‘How Nigeria can fix power sector’
How can Nigeria’s endemic power problem be resolved? By increased investment in renewable energy, gas pipelines, power plants and transmission network, among others, says Green Elec President Marcel Hochet, in this interview with AKINOLA AJIBADE. He also speaks on the plans by five states to build solar-powered mini-grids.
How can Nigeria tackle the perennial problems of shortage of gas and poor power supply?
To address the problems, stakeholders including the Federal Government must try and invest in key infrastructure such as gas pipelines, equipment used in the distribution, generation and transmission of electricity, and other facilities.
Of note is the use of obsolete equipment such as transformers, feeders, sub-stations and others, that need to be replaced with new ones by power distribution companies (DisCos) to adequately supply power to the consumers. Since the operators are not having enough money to play around with, they need to bring in more investors into the industry to provide the fund needed to move the sector forward.
By so doing, stakeholders are helping in accelerating the growth of the industry, and also by reducing problems such as pipeline vandalism, poor generation and supply of power, which have resulted in low activities in the sector. When this happens, gas producers and suppliers and the power generation companies (GenCos) would be able to increase their output.
What is the problem facing the national grid?
The national grid is old, a development, which has resulted in the incessant collapse of the grid and inability of some parts of the country to get light. Successive administrations have spent a lot of money on the sector. Former Presidents Olusegun Obasanjo, Umaru Musa Yar’Adua and Goodluck Jonathan have launched many projects in areas such as power generation, distribution and transmission. Many of the projects have not been completed due to funds and lack of coordination among the stakeholders.
Where in particular do DisCos require investment?
The energy distribution firms need to upgrade their facilities by acquiring the latest technology in order to encourage growth. The firms must phase out analog meters, and in turn, provide their customers with pre-paid meters and smart meters. By scaling up investment in the area of meters, the firms would increase their earnings while at the same time blocking loopholes that were brought about by lack of enough meters in the sector.
The loopholes are evident in the use of pre-paid meters for criminal activities such as meter tampering and its subsequent manipulation of volume of energy consumed by customers. Smart meters would be of help in this regard. The reason is because with smart meters power firms would be able to monitor criminal activities on the meters and promptly block them.
What should power firms do to overcome their huge debt burdens?
The answer is simple. The power firms must meter their customers with a view to monitoring their consumption pattern and collecting bills. The problem in the sector is poor liquidity caused by inability of consumers to pay their bills. Once meters are issued to customers, they would pay their bills, and the revenues of the firms would increase as well.
What is your assessment of privatisation of the power sector?
The unbundling of the assets of the Power Holding Company of Nigeria (PHCN) and the subsequent sale of the assets to private investors in 2013 is a good achievement. However, the privatisation is yet to achieve the desired results as power situation gets worsened by the day. Virtually, the operators are not finding it easy. The DisCos are struggling to survive due to huge debts.
But the Federal Government has given DisCos a N700 billion lifeline.
Though the Federal Government has given the firms N700billion, mind you the money was not given to them free. The money was given to the firms in form of short-term loan to help them improve their activities. Power distribution firms are in a terrible financial situation. The firms are unable to pay for electricity they collected from the Nigerian Bulk Electricity Trading (NBET). On the other hand, NBET is also unable to pay the power generation companies, which are also unable to pay for the gas they bought to generate power. The DisCos should leverage the widening metering gap in the industry to make money and further improve their operation instead of trying to survive on the back of the N700 billion loans offered by the government.
What should be done to boost electricity supply in the country?
The industry requires a combination of different sources of power to grow. It is not enough to rely solely on the traditional methods of generating power such as gas and hydro. Though they are veritable energy sources as seen in countries across the world that use them to provide power, the use of renewable energy sources such as solar, wind, biomass and coal, is also important. A combination of off-grid and on-grid sources of generating power would help in improving power supply in Nigeria.
How many megawatts (Mw) of electricity does Nigeria need to achieve energy sufficiency?
Nigeria requires 40,000 Mw of power to meet the energy needs of its over 170 million population. The country cannot achieve much with 20,000 Mw of electricity in view of its growing population. France and other developed economies are combining various energy sources together to improve generation. France generates over 500,000 megawatts (Mw) of electricity for its 60 million populations. Also, South Africa generates 40,000 (Mw) for its 48 million population people. The country should use varied sources of generating electricity. Nigeria should take a cue from France and South Africa by using different sources to generate power. For instance, solar would help in boosting power generation in Nigeria in view of the county being located in the tropical region where there is high intensity of the sun – a raw material needed to provide solar energy.
How many megawatts of power have solar generated in Nigeria?
The country has so far generated 50 Mw of power. In the next five years, the country would provide 500 Mw of power. The world is evolving and new technology is coming up to aid the production of electricity through solar means. Already, new investments in solar energy are coming up in the country. Many international companies are interested in investing in solar energy in Nigeria and beyond.
