Embedded power generation to rescue

Electricity distribution companies in Nigeria are now resorting to embedded power gen- erators to make up for the supply shortfall.

Prior to now, Nigeria Electricity Regulatory Commission (NERC) had signed two regulations: the Independent Electricity Distribution Network (IEDN) and Embedded Genera- tion 2012 to open up Nigeria’s elec- tricity sector for more investments in capacity growth.

The combined impacts of the two regulations means that com- munities, local and state govern- ments as well as private investors in Nigeria can now generate and distribute electricity for sale to end users without recourse to the na- tional grid.

They in essence freed investors from the ambiguities of generating and sending power to the national grid and thus made it easier for distribution companies to participate in the various op- tions available to augment their distribution capacities.

According to Sam Amadi, Chairman of Nigeria Electricity Regulatory Commission (NERC), “Distribution Companies (DIS- COs) are always free to contract power from embedded generators if they so choose, as long as they follow the process and regula- tions.”

Embedded power generation is simply a situation where a gen- erator is directly connected to the distribution network.

The Embed- ded Generation Program involves the construction of smaller sized plants in generating electricity that is connected to and evacuated through the distribution network infrastructure.

It consists of smaller or modular generators that use a variety of generation technolo- gies such as solar, wind, biomass, diesel, fuel oils, crude oil and small hydro.

It is also a useful means of dedicating power to state and local government, eligible customers and others.

The embedded generation can help the electricity distribution companies (DISCOs) to get sup- ply of electricity faster and also cut down their dependence on the Nigerian Bulk Electricity Trading Company (NBET), which ensures that power evacuated from the Electricity Generation Companies (GENCOs) are readily paid for by the DISCOs.

It would provide reliability for supply of energy critical for viable industrial activities and peak shav- ing, high power quality or voltage control, provision of high quality power necessary for sensitive in- dustrial equipment.

It also mini- mises line losses and voltage sag, closeness to load results in more efficient power transmission.

Other qualities of embedded generation include substitute for main supply, source of power in area without grid supply, that is, rural areas; backup standby generation ensures regular sup- ply and provision of ancillary services such as voltage or fre- quency control.

Some companies and govern- ment agencies generate captive power.

However, any excess power from these captive power plants could be used for embed- ded power generation.

Examples of companies and agencies that generate captive power include Island Power (114MW); Lafarge WAP- CO (90MW); Dangote Cement (258MW) at Obajana and Ibeshe; Western Metal Product Company Limited (WEMPCO) 52MW; Ni- gerian Breweries plc (16.8MW); Guinness Nigeria’s Ogba brewery (9.3MW); and Nestle Nigeria plc (3MW).

Others are United Ce- ment Company (47mw); BUA Sugar Refinery (20MW); BUA Cement (45MW); Notore Fertil- iser (50MW); Flour Mills (60MW); Unilever (6MW); Academy Press (1.2MW); Cadbury (7.3MW); IMIL (14MW); Dangote Sugar (15MW); Golden Sugar (12MW); Oando Akute (12.1MW); NLNG (400MW); and Indorama Eleme Petrochemi- cal/Indorama Fertiliser plant, about (225MW).

The NERC regulation permits investors, communities, state and local governments to generate and distribute electricity for their exclusive consumption using fa- cilities of existing electricity distri- bution companies or independent electricity distribution network operators.

This gives investors and distribution companies the opportunity to enter into bilateral power supply arrangements.

Three frontline electricity dis- tribution companies in the coun- try; Eko, Ibadan and Ikeja Discos are in the forefront of using em- bedded power to augment the amount of electricity they get from the national grid, with which they do not always meet up with the demands of their customers.

They have elected to negotiate bi- lateral power supply agreements with embedded power generators in the country. Eko Electricity Distribution Plc (EKEDP) for instance has concluded plans to acquire up to 474MW of power directly into its network in an unprecedented embedded power generation initiative which will more than double its current allocation from the national grid.

The proximity of these smaller sized plants to load centres within various com- munities will further assist EKEDP in alleviating some of the current challenges being experienced by unclogging its transmission grid of bottlenecks amongst other notable issues.

To this intent, EKEDP extended invitation bids to budding power generating companies and in return, received over 50 letters of interest.

In what industry watchers have acknowledged to be a transparent process, all the bids received were evaluated for both technical and commercial competence and thereafter, 14 companies were adjudged as adequate in possess- ing the technical and commercial capacity to participate in the first phase of EKEDP’s embedded generation program.

Following the receipt of NERC approval on the submissions tendered, EKEDP will then invite approved companies for final negotiations leading to the signing of Power Purchase Agreements (PPA) with them.

Projects alongside the Embed- ded Power Generation program are expected be completed within the next 18-24 months bringing about a most welcome relief to customers who have had to en- dure long periods of erratic power supply from the grid.

Speaking on bringing relief to its valued customers, Oladele Amoda, Managing Director Eko Electricity Distribution Plc ex- pressed that “with the active sup- port of NERC for our proactive measure, our customers can in- deed expect to enjoy the benefits of the privatisation of the power sector.”

Amoda continued that “apart from the embedded generation plan, EKEDP is also engaged in bilateral negotiations to purchase more power into our network which will bring relief to our con- sumers in the short term.”

The distribution company ad- vised its customers to be frugal in their consumption of power so as to avoid unnecessary high energy bills.

He also urged them to settle their bills promptly and report any power theft either witnessed through illegal connections or through the vandalism of EKEDP equipment.

FRANK UZUEGBUNAM