Exploring the Electricity Market in Nigeria through the Incorporation of Stranded Generation

Abstract

Electricity Markets are a prominent phenomenon in the developed world. Numerous countries across Europe, North America and Southeast Asia have a fully developed electricity market. In these countries, the value chain from power generation could be complex yet elegant in simplicity. All aspects of the value chain are commercial whereby there are commercial entities that generate and sell power while others could purchase power in bulk and sell to end users. The markets are dynamic despite regulations. Competition is in-built such that buyers and sellers have the robustness of choices within a given grid system. This work aims to explore the opportunities available in Nigeria for the introduction of the deregulated Electricity Markets within the ambits of the regulations of NERC (Nigerian Electricity Regulations Commission). The Nigerian public power supply infrastructure is classified into GENCOs (Generating companies), DISCOs (Distribution companies), and the TCN (Transmission companies). The TCN is limited in capacity and thus unable to effectively transmit the power generated by the GENCOs. The GENCOs are thus limited in output which limits the power allocated to the eleven DISCOs across the country. The market is thus limited in the product (electricity) and the DISCOs have insufficient power to sell to the final consumers. Independent Generating Plants have however been identified in this work, and recommendations based on incentives payments have been explored using the Electricity Market, to bring these Stranded Power Plants into play.