Achieving Universal Electricity Access

PART I: INTRODUCTION

Background of Study

The importance of modern energy services in promoting socio-economic development has been extensively documented in the literature (Kaygusuz 2011), (Kanagawa and Nakata 2007) (Kanagawa and Nakata 2008). Access to modern energy services is closely related to other indicators of a descent standard of living in the 21^st century, namely, availability of portable drinking water, literacy, health services, child mortality, etc (Meisen and Akin 2008). For example, in rural areas, the higher luminance of modern lighting brightens homes and encourages pupils to study in the nights; clean cookstoves and cookers using liquefied petroleum gas (LPG) can reduce incidences of indoor-air pollution caused by reliance on traditional biomass for cooking (Isihak, Akpan and Adeleye 2012), etc. As the most versatile carrier of energy, electricity is important in the provisions of basic social services in health, water, etc. Electricity is also useful promoting the income formation in rural areas through the development of rural microenterprises (Akpan, Essien and Isihak 2013a). Electricity also powers large machinery in factories to increase productivity. Modern energy services, especially electricity, are crucial to several sectors of the economy of any country: higher education, agriculture, financial services, communication, rural development, etc.

Despite the huge advantages of having access to electricity, several millions of persons around the world lack access to electricity. The International Energy Agency (IEA) estimated that in 2011 about xxx billion persons lacked access to electricity of which xxx million were in sub-Saharan Africa (IEA 2011). Consequently, one of the major energy challenges confronting countries in sub-Sahara Africa is that of providing access to modern energy services to its citizens. The electricity access situation in Nigeria is similar to that of many developing countries: the electricity access rate in Nigeria – the percentage of population without access to electricity – is 56% (NPC 2014) which is equivalent to about xxx million persons. However, the electricity access rates in the various states vary significantly from 10.9% in Taraba State to 99.1% in Lagos State as shown in Fig. 1.

Figure 1: Electricity access rate in Nigeria by states

Source of data: (NPC 2014)

Three main factors which are inter-related are responsible for this disparity in the electricity access rates across the states:

1. The population density across the states varies significantly as shown in Fig. 2. Places with higher population density have higher commercial activities and in-turn higher demand for electricity. Therefore, transmission and distribution lines are often constructed to deliver electricity to such locations because the electricity so delivered will not be under-utilized[1];
2. The major sources of electricity generation are natural gas and hydro. The gas-powered plants are located in the Niger Delta area where there is abundance of natural gas while the hydropower plants are in Niger State. Because transmission lines are constructed to evaluate power from the generation source to demand areas, these states and other states along the path of the transmission lines tend to have higher electricity access rates;
3. Due to the first two reasons itemized above, the national grid does not cover all parts of the country. The electricity grid covers the states with high population density but not those with low population density as shown in Fig. 3.

Figure 2: Population density across the different states in Nigeria

Source of data: (National Population Commission, Nigeria 2006)

Figure 3: Map of Nigeria showing existing, ongoing, and proposed generation and transmission (HV) projects

Source: Transmission Company of Nigeria

Given the importance of electricity access to sustainable socio-economic development of a country, the government of Nigeria carried out comprehensive reforms in the electricity sector to promote efficiency in the sector. One of the objectives of the electricity sector reforms is to increase access to electricity in areas with low electricity access rate. Consequently, the Electric Power Sector Reform Act 2005 created the Rural Electrification Agency to set up and administer the Rural Electrification Fund. As noted in the Act, the purpose of the Fund is to promote rural electrification programs through public and private sector participation in order to achieve more equitable access to electricity across the various states and to ensure universal access to electricity in Nigeria within the shortest possible time.

