Energy
Inaccurate data, govt interference, inefficiency threaten power supply
Mr. Babatunde Fashola, Minister of Power, Works and Housing
By BUKOLALONGE
The Electricity Generation Companies (GENCOs) have identified inaccurate data, government interference, and inefficiency as major factors, currently affecting power supply in the country. Electricity generation Stations
In a report obtained by BH, the GENCOs explained that the power sector is in dire need of total overhauling.
“From research, developed nations differ from underdeveloped (third world) countries of the world majorly on data.Investments for the growth of the generation sub-sector did not depend on the returns from the distribution sub-sector.
“Investments to improve data quality and adequacy in all sub-sectors of the industry, with the priority being the distribution sub-sector for obvious reasons will solve a number of issues inhibiting the growth of the sector, especially the inability of the DISCOs to make capital investments.
“Government’s intervention through the Central Bank of Nigeria (CBN) to continue market interventions without seeking first a better understanding of the market through bankable data will be an effort in futility.”
The report stated that the power sectors’ development was tied to the demand chain, adding that: “The determinant of whether power generation should increase or not, is the demand side of it. Electricity supply is closely tied to demand and facilitated through a pool where the output from all generators are aggregated and scheduled to meet demand.
“This is because the storage mechanism for electricity generated is in view. Hence supply must vary dynamically with changing demand. Statistics from the Nigerian system operator on load demand over the last three months average over 22,000MW.
“This means that there is a suppressed demand of over 17,000MW compared to what is being generated today. This could potentially escalate when there is stability of supply and high-ticket consumers who are self-generating decide to join up. How do we plug this gap?”
Explaining the appalling power situation, the report stated: “Currently Nigeria has installed capacity that is over 13,000MW, available generation that is over 7,500MW and average generation that is about 4,000MW.
On October 22nd 2018, average energy sent out was 3,854MWh/hour peak Generation attained on October 22nd, 2018 – 4,729MW. This shows low/minimal optimization of generation capacity due to constraints on the transmission and distribution networks. Without these constraints, additional 3,000MW could be made available to customers, and also serve as an incentive for GENCOs to recover the unavailable capacity of over 5,000MW.”
The report further stated that the electricity market has the potential to absorb significant investments and provide rewarding returns on those investments if the market is allowed to run on a competitive basis with little or no government interference.
“The lack of sanctity of contracts has resulted in huge debt burden on the GENCOs who are never fully paid for power generated and supplied to the market. In addition to the points above, it is imperative to note, that: “Successor/Legacy GENCOs, signed a performance agreement with the Bureau of Public Enterprises (BPE) with performance targets in recovering capacity.
“All Generation companies signed Power Purchase Agreement (PPA) with the Nigerian Bulk Electricity Trading Plc or Bulk Traders (NBET) with associated obligations on contracted quantities. Hence, the market should be very much aware of these obligations so as to enable performance of all parties.” Investing on transmission
“To optimize the current generation capacity, planning becomes pivotal, taking into cognizance the gestation period for power development.
“There is a need for massive investment in transmission and distribution networks in the country. Power GENCOs have the capacity to increase their output in the near term.
“However, an increase in power generation without a resultant increase in TCN’s wheeling capacity and improved distribution infrastructures will continue to lead to stranded power generation. Nigeria has about 13,000, MW, of installed capacity, a transmission capacity of about 5,000MW and distribution that hovers between 3,500 and 4,200MW.”