HERIOT-WATT UNIVERSITY

SCHOOL OF ENGINEERING AND PHYSICAL SCIENCES

MSC IN ENERGY / RENEWABLE ENERGY ENGINEERING

PROJECT PORTFOLIO

Title: EVALUATION OF EMBEDDED POWER GENERATION IN NIGERIA

Author: OLUWOLE ABDUL-JELIL ADEBANJI

Registration Number: 091607267

Date: 15TH AUGUST, 2011.

Supervisor: Dr. MOUNIF ABDALLAH

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DECLARATION OF AUTHORSHIP

I, Oluwole Abdul-jelil Adebanji (091607267) confirm that the Project Proposal entitled

EVALUATION OF EMBEDDED POWER GENERATION IN NIGERIA is part of my assessment

for the Critical Analysis and Research Preparation Module

I declare that the report is my own work. I have not copied other material verbatim except

in explicit quotes, and I have identified the sources of the material clearly.

(Signature) (Place and Date)

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ACKNOWLEDGEMENT

I give glory to GOD almighty for good health and wisdom since the start of my

academic year till date, my profound gratitude also goes to my teachers and lecturers

within and outside my study department for their enormous support. Also I will like to

give honour to Mr. Kamal Habib and Mr. Olubunmi Obajuluwa for the necessary documents

and references, Miss Nonye for her relentless support, Miss Rukayat Balogun and Miss

Tosin Nurudeen who both showed me love, Miss Tosin Onabanjo for her numerous

corrections, Mr. Dipo Adewale (Dr. zaga) for topic analysis, Mr. kamaldeen Oluwole for

finances and support, Mr. Abubakre Bakare my reference coordinator, Dr. Mounif

Abdallah, for supervising this project and guiding me through, and others to whom I have

not acknowledged in here, I appreciate your prints in my life and wish you the very best in

your endeavour.

My final and utmost gratitude goes to my parents, Chief Mr. and Mrs. Oluwole, to

whom God have given the privilege to mould me up to this moment and care fore me. I

really appreciate you both and Im no one without you. Thanks and God bless.

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TABLES OF CONTENT

CHAPTER 1

1. Introduction 1

1.1. Background 2

1.2. Energy Resources in Nigeria 3

1.3. Literature Review 9

1.4. Aims and Objective 13

1.5. Overview of Dissertation 14

CHAPTER 2

2. Embedded Generation 15

2.1. Current Available Technologies in Nigeria 17

2.2. Recent Advancement, Research and Development 19

CHAPTER 3

3. Problems of Electricity in Nigeria 22

3.1. Generation-Supply Incapacity 22

3.2. National Policy 31

3.3. Management and Corruption Issues 32

3.4. Inaccurate Data 33

CHAPTER 4

4. Economic Analysis of Embedded Power Generation (EPG). 34

4.1. Emission 34

4.2. Cost of Technology 38

4.3. Technical and non-technical loses 42

4.4. Distribution and Adequacy 46

4.5. Efficiency (sustainability) 48

4.6. Environmental Impact 48

CHAPTER 5

5. Making it Happen 51

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5.1. Funding 51

5.2. Planning and Operation 53

5.3. Regulatory policies for EG 56

CHAPTER 6

6. Conclusion 59

6.1. Contribution to the Knowledge 60

6.2. Limitation to the Study 60

6.3. Future work 61

Appendix 62

References 69

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LIST OF FIGURES

Figure 1: The graphical representation of investment years in the electricity industry

Figure 2: Electricity generation in Nigeria from 1970 2005

Figure 3: Transmission and Distribution in Nigeria

Figure 4: Electricity consumption in Nigeria by sectors

Figure 5: Relationship of generation, transmission, distribution, and consumption pattern

in Nigeria

Figure 6: Costing per MWh of electricity produced from different plant types ($/MWh)

Figure 7: Cost per kWh (Nigerian naira)

Figure 8: Comparison Revenue Sales between Both Concepts-CP and EG

Figure 9: Relationship between functional economic parameters

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LIST OF TABLES

Table 1: Analysis of the Potential Energy Resources in Nigeria

Table 2: Existing power generation capacity in Nigeria

Table 3: Emission conversion

Table 4: Cost comparison between CSP and EPG

Table 5: Technology costing per kWh

Table 6: Effect of transmission and distribution loses with projection plan (central stations)

Table 7: Effect of transmission and distribution loses with projection plan (Embedded

Generation)

Table 8: Comparison Revenue Sales between Both Concepts; CPS and EPG

Table 9: Potential impacts for CPS and EPG

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DEFINATION OF TERMS

CP Central Plant

CPS Central Power Station

DOE Department of Energy

ECN Energy Commission of Nigeria

EG Embedded generation

EPG Embedded Power Generation

FCT Federal Capital Territory

IAEA International Atomic Energy Agency

IPP Independent Power Producers

NARUC (US) National Association of Regulatory Utility Commission

NERC National Electricity Regulatory Commission

NEPA National Electric Power Authority

PHCN Power Holding Company of Nigeria

RT Renewable technology

WEM Wholesale Electricity Market

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ABSTRACT

Electricity Issues have become the headline problem affecting growth within the Nigerian

economy over the last two decades. This has resulted in changes citizenry believes on the

ability of the government to provide adequate supply of electricity resulting in the nations

Self-power generation alternative. This dissertation focuses on concept that could enhance

adequate supply considering the proposed plan from the Nigerian Electricity Regulatory

Commission (NERC).

In particular, I analyzed the gap that exist between the present generation capacity to its

present and future demands based on the population growth and explained the potential

shortcomings in the electricity industry. I evaluate the present concept of Central Power

Station (CPS) to promote an efficient and effective electricity generation and supply to the

populace with reference to economic costing and environmental consideration.

I explored the different potentials available for electricity generation within the country

and established the need for policy changes to encourage sustainability of energy

consumption and utilization. I find that, Embedded Power Generation (EPG) could be a

practical solution to the problem of electricity shortages and the integration of different

energy sources into electricity generation with respect to population distribution in the

rural and sub-urban areas in Nigeria.

More broadly, this dissertation highlights the impact of the present policies of the country

in displacing other energy sources and concentrating on conventional sources-gas for

electricity generation. Because emission profile has not been considered limited for energy

consumption in Africa, many present practices and projects throughout the region are

implemented on the basis of need and not of environmental concern. Likewise, if an

economic data management board is established with a goal of making every Nigerian

count, the problem of projection and forecast on future needs and analysis will gradually

become history.

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1. Introduction

Life is known to have a correlation between its energy availability and consumption. The

pressure on the available energy resources due to an increase in population of the world

over the years has resulted into a global issue across all sectors which is seemingly

dependant on energy. This effect is universal and the cumulative effect brought about by

the trending Global warming.

Nigeria is a country blessed with abundant energy resources with a large proven reserve of

oil, gas and other renewable energy resources which can make the country have excess

power production, but the growth of the industry still pose a problem to the decision

makers an the populace. The energy sector which is the life of every economy contributes

about 80% of the total income of the country mainly oil revenue. This industry also account

for the water and air pollution-a threat in various parts of the country.

The nation accommodates over 150 million people with an average demand of 20,000MW,

however its supply is below 4000MWe thus, a per-capita consumption 128KWh/capita of

electricity [1]. The country is experiencing power poverty as, over 70% of the nation lacks

constant electricity supply; this accounts for the rural and rural-urban populace. This has

lead to a drag in the development of different sectors cutting across, Agriculture, Education,

Technology, Health, Economics and Management, and also an indirect impact on the

unemployment rate of the country. Over 60 million Nigerians now uses generators to

generate electricity which increases the demand for conventional oil and irrefutably

enhance global warming.

Environmental crises resulting from of increasing demand for conventional fuel that

cumulatively have cumulatively lead to increased awareness of global warming and recent

trends of sustainable power generation. This work focuses on the ways of mitigating the

excessive use of conventional fuel for power generation and increasing the adequacy of

electricity through sustainable means in generation, transmission, distribution and

consumption.

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In view of this, the available resources in Nigeria will be presented to analyze the sources of

the Nigerias problem as well as the parameters which have not been considered in enabling

a developmental solution in the power sector.

