Sustainability Insights For Electric Power Sector Transformation - Victor Udo

Sustainability Insights For Electric Power Sector Transformation (eBook)

Looking at Nigeria

Victor Udo (Autor)

eBook Download: EPUB

2021 | 1. Auflage
320 Seiten
Bookbaby (Verlag)
978-1-0983-8476-0 (ISBN)

The book provides perspectives on the infrastructural and human capacity imperatives in the emerging electric power centric utility services. These insights will help to leapfrog underperforming sectors towards operational excellence in bundled utility services for customer loyalty and global sustainability. The book links the electric power sector with the interplay of people, planet, prosperity, peace, and partnerships (5Ps) - the essence of global sustainable development. A critical review of the electric power sector also known as the electric utility industry is provided. Using the Nigerian situation as an example, the book pivots from the present situation to consider the past and the potential future of sustainability centric transformation in the sector. The author's insights are based on what he saw, participated in, and contributed to both in the Nigerian and USA corporate, public, and academic spaces. The book will help readers to understand, appreciate and adopt appropriate processes, products, prices, communications, care, support, and services in the emerging power sector. In this transforming industry the demarcation lines between retail electricity production, storage and delivery is blurring. The traditional lines between service providers and users is becoming more complicated as consumers of electricity are also producing electricity in what is considered 'Prosumers'. The book is a reference for the electric power sector stakeholders, a basic text for students and a general reading for both energy industry and sustainability practitioners. Using Nigeria as a metaphor for developing nations with poor electricity supply, the author advocates business and public policies that will ensure the leapfrogging of service delivery for enhanced quality of life. He advocates leadership and structural evolution of the sector towards decentralization, digitalization and decarbonization (3Ds).

This book presents the electric power sector as the combination of Alternating Current (AC) and Direct Current (DC) systems into an infrastructural value chain managed by a value constellation of stakeholders. The demand for global sustainability and emerging technological convergences are synergizing to transform the sector towards decarbonization enabled by digitalization and decentralization. Sustainability insights on the simultaneously evolutionary and revolutionary processes that are helping the electric power sector to improve is provided by using Nigeria as a metaphor of underperformance. Effective application of these insights will encourage a leapfrog into transformational service provisioning for customers and the public in general. Presently across the globe (in most modern societies), AC and DC generation and utilization/consumption of electricity occurs as large-scale integrated systems - known as the electric power infrastructure or grid. Such large-scale grid infrastructure requires certain competencies to develop, implement and manage effectively. With new technologies and the increasing demand for sustainability, this mostly centralized grid approach is transitioning from the existing to an emerging architecture. Both the existing and the emerging grid architecture require core competency and human development. The electric power sector provides services from the local to global (villages, communities, localities, state/provinces, regions, nations and internationally) as an infrastructural value chain/constellation. With appropriate leadership, these infrastructural value chain and constellation of stakeholder ensure customer satisfaction while enabling social sustainability, technological sustainability and environmental sustainability. Technology convergence is driving the transformation of the sector. The two domains that determine the success of functional electric power sectors are covered in the book. These are the infrastructural value chain and utility services competencies. Contemporarily, both domains are being transformed by synergistic impacts of technological convergence and the emerging hierarchical grid architecture. The book summarizes these changes as four groups of concentric hexagons - grid architecture, infrastructure, technological convergence and core competencies. The first which is Hexagon of Grid Architecture includes Giga, Mega, National, Macro, Micro and Pico/Nano grids. Critical sub-systems in the sector are covered as the second Hexagon of Infrastructure including prime resources, generation/storage, deliver ((transmission/ distribution), utilization/consumption, revenue collection and customer care. The third is Hexagon of Technological Convergences which include distributed energy resources (DER)/smart grids, re-electrification of transportation, internet of things (IoT), distributed ledger technology (DLT)/blockchain and digitally enabled sustainable development (DESD). Hexagon of Core Competencies is the fourth in the group and the most important aspect of the electric power sector. It has to do with people - human capital in critical areas including public policy, corporate governance, strategic management, engineering, design/construction, supply chain/procurements, stakeholders' relationships management, finance, accounting/administration and operations, scheduling/maintenance.