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Most rural electrification projects are done by extending the existing grid to the unelectrified communities. However, studies have shown that in situations where there is a larger problem of availability of sufficient generation capacity such as in Nigeria, extending the existing grid only connects households to the grid but does not necessarily imply that electricity will be available for household or productive uses (Akpan, Essien and Isihak 2013a). Moreover, grid-extension is capital intensive which implies that it will only be cost-effective when there is adequate demand for electricity in the unelectrified communities, otherwise, it will lead to underutilization. Incidentally, as we highlighted earlier, the population densities of the states with low electricity access rate are also relatively low. In addition, substantial percentage of the population in these places lives in rural areas where energy is needed mainly to meet the basic needs of lighting and cooking. The high cost of extending the existing grid, coupled with the low population density and the low energy demand implies that other options for increasing electricity access in these areas, i.e. decentralized option, may be considered. Indeed, studies have shown that the use of decentralized option to increase electricity access in rural areas with sparse population settlement pattern and low electricity demand profiles is usually cost-effective (Bhattacharyya 2012a). The decentralized option will often use locally-available energy sources, usually solar, wind, or hydro, to generating electricity to meet the demand in the unelectrified community. These locally available energy sources may be complemented by a stand-alone diesel/gasoline generating set. The role of the rural electrification planner in this situation is to examine the cost-effective technology option, between grid-extension and decentralized electrification, for providing access to electricity in unelectrified communities.

Spatial Electricity Planning

Given the huge capital outlay required to construct transmission and distribution grids, and the fact the in many developing countries a large percentage of the population resides in rural where the electricity demand profiles may be low thereby leading to gross under-utilization of electricity, several studies have used electricity planning models to obtain the cost-effective option between grid-extension and off-grid electrification for increasing electricity access in rural areas (Sinha and Kandpal 1991), (Nouni, Mullick and Kandpal 2008), (Parshall, et al. 2009) (Deichmann, et al. 2011). These studies examine the cost of delivering a given amount of electricity from the point where the existing grid terminates to an unelectrified community by extending the existing grid and compares that the cost of using an off-grid option to deliver the same amount of electricity. The cost of grid-extension usually covers the capital cost of extending the medium and/or low-voltage transmission or distribution lines to the unelectrified communities having different levels of load, the cost of increasing the generation capacity to meet the additional load levels, the cost of constructing 33/11kV substations if required, the maintenance cost, and the potential transmission/distribution losses. The cost of the off-grid option usually include the cost of constructing the distribution lines and the cost of generating electricity using different locally available sources of energy, and the maintenance cost.

In more recent times, some studies (Parshall, et al. 2009), (Sanoh, et al. 2012) have incorporated geographic information system (GIS) models to this traditional electricity planning method. GIS enables the planner to visualize the spatial location of the unelectrified communities in reference to the location of the electricity grid and to calculate the spatial distance of the communities from the grid. This procedure eases the process of estimating the capital cost of extending the existing grid because the capital cost is directly proportional to the distance of unelectrified communities from the grid. Another study (Kemausuor, et al. 2014) applied the Network Planner Tool which is a free web-based program that integrates geospatial information with energy demand information at a disaggregated level to assist electricity sector planners in determining the least-cost technology option for increasing electricity access. The model was developed by the Sustainable Engineering Lab of the Earth Institute, Columbia University, United States.

Objective of the Study

This study seeks to examine the cost and the least-cost technology options for achieving universal electricity access in Nigeria, i.e. electricity access for all, within a specified investment timeline. This is done by applying the Network Planner Model at the state level and then aggregating the results to provide a whole picture for the entire country. It is important to note that the model may be applied at the national level but we preferred the state level so as to provide a picture of the situation at a disaggregated level.

Organization of the Study

This study is organized into five parts: Part I is the Introduction which sets the background for the study; Part II is an overview of the electricity sector in Nigeria; and Part III is a presentation of the Network Planner Tool which is used in the Study. In Part IV, we present the comprehensive results; while in Part V we provide our concluding remarks.