1.1. Background

Nigeria is a country with over 150 million people with the majority of the populace in the

rural area. It covers a geographical area of 356,667 sq. miles with 98.6% of it being land (2).

From the Federal Government statistics, the nation is divided into 36 states, a Federal

capital territory (FCT) and six geo-political zones which leave Nigeria governance and

management issue in a complex situation. Just as power is important to the global

economy, electricity plays important role in Nigeria throughout the life and activities of its

people, with growing and important technological developments. Electricity was first

generated in Lagos, Nigeria dating far back to 1896, 15 years after it was introduced in

England. Since then, there have been series of legislative changes to the control and

management of electricity production and distribution in Nigeria (3),

Recently the economy of Nigeria has witnessed several drawbacks due to the epileptic

power supply in the country despite the abundance of energy resources. Electricity

production has been abundant in the country until the early 1980s when the power sector

experienced isolation with little or no infrastructural development, as well as lack of

maintenance. The growing population also is of great concern as this elevated the pressure

of the supply-demand structure that is recently experienced. In 2001, the installed capacity

of the nation drop to an unbearable 1,750MW from an initial installed capacity 5,600MW

with only 24% of the generating unit operating, as compared to its 6,000MW load demand

(4).

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1.2. Energy Resources in Nigeria

Nigeria is the heart of Africa when it comes to energy resources, and its reserve, together

with Libya accounts for two-third of Africas crude oil reserve. It also has a huge gas

reserve and ranks second to Algeria (4). It has the greatest percentage of Africas bitumen

and lignite reserve and this make her unmatchable with other countries in the nation as

regards conventional energy sources. Below is a subjection of various resources and their

measures in the country.

1.2.1. Natural Gas

In 2005, Nigerias proven natural gas reserves assessed at about 187.44 trillion standard

cubic feet, which is larger than its oil resources in terms of energy. The discovery of gas was

as incidental as the discovery of oil in Nigeria and almost 75% of the gas produced was

being spread throughout the country after its discovery. Nevertheless, the spreading was

reduced to about 36% due to the harsh efforts made by the government to monetize

natural gas. In the domestic sector, 80% of the energy source is gotten from natural gas

which is mainly for power generation while the remaining 20% is used in the industrial

sector. The probable lifespan of Nigerian crude oil is about 44 years, looking at the current

reserves, misuse and, production capacity which is at 2million b/d productions. However,

for natural gas is about 88 years based on the 2005 production rate of 5.84bscf/day (5).

1.2.2. Oil

In recent years, the advent of oil in Nigeria has been given the upper hand to any other

source of energy, thus leading to its intense growth in the country. In 1999, Nigeria had a

verified reserve of 25 billion barrels of mostly low sulphur light crude, which considerably

increased to 34 billion barrels in 2004 and presently about 36.5 billion barrels (5). The

exploration of the reserves is a result of the aid of Joint Venture operations, an alternative

funding scheme, new production sharing plan and the opening of new frontier and

deepwater offshore blocks. Due to different oil potentials that have been detected, it is

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forecasted that, reserves will reach about 68 billion barrels by year 2030. Although oil

production has increased gradually in Nigeria in recent years, this however depends on the

economics and geopolitics in other producing and consuming countries. The average daily

production of crude in Nigeria is 4million barrels per day and it is forecasted to increase to

5million barrels per day in year 2030. Nigeria has four refineries in the downstream oil

sub-sector with a size of 445,000 barrels per day and 5001 km network of pipeline from

the refineries to 22 oil depots (4).

1.2.3. Coal

This was first discovered in Nigeria in 1909 and mining began in 1916 with a recorded

output of 24,500 tons. Production rose to a peak of 905,000 tons in 1958/59 with a

contribution of over 70% to commercial energy consumption in the country. Available data

shows that, graded sub-bituminous coal occurs in about 22 coal fields around the old 13

States of the Federation. The proven reserves in the country are about 639 million tonnes

while the inferred reserves are about 2.74 billion tonnes. The consumption has dropped

drastically with the discovery of crude oil in 1958 and the general conversion of

mechanical engines to use oil. This dropped production to only 52,700 tonnes in 1983 and

contributed about 0.02% to commercial energy consumption in the country in 2001.

1.2.4. Hydropower

Hydropower structure depends on the different energy levels of water in a dam, lake or

reservoir and their discharged tail water level downstream. Presently, the usage of

hydropower in the country is 29% of the total electrical power supply. The first major

hydropower supply station in the country which is situated at Kanji, Niger with capacity of

836MW. There are efforts to expand this to 1156MW. There is another hydropower station

at Jebba, on the Niger with an installed capacity of 540MW. An evaluation for rivers Benue,

Cross River (at Shiroro, Makurdi and Ikom), and Kaduna indicates their total size to be

about 4,650MW. The estimated hydropower resource that is potentially available for use in

Nigeria is 11,000MW. Small hydropower systems can be built in all the parts of the country.

This will enable the potential energy in the large network of rivers to be utilized and used

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for electrical energy, which will help disperse energy to several parts of the rural

community.

1.2.5. Solar Radiation

Solar radiation is the radiant energy that is radiated from the sun from a nuclear fusion

reaction that creates electromagnetic energy. The amount of solar radiation in a specific

place is related to the solar energy potentials. Solar energy is the most promising of the

renewable energy sources if we look at its unlimited radiation of energy. The energy the

sun radiates is about 3.8 x 1023 kW per second. Research has shown that solar energy

resource in Nigeria is fully available for use. Nigeria receives 5.08 x 1012 kWh of energy per

day from the sun. This amount of electrical energy is equivalent to 4.66 million barrels of

oil per day (4).

1.2.6. Wind

Wind is associated with the movement of air masses caused primarily by the differential

solar heating of the earths surface. This could be harnessed with a wind turbine. Wind

energy has been used for centuries for domestic purposes such as water pumping, milling

and grinding of grains. A study carried out on wind energy in some states in Nigeria shows

that the annual wind speed ranges from 2.32 m/s to 3.89 m/s (6). Consequently, efforts

have been directed greatly towards the use of wind power for the generation of electricity.

Fast changes in technology has occurred and major wind powered generating plants have

been installed in many places for easier access of generating electricity.

1.2.7. Biomass

Biomass is the energy of biological systems generated from wood and wastes. Biomass

energy is an indirect form of solar energy due to its generation through photosynthesis.

The biomasses in Nigeria are wood biomass, residues and waste (forestry, agriculture,

municipal and industrial), forage grasses and shrubs, and aquatic biomass. Nigeria is using

80 million cubic meters (43.4 x 109 kg) of fuel wood yearly for cooking and other domestic

uses (7).

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The potentials of energy resources in Nigeria are summarized in Table 1 below which

shows the various resources, its reserve and its utilization.

Table 1: Analysis of the Potential Energy Resources in Nigeria (8)

S/

No

Resource Type Reserve

(Natural Units)

Production

Level

(Natural

Units)

Utilization

(Natural Units)

1 Crude Oil 36.22 billion

barrels

2.06 million

barrels/day

445,000

barrels/day

2 Natural Gas 187 trillion SCF 7.1 billion

SCF/day

3.4 billion SCF/day

3 Coal and lignite 2.734 billion

tones

insignificant Insignificant

4 Tar Sands 31 billion

barrels of oil

equivalent

- -

5 Large Hydropower 11,250 MW 1,938MW

(167.4 Million

MWh/day)

167.4 Million

MWh/day

6 Small Hydropower 3,500 MW 30 MW (2.6

million

MWh/day)

2.6 million

MWh/day

7 Solar Radiation 3.5-7.0

kWh/m2/day

(485.1 million

MWh/day using

0.1% Nigeria

land area)

Excess of

240kWp of

solar PV or

0.01 million

MWh/day

Excess of 0.01

million MWh/day

of solar PV

8 Wind (2-4)m/s @ 10m - -

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height

9 Biomass Fuel-wood 11million

hectares of

forest and

woodland

0.110 million

tonnes/day

0.120 million

tonnes/day

Animal

waste

245 million

assorted in 2001

0.781 million

tonnes of

waste/day in

2001

-

Energy

Drops and

Agric

Residue

72 million

hectares of

Agric. land and

all waste lands

Excess of

0.256 million

tonnes of

assorted

crops

residues/day

in 1996

-

10 Nuclear Element Not yet

quantified

-

Table 1 shows that, resources remain abundant in Nigeria but the lack of strategies,

techniques and investment to harness and utilize these resources coupled with the right

institutional policies for a lawful and environmental production has invariably caused it to

remain in its poor economic and infrastructural state. This remains evident in the power

sector and all other sectors of the nation.

