Fix the mix: A more balanced electricity mix for Nigeria
The electricity supply situation in Nigeria has evolved considerably in the last decade, so much that an observer has aptly named it the ‘decade of power. As at year 2002, the incessant power shortages, inefficiencies of a government monopoly, a rapidly growing economy and a dearth of investments have brought the power sector to its knees. From 1990 to 2001(a whole decade), not a single megawatt of generating capacity was added to the electricity grid while the available capacity dwindled rapidly.
However, after a return to democracy, a splurge of investments by government and a comprehensive reform programme was established. Installed generation capacity has been scaled up from about 6000 MW (4 Gas Fuelled & 3 Hydro Powered) in year 2002 to about 13,700MW (25 Gas Fuelled & 3 Hydro Powered) in 2013 – a very significant growth in gas fired generating capacity.
Given the circumstances then, government’s focus on developing gas fired generation capacity was a no-brainer. An average gas plant can be constructed and commissioned within three years, construction costs compared to other fuel sources are quite competitive, gas flaring would be considerably reduced and the long term availability of gas were guaranteed. But these advantages have now created a different challenge for the country. We have built an electricity mix that is mono-fuel dependent and a fragile energy infrastructure system which Nigeria considering its security and political peculiarities cannot afford.
The gas conundrum
Hardly would any day pass since the conclusion of the Phase I privatization without the problem of gas supply being recanted by government and its agents. There seems to be a real challenge with getting the power plants around the country to run due to gas supply issues. About 20 percent of gas fired generating capacity is ‘left on the table’ due to gas availability. Gas pipelines and infrastructure are being continually sabotaged. Several power plants are down because of gas supply constraints and other technical faults. There are uncertainties and increasing regulation around gas prices. The whole eastern part of the country gets a dismal 300MW of electricity because of gas supply constraints. The consequence of all of these is a significant drop in power supply far worse than the PHCN days.
By now in other climes, a ‘state of emergency’ would have been declared on the issue of gas supply security because it has morphed into a serious danger to the nation’s economy. Moreover, it would be naïve to ignore the core underlying challenges which include the lack of a robust energy policy, an unreliable/inflexible gas infrastructure (pipelines, underground gas storage) and a disproportionate dependence on gas for electricity generation. If the major arterial gas pipeline, the Escravos – Lagos Pipeline is sabotaged today, at least seven major power plants (mostly located in the high demand centers of the south west) with installed capacity of about 3500MW would be knocked out of the grid completely. Nigeria’s electricity supply is too exposed to gas.
Comparative analysis
The challenge of finding a balanced energy mix is universal and very germane for every country’s economic prosperity. Various governments try to enact laws and establish policies around the natural resources available, the variety of energy needs and the economic, social, environmental and geopolitical situation. The overarching aim is to achieve a useful balance and control over energy security and also limit exposure to a mono-fuel and its attendant risks. Most developed/emerging countries have succeeded and continue to evolve and Nigeria must follow suit. The current narrow focus on gas fired generation even with the abundance of natural gas must be carefully balanced.
It’s noteworthy that other nations with bigger gas resources than Nigeria have pursued a balanced electricity mix.
Russia, for instance, has the biggest gas reserves in the world but it has the most balanced electricity mix – gas, hydro, coal and nuclear contributing adequately. Iran has also managed to achieve a better balance of its electricity but Egypt just like Nigeria has a disproportionate dependence on gas for its power supply. Egypt is suffering badly from this imbalance. Power cuts and rationing is now the order of the day due to gas supply/production constraints just like Nigeria. The government has resorted to draconian diversions of gas meant for export by International Oil Companies (IOCs). Qatar, a smaller country and ally to Egypt is sending ‘LNG bailouts’ to Egypt.
Let’s take a further look at our economic ‘peers’, the MINT countries’ (Mexico, Indonesia, Nigeria & Turkey) energy mix.
Nigeria’s electricity mix still ranks as most imbalanced amongst the MINTs, underscoring the humongous work ahead for the nation’s energy policy makers.
South Africa also generates about 95 percent of its power through coal. But there is a possibility that baring very extensive investments in infrastructure, the cheap coal resources left would only be enough for just about half a decade. In reaction, government is planning to amend the country’s mineral and petroleum law to constrain the export of certain ‘strategic’ resources’ like coal.
Options for Nigeria
Hydro power currently supplies about 16 percent of worldwide electricity needs and is the most popular of all ‘renewable’ energy sources. Nigeria used to be keen on hydro power and was a key element in the old days of ‘National Plans’ but over time, this has been abandoned.
By world standards, the existing hydro power stations in Nigeria are just medium sized. The total installed capacity of all the three operational hydro stations (Kainji, Jebba & Shiroro) is less than 2,000MW (with far less available capacity) while the biggest dam in the world, the Three Gorges dam located in China is 22,500 MW. Its high time Nigeria re-energized its hydro power strategy to deliver on the much needed megawatts. The Zungeru and Mambilla hydro power stations are huge projects that have been in the pipeline for almost three decades. Both projects were an integral part of the 1982-2002 national plan.
To ramp up hydro capacity, urgent and decisive measures must be taken to remove the usual policy, commercial and technical encumbrances that frustrate projects in Nigeria. It won’t be out of place if we generate about 25 – 30% of our electricity from hydro in the near future.
Data from World Coal Association reveals that there are 2,300 coal fired power plants worldwide. About 600 are in the US, 620 in China. – China & India builds four coal fired power plant every week. According to International Energy Agency (IEA), in 1973, about 38 percent of worldwide electricity was generated from coal but by 2011, it has increased to 41 percent. South Africa generates about 95 percent of its power from coal.
It’s inconceivable that Nigeria would ever fulfill its economic potentials without adopting coal as part of its electricity generation mix. The only coal fired power plant in Nigeria today is a derelict 10MW power plant in Oji River, Enugu State.
Without much delay, Nigeria urgently needs to establish a sound commercial and environmental framework to support the growth of coal energy. Though NERC has licensed some coal power plants but commission’s body language does not imply that coal will be taken seriously.
There is no universal standard for a country’s electricity mix but diversification and balance considering the availability and cost of energy resources is key. Furthermore, the commercial, legal and technical framework must be continually attuned to stimulate and sustain investment in diverse energy resources.
Adegun, Adedamola is a Gas Commercial Advisor with an Exploration & Production company in Nigeria.