PART II: Electricity Sector in Nigeria

Legal Framework

The year 2005 is a pivot year in the organization of the electricity sector in Nigeria because of the Electric Power Sector Reform (EPSR) Act, 2005 which is the prevailing legal framework governing Nigeria’s electricity sector. Prior to 2005, the sector was managed by a centralized, vertically integrated, state-owned monopoly called National Electric Power Authority (NEPA) which was created in 1972. By the late 1990s and early 2000s, NEPA was characterized with large wage bills due to over-staffing, accumulated debt, low rate of recovery of bills, and corruption. The poor performance of the sector in terms of low generating capacity relative to high demand, and erratic nature of supply necessitated reforms. The reforms were envisaged as a vehicle to attract private sector investment in the generation segment, improve reliability of electricity services, and improve operational and managerial efficiency in the sector. Prior to the enactment of the EPSR Act 2005, there was the National Electric Power Policy in 2001 which expressed the readiness of government to engage in far reaching reforms to increase the operational efficiency of the sector and set the stage for the Act. The EPSR Act 2005 mandated the vertical unbundling the various segments of the electricity value chain; the horizontal unbundling of the facilities in the generation segment; the decentralization of the distribution activities; the privatization of the successor companies from the vertical and horizontal unbundling; the creation of an independent regulator (Nigerian Electricity Regulatory Commission) which is also mandated to promote private sector participation in the generating segment through independent power plants (IPPs); and the establishment of the Rural Electrification Agency. The present structure of the Nigerian electricity sector is shown in Fig. 1.

Figure 1: Organizational structure of the Nigerian electricity market

Source: Author’s compilation

Energy resources and utilization

Nigeria is highly endowed with energy resources. Its resources based comprises of solid, liquid, and gaseous fossil fuels as well as renewable energy although they are not equally distributed across the country.

Fossil Fuels

Nigeria’s crude oil is classified as “light” and “sweet” and is concentrated in the Niger Delta part of the country as well as the Bight of Bonny. At the end of 2011, Nigeria’s proved recoverable crude oil reserve was estimated to be 37.2 billion barrels making Nigeria to have the ninth largest [2] crude oil reserves in the world and the second in Africa (World Energy Council, 2013). Nigeria produced about 1.75 million barrels of oil per day in 2013 (based on figures from the organization of petroleum exporting countries, OPEC) and exports a greater part of the unrefined crude oil. Xx% of domestic demand for refined products is met through imports. In terms of end-use, Xx% of gasoline (premium motor spirit) and diesel is consumed in the transportation sector, xx% for self-generated electricity, and the remaining used as industrial inputs (ref).

As with crude oil, Nigeria’s natural gas is concentrated in the Niger Delta part of Nigeria and the Bight of Bonny. At the end of 2011, Nigeria’s proved recoverable gas reserves was estimated to be 5110 billion cubic meters (180.5 trillion cubic feet) making Nigeria to have the eight largest natural gas reserve in the world and largest in Africa (World Energy Council, 2013). Although Nigeria produces and exports much of its gas, a large proportion is being flared. In 2011, (World Bank, Flaring Estimates Produced by Satellite Observations, 2011) estimate that 14.6 billion cubic meters of natural gas was being flared in Nigeria. Domestic utilization of gas is mainly for power production and a small percentage is used for domestic cooking. Of the xxxMW of installed generation capacity in Nigeria, 6558MW is from gas-powered generating plants (UNECA, 2011).

Nigeria also has considerable amount of coal and tar sand which are barely utilized. The Renewable Energy Master Plan (REMP) 2012 estimated these to be 2.7 billion tons and 31 billion barrels of oil equivalent respectively (Energy Commission of Nigeria, 2012).

Renewable Energy

Nigeria is blessed with enormous renewable energy resources, mainly hydro, solar, wind, and biomass. The hydrography of Nigeria is made up of several rivers as shown in Fig xx and these rivers are themselves parent rivers to many other adjoining streams. This network of water bodies provides huge potential hydro-electric power. The REMP estimated that up to 11250MW and 3500MW of large and small hydro electricity power respectively can be obtained from Nigeria’s hydro resources. However, this potential has been grossly under-utilized because only 1900MW and 64.2 MW of large and small hydro power plants have been installed till date.

