The economic cost of unreliable grid power in Nigeria

Abstract

The ever-increasing demand for electrical power in Nigeria, coupled with a limited supply, have restricted the nation's socioeconomic development. The country’s policymakers, aware of this, have formulated and enacted energy development policies in recent years targeted at diversifying the current electricity mix and increasing electrification to rural settlements.Despite these efforts, electricity infrastructure projects have been sidelined, power outages are common and grid unreliability is costing industry significant amounts to secure the electricity supply necessary for business sustainability and profitability.This paper presents the current state of the electricity industry in Nigeria and argues the case for integration of renewable energy technologies. A case study is presented based on electricity cost information collected from a survey of Nigerian industry. Three future electricity supply scenarios are presented: a do-nothing or business-as-usual scenario; a scenario of increased reliance on grid power due to improvements in reliability; and a scenario involving shifting some of the current diesel on-site generation to solar photovoltaics. It is shown that increasing the utilization of renewable sources could significantly reduce the costs and CO2 emissions incurred due to the current reliance on self-generation, primarily using diesel generators, amidst grid unreliability.