Chapter Two

The Nigerian Electric Power Sector Insights

History of Nigerian electric power sector predates both the 1914 amalgamation and the 1960 independence of the country. With such a long period of existence, it is more than fair to expect that the sector should have stabilized and matured long before the year 2021. Yet, the Nigerian electric power sector is filled with promises, especially during military coup announcements and electioneering campaigns. After such announcements and campaigns, little or no transformational changes occur in the sector. Even with the enormous capital deployment in excess of $20 Billion or N 15 Trillion between 1999 and 2018 at the Federal level alone, steady grid power supply remains elusive to most Nigerians. Such a pathetic situation deserves a critical review.

This chapter thus provide a review of the Nigerian electric power sector in three sections. The first section is focused on the overall Nigerian electric power sector by summarizing the contemporary status and a brief history. The sector reforms under President Obasanjo and President Johnathan are also summarized. The second section presents the Akwa Ibom State electric power sector as a potential Macro grid with the essential building blocks – power production, delivery, and consumption. Finally, in the third section, an advocacy framework for the emancipation of the Nigerian electric power sector from the false consciousness of negative interests of corruption is outlined using appropriate comparisons.

2.1. General Status Overview as of 2021

Until the 1970s and 1980s, most of the electric power sectors around the globe were vertically integrated. One organization used to own and operate the entire infrastructure chain from the prime resources to customer care infrastructure. Beginning in the 1970s, the electric power sector in most parts of the world has been restructured such that the generation, transmission, and distribution infrastructure are separate organizations. These organizations are businesses whether publicly or privately owned. In Nigeria, the National Electric Power Authority (NEPA) was a vertically integrated organization.

As a result of President Obasanjo’s reform agenda codified in the Electric Power Sector Reform Act (EPSRA) of 2005, the Nigerian electric power sector has been restructured, unbundled and partially privatized. Partially in the sense that as of 2021, the State and Federal government still own 40% shares in the distribution companies. Under EPSRA, what used to be NEPA was unbundled into regulatory agencies and core power sector businesses. NEPA assets were transferred into a newly incorporated Federal entity known as Power Holding Company of Nigeria (PHCN). In all, the restructuring and unbundling resulted in at least 25 public and private entities:

1. Rural Electrification Agency (REA)

2. Nigerian Bulk Electricity Trading (NBET)

3. Nigeria Electricity Liability Management Company (NELMCO)

4. National Power Training Institute (NAPTIN)

5. Niger Delta Power Holding Company (NDPHC)

6. Nigeria Electricity Regulatory Commission (NERC)

7. Electricity Management Service Company (EMS)

8. Eleven (11) Distribution Companies (DisCos)

9. One Transmission Company of Nigeria (TCN)

10. Six (6) Generations Companies (GenCos)

Due to the critical nature of the sector, key aspects require regulatory oversight. The two most critical aspects are safety and cost-reflective supply of electricity to the end-users as a public utility service. One of the two predominant regulators is NERC - the independent entity that drives (or should drive) the sector reforms consistent with the EPSRA. NERC’s key functions include licensing and market supervision through permits, rulemaking, and orders. NERC regulates the sector in four main subsectors; generation, transmission, distribution, and retail with some overlap with rural electrification which is mostly under the REA.

The other predominant regulator from the above list of NEPA successor entities is EMS now Nigerian Electricity Management Services Agency (NEMSA). NEMSA is the enforcer of the equipment standards for the safety of the sector. After a lengthy bureaucratic fight about whether EMS should be housed under NERC, EMS succeeded in becoming an independent entity (NEMSA) through the passage of the NEMSA Act of 2015. NEMSA’s safety enforcement role as an independent entity notwithstanding, the overall sector is primarily regulated by NERC while the overall policy coordination is provided by the Ministry of Power.