Electricity supply in Nigeria has been stable until the mid 90s however, due to lack of

monitoring, maintenance, planning and investment in the power sector for more than two

decades despite the increasing demand capacity for energy, electricity in the nation and

other resources as a product of population growth vis-a-vis its need for technological

advancement.

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The figure below shows the period of isolation in the sector which cumulatively caused the

present problem of electricity drought. There have been drop in investment from 1980 till

1983 where little investment was made into the sector by increasing the capacity of the

hydroelectric plants which spanned another two years and then a fluctuation in investment

throughout the military reign until the democratic regime where investment consideration

were made and implemented in 2000.

Figure 1: The graphical representation of investment years in the electricity industry

(9)

There has been lots of research related to the power industry in Nigeria with the aim of

identifying the problems and proffering a solution. The effort by different people is

presented in the literature review section and their relevance to the present development is

summarized in relation to the need of this work.

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1.3. Literature Review

Several studies have been carried out in the past as regards sustainability in electricity

generation. Dating far back as 1990, research in renewable energy in Nigeria has

determined the potential of renewable energy sources available in Nigeria. It is brought to

light that the most appraised research done in the area of renewable energy in Nigeria is

dated far back as 1990. In view of this and other subsequent research, the future still seem

bright and reliant on conventional fuel with its forecasted rigid oil policy. In 2000, there was

appraisal of different research around the world on renewable technology. Subsequently,

different observation and recommendation were made by different vendors as regards the

potentials of resources available and the ways to which they could be harnessed.

Ayodele [10] evaluated the electricity problems in Nigeria and concluded that there is lack of

maintenance and that the electricity potential of the country is a multiple of the present

demand which have still not been met. He further stressed that there should be better

strategies to manage the present capacity before additional implementation with regards to

the demand, He also recommended that there should be policy regulations to maintain a

sustainable process of energy transmission that account for an average loss of 40% and

admitted that the privatization program will enhance development of the sector but there

should be greater chances given to indigenous investors. His publication was appraised both

home and abroad, the power sector has been privatized and several deregulation has been

done to enhance private generation of electricity for commercial purposes but the

management problem still persist.

Sambo (11) evaluated alternative energy generation and concluded that there has been lack

of finances to fast track the development, there is also lack of adequate expertise and even

the available ones are not empowered as expertise are mostly sourced from abroad. Others

include lack of awareness of renewable technologies, intermittency of resources, thus

problems of energy storage and system management in periods of no resources added to

the complexity of the problem. He recommended that, there should be deregulation and

liberalization of the energy sector so as to give room for appropriate tariffs which will boost

the competitiveness of the technology, intensify Research and Development (R&D) in

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Renewable technology (RT) so as to reduce cost, enhance development and sustenance of a

renewable energy database, and also encourage huge investment in renewable sources from

the revenue of fossil resources. He has made a lot of contribution to the development of RT

in recent times which lead to the establishment of Nigerian Energy Commission, and his

research have been appraised in the power sectors, where some have been implemented

and other are awaiting approval, majorly RT due to the lack of favorable energy policy.

He also assessed the roles of energy in millennium development goals and concluded that

(12), there is inability to pay for tariffs due to economic poverty, inability of private sector

contribution due to unfriendly policies, unfriendly community relation which incorporates

grievances in the public and debar implementation of developmental process. He

recommended there should be privatization of the energy sector to fund and strengthen it,

imploring diversified sources for energy generation and intensified R&D into the problems

of energy generation and distribution.

National Stakeholders Forum on Rural Industrialization and Development through

Renewable Energy Technologies [10] had also researched the development through

renewable technologies and recommended that;

There should be an institutionalized energy policy

The total renewable energy potential of the country should be analyzed and identify

local conditional priorities to different ecological zones

There should be a standard testing laboratory for renewable technology to assure the

quality of products

There should be an integration to renewable energy by taking global partnerships to

aid funding and growth

There should be an establishment of renewable energy funding program like the one in

India, IREDA.

There should be a participatory approach from other successfully developed project,

coordinator from other parts of the world to enable the implementation, and public

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awareness programs to facilitate support from financiers, decision makers and the

public.

Aliyu and Elegba (13). evaluated the prospect of hydropower development for rural

applications in Nigeria and concluded that Integrating into renewable energy has been a

problem due to; the technological incapability, high cost of infrastructure, financial

constrain, low level of public awareness, and a general absence of a comprehensive energy

policy. They also recommended that there should be an assessment to determine the total

potential of renewable energy in Nigeria, encourage private investors, and develop training

and testing centres for this purpose. Implementation of energy conservation modules

should be introduced into the educational curriculum. Their works is appraised and many

of their recommendation have been put into practice as renewable technology is now

getting public awareness after a long time buy yet to have recognition in the nations

supply.

Akinbami [14.] carried out a research on renewable energy resources and technology in

Nigeria; he concluded that the future energy supply projected using MARKAL would

provide a large scale linear optimization level as opposed to the non-linear future models

of renewable energy. He also said that, due to the scale of economy, large scale hydropower

will take the greatest share in commercial renewable technology under CO2 emission

mitigation. He also suggested that there should be intensive effort towards energy supply

system in the country to adequately and efficiently harness renewable resources to enable

economic growth and development. This research did a lot of help analyzing the possible

plan of an energy mix economy but it has not been implemented.

Ojosu and Salawu, [6] evaluated the potentials of windmill utilization according to end use

and concluded that there are good locations with great potentials for energy generation

through wind power. This was a very good study to wind potential, however limited to most

part of the country but till now, the applications have been insignificant in all parts of the

country.

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Ojosu and Salawu, [7] carried out a research and estimated the wind energy density from a

wind turbine at a height of 25m in different locations across the country and proved the

potentials of generating electricity through wind energy as shown in appendix VI. They

concluded that wind energy will help to substantiate the electricity generation in the

country. There is however a limitation for large scale implementation to this model, as cost

analysis and return on investment where not included in the research.

Akinbami et al [15.] evaluated the waste produced in Nigeria daily with their potentials for

biogas production. They concluded that, with intensified urbanization and industrialization,

the municipal solid waste will continue to grow and this can substantiate a production of 6.8

million m3 of biogas from fresh animal waste daily. This work also provided an overview of

waste potential and energy generation from the waste but wasnt able to statistically show

the daily volume of waste generation at different regions and the biogas value of this waste.

SELF organization [16] researched the potentials of Photovoltaic (PV) for distance villages

and showed that, the cost of PV electrification is less than getting power from the national

grid due to the transmission distance to the villages from sub-stations. They further showed

that PV require less operational expenses if adequate training is given to monitoring

personnel. It can be the most reliable source of power due to; the huge expenses of running

power generator, the availability of fuel at distant locations and the fluctuating nature of

conventional fuel supply. They concluded that there should be assistance from multinational

firms, non-governmental organization and government in order to enable the same project

across other rural communities. This work is a tactical development to the demand of a

rural area and it has the motive of making better living standards for rural areas. This was

implemented and it worked perfectly. Works like this should be done across other parts of

the country to enhance a significant impact of solar technologies in the nation, this has been

able to accommodate the villagers basic needs but increase in electricity demands will be a

detriment on the capacity of the solar PV.

Sambo [17] evaluated the challenges for a sustainable energy production by using the

information sourced from International Energy Agency (IEA) to stipulate the need for a

significant change on the energy production and concluded that, there is high energy

22

wastage in the country. The community relation problem in Niger-delta is also a major

hindrance to development, the demand for power is growing while supply is reducing due

to inefficient/old power plant. He recommended that, there should be emulation of the

developed countries by having a national energy plan and energy laws to enhance socio-

economic development.

