The Nigerian Electricity Regulatory Commission has given the green light for the acquisition of 450 megawatts of electricity from Zungeru Hydro Electricity Generation Company Limited.
The move, stemming from the Commission’s Order No. NERC/2024/044 regarding ‘Transmission System Dispatch Operation, Cross-Border Supply, and Related Matters’, aims to enhance grid stability and prevent the shutdown of the newly completed Zungeru hydropower plant while it seeks off-takers.
In a directive signed by its Vice Chairman, Musiliu Oseni, the NERC acknowledged that the national grid’s sub-optimal dispatch was partly due to low generation, hampering electricity distribution companies’ ability to meet committed service levels to end-use customers.
The commission noted that the Zungeru Hydro Electricity Generation Company successfully completed its initial capacity testing on May 15, demonstrating an average generation capacity of 600MW.
As the Zungeru power company currently lacks contracts with off-takers, it had planned to shut down the plant after the capacity test until contractual arrangements were finalized.
To prevent this, the NERC decided to keep the power plant connected to the grid to enhance service delivery to electricity consumers in Nigeria.
The commission granted a special dispensation allowing the Independent System Operator of the Transmission Company of Nigeria to oversee the administration of settlement for power from Zungeru for an initial 105-day period starting from May 16.
“Whereas Zungeru Hydro Electricity Generation Company currently has no contract and had indicated its decision to shut down the plant after the capacity test pending the finalisation of contractual arrangements with her prospective off-takers. The Commission, however, considers it necessary to ensure that the power plant remains on the grid and continues to inject power to improve service delivery to electricity consumers in Nigeria.
“Given the overriding public interest, the Commission has granted a special dispensation that permits the Independent System Operator of the Transmission Company of Nigeria to assume responsibility for the administration of settlement for power wheeled from ZHEGC for an initial period of 105 days commencing from 0.00Hrs of the 16th May 2024,” the NERC directive read partly.
To avoid the continual practice of limiting Distribution Companies’ load offtake as a corrective measure for system imbalances, the commission “directs the TCN-ISO to enter into an interim energy sales agreement with ZHEGC for up to 450MW of energy and capacity to address the imbalances currently experienced between generation and offtake, thereby further strengthening grid management. The agreement shall be on a best-effort basis.
“The commencement date for the interim agreement is 16 of May 2024 and shall be in effect till the 31 of August 2024 in the first instance”.
On the administration of the agreement, the directive said, “For every settlement cycle following the commencement of the agreement, ZHEGC shall invoice the Market Operator for capacity and energy based on the metered energy generated as contained in the Final Settlement Statement. The MO shall issue two settlement statements to the DisCos; one for the settlement of the transmission and market administration services. The second invoice shall reflect the energy from ZHEGC allocated to the DisCos on a pro-rata basis using the total energy offtake by DisCos for the month.
“The settlement for the energy supplied from ZHEGC shall be prioritised from the market revenue administered by Nigeria Electricity Supply Industry Stabilisation Securities Limited.
“NESI-SSL shall pay the Market Operator the full value of ZHEGC’s energy invoiced to the DisCos for onward payment to ZHEGC in line with the terms of the interim energy sales agreement.”
The PUNCH reports that the Zungeru power plant is a major infrastructure project with the capacity to generate 700MW, making it the second-largest hydroelectric plant in Nigeria, behind the Kainji Dam.
Located in the Kaduna River, near the town of Zungeru in Niger State, the plant is to generate 2.64 billion kilowatt-hours of electricity annually, meeting nearly 10 per cent of Nigeria’s domestic energy needs.
On May 2, the Minister of Power, Adebayo Adelabu, disclosed that power generation rose to 4,800MW following the completion of the Zungeru power plant.
“Let me mention that we have started seeing improvements in our generation output. In the past few days, the output has increased from 4,200MW to 4,800MW. What we experienced in February and some parts of March is not desirable when we had very low generation.
“What led to the increase in the past few days was the commencement of the operation of Zungeru hydroelectric power plant that just added 625MW to the national grid,” Adelabu had said.
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