ACHIEVING UNINTERRUPTED POWER SUPPLY, THE ROLE OF COAL

IN THE NATIONAL ENERGY MIX. REGULATORY AND POLICY

PERSPECTIVE.

by Engr. A. Yusuf, PhD

Nigeria, with a population of 170 million people (NPC, 2006) is certainly

the most populous black nation on earth. It is a country rich in energy
resources; the worlds 13th largest producer of crude oil, the 5th largest
exporter of petroleum products and 650 million tonnes of proven reserve
of coal. Ironically, its per capital electricity consumption is among the
lowest in Africa with electricity supply characterized by frequent power
failures, poor power quality and load shedding.

This has increased the cost of production for businesses and caused many
to close down. Industrial machines are constantly damaged due to poor
voltage quality and many businesses have resorted to the acquisition of
standby generators which has further increased their operating cost thus
slowing down the growth of the economy.

Nigeria's electric power generating and grid distribution capability as at

mid-August 2015 stands at 7, 300 megawatts (MW) consisting of 17%
hydro and 83% gas fired thermal power plants. Due to the combine effect
of inadequate power transmission infrastructure and gas supply
constraints, only 4, 735 MW is actually generated. Total energy fed to the
grid stands at 98GWh (about 0.6kWh per capita) which is far short of what
is required to support the current population and to keep the economy
growing.

Based on a detailed demand projection study (ECN, 2005) conducted by

the Energy Commission of Nigeria in 2005, current estimated demand
stands at 16, 800 MW. Power generation portfolio consists of twenty two
(22) gas fired plants and three (3) hydropower generating facilities. There
is currently no coal fired power plant in spite of the vast coal reserve
present in the country. The questions posed by this scenario are; why is
coal, which can be found in such abundance, not being exploited by
Nigeria for power generation? What incentives need to be put in place in
order to establish the use of coal as fuel for power generation in
particular, and in general, create a market for the trading of coal locally
and internationally? The aim of this paper is to show that coal has a
potential of being a major player in the Nigerian energy mix.

Electricity Installed capacity of countries with population above

50 million

GDP
Install (PPP)
ed Int$
Populati
capaci per
on
ty capit
Country (million) (GW) a

1146. 1320
China 1357.0 0 6
1039. 5463
United States 321.9 0 0
3661
Japan 127.3 287.0 9
2299
Russia 143.5 223.1 0
India 1210.0 208.1 5701
4640
Germany 80.6 153.2 1
3932
France 65.8 124.3 8
Italy 60.7 122.3 3546
 3
1589
Brazil 200.4 113.7 3
4023
United Kingdom 64.6 93.5 3
1730
Iran 80.7 62.1 3
1731
Mexico 122.3 62.0 5
1978
Turkey 76.7 49.5 8
1304
South Africa 50.6 44.3 9
1051
Indonesia 249.9 39.9 7
1573
Thailand 69.5 32.6 5
1053
Egypt 89.1 26.9 3
Vietnam 89.7 26.3 5629
Pakistan 193.2 22.3 4811
Philippines 98.4 16.4 6969
Bangladesh 156.6 6.7 3123
Nigeria 173.6 5.9 5911
Ethiopia 94.1 2.1 1500
Dem Rep. of Congo 67.8 0.6 746

The above table show that among the comity of nations with population
larger than 50 million, Nigeria installed capacity trails behind in the group
of Ethiopia and the Congo (DRC).
If we must move away from such humiliating bottom-of-the- table
position, we must take radical steps to change of power supply fortune.
Economic development depend squarely on adequacy of energy supply .

The correlation between energy supply and economic growth can be seen
from a look at the G8 nations which are the foremost industrialized
nations. Table 2 shows that nearly all the G8 member nations have
installed generation capacity of 100 000 MW. Similarly a look at the G20
member nations lead to the same conclusion

Power demand of industrial sector required that a robust energy mix that
guarantee continuous supply of baseload to ensure high reliability and
voltage quality. In general this possible from fossil (coal and gas) , hydro
and nuclear power technology. While nuclear can provide the highest level
of reliability at the cheapest cost per MWh, it require long construction
period given the complex international regulatory and security protocols
that must be followed. Hydro power depend on the available exploitable
potential . The report of a study of power generation resource potentials
by the Energy Commission of Nigeria indicate a total of 8641 MW of large
hydro capacity. This is in addition to numerous sites with economically
feasible small hydro power potentials.