Jekayinfa and Scholz [18.] carried out an assessment on the potential availability of selected

residue from available energy crops for possible conversion into renewable energy as

shown in appendix VII. It concluded that about 58 million tonnes of residue were available

for use by 2004 which have the energy equivalent of 20.8 million tonnes of oil. They also

projected the residue availability for 2010 to 80 million tonnes and concluded that when

these residues are converted into usable energy, they could supplement fossil energy by

80%. Their work was streamlined to energy crops but until now, commercial

implementation has not been done to put the work into practice.

All the above lead to the initiation of this work to delineate the parameters for a sustainable

and effective electricity generation, correlate the inter-dependency of all this parameters,

identify all the necessary changes to facilitate growth in this sector and to cater for the

needs of the growing population with her industrial and technological needs and provide a

recommendation

1.4. Aims and Objective

The aim of this project is the provision of adequate electricity to enhance growth and

development across all sectors of the economy. The objective of this research is in view

with the pressure on the nations needs for uninterrupted cheap electricity supply to enable

the growth of industries, local businesses and a good development across all sectors.

Analyze the present generation of electricity and compare with the demand of the

nation

Analyze the various shortcomings of electricity poverty in Nigeria in all the phases;

generation, transmission, distribution-sales and consumption,

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Analyze the costing required to invest in the acute power structure,

Discuss the ways of realizing a sustainable power generation scheme to enhance

adequate supply with the available technologies.

Discuss the needs of mixed generation and the enabling policies.

1.5. Overview of Dissertation

This chapter has been able to give an introduction and a purpose which necessitated this

research. Chapter 2 will introduce the proposed concept of Embedded Power generation

(EPG) and circumnavigate its operations. Chapter 3 will present the methodology used in

this project and the result of the methodology. Chapter 4 will present an economic analysis

of both conventional-Central Power Station and the EPG concept. Chapters 5 will discuss

the necessary actions to be taken to achieve realities in the proposed concept. Chapter 6

will round up the project with a conclusion and a recommendation.

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2. EMBEDDED GENERATION

As earlier discussed, the increasing gap between supply and demand continues to pose a

threat to the life of the sector and a great challenge to Nigerians, as a whole. This threat has

increased the percentage of the population on self generation using petrol and diesel

generators, all of which are very expensive and very harmful to the environment.

Traditionally, electric systems have been built with the Central Station Concept due to its

economies of scale in power generation and cost consideration. The larger generators

produce electric energy at a fraction of the cost of running smaller generators; the bigger it

is, the greater the economics of power production. In recent years, for various reasons

encapsulated in the need for growth and developments, the traditional economic margins

between the large and small units have virtually reduced (19).

Embedded generation (EG) could also be termed as distributed generation which involves

electricity generation through different sources, i.e; gas, wind, biomass, oil, PV, small

hydropower, e.t.c. which is directly connected to medium voltage distribution in a more

decentralized supply pattern to the consumers rather than been on the transmission

network (grid). This generation makes it possible to incorporate smaller plants of

generation capacity below 50MW directly into the distribution network without connecting

to the grid.

EG, involves the use of small generators and storage power system, located on the utility

system to provide adequate electricity according to demand and specification. It is

constructed as stand-alone (isolated from the grid), and it is a recent development to help

tackle the problem of power distribution and ease of maintenance.

Chapter 1 has been able to analyze the potential of generating electricity through the

various resources available in the country but until now, gas has been the major source of

national generation. Historically, hydropower used to have the larger take on the supply

network but many of the plant have been reported ineffective and working below expected

capacity due to lack of maintenance.

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EG could be used by state or local government to generate electricity for private or

commercial purpose, also by multinational companies and Independent Power Producers

for industrial applications and commercial purpose respectively due to its medium capacity.

This idea is urged by the need of adequate supply of electricity which technically appears

too large for the public sector to handle.

EG could be classified into two major topics according to its application;

Traditional (convention) power generation

Low head hydro

Combined cycle turbine

Combustion turbine

Diesel generators

Co-generation units

Renewable Energy power generation (future use)

Fuel cell

Hybrid system

Tidal power

Ocean gradient

Wind

Solar thermal

Biomass

Geothermal

Photovoltaics

The above classification has various relationships and differences which make them fit for

Nigerian scenario. Both conventional and non-conventional could be used for;

26

Standby or emergency power generation,

Independent Power Producers (IPP)

Hybrid systems,

Dispersed storage and generation,

Dispersed energy system, e.t.c.

2.1. Current Available Technologies in Nigeria

Commercial electricity in Nigeria has been generated using coal, hydro and gas respectively

according to their age. The electricity produced has been distributed unevenly amongst the

population and cities due to demands management and revenue consideration. For most of

the populace who lives in the rural area, the available source of energy to them is the

biomass and traditional lanterns. This reduces the chance for developments and enhances a

vitalized environment for spreading of diseases as health technology cant be positively

driven without electricity. The urban areas also lack adequate and quality electricity supply

which aided the paralysis of several businesses and increased the market value of various

commodities.

The existing technologies used for commercial deployment are summarized in the table 2

below.

27

Table 2: Existing power generation capacity in Nigeria (20)

S/

N

Power station/

location

Plant

type

Year of

commissionin

g

Installed

capacity

(MW)

Installed

units

Units

available

1 Lagos station - Egbin Thermal 1984, 1987 1320 6 4

2 Sapele

station @

Ogorode, Delta

Thermal 1978 , 1990 1020 10 1

3 Egbin AES, Lagos Thermal 2003 170 9 9

4 Afam Thermal

(gas)

1975 , 1982 710 20 3

6 Ijora Station Lagos Thermal

(gas)

1978 60 3 2

7 Lagos IPP

(Enron/AES) Egbin

Thermal 2003 170 9 9

8 Oji Thermal

(coal)

1956 30 - None

9 Delta TV @ Ughelli Thermal 1966, 1990 832 18 12

10 Kainji Hydro 1968, 1976,

1978

760 8 6

11 Jebba Hydro 1986 540 6 6

12 Shiroro Hydro 1990 600 4 2

TOTAL 6212 94 54

From table 2; In 2004, there is a total of 94 installed units with 6212MW installed capacity,

68.9% thermal, 30.59% hydro and

28

Recently the lack of adequate supply made the populace source for self generation. This has

been done with the help of power generators with capacity ranging between 2.5-500KVA.

These generators uses petrol or diesel as their fuel and are very inefficient, expensive and

highly emissive constituting noise and air pollution to the prevailing unclean environment.

A newspaper blog reported recently that, over 60million Nigerians now own a generator (21)

which makes the generator industry better than the television industry.

Renewable technologies are available but have not been commercially deployed; it is still in

the research stage. Some of the technologies have been proven but the future of renewable

in the country is bleak irrespective of its potential because the present energy policy doesnt

by anyway encourage or actually enforce sustainability.

2.2. Recent Advancement, Research and Development

With reference to the prevailing situation, the government has decided to rescue the almost

dead power sector which could lead to the paralysis of the economy by establishing a

mandate through the federal constitution Act No. 62 of 1979, as amended by Act No. 32 of

1988 and Act No. 19 of 1989, with the statutory mandate for the field of energy in all its

ramifications.

The established bodies in the process of deregulation include;

Energy Commission of Nigeria (ECN); mandated to carry out overall energy sector

planning and policy implementation, promote the diversification of the energy

resources through the development and optimal utilization of all, including the

introduction of new and alternative Energy resources like Solar, Wind, Biomass and

Nuclear Energy.

National Electricity Regulatory Commission (NERC); mandated to enable

uninterrupted electricity supply, fluidize private sector participation, ascertain

consumer protection and a general fair regulation.

29

Wholesale Electricity Market (WEM); creation of a competitive market for

distribution companies to source for electricity from any of the available generating

market.

Rural Electrification; unbundling agency to manage the rural electrification funds,

with the objective of expanding access to electricity in rural communities.

Independent Power Producers (IPP); facilitating private companies to enable power

production through their generating plants and enter into bilateral agreements with

preferred customers or distribution companies.

