In a recent meeting, Nigeria’s electricity regulatory commission and the manufacturers association agreed to create a framework for industrial embedded generation in the West African country.
This Day reported that the Nigerian Electricity Regulatory Commission (NERC) encouraged the members of the Manufacturers Association of Nigeria (MAN) to drive their plan to investment in embedded generation and captive electricity solutions.
Both parties agreed to create a framework for the development of micro grids for industrial clusters across the country.
This framework is to be driven by MAN through a Special Purpose Vehicle (SPV).
In this regard NERC and MAN decided to set up a committee that would understudy and address possible challenges posed to industrial productivity and the country’s broader economic goals as it relates to power.
The committee is also set to develop and dedicate small grids that can be connected to larger distribution grids providing electricity to industrial clusters.
NERC supports embedded generation
In an earlier statement to local media in March, Dr Sam Amadi, Chairman of NERC, stated that the Commission would ensure that the cost of electricity does not destroy the nation’s industrial sector.
This Day reported that Amadi explained that this recent meeting’s objective is to make power available to industrial clusters in a reliable and quickest possible approach.
He noted that amongst the options being considered includes an arrangement to upgrade licences of embedded generation and captive electricity generators.
The excess capacities would supply firms within their vicinity through commercial arrangements. This would be jointly beneficial to the electricity distribution companies and the industrial sector.
Coal and embedded generation
Amadi equally stated that MAN could take up the options of developing small embedded generation power plants using the huge coal deposits that are found across Nigeria.
According to him, investments in such small size coal-powered plants could be quite economical for MAN to promote especially amongst its members in industrial clusters situated where there are coal deposits.
He further explained that the establishment of micro grids could be “beneficial as it will provide commercially viable electricity to industries and free grid electricity that goes to industries for residential and other consumers”.
The meeting also revealed that a technical committee with nominations from the Commission will be set up and coordinated by MAN since its members will be the main beneficiary of stable and adequate electricity supply.
Developing the framework
According to This Day, the committee is expected to develop the embedded generation framework that would provide alternative solutions to associated financial and technical impediments to realising the objective.
The framework on the micro grid is also expected to adapt to NERC’s regulations on embedded generation.
The regulation is applicable when electricity is generated and consumed within a distribution network as well as similar regulation on independent electricity distribution network.
This permits development of electricity distribution to an area yet to be developed by a distribution company.
A suggested approach entails mobilising industrial clusters to establish a special purpose vehicle that will secure equity participation of members in a cluster.
In addition, it will secure access to project finance to sponsor modular power plants using networks of electricity distribution at mutually beneficial financial terms.
The committee is expected to submit its recommendation within four weeks.