A fortnight ago we were treated to yet another episode (it was not a comedy, for sure) of gas supply disruption which, as expected, led to significant drop in power supply nationwide. Gas availability, or more appropriately, the lack of it, is one monstrous challenge that has bedevilled the Nigerian power sector for ages.
Huge resources and efforts have been expended by government to secure adequate gas delivery for power generation through various initiatives, quite creditably. However, without sounding pessimistic, certain perils may continue to derail the realisation of uninterrupted gas supply and consequently, stable electricity generation in the absence of an optimal technology and fuel mix.
As Daniel Yergin (the author of two energy best sellers – “The Prize: The Epic Quest for Oil, Money and Power“ and “The Quest: Energy, Security and the Remaking of the Modern World”) rightly puts it – “The answer to today’s energy problem should not be viewed from a dogmatic “either or” lens. We need an ecumenical approach—a combination of new oil and gas supplies, renewables, and greater efficiency” and in the Nigerian case coal, we must add.
Nigeria has virtually relied entirely on domestically procured natural gas as the dominant fuel for power generation. At present, natural gas and oil represent almost 80% of the electricity generation mix in the Nigerian power sector and the share of gas is expected to significantly increase in the coming years. The whole idea is not necessarily imprudent but a disproportionate fuel policy skewed towards gas may not be an optimal strategy.
The near total reliance on gas for power supply is a policy flaw which could, ultimately, throw up unintended consequences in future. The issue is not simply whether Nigeria has abundant, low-cost fuel. Security of fuel supply should not be seen purely from the point of availability (gas in the ground) but must be viewed from the broader sense of possible market failures and physical security of infrastructure.
Increased fuel supply security as a result of diversification diminishes an economy’s susceptibility to price shocks, dominant market behaviour, sabotage and acts of terrorism. But does this in any way suggest that natural gas should be substituted with other fuel and technologies? Emphatic NO and indeed, not a viable proposition.
Rather, diversification seeks the development of alternative sources of fuel supplies to reduce overall dependence on a particular fuel type, source and infrastructure based on strategic, cost and operational considerations.
Fortunately, there are a few countries in the world that can lay claim to fossil and renewable resources endowment as much as we can as a nation. Notwithstanding, the difference between nations is not so much a function of resource endowment but so much of how well these resources are explored, exploited and managed for the general good of its citizens.
With estimated total recoverable coal reserve of 330 mtoe – mainly clean coal, potential hydro resources (large and small) in excess of 10,000MW capable of generating over 36,000 GWh of electricity annually in addition to huge wind and solar resources, we have no reason not to consign the dark age to history. Electricity could also be a major export commodity and a legitimate foreign exchange earner for the country.
Given the diversity of our resources and the almost constant threat associated with gas pipeline infrastructure, there is a crying need for government to transform our energy policy and urgently reassess how coal can be deployed more cleanly and efficiently through appropriate policy support, beyond merely execution of MOUs, and probably seek new opportunities in PPP arrangement in additional hydro generating capacity while setting higher renewable targets in the generation mix.
According to International Energy Agency (IEA) report, levelised costs of generating electricity from gas-fired power plants is estimated at US$37-US$60/MWh compared with US$25-US$50 USD/MWh for most coal-fired power plants which underscores the economic attractiveness of coal power technology. Substantial cost savings also exist in transmission costs where coal power plants are located in close proximity to coal rich regions of Nigeria
In addition, coal plants have one unique advantage- they tend to offer better efficiencies as their size increases (until the size reaches around 800-1000 MW). The operational characteristics of alternative electricity generation technologies and their levelised cost profile, especially in the case of coal, present a strong business case and a socially optimal mix.
Part of that diversification drive may also include giving serious consideration to investment in strategic gas storage facilities, construction of scalable LNG re-gasification terminals in major port cities to ensure stable supply of gas to substaintailly mitigate the risk of pipeline disruption.
Potentially, Nigeria can create new sources of economic growth through massive investment in renewable energy related R&D. To help spur the development of an indigenous renewable energy industry in Nigeria, substantial local content requirement on any renewable energy project in the country should be made mandatory.
Renewable technology is not space technology. Instructively, even space technology is gradually being demystified with the recent subscription of India and China as members of the space club. Therefore, it will be utterly disingenuous to subscribe to claims that we do not possess the required capacity to develop largely (though not necessarily wholly) home-grown renewable technologies, if given the right incentives.
Other renewable support schemes could include priority connection to the grid, where justifiable, but contingent on improved transmission infrastructure, low interest loans and other forms of budget support. One would have expected the government to channel sizeable portion of SURE-P funds to worthy endeavours like these. It is not late.
“On no one quality, on no one process, on no one country, on no one route and no one field must we be dependent. Safety and security… lie in variety and variety alone” – Winston Churchill
By: Ubohmhe Glenn Olowojaiye