As a popular saying-what cant be measured cant be managed. This has further helped to

measure the energy demand and strategies of supply by collaborating with the

International Atomic Energy Agency (IAEA) for a 30years planning period. This measure

employed the IAEA modeling tool;

Model for the Analysis of Energy Demand (MAED)

Model for the Energy Supply Strategy Alternatives and their General Environmental

Impact (MESSAGE).

The result enhanced incorporating private companies into the power sector through the

privatization program to qualitatively supplement the capacity of the present generation

and supply of electricity that the country craves for. In regards to this, several groups,

companies, bodies, state government have attempted to implement project in the past to

reduce the problem of inadequacy but most of their impact havent been visible due to the

great gap between the present demand and supply. Also 98% of commissioned and

proposed projects have not been able to address sustainability, but their main goal is

adequate and reliable supply which is still a reality of decades ahead with regards to the

present pace of growth.

This dissertation aims at providing adequate and sustainable electricity supply through EG

in a decentralized pattern to be able to; harness energy potential of different sources at

different locations, reduce the losses during transmission, reduced cost of connection,

enhance greater market and competition, and opportunities for private and local/state

30

government participation. This will open the market for indigenous and foreign investors

to utilize its assets and benefit hugely from the relatively untapped market while the

populace will get adequate supply and lower tariffs from the competitive market, also

greater employment opportunity and the dream of industrialization can be brought alive.

The summary of the reason for the privatization acts are enlisted below;

Sustainability

Inadequacy and quality of supply

Wastage

Environmental impact

Poverty

Economic decline

Lack of accountability and good management

In view of the situation of the country, the potential problems will be discussed and then,

the subsequent chapters will economically analyze a preferred solution to the present

structure.

31

3. PROBLEMS OF ELECTRICITY IN NIGERIA

In an attempt to decipher the problems of electricity supply inadequacy in the nation,

interviews were carried out to research and ascertain the main problems in the industry

and how they affects the country across all sectors. The area of focus included

industrialization, electricity usage, economic growth, environment sustainability, and

barriers to development. After several telephone and one on one interview from

government representatives, private organization and various individuals across different

sectors, responses could be summarized as;

Generation-Supply incapacity

National policy

Management and corruption issues

Inaccurate data

The above enlisted problems have unarguable been seeking amendment through the cry of

the people but each point is deepened and cannot be tackled from the surface; there is need

for reforms in different departments, responsible for managing the above problems by

using different strategic tools.

3.1. Generation-Supply Incapacity

This was tackled by most government representative in a forum discussion. It was stressed

that the people are expecting the government to provide adequate electricity supply which

isnt disputed as the government responsibility. They said effort have been concentrated on

this in recent years, unfortunately the actions hasnt been evident due to sabotage of

government effort and the deepened network problems.

Their problem was analyzed subjectively in the various phases of generation-supply as

discussed below.

32

3.1.1. Generation

It was stated that, the total installed capacity of the current generating plants is 7876MW

including IPP generation but, the available capacity is less than 4000MW as at December

2009. There are fourteen generating stations and seven of them are old enough to be

overhauled which generate an average daily capacity of 2700MW which is far below the

initial peak load forecast of 8900MW for the existing infrastructure. This resulted to load

shedding as a solution to help distribute electricity to all parts of the country.

The problems are summarized below;

Insufficient funding of the station to aid maintenance.

Lack of adequate human power and experienced personnel to handle and operate

the stations.

Old equipment and facilities to enable efficient and effective generation.

Concentration on few sources of energy for electricity generation

Inadequate capacity

Sabotage of government efforts

The above listed points have been summarized from the analysis from government

representatives. It is clear that there is lack of funding in the power sector as the present

capacity of the nation is far below the present demand of the nation. This resulted to the

problem the nation is facing now.

Figure 2 shows the electricity generation in Nigeria putting into consideration the installed

capacity and the total generation.

33

Figure 2: Electricity generation in Nigeria from 1970 2005 (22)

Figure 2 shows the gap between the installed capacity and the total generation. This is as a

result of the old plants which are still in use. Most likely, greater amount of energy is used

to power the old generating plants and a given lower output than its installation state due

to drop in efficiency and lack of maintenance. Some professionals proved that efficiency of

these plants sometimes dropped by 60% depending on the state of the plant.

Mr. Mohammed of the Energy Commission of Nigeria (ECN) discussed at length on the

effort of the commission to put online some new generation plants with the

institutionalized IPP, to enable abundance and quality electricity. He also said that, the

problem at hand now encompasses all the phases of production to consumption and more

effort will be focused on the transmission, distribution and marketing of electricity to

create a conducive atmosphere for investors, ease discharge of their objectives, and enable

them recoup interest on investment. The summarized future generation capacity of Nigeria

is in appendix I.

Appendix I shows the proposed power generation plan for the adequate supply of

electricity. We can conclude that, the plan is just to supplement the present energy

generation capacity but the problem of sustainability has been postponed to the future

34

with reflections of present action. Hydro-generation takes a share of 19.84% of the

proposed generation plan and 80.16% goes to thermal. From the share potentials of energy

resources available in the country (table 1), we know gas is abundant in the country

likewise other resources, so this doesnt give gas an edge in utilization or to forego other

potential resources as this sums up to wastage of resources. Environmental concern and

laws has been gaining acceptance across developed nation but until now it hasnt been

trending in Nigeria. Knowing this, any project that involves the environment and has a life

extending into the future should put sustainability into consideration. Gas is accepted to be

partly clean for generating electricity in terms of its pollution level but its not as clean as

renewable energy thus there is room for mixed generation due to the energy resources

available in the country.

3.1.2. Transmission

Technically, the problem of transmission has only been identified by the people in the

engineering department who are exposed to core activities which involves installing

transmission lines. Transmission loses over long distances have been estimated to be

8.05% of the total electricity production compared to the 6-7% of the developed world. The

issues of transmission cannot be ignored as the proposed generating plant needs

transmission medium to effectively convey its power.

Mr. Olubunmi Obajuluwa of Power Holding Company of Nigeria (PHCN) expressed the need

of replacing the old transmission lines as the capacity and efficiency of transmission has

reduced over the years due to heating and overloading, and most likely quality materials

were not used at the time of construction, and there wasnt any monitoring agency to verify

that on behalf of the government. This increased loss of voltage during transmission. He

also stressed that government properties havent been secured enough because, there have

been reported cases of destruction and theft of public infrastructures in new sites before

decommissioning.

35

Another Engr. Abdul of Energy Commission of Nigeria said the transmission system doesnt

cover all part of the country-the maximum current capacity is 4,000MW and also

summarized other problems as;

Overloading of transformers in service areas,

Lack of development in the sector to implement modern technologies for

communication and monitoring,

Vandalization of lines associated with lack of surveillance on electrical

infrastructure,

Lack of fund to regularly expand, update, modernize, and maintain the network as a

result of resource allocation,

It covers only the major parts of the country,

Inadequate tools and attendant/staffs for urgent maintenance,

Long process of funds allocation to maintenance needs,

Lack of technical know-how to implement the maintenance needs.

3.1.3. Distribution & Marketing

The problems of generation and transmission have been analyzed and the major

hindrances have been considered, it is fair to say present problem would exact an equal

reaction on the distribution network coupled with some marketing problems. Thus, we can

have a full problem profile of distribution and marketing. I spoke with the several

representatives of PHCN marketers and they all have a wide range of problems which need

to be tackled to stabilize the situation. The problems spanned across the problems of

generation and transmission and categorically stated that, many of the aggrieved

customers have displaced their grievance on their staffs as a result of inefficiency in the

generation and transmission stages. This problem faced across all states in Nigeria mostly

lead to their inability to perform. Like the popular saying to whom much is given, much is

expected, many of the populace expect constant supply from the government and the only

people to display their aggression with are the marketers. Some great clash has been

36

recorded in several states of staffs been maltreated, beaten, injured and sometimes killed in

the events of carrying out their jobs.

The problems were summarized thus,

Weak and inadequate network coverage,

Insufficient fund for mobilization and implementing task,

Poor billing system,

Inadequate logistics facilities (tools and vehicles),

Fraudulent practices by staff and very poor customer relations,

Low staff morale and lack of regular training,

Lack of access to remote places in the distribution plan.