Table 1. Hydro resource potential

Location Capacity
(MW)

Ikom 730
Lokoja 1050
Zungeru 450
Mambilla 3960
Makurdi 1062
 Onitsha 1050
Gurara 300
Dadinkowa 39
Total 8641

Coal

Although the Country has large petroleum and gas resources which are
being developed by the private sector for export, strategic wisdom
dictates that we should not depend solely upon these resources for power
generation within the country. Rather we must revitalize the coal mining
industry and expand power generation by attracting foreign companies to
develop these large coal resources and construct coal-fired generating
plants that will connect to the country's electrical distribution grid.

Although there is intense international campaign to discourage coal

based power and promote renewable energy, Nigeria must as matter of
survival strategy, explore the full potential of her coal resources to
provide the needed energy for industrial growth. The exploitation of coal
for electricity generation (and complementary usage in the production of
coal briquettes for domestic and industrial heating) will bring a number of
benefits including:

Increased and more reliable electricity supply, Lower cost electrical

energy, Expanded industrialization of the economy, Increased
employment and human resources development, Increased capacity
utilization of existing industries, Increased national income through taxes

A look at the G8 and the G20 countries show that all G8 members and all
G20 nations (except Saudi Arabia) have substantial amount of coal in
their energy mix. Table 2 and 3 below show the prominent position of coal
in their energy supply mix .

Coal in G8 industrialized countries

Populati total Coal %

on Install Install
 ed
Capaci
ty ed
(million) (GW) (GW) coal

United 1039.0 382.1

States 321.9 0 2 37%
Germany 80.6 153.20 52.89 35%
United
Kingdom 64.6 93.45 29.75 32%
Russia 143.5 223.10 37.94 17%
Japan 127.3 287.00 38.30 13%
Italy 60.7 122.30 9.29 8%
Canada 34.5 136.90 10.07 7%
124.30
France 65.8 0 8.57 7%
Nigeria 173.6 5.9 0 0

Coal in G20 Countries

Installe
Populatio d Coal
n Capacit Installe %
(million) y (MW) d (MW) coal

South Africa 50.6 44260 40361 91%

 147812
India 1210.0 208100 .5 71%
Australia 24.4 59130 30447 51%
Indonesia 249.9 39900 19555 49%
103900 382121
United States 321.9 0 .3 37%
52885.
Germany 80.6 153200 7 35%
United
Kingdom 64.6 93450 29750 32%
Repic of Korea 48.2 84660 23965 28%
Turkey 76.7 49520 11459 23%
Russia 143.5 223100 37942 17%
114600
China 1357.0 0 155506 14%
Japan 127.3 287000 38302 13%
Italy 60.7 122300 9286 8%
Mexico 122.3 62000 4700 8%
Canada 34.5 136900 10066 7%
France 65.8 124300 8572 7%
Brazil 200.4 113700 3205 3%
Argentina 40.1 32870 650 2%
Saudi Arabia 27.1 49050 0 0%
Nigeria 173.6 5.9 0 0%

Placing Renewable energy in its proper context.

The appropriate energy mix to pursue is that which is suitable for our
national development plan. Nigeria currently not just electricity but large
capacity of base load supply that can power industrial development o
create job and boost the economy.

Most of the industrialized nations already achieved this kind of power

supply from fossil fuels(coal and gas) and nuclear sources. They are
currently garnishing their energy mix with renewable energy .

It is necessary to view the current rhetoric on renewable energy, global

warming, clean energy options being preached by energy rich nations to
energy poor nations in the light of survival of nations. To the developed
nations they have the caked baked already and the renewables are the
icing on the cake. The energy poor nations is starving and have no cake
yet so must be prepared to muster all the resources available to them to
be able to lift their economy from being the market for products of
industrialized nation to become producers nations. Renewable energy will
not serve this purpose. For instance , at efficiency of 19%, if 2 ha (two
football pitches) of land space is covered with 1 MWp of solar panels
would give less than 1.14MWh of energy per day of 6 hour sunshine.