Three of the listed NEPA successor industries namely, REA, NELMCO and NAPTIN play intervention roles in the industry. REA is focused on rural electrification while NELMCO was created to manage the liabilities resulting from the EPSRA driven reforms. NAPTIN on the other hand provides and facilitates human training aspects of the sector. In general, together with the safety enforcement role of NEMSA, NEPA successor entities along with new entrant private entities are regulated by NERC. NEMSA and NERC regulations are (or should be intended) for the benefit of electricity customers and consumers as well as Nigeria’s national interests. Note that every consumer is not a customer since customers are the bill payers while consumers are the actual users of electricity.

Customers pay monthly bills for grid electricity supply resources and services aspects of the sector which is generally referred to as the Nigerian Electricity Supply Industry (NESI). NESI is the major aspect of the overall Nigerian electric power sector hence the primary focus of NERC (the sector regulator). In addition to the NEPA's successor companies, the other NESI participants are the Independent Power Producers (IPP) and the National Integrated Power Projects (NIPP) owned and managed by the NDPHC. The model of NESI principally starts with the prime resource and ends with the consumers as shown in Figure 2.1 consisting:

• Gas Supplier - Prime Resources Providers

• Power Generators – NEPA Successors, NIPP and IPP

• Power Transporter and System Operator – TCN

• Power Distributors – Eleven entities across the country

• Power Trader – NBET, a transitional wholesale entity

• Power Consumers - Customers and End Users

• NESI Regulator – NERC.

We will consider each of these NESI's seven core areas in detail below.

1. Gas Supplier - Prime Resources Providers: As illustrated in Figure 2.1, NESI’s structure starts with the gas suppliers who are not directly regulated by NERC but for the most part, represents the predominant prime resource for NESI.

At the retail off-grid level of the sector, petrol, diesel and recently solar are predominant prime resources. The other major prime resource for NESI is hydro (water resources) which is part of the generating plants. Other prime resources (such as coal, nuclear, biomass, geothermal, wind) are yet to be significantly harnessed and deployed across NESI. As shown in Table 2.1A, most of the generating plants in Nigeria are gas-based. Thus, the prime resources in the NESI model are generally represented by gas suppliers. Gas suppliers provide fuel to the generating plants in exchange for payments typically covered under what is known as Gas Sales and Purchase Agreement (GSPA). Individual power generating companies such as Ibom Power have GSPA with independent gas providers such as Seven Energy. Nigeria is the 9 th largest natural gas country in the world and the largest in Africa with a reserve of over five (5) Trillion Cubic Meters. Yet, gas supply for power generation remains one of the most critical challenges facing the sector.

Estimates by the Nigerian National Petroleum Corporation (NNPC) and others show that 12 to 40% of the gas produced in Nigeria is flared creating economic and environmental costs. With little regard for the environmental impact, it is more profitable for the major oil producers to flare the associated gas. Instead of flaring, oil companies should be investing in gas infrastructure for the Nigerian domestic market including power generation customers. However, poor gas pricing has not encouraged such investments. But with the amount of reserve, the clean attributes (compared to coal and nuclear), and the flexibility of use, gas remains the main prime resource in the Nigerian electric power sector.

Leveraging the above fact to improve upon gas supply, the Gas Aggregation Company of Nigeria Limited (GACN) was incorporated by the Federal Government in 2010 to stimulate the growth of natural gas utilization in the Nigerian domestic market. GACN is the agency with the responsibility of implementing the commercial framework articulated in the Nigerian Gas Master Plan (NGMP). The NGMP commercial intent impacting the electric power sector includes:

• Managing the allocation of gas to domestic buyers

• Processing requests from domestic gas buyers

• Facilitating Gas Sale and Aggregation Agreement (GSAA) negotiations

• Managing escrow accounts on behalf of gas sellers and dispute resolution process for stakeholders.

Further discussion of the Nigerian gas sector is beyond the scope...

Erscheint lt. Verlag	10.6.2021
Sprache	englisch
Themenwelt	Wirtschaft
ISBN-10	1-0983-8476-8 / 1098384768
ISBN-13	978-1-0983-8476-0 / 9781098384760

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