DEC 4th, 2019: Speaking at high-level meetings with Nigeria’s top energy decision-makers in Lagos and at the Embassy of Finland in Abuja last week, the energy system integrator Wärtsilä presented an industrial strategy that can bring about a more sustainable and cost-effective power sector for the country.
The issues plaguing the Nigerian power sector are well known. The optimal solution to fix it, less so. Although Nigeria still lags behind peer economies such as Brazil or India in providing widespread and reliable electrification to the people, the country has the basic assets needed to catch up, starting with abundant natural gas and solar resources that have yet to be tapped.
To make the most of its energy resources profile, experts at Wärtsilä believe that flexible power technology will be its key ally, and smart policy its key enablement strategy. With regards to policy, Nigeria has already made crucial progress in the past few years. It is an all-important step forward, considering that no country in the world as ever built up a reliable power infrastructure without the pivotal role played by policymakers to provide the robust legal framework needed to attract and secure investor confidence.
Modelling the country’s optimal energy strategy
The centre piece of the event was Wärtsilä’s Nigeria 2030 Power System Modelling Study presentation. The study provides powerful insights into the behaviour of power systems and allows to find the lowest total cost solution for the future while considering system constraints. It relies on the powerful Plexos market simulation software, which has been used by Wärtsilä to support energy strategy development in more than 70 countries globally.
Of all the possible cases processed by the software, the study showed that annual generation costs are lowest when the gas capacity consists of 60% baseload and 40% flexible, taking into account the significant planned renewable energy capacities. This optimal business case would save around 60 million USD annually.
In addition, let us keep in mind that the model developed considers an ideal power system with no distribution restrictions. However, the reality today is that the power system faces several challenges, including blackouts, fuel shortages, financing, maintenance, demanding operating conditions and reduced cooling water availability.
These challenges, combined with the demand fluctuations and planned renewable energy additions, comfort the fact that flexible engine technology offers a superior solution over gas turbine technology in meeting Nigeria’s future power needs. Indeed, gas engines will be needed to complement the increasing renewable capacity by offering flexible balancing power generation.
This strategy is more sustainable going forward, but it is also more cost-effective. Detailed cost analysis has shown that renewables combined with flexible engine-based power plants are more economical than traditional baseload energy solutions, with a total cost of electricity up to 24% lower. Inflexibility has a cost by limiting how much cheap renewable energy can be economically integrated to the system.
Closing the argument, Wale Yusuff, Managing Director of Wärtsilä Nigeria, pointed that: “Renewables provide cheap electricity, and their output should be maximized whenever possible. However, they are inherently intermittent. At the time, the demand of electricity also changes with time. As a result, by developing a balanced thermal portfolio with baseload gas and flexible gas, Nigeria can achieve a well-functioning power system with a high share of renewables.”