The southern fringes with the Atlantic Ocean experience up to 3500mm/year of rainfall occurring in over eight months while rainfall in the northern Sahelian region has rainfall sometimes last for only three months yielding 500mm/year. This implies that even though there is high potential for mini hydro electric schemes in the entire country, the most attractive regions for mini hydro power will be Southern region.

Figure 2: Major Rivers in Nigeria

Source: Author’s adaptation from blank map by RadosÅ‚aw Botev

Due to the diverse climatic zones ranging from the mangrove swamps in the South to the Sahel savanna in the North, together with very diverse physical geography, Nigeria’s solar and wind resources vary significantly across different parts of the country. According to the REMP, average solar irradiation is between 4 and 6.5 kWh/m²/day while average wind speed is 2-4m/s at 10m for mainland areas. Till date, only about 15MW of solar installations exist often as solar home services, public lighting, or traffic lights (refs). Geothermal energy resources exist in some part of the country (Kurowska & Schoeneich, 2010) identified warm springs in Ikogosi (Ondo State), Wikki (Bauchi State), Ruwan zafi (Gyakan hot spring, Adamawa State), and Akira (Awe local government area, Nassarawa State). However, a techno-economic feasibility and viability study on the potential for geothermal based electricity is yet to be conducted till date.

Biomass is perhaps the most used energy form in Nigeria. According to xxx, biomass use consist of xx% of final energy consumption in Nigeria. Xx% of rural areas rely on biomass to meet their cooking needs (expand and consolidate). Biomass accounts for 37% of aggregate energy demand and 95% of rural energy use (REMP, 2005). Biomass is being depleted in some of the northern states due to desert encroachment. Studies have shown that even people with electricity access still really on biomass for cooking (Bhattacharyya, 2012; IEA, 2010). The reliance on biomass for cooking seem to be more cultural than economical

Electricity Supply and Demand

Publicly distributed electricity generation in Nigeria is dominated by hydro and gas-fired plants with an installed capacity of 1900MW and 6558MW respectively (UNECA, 2011). However, as at the end of 2012, the combine operational capacity of all the generating facilities was below 4600MW (FGN, 2013). There are also cogeneration plants; completed generation projects under the National Integrated Power Projects (NIPPs)[3]; and stranded power from completed IPPs which are yet to be connected to the grid (Eberhard & Gratwick, 2012). As a fast-growing economy with a population of over 165 million (World Bank, 2013) and a rising number of middle-class, the demand for electricity in Nigeria far outpaces the effective capacity to supply. Daily data on peak generation and peak demand forecast from May through September, 2014 from the website of the Presidential Task Force on Power Reforms[4] showed that peak generation fluctuate between 3000MW and 4000MW while peak demand is over 12000MW yielding a supply gap of between 8000MW and 9000MW with resulting frequent sporadic outages in areas that are connected to the grid.

Moreover, Nigeria’s generation capacity per capita is relatively low when compared to other developing countries as shown in table xxx while the demand for electricity is constantly increasing. (what is the estimated electricity demand in Nigeria and the projected level of increase? )

The program requires data at different levels – household, community, and national. At the household level, data on household electricity demand profile are required. Since households belong to communities, the summation of the electricity demand of all households in a community forms the electricity demand – and also requires different types of data which may be grouped into five categories. We present below the data requirement and the modeling procedure of the Network Planner Tool.

Geospatial data

The model requires data on the spatial location (longitude and latitude) of the demand centers. The model also requires data on the coverage of the existing medium voltage in the area where demand centers are located.

[1] It is important to mention that in states that have very low population density, there is also much variation in the population densities across the local government areas (LGAs). For example, even though the population density of Taraba State is 54persons/km², within Taraba, the population density varies from 10 persons/km² in Gashaka LGA to 713 persons/km² in Jalingo LGA (2006 Census Report figures)

[2] Tenth, if oil sands are included in Canada’s oil reserves.

[3] Details of the structure and projects under the NIPP can be found at http://www.nipptransactions.com/

[4] http://www.nigeriapowerreform.org/