Figure 3 below shows the transmission and distribution losses over the years due to lack of

maintenance coupled with the incompetent installed infrastructure to utilize the total

generation capacity.

Figure 3: Transmission and Distribution in Nigeria (23)

37

3.1.4. Consumption

This is virtually the end of the whole needs for generation. Electricity is a vital part of

development and human life but till now people have failed to respect its usage as a result

of many factors. Nigeria havent been able to generate enough to meet its demands thus, a

lot of regulations cannot be implemented on the needs to avoid wastage.

Wastage has been recorded high in various part of the country as a result of improper

billing system and low tariff on electricity aside the technical loses experienced. The

government has subsidized electricity to the extent that, a continuous subsidy will possibly

affect other sectors of the economy.

A group discussion between Nigerian living in western countries has shown that, the

attitude of fresh Nigerian immigrant towards electricity consumption tends to be wasteful;

they tend not to know the value of electricity by consuming electricity wastefully and

unknowingly. This is as a result of inaccurate billing; they have not been billed according to

their usage (fixed/ estimated billing system), no matter their consumption. This

differentiates them from people living in a technological-driven world where billing is

based on consumption coupled with service delivery to satisfy the customers needs.

On the contrary, some electricity customers also said that, they wont pay for electricity

even if its available and referenced that; they provide all the basic amenities by themselves

and they havent got a reason to uphold and hail their citizenry; they provide water for

their homes, generate electricity by themselves, self-construction of roads and drainages to

mention a few.

The summarized problems are,

Inaccurate billing system,

Old system of electricity distribution and monitoring,

Acute demand-supply level,

Increasing poverty level of the country,

Lack of education on the real value of electricity supply and,

38

The negative populace attitude towards electricity consumption.

Figure 4 shows the consumption of electricity according to sectors, this further interprets

that electricity wastage is high in residential as it accounts for the largest consumption. As

a result, its the same people that consumes electricity in residential building, goes to

offices and industries to apply the same wasteful orientation which makes them utilize full

load demand at other places which has an equal effect on the distribution network. The

demand load increases and this weakens and sometimes leads to burnout of some

electrical infrastructures. In view of several burnouts, its not advisable for continuous

replacement by the government if the situation remains the same and the consumers

remains unconscious of energy usage.

Figure 4: Electricity consumption in Nigeria by sectors (22)

Mr. Kamal Habib of the Ministry of Budget and Planning stated that, the population growth

of the country cant be under-estimated with its present population of over 150million and

39

has 70% of its population to be under the age of 30years and 47% are ladies willing and

able to make their own family. He analyzed that; each of the ladies will virtually give birth

to an average of three kids which will put the population of the country in the next decade

close to 340 million. This will put the country as the most populous black nation with great

population density, and with its present ill-economic growth and lack of planning, it could

be the most poverty driven nation in coming years. He stressed the need of the country to

encourage greater and strong planning network for all sectors with the implementation of

rigid laws and strategized approach to enable the citizen have confidence in the

government and future of the nation.

From the above outcomes from the interview with different people that are relevant to this

research, it is fair to summarize the most critical issues facing the power industry into the

subtopics of generation, transmission, distribution, and consumption attitudes. This could

be linked together in a cyclical orientation as represented in figure 5

Figure 5: Relationship of generation, transmission, distribution, and consumption

pattern in Nigeria

Figure 5 shows that all the processes dependent on one another. A given scenario is the

epileptic generation problem as a result of lack of funding and other criteria explained

40

above, this inevitably reduces the capacity of transmission coupled with poor transmission

facilities and other related problems; a resulting lesser voltage to be distributed. The

insufficient distributed voltage leads to a poor marketing ability based on inefficient

service and therefore a low revenue generation. The actual consumption is not billed

accurately and the customers are not keen on knowing the nature of their bills as a result of

fluctuating and unreliable electricity sector and also, most customers are on self electricity

generation.

This will affect the response of the customers to bill payments and then low revenue will be

generated. Thus, yearly accounting analysis sums up to great loses for the power sector

irrespective of its subsidies and then the effects goes on and on which finally leads to

damage of major infrastructure with no regular maintenance.

3.2. National Policy

The legal policies of the country has encouraged electricity generation through all available

potentials but it doesnt enforce sustainability which is the only edge renewable technology

has got over conventional technology outside economics. The summary of the main points

of the regulation mandated through the NERC are;

create, promote and preserve efficient industry and market structures, and to

ensure the optimal utilization of resources for the provision of electricity services;

maximize access to electricity services, by promoting and facilitating consumer

connections to distribution systems in both rural and urban areas;

ensure that an adequate supply of electricity is available to consumers;

ensure that the prices charged by licensees are fair to consumers and are sufficient

to allow the licensees to finance their activities and to allow for reasonable earnings

for efficient operations;

ensure the safety, security, reliability, and quality of service in the production and

delivery of electricity to consumers; and

ensure that regulation is fair and balanced for licensees, consumers, investors, and

other stakeholders.

41

Considering the above statements, various progresses have been made by the NERC on

implementing strategic project to enhance development in the power industry but the

sector has not been liberalized to enhance competition in its real sense. Many of the

projects and licenses are awarded not based on merit of the awardees, and policies arent

rigid enough to deal with defaulters. There is also need for national energy master-plan

that would efficiently manage each parts of the nation effectively by enhancing and

empowering states and local government into full time independent energy producers and

marketers if they so wish.

The problem of fuel sourcing should also be backed legally to avoid the fluctuation in

energy production as major consumers like power station wouldnt for any reason source

operation-fuel from the black market. The institutionalization of renewable energy funds

which will help promote local manufacturers, suppliers, and renewable energy users

through incentives should be considered in energy policies.

3.3. Management and Corruption Issues

This is the major of any organization and the government has suffered from this issue as

most of the workers arent dedicated to doing their jobs in the right way. Many factors are

responsible for this due to the country planning and organization pattern. It includes but

not limited to;

inconsistence in salary packages:

greed

monitoring and auditing issues

leadership qualities and characters

The workers have complained that the take home packages have not encouraged them to

devote all their abilities into the job as most of them have to look for additional jobs to

supplement their income and meet up with expenses they spend on the government job.

Also inflation occurs several times in a year but, there hardly have a salary review in four

years. Also some workers complained of salary delays for weeks after due time.

42

Greed is generally accepted to be ruining the state of economy in the country which occurs

deep into the system of governance and attempt to tackle it hasnt yielded any positive

result; thus younger generation are capitalizing on its continuity.

The issues of monitoring and auditing hasnt been tackled at all, no agency is responsible

for auditing or monitoring the potential problems and therefore create a complex scenario

after the situation has been abandoned for long. Most of the projects awarded are not

monitored and then a failed result will be the output

3.4. Inaccurate Data

This problem cuts across all sectors of the economy. The provision of adequate electricity

for the nation need some basic data like the actual population count which shouldnt be

politically influenced, the present generation, transmission and distribution capacity, the

structural capability of the environment compared to its actual demands and needs, e.t.c.

Most part of the nation is agreed to be under the rural communities and even the Local

Governments managing their environment is yet to include them on their planning map or

have a detailed statistics about them, how then would the State and Federal Government

access genuine information of these localities. This leads to inadequate provision for them

since the present amenities are only for the urban areas where records are known.

Historically, most estimate done to excess or surplus the actual budget in order to

incorporate un-recorded statistics have been falsified mostly due to under-estimation. This

shows that, the unrecorded values of any parameter in the country is greater than the

recorded value, thus any forecast based on inaccurate data will give an unrealistic future.

43

4. ECONOMIC ANALYSIS OF EMBEDDED POWER GENERATION (EPG).

As explained in earlier chapters, the urgent need for adequate electricity is the status of

Nigeria but, when structuring a solution, a lot of parameters need to be considered to avoid

implementing project that might be termed wasteful, uneconomical or unsustainable in the

nearest future. As a result of this, this chapter compares the proposed concept-Embedded

Power Generation (EPG) and the conventional concept-Central Plant System (CPS) under

economic and sustainable parameters to realize an ideal option for future electricity.