Like I discussed with you, for the communities that have not gotten power, this is a tremendous change for them. This is not immediate, but a long-term, in the next 10 years or 20 years. It is possible to provide 500 or 1,000 Mw of solar power, once there is a right operating environment. We have other renewable energy sources in Nigeria, which can be used to generate power. Nigeria is blessed with natural and human resources. What remains is the ability to use those resources for the production of electricity.
You are at the vanguard of advocating use of solar energy in Nigeria. What is the level of involvement of states in the initiative?
The response of the state governments to provide power with solar energy is impressive. Five state governments drawn from three of the six geo-political zones have indicated interest in building solar-powered mini-grids for their communities that are not connected to the national grid with a view to provide solar power for them. The states that have partnered with Green Elec for provision of solar powered mini-grids include Kaduna, Imo, Delta, Rivers and Ogun States.
How many solar-powered mini-grids are needed in each of the communities?
Provision of mini-grids depends on the available resources on ground. However, we are going to build two mini-grids for 1000 homes. In a community, we have 1,000 homes and when divided into two, we are going to have 500 homes. This implies that 500 homes will be using one mini-grid. A home boasts of five people and that gives us a total of 5,000 people, when multiplying 1000 homes by 5 people.
Has your organisation carried out pilot studies in those states?
We have carried out a pilot study for the provision of street light in Owerri, Imo State and Port Harcourt in Rivers State. A pilot study on street light has taken place in Delta state, while discussions are ongoing for pilot study on the use of mini-grids. In Ogun State, we are providing solar power stations for the use of medical centres that are located in six Local Government Areas (LGAs) in the state. That of Kaduna took place few weeks ago. It is almost a year that we have been holding discussions and negotiating for the building of mini-grids in the state.
What is the reason behind the take-off of the project in Kaduna State?
The project is starting in Kaduna State for obvious reason. Kaduna is one of the key states in the Northern part of Nigeria, which is in dire need of electricity. We are leveraging Kaduna in order to reach other states in the North that also need power for survival. Findings have shown that Northern states are in need of electricity than the states in the South-South and South-West regions, and there is the need to make solar power available for them through the mini-grids. Also, climate is another reason for commencing the project in Kaduna or better put, the North. The intensity of the sun in the Northern parts of the country is very high and that is what is needed to generate solar power.
Is partnership evolving between your firm and Lagos State government soon?
For now, there is no partnership between Lagos and Green Elec on the issue of providing solar power for the state, regarded as the commercial nerve centre of Nigeria.
Why is it so?
The state government is not convinced that solar energy is as effective as people are made to believe. Whenever you meet any of the officials of the government, and you are discussing the issue of using solar energy system, the first question they ask is: Does the solar power system you are bringing have a lasting value? They are asking this question because they have experimented solar power system in the past and they discovered that its batteries do not last. The batteries usually run down six months after installing them. It would take some time before the state government buys into the idea of using solar power fully. However, we have made them to understand that the street lights that we provide do last 10 years.
How are you leveraging Lagos for growth in future?
We want to leverage the commercial prospects of Lagos for growth. We would like to provide solar power for banks, hospitals, schools, oil and gas facilities, factories, and other commercial entities.
What led to the formation of Green Elec?
The desire to explore opportunities in solar power, maximise its potential for the benefit of people who never believed that they can power their homes and offices with solar power and generate electricity for people living in urban and rural areas, especially those not connected to the national grid, informed my decision to set up a solar energy firm known as Green Elec.
When did the firm start operation?
The company was registered in Nigeria and France in July 2015. Prior to this period, I had worked with a French power company, Schneider Electric, for two decades. I came to Nigeria to set up a subsidiary of Schneider Electric in 2004 through which the firm was able to work with the Federal Ministry of Power and other stakeholders. Altogether, I have spent 12 years in Nigeria, a development, which enables me to know the energy gap in the country and what can be done to bridge the gap.
Who are your target consumers in Nigeria?
Basically, we are targeting two markets in the country. The first is the rural market, through which we would provide solar powered mini-grids for communities that are not connected to the national grid. The second market is urban centres, where we would be providing solar energy for banks, hospitals, schools, factories, oil and gas facilities, and other commercially-driven institutions. There are bigger companies like Nestle Nigeria Plc, Nigerian Breweries and others that would need solar energy to power some of their operations. These companies are powered by generators due to irregular power supply in the country. This has eaten deep into their cost of operation and we want to help them reduce the cost of energy by advising them to use solar energy during daytime. When the sun declines, they switch to the national grid by using electricity that is provided by power firms. When there is power failure, they are expected to use generators as the last resort.
Why did you set up the firm in Nigeria?
Nigeria is one of the countries with serious energy needs. This is evident in the inability of larger percentage of the 170million population to get regular power supply.