Mihouse set to deploy Nigeria’s 1st coal-to-power plant with 30MW
…project to cost $100m, employ 400 Nigerians directly
The nation’s electricity narrative is set to change positively when an American multi-power production company, Milhouse Generation Services deploys what would become Nigeria’s first coal-to-power plant, in the Nsukka area of Enugu State.
Milhouse says it is on a fast track to contribute to mitigate the nation’s power generation capacity from public source, as it would build a clean coal technology electricity plant in Enugu in a few months.
Frank Martin, managing director of Milhouse Generation Services Limited told BusinessDay exclusively in Enugu that the company, which had secured a Nigeria Electricity Regulatory Commission’s (NERC) operating licence, would produce a 30 megawatts (MW) coal-fired electricity from two power substations.
He said the power company, incorporated in Nigeria and owned by US-based Milhouse International, LLC, would build two substations in Nsukka and Enugu, where he said there are significant deposits of coal – better quality than what they have in the U.S.
The company is working on a substation at the Nsukka campus of University of Nigeria (UNN). According to him, the company will be supplying 30 MW of electricity to the national grid, and 2 MW to the University campus.
The substation will cost about US$100 million, and will produce 60 MW of electricity, and also employ over 400 people directly. The coal mine will be situated in Awhum.
Martin, the MD said the project will soon start, once arrangements have been completed; pointing out that they have already signed a Memorandum of Understanding (MoU) with the host community through their paramount ruler (Igwe), where also the mining site will be located. The substation will be completed within about 12 months.
The World Bank Group says electricity capacity from generators represents over 50% of Nigeria’s overall generation capacity. The Bank also estimates that diesel generator capacity in Nigeria is expected to more than double by 2025, due to sheer demand.
It said the direct cost of self-generated electricity in Nigeria is three to four times the cost of public supplied electricity from the national grid.
The Milhouse companies have their roots in Chicago, Illinois, USA, where a Milhouse Engineering & Construction (ME&C) employs over 180 engineers that serve multiple markets, including the power sector. Many of its engineers hold the PE [professional engineer] license, an electrical engineer’s highest standard of competence in the U.S. Milhouse International LLC currently serves multiple energy sectors of the U.S economy, including the natural gas sector, electrical power from gas and electrical power from biosolids.
Wilbur C. Milhouse, PE, the chairman of the power firm, a leader of both his U.S companies and international enterprises, said, he is excited about the potential that Nigeria has, given its abundant natural resources.
He said, while studying energy sources in Nigeria, he was surprised to know that there are currently no coal-to-power projects underway in Nigeria, in spite of the country’s massive coal reserves. Hence, Milhouse Generation will be the first coal-to-power individual power producer (IPP) in the southeast region.
He said that the licence his company has can do 100MW of electricity; and they have three licenses for the exploitation of coal in three locations in Enugu State.
He also disclosed that Enugu has one of the best coals in the world, better than what the U.S has. He said they had taken the Enugu coal deposits to the U.S for test, and certified it of better quality.
Meanwhile, Milhouse Generation would be looking to the entire Enugu State and Nigeria, in terms of production. Martin says Nigeria has all it takes to ensure steady power supply from coal.
“Clean coal technologies are the best bet for the region,” said Frank Martin, vice president, Power Development for Milhouse Generation. He added that “Power systems require abundant fuel sources in close proximity to the location where power is generated, which is why available local coal is a boon. Milhouse believes the area’s coal reserves can support up to 1000 MW of electricity. This potential will be realized in subsequent phases.”
He said, similar to the United States, Nigeria was blessed with abundant coal reserves. But unlike the U.S and other developed economies that have been able to grow from harnessing their significant coal reserves situated close to the surface, Nigeria was yet to harness its vast coal deposits. Today, it is said the U.S generates most of its power from coal, with natural gas a close second. Although solar and wind have seen some implementation, they only comprise about 5% of the US energy mix. Other developed economies still depend heavily on coal for their base load energy requirements. The Euro area (40%), China (73%) and South Africa (77%). It is said these economies will have significant energy issues if their coal plants were shut down.
Nigeria had generated electricity from coal in the 1950s, but this was abandoned in the wake of the Civil War (1967–1970) and the focus change to petroleum. Nigeria now generates her electricity mostly from gas thermal plants (roughly 80%) and hydro (roughly 20%).
Nigeria has about 8,000MW available electricity generation capacity, but only 3,000 to 4,000 MW is actually operational. Government now seeks to aggressively grow its generation capacity and diversify the electricity generation mix by encouraging private sector participation. The current administration is said to have expressed significant interest in generating electricity from coal. Milhouse told BusinessDay that the firm plans to build capacity as the grid strengthens over time.
But Joseph Zurad, PE, executive vice president and Milhouse’s most senior electrical engineer, said, “The instability of (Nigeria’s) national grid is still a key issue. For Zurad, with over 40 years experience, “smaller projects that can be expanded quickly is the best option for Nigeria.” He said, “currently, we are seeing larger plants with unused capacity due to grid issues. Today, the diesel generator is Nigeria’s most common form of power production. Clean coal technology is not new.”
He said developed economies have been implementing such solutions for over 20 years; adding that the typical solution eliminates over 95% of the sulfur content that in the past had negatively impacted the environment. “Today, clean coal technologies are highly efficient, dependable, long lasting, and have eliminated harmful emissions. Such technologies meet global emissions standards. While they can be more expensive operationally than gas fired, solar and wind technologies, they are much more efficient, reliable and dependable than those sources.
However, the Milhouse senior engineer said, adding coal generation to Nigeria’s energy mix would not significantly increase its weighted average cost for power, as gas fired projects will continue to dominate the energy mix for a long time. Natural gas is government subsidized and highly regulated, so that the true cost of gas-to-power (i.e. pipeline design and engineering, installation and maintenance), are generally not included in the cost of gas that is paid by power plants. However, the consumer still bears this cost, as pricing is controlled by government, he stated.
Zurad said few gas pipelines exist in the South East region, and adding such infrastructure would be an expensive, multi-year slog that investors may be unwilling to undertake. Hence, the Milhouse project will offer significant job opportunities for the community. The plant alone will employ over 100 local residents, ranging from plant operations, security, maintenance and administrative personnel. Importantly, each power plant position is expected to create two additional jobs in the broader community.
Wilbur, chairman of Milhouse Generation Services talked on gains of the incoming coal-to-power project. “Manufacturing plants and business in general would celebrate consistent power and only use their diesel generators as backup instead of a primary power source. This would attract large manufacturing business from all over the world, similar to what China has experienced over the last 20 years. The administration’s goal is to produce 10 GW of power by 2020. This will require a proper energy mix, to which Milhouse is excited to contribute. As power supply and generation mix expands, it will create jobs and empower Nigeria’s bustling youth population. The administration’s ‘made–in-Nigeria’ mantra is similar to the ‘made-in-America’ slogan in the U.S. Power from multiple sources is not optional, as it holds the key to Nigeria’s future and its ability to achieve the plethora of opportunities that are on the table for all Nigerians,” Wilbur added.
BEN EGUZOZIE & REGIS ANUKWUOJI, ENUGU