To do justice to the framework of this dissertation, all parameters have to be considered to

enable an effective performance of an ideal solution. These sums up to major parameters

for comparison of the two concepts as;

Emission,

Cost of technology;

Capital cost, Operation and maintenance

Cost of per kWh

Technical and non technical loses,

Distribution and coverage,

Efficiency (sustainability),

Environmental impact.

In view of these parameters, a summary will be extracted from the characteristic of the two

concepts. This is to present their potential effectiveness towards electricity structuring and

distribution in Nigeria.

4.1. Emission

This occurs as a result of the combustion of fuel in the power industry. Emission is a very

important factor when considering sustainability, thus energy and carbon conversion is

helpful to calculate the energy values in different units and its equivalent emission factor of

44

different fuel sources. The table 4 below shows the summary sourced from Department for

Environment, Food and Rural Affairs (DEFRA)-carbon trust.

Table 3: Emission conversion

FUEL UNITS Kg CO2 /unit

Grid electricity KWh 0.537

Renewable electricity KWh 0

Natural gas KWh

Therms

0.185

5.421

LPG KWh

Therms

Litres

0.214

6.277

1.495

Gas oil Tonnes

KWh

Tonnes

3,190

0.252

2.674

Fuel oil Tonnes

KWh

3,223

0.268

Burning oil Tonnes

KWh

3,150

0.245

Diesel Tonnes

KWh

Litres

3,164

0.250

2.630

Petrol Tonnes

KWh

Litres

3,135

0.240

2.315

Industrial coal Tonnes

KWh

2,457

0.330

Wood pellets Tonnes

KWh

132

0.025

45

Having these values, it very easy to delineate the values of the carbon dioxide emitted from

the various technologies which is planned for electricity generation process. According to

appendix I, it shows a proposed plan of generating 17,887MW of electricity of which

80.16% is thermal (gas), and 19.84% hydropower. This gives us 14,338MW electricity from

gas and 3,549MW of hydropower,

Statistical representation:

For gas;

14338MW = (14338 x 8760hours) = 125.6 x 106MWh

125.6 x 106MWh = 125.6 x 109kWh

125.6 x 109kWh = (125.6 x 109 x 0.185) = 23.24 x 109Kg CO2

23.24 x 109Kg CO2 =23.94 x 106 tonnes of CO2 Annually

For hydropower;

3,549MW = 0Kg CO2 Annually

For EPG, which could use renewable energy or conventional fuel, the emission is zero for

renewable as seen with hydropower or other renewable sources and a measurable volume

with regards to the fuel technology used. In Nigeria, the present forms of embedded

generation available are PV, diesel, and petrol generators which are widely distributed in

the cities and sparsely available in the rural area. Availability of petrol and diesel

generators is due to cost of operating and availability of fuel in a close distances. These

generators are highly inefficient due to their standards and produces greater emission. The

smaller ones have a life span of 18months and the larger ones could work efficiently for

5years depending on its originality and maintenance.

46

Statistical representation of diesel and petrol generators:

Diesel generator;

1 litre of diesel = 10.9kWh

litreperkgCOkWhdieselofkWh 2725.2)250.09.10(9.10

10.9kWh of diesel = (10.9kWh x 0.250) = 2.725Kg CO2 per litre

Petrol generators;

1 litre of petrol = 9.6kWh

9.6kWh of petrol = (9.6kWh x 0.240) = 2.3Kg CO2 per litre

Note: the emission standards all depends on the condition of the generators, capacity

factor, load factor and efficiency. The above calculation has been done based on a new

generator with efficiency of 90%, capacity factor 0.85 and operating under the load

capacity.

As earlier stated in previous chapter, an estimate of 60million Nigerian uses generators for

self power generation. Another newspaper blog says Nigerian using generators consumes

an average of four litres of fuel per day for electricity purpose (24).

It we assumed that, the minimum emissive fuel type is used for the generator which is

petrol.

Statistical representation:

60million x 4 litres = 240 x 106 litres

240 x 106 litres = (240 x 106 litres x 9.6) = 2304 x 106 kWh/day

240 x 106 litres = 552 x 106Kg of CO2 daily

47

The above statistics clearly shows that, the minimum inevitable emission is 552,000 tonnes

of CO2 daily. Its is clear that embedded self generation from petrol and diesel is not in

anyway good for the environment, as other sources of pollution like transportation which

produces a greater amount of greenhouse gases to the environment is also of major

concern. Thus any attempt to implement an energy intensive project, the emission

potentials of the project should be considered.

From table 4, we can conclude that, natural gas is the cleanest non-renewable energy due

its low emission level, and the proposed power plants will be fueled by natural gas.

Unfortunately, the huge investment required to build infrastructure such as gas pipelines

for an enabling environment is a barrier thats yet to be crossed. Also, natural gas could be

highly abundant in the country but, parameters such as local fuel security and vandalism of

government properties which could suspend the operation of the stations should be

considered which continues to pose a threat to the Nigerian oil industry, irrespective of its

abundance. It is also clear from earlier analysis in table 1 that the abundance of resources

in Nigeria creates an open option for mixed-generation. Any of these resources could be

tapped to enhance mixed-generation, avoid wastage of natural gas and enhance fuel

security for the future of the power industry.

4.2. Cost of Technology

This section compares both concept of EPG and CPS and discusses which is economically

viable per kWh or MWh of electricity produced. It shows cost comparison of the two

concepts under the different possible fuel technologies with references to;

Capital cost, operation and maintenance

Cost of per kWh

4.2.1. Capital cost, operation and maintenance

To analyze this part with the various fuel technologies available, we have to consider the

costing necessary for generation, transmission and distribution. We have to take note that

the cost incurred for transmission could vary depending on;

48

the style or technology adapted in the project,

the voltage to be transmitted and also

the terrain over which transmission companies build transmission lines also affects

cost, e.g. mountainous terrain far from roads and relatively flat plains with nearby

roads.

Thus, an assumption will be made from the National Association of Regulatory Utility

Commission (NARUC) in the United States of America. The NARUC stated according to

estimates from various project that, the cost of transmission ranges from $US 0.5

1.5million per mile (25).

It is generally accepted that the capital cost for electricity production varies with the type

of fuel technology and the types of plant, so the various expenses to be incurred in

generating a MWh of electricity through different technologies according to the United

States Department of Energy (DOE) is represented in Appendix II.

Appendix II, represents the cost for conventional plant system, thus if we assume that there

is no other variable or changes that is meant to occur with costing for the EPG except for

cost of transmission which is zero, then a resulting difference of just the transmission cost

will be represented in the table 5

Table 4: Cost comparison between CSP and EPG

Plant Type Total System Levelized Cost $/megawatt-hour

CSP EPG = CSP Transmission

Investment

Conventional coal 94.8 93.6

Advanced coal 109.4 108.2

Advanced coal with CCS 136.2 135.0

Natural gas-fired

Conventional 66.1 64.9

http://www.raponline.org/Pubs/ELECTRICITYTRANSMISSION.pdf

49

combined cycle

Advanced combined

cycle

63.1 61.9

Advanced CC with

CCS

89.3 88.1

Conventional

combustion turbine

124.5 121.0

Advanced

combustion turbine

103.5 100.0

Advanced nuclear 113.9 112.9

Wind 97.0 93.5

Wind- Offshore 243.2 237.3

Solar PV1 210.7 206.7

Solar thermal 311.8 306.0

Geothermal 101.7 100.7

Biomass 112.5 111.2

Hydro 86.4 84.5

Table 5 could be represented in a chat to graphically compare the differences.

50

Figure 6: Costing per MWh of electricity produced from different plant types

($/MWh)

From the above charts and figures from the tables, it is clear that, EPG is a better option

when economic costing is considered as the single parameter for project choice and

implementation.

4.2.2. Costing per kWh

The analysis in Table 6 shows the variation in the cost of different fuel technologies

adapted from the Canadian Energy Research Institute (CERI). This assumption is made to

suite Nigeria as there arent any available details for the costing per kilowatt of electricity

produced in Nigeria.

