and management of electricity meters

6. Rural Off-Grid (IEDN) -       Isolated IEDN in a rural area not connected to any licensed distribution or transmission network.

-       Rural area is defined as an area

o   Situated over 10KM from the boundaries of an urban area or city

o   With less than 20,000 inhabitants

o   At least 20KM away from the nearest existing 11KV line.

-       Will require to purchase power from a Generating Company through bilateral contract.

-       Can seek financial support from the Rural Electrification Fund (which at present is non-operational).

-       Requires a license from NERC

7. Urban Off-Grid IEDN -       IEDN in an urban area but not connected to any licensed Transmission network

-       Separate tariffs to be approved by NERC

-       Electricity Meters installation and management responsibility of the investor

-       Requires License from NERC

-      


Transmission

Investment Opportunities in the Transmission network

The transmission network system requires a significant amount of investment for expansion of wheeling capacity, improving reliability, stability and reducing transmission losses.

The Private Sector investment will be required in the following areas to achieve the goals of the electric power reform program of the government. Transmission Network expansion;

-       Dualization of critical lines to create redundancy;

-       Relief for congested segments of the grid;

-       Replacement of old & broken down lines & equipment

-       Modern asset management & operational processes

-       Efficient Project management practices

-       Vegetation management;

-       Human capacity development

-       Local manufacture of components.

-       Implementation of the Super Grid concept (approx. cost of $5bn)

Nigeria’s Nationally Determined Contributions (NDCs)

Nigeria's Intended Nationally Determined Contributions (NDCs) aim to ensure economic and social development by growing the economy at 5 percent a year, improving the standard of living, and ensuring access to electricity for all;

⮚    Work towards ending gas flaring by 2030.

⮚    Work towards off-grid solar PV of 13GW (13,000 MW).

⮚    Promote the use of efficient gas generators.

⮚    Increase energy efficiency by 2 percent per year (30 percent by 2030).

⮚    Promote transport shift from private cars to public buses.

⮚    Improve and modernize the electricity grid.

⮚    Implement economy-wide energy efficiency.

⮚    Build efficient gas power stations.

⮚    Adopt and disseminate a climate-smart agriculture.

⮚    Reduce transmission losses.

⮚    Promote the use of renewable energy

General

Improved power sector management and governance would help to reduce outages and transmission losses. Failure to do so would impede industrial growth and would mean continued high levels of use of polluting backup generation. Reducing bioenergy use across all sectors would bring several benefits, not least because its use is strongly linked to deforestation and air pollution (IEA, 2019)

References

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