POTENTIAL POWER GENERATION COAL-FIRED POWER PLANTS

Coal is found in the following Nigerian states: Enugu, Imo, Kogi,

Delta, Plateau, Anambra, Abia, Benue, Edo, Bauchi, Adamawa,
Gombe, Cross River and Ebonyi.
According to a recent report, the Kogi District and the Benue (Orupka-
Ezimo) District can each support a coal-fired power plant with ultimate
capacity of approximately 3,500 MW. These plants could be built in
phases to match the production buildup of the associated coal mining
operations. Already, Messrs Zumma Energy ltd is already developing a
coal power project at Itobe in Kogi. With proximity to the river Niger and
Benue, sufficient water would be available to operate a plant with cooling
towers..

Based on their coal resource potential these Districts should ultimately be

able to support electrical generating capacity of approximately 7,000 MW.
There is the possibility that a third power plant of 2,500 to 3,500 MW
might be supported by Enugu's resources. Similar potential is available in
Gombe-Bauchi axis.
Challenges facing coal power

Coal mining industry is currently not developed due to absence of coal

demand Banks require demand profile and supply contract to guarantee
regular income from mining activities. On the other hand, coal power
plant is not developed due to absence of local fuel supply market and lack
of suitable transport infrastructure. Bank require fuel supply agreement to
ensure that the power plant will take off as planned. Existing coal mine
license holders have sited the above as the reason for their non-
performance. This is a chicken or egg which came first scenario.

While transportation of coal to distant power plant site may be avoided by

establishing the plant close to the mines, the transmission line to
evacuate the power may be a challenge. The transmission system must
be opened for private sector investment with appropriate mechanism for
recovering the investment so made from tariff.

To solve the Chicken - egg debacle that has bedeviled coal power
development there is need to revoke existing non-performing mining
lease. Conduct simultaneous action of coal mine leases, power
generation capacity and transmission linkages to coal sites. The existing
regulation on generation capacity procurement is adequate for the
purpose. The Request for Proposal may specify the technology to be used
to mitigate all environment.

Captive power to contribute to the grid

Opening up the market for captive power licence holders to sell excess
power to the grid at negotiated tariff and installation of appropriate
netmetering system. This will unleash the contribution of a large volume
of stranded capacity form various industrial consumers who currently
operate below their plant capacities and have their generator running at
suboptimal capacities.

A survey conducted by the Commission in 2014 and 2015 showed that

over 1000MW can be unleashed to the grid given appropriate incentives.
This will require the declaration of eligibility as specified in the EPSR act
2005.

Embedded generation
With appropriate regulatory incentives embedded generator may produce
power for willing buyers at a negotiated tariff to be approve by NERC and
selling a specific share of the energy to the local Distribution grid at
regulated bulk energy prices.

CONCLUSION

Nigeria has abundant reserve of good quality sub-bituminous coal suitable

for power generation. The potential market for coal is huge and attractive
policy and fiscal incentives are in place to attract investors. The deficit in
transport infrastructure has hindered exploration for export and uses
outside the coal mining areas. Recent reform in the power sector has
provided favourable condition for locating coal plants near the mining
sites as tariff have become cost reflective. It is hoped that the recent
reforms in the Nigerian solid mineral subsector will begin to propel
investment in coal production and utilization for a richer energy supply
mix and a stronger impact on the economy

Bibliography

Behre, D. (2006). Feasibility of Nigerian Coal Resources Development

CMM Global Overview, 2006.

ECN. (2008). Assessment of Energy Options and Strategies for Nigeria:

Energy. Abuja.

Ministry of Mines & Steel. (2010). Coal Exploration and power generating
opportunities in Nigeria. Abuja: MSMD.

Ogunsola, O. (1990). History of Energy Sources and Their Utilization in

Nigeria, Energy. Energy Sources , vol 12 issue 2.

Oji J.O, N. I. (2012). Coal Power Utilization as an Energy Mix Option for
Nigeria: A Review. American Academic & Scholarly Research Journal, 2.
Sambo, A. (2009). Prospects of Coal for Power Generation in Nigeria.
International Workshop on Promotion of Coal for Power Generation,. Held
at the Nike Lake Resort Hotel, Enugu on 27th-28th April, 2009.