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

CSP

EPG = CSP Transmission Investment

51

Table 5: Technology costing per kWh

TECHNOLOGY COST PER KWh

(Canadian cent)

COST PER KWh (Nigerian

Naira)

Coal 5 7.9

Gas 9 14.22

Biomass 8 12.64

Biomass co-firing 11 17.38

Micro hydro 27 42.66

Small hydro 19 30

Large hydro 10 15.8

Solar PV 79 124.84

Solar thermal 35 55.31

Wind 11 17.38

*exchange rate was adapted from www.xe.com which evaluates 1cent as 1.58naira (July

2011).

The above table is interpreted into a chart as shown below

Figure 7: Cost per kWh (Nigerian naira)

NGN 0.00

NGN 20.00

NGN 40.00

NGN 60.00

NGN 80.00

NGN 100.00

NGN 120.00

NGN 140.00

http://www.xe.com/

52

Solar PV is the most expensive technology to generate electricity as shown by figure 7. It

should be emphasized that as much as solar intensity is very much available in the

northern part of the country, the technology is still very much in its infancy and there are

ongoing research as to reduction in the price of the panel and increase in the conversion

efficiency. The cheapest technology is the coal followed by biomass and then the most

utilized in Nigeria which is thermal (Gas). Other technologies also could be harnessed but

they have not been incorporated due to strategic difficulties in managing and operating

them while most renewable technology hasnt been applied fully as a result of the

intermittency and historic uncertainty.

4.3. Technical and non-technical loses

This helps to compare the technical and non-technical loses associated with both concepts

of CPG and EPG. The table below shows the proposed plan of power generation with its

present loses and a projected reduction in loses for the upcoming years by the NERC and

the power planning committee.

Table 6: Effect of transmission and distribution loses with projection plan (central

stations)

Description 2011 2012 2013 2014 2015

Out-going power(GWh) 97,131 109,272 115,829 122,778 130,145

Transmission loses 8.05% 8.05% 8.05% 8.05% 8.05%

Delivered to distribution(GWh) 89,312 100,476 106,504 112,895 119,668

Distribution loses 11% 11% 10% 10% 10%

Delivered to customers(GWh) 79,488 89,423 86,269 93,477 101,239

Non technical loses 14% 12% 10% 8% 6%

Billed to customers 68,359 78,693 86,269 93,477 101.239

Revenue collection loses 8% 6% 4% 2% 2%

Sales where revenue is collected 62,891 73,971 82,818 91,607 99,215

53

(GWh)

Revenue based sales as % of out-

going

65% 68% 72% 75% 76%

The present transmission loses in Nigeria from the grid is a constant 8.05% of the outgoing

power from the central station, other loses recorded presently are the distribution loses,

non-technical loses, and revenue collection loses all of which are projected to reduce as the

year goes by with more effective management. From table 6, the percentage revenue of the

outgoing power from a central station is 65% for 2011 and 76% to be expected in 2015

considering greater management efforts across all phases of electricity generation to

consumption.

The next table shows a scenario of the losses that could be encountered from embedded

power generation using the same power generation techniques with the same power

output for the present and upcoming years ahead.

Table 7: Effect of transmission and distribution loses with projection plan

(Embedded Generation)

Conventional

Plant

Embedded Generation

Description 2011 2012 2013 2014 2015

Out-going power(GWh) 97,131 109,272 115,829 122,778 130,145

Transmission loses 8.05% - - - -

Delivered to distribution(GWh) 89,312 109,272 115,829 122,778 130,145

Distribution loses 11% 7.33% 6.33% 5.33% 4.33%

Delivered to customers(GWh) 79,488 101,262 108,497 109,655 124,510

Non technical loses 14% 7% 5% 3% 1%

Billed to customers 68,359 94,174 103,072 106,366 123,265

Revenue collection loses 8% 5% 4% 3% 2%

54

Sales where revenue is

collected (GWh)

62,891 89,465 98,949 103,175 120,800

Revenue based sales as % of

out-going

65% 82% 85.4% 89% 93%

*note; 2011, is the baseline for the calculation and the projection is made from 2012 for

EPG.

From tables 7 & 8, we could extract the revenue generated from both concepts as a product

of their encountered loses and simplify it into a table of revenue as shown below.

Table 8: Comparison Revenue Sales between Both Concepts; CPS and EPG

YEAR 2011 2012 2013 2014 2015

CPS

Sales where revenue is collected

62,891 73,971 82,818 91,607 99,215

Revenue based sales as % of out-going

65% 68% 72% 75% 76%

EPG

Sales where revenue is collected

62,891 89,465 98,949 103,175 120,800

Revenue based sales as % of out-going

65% 82% 85.4% 89% 93%

55

Figure 8: Comparison Revenue Sales between Both Concepts-CP and EG

From the chart, it is clear that EG has a reduced loses encountered in the medium of

electricity production to consumption and therefore a greater revenue due to its smaller

size, easier management and low maintenance requirement depending on the size of the

plant.

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

2010.5 2011 2011.5 2012 2012.5 2013 2013.5 2014 2014.5 2015 2015.5

CP

EG

56

4.4. Distribution and adequacy

This part of the analysis helps to measure the extent of coverage between the traditional

CPS and the proposed EPG concept as a product of the historical relevance in Nigeria. The

numbers of people that benefits from the central station might be estimated huge but as a

matter of fact the grid supply electricity to approximately 4.7million customers which is

generated from central power station as at 2009 (26). These numbers could be further

analyzed by comparing it with the demand of the business centre of Nigeria which is Lagos

state. The Governor of Lagos State in his annual economic briefing stated that; Lagos has

approximately 4million homes and each home accommodates an average of four people,

this puts the total number of its occupant to 16million people. Thus, we could assume that,

the numbers of people that benefits from the electricity supply of the whole nation is

optimally 20million people including ghost consumers (people who dont pay for electricity

and their usage isnt recorded).

However, as earlier introduced in chapter one that, most of the populace inhibits the rural

environment, and the inadequacy of electricity produced from the generation station and

economics of revenue generation makes it impossible and uneconomical to supply

electricity to the rural communities; if electricity infrastructures are extended into the rural

area, the expected revenue wont be achieved due to the poverty level and unemployment

rate. Thus the load and revenue managers prefer to distribute to cities where greater sales

could be achieved so as to meet their revenue target.

The PHCN also complimented this and stated in the last consumer protection forum that;

the cities are responsible for 90% of their revenue irrespective of its undercharged

electricity prices and most of the power supplied to the rural communities is mostly lost as

revenue collection hasnt been an easy task. This statement could be backed by the load

management scheme which made Lagos State benefit 1000MW from the staggering

4000MW national capacity.

Funds secured through electricity sales is also less than the cost of generating electricity

and the government has been subsidizing the cost of electricity over the years but the

57

inconsistency in subsidy keeps the IPPs running a negative account and also scares

potential investors.

All the above issues and concerns are due to the problem associated with central station

and the way the sector has been managed over the years. Thus, EPG could be a better

alternative for power generation if it could be available in all communities or in all the 776

Local Government to produce electricity according to their needs and tapping from the

available resources within 20-50Kilometers circumference distances around their

environment. This concept is sure to provide the country with easy access to electricity and

greater coverage of the rural areas. Greater revenue could be generated as micro-

generation could be easily monitored, therefore, marketing activities could be directed to

target customers and management streamlined to plant capacities.

The EPG structure could also be likened to that of the rural water supply in Nigeria.

Historically, the central water distribution plan doesnt reach the rural communities due to

discontinuity in the infrastructural project or sometimes due to shortage in water level

from the District Water Corporation or sometimes distance of travel or sometimes no

electricity to power the pumps, or pressure drop encountered due to pipeline leakages

which arent monitored.

Since huge funding is necessary to implement major projects, Local and State Government

have resulted to financing micro project that will effectively cater for the small

communities and reduce their inaccessibility to basic amenities. Water supply has been

made available to them in varieties of ways, ranging from the hand powered surfaced water

pumps to a submersible pump depending on electricity availability in the different regions.

This project might not have helped so much due to the quantity decommissioned but it has

greatly helped the rural communities have access to quality and clean underground water.

From the above discussion, the distributed concept