Hydropower has been found to be Nigeria’s cheapest source of electricity as it charged N3.67 per kilowatt (kW) hour in electricity 2023 electricity invoices.
This is according to a recent report from Electricity Market and Rates Consultants (EMRC) Limited.
The report stated that in Nigeria today, the cheapest sources of electricity are from hydropower plants.
This is because, in electricity market invoices for 2023, hydropower plants charged an energy tariff of 3.67N/kWh, compared to the industry average of 17.69 N/kWh from all generation plants.
According to the report, the development of grids within states may pose the risk that states lose out on receiving cheaper electricity from hydropower plants.
The EMRC report highlighted the fact that hydropower is a significant electricity source in Nigeria with three on-grid power plants contributing to the installed capacity.
EMRC noted that the fourth quarter of 2022 saw an output of 1,316 megawatts (MW), influenced by seasonal changes and operational factors.
Meanwhile, in its Q1 2023 Electricity report, the Nigerian Electricity Regulatory Commission (NERC) stated that during the highlighted period, hydropower generation in the country is hampered during the dry season.
The NERC report stated further that the Shiroro hydropower plant reported outages in Q1/2023 due to water management to maintain its reservoir through the dry season.
The NERC report also noted that in Q1/2023;
- The Dadin Kowa hydro plant had a capacity of 43.18-gigawatt hours, which was lower than the 80.79 GWh recorded in Q4/2022.
- The Jebba hydro plant boasted a capacity of 766.67 GWh, slightly less than the 814.37 GWh reported in Q4/2022.
- At the Kainji hydro plant, the capacity stood at 989.96 GWh, a decrease from the 1,043.26 GWh documented in Q4/2022.
- Conversely, the Shiroro plant exhibited a capacity of 570.95 GWh, significantly down from the 974.05 GWh registered in Q4/2022.
Recommendations
According to the EMRC report, the presence of a substantially poor population in a state poses a considerable risk to ventures in a state’s electricity market as it suggests that the potential customer base capable of paying for electricity services is limited.
The report stated further that electricity providers in states with a high number of poor residents may encounter high losses due to unpaid bills and poor revenue generation from electricity sales.
The report recommends that policymakers and stakeholders in the Nigerian Electricity Supply Industry (NESI) consider each state’s socioeconomic characteristics when developing strategies and regulations for market involvement.
According to the EMRC report, understanding the incidence of poverty in each location would aid in the following:
- The development of tailored solutions to solve cost concerns
- Enhancing energy access for the disadvantaged
- Developing long-term models for power distribution and consumption.
Thanks for the report