I

n distributed or embedded generation (DG) schemes, effectiveness,the transmission and distribution sectors will
power plants sized typically &om a few kilowatts up to operate as monopoly businesses in their franchise areas,
lOMW are sited at or near the loads, operating in a with strong oversight from the regulator.
stand-alone mode or connected to a grid at the This plan should help transform the electricity supply
distribution or sub-transmission level. In some cases, indusw h m its current state of an inefficient unprofitable
DG harnesses unconventional energy resources. entity with a cumbersome bureaucratic structure to that of
In developingcountries DG is ideally suited for small remote an efficient, innovative and profitable industry comprising
loads located far from the grid. individual companies operating under the discipline of a
DG technologies and energy resources include: free market economy
W Wmdelectric conversion systems Nigeria's national assembly recently passed an Electricity
W Mini and micm hydro plant Reform Bill (yet to he signed by the president) that will give
W Solar PV and solar thermalelectric conversion legal backing to this radical restructuring. The Bureau for
W Geothermal Public Enterprise has since embarked on preparatory work
W Biomass for the unbundling of NEPA.
W Small co-generation plants powered by natural gas and
supplying electrical and thermal energies. DISTRIBUTED GENERATION IN NIGERIA
W Electro-chemical energy systems (eg fuel cells and One of the factors in favour of distributed generation,
hydrogen production) especially in developingeconomies like Nigeria, is the need
W Electrical storage system for secm electricity supplies for large industrial customers.
W Thermionics and thermoelectrics NEPA has not offered reliable supplies, so distributed
W Tidal waves and ocean flows generation should bring the followingbenefits to industrial
Since DG is located on or near the location where the customers, complementing the activities of NEPAs
energy is used, it usually operates at the low voltage electricity distribution service:

DISTRIBUTED GENERATION IN

EN
(hetween llkV and 132kV)level of the bulk electric power Reliable electricity supply
distribution system. Since they are on site, they have greaterPower of the high quality required by industrial
local control and can be used more efficiently applications that are dependent upon sensitiveelectronic
instruments and controls.
DEREGULATION IN NIGERIA Efficiencygains for on-siteapplications,which minimise
Nigeria's low electricity consumption (around 85kWh per line losses and voltage sag.
capita), provided mainly by National Nigerian Electric Et A stand-alone power supply in m a s where transmission
Power Authority Association's (NEPA's) unreliable system and ktribution infmstruchm does not exist or is grossly
and infraslructure,poses a challenge to the government. inadequate.
NEPA's poor performance is one reason why the Provision of backup and other ancillary services in times
government recently decided to deregulate the industry It of stress on the network.
decided to break the company up into three sectors ~
Reduced congestion through peak load shaving.
generation, transmission and distribution/supply - and Distributed or embedded generation in Nigeria is
privatise its constituent parts, allowing the new companies generally a point-to-point radial connection from the
to operate under competitive market principles as far as generating machine straight on to the load centre. NEPA's
practicable. Figure 2 shows the proposed structure electricity distribution operation to consumers covers a
In the new 'unbundled' structure,an industry regulator wider geographical area involving both radial and mesh
will he set up to oversee the activities of industry networks used to supply electricity to several customers on
participants to ensure fairness in all their operations and the low voltage end of bulk electricity delivery
protect consumers' interests. To ensure efficiency and Over the years small-scale on-site distributed or
 Nigeria

ON-SITE POWER HAS AN IMPORTANT

ROLE TO PLAY IN NIGERIA AND CAN HELP
SUPPORT THE GRID. BUT THE NEW
INDUSTRY MUST BE STRUCTURED TO
GIVE DUE WEIGHT TO DISTRIBUTED
GENERATION, AS ABIMBOLA ODUBIYI
AND INNOCENT E DAWIDSON EXPLAIN

embedded generators have been established alongside

NEPA's 11-33kV distribution networks. These small
generators (mostly using diesel or furnace oil) supply power
to industries and in some cases communities attached to
them, through self-built private distribution networks.
It is unfortunate that NEPA has not taken advantage of
the opportunities provided by DG to alleviate the problem
of power shortages, especially in the rural electrification
programme. Overemphasis on costly large centralised
electricity supply facilities is depriving some customers of
the benefits that DG can provide.
Early in the deregulation process, the following issues
regarding DG and its impact on operations of local
distribution network operators @NOS) need to be addressed
Wfl DNOs cmted h m NEPA have monopoly status as the
sole provider of electricity iu their franchise region,
especially in rural areas; and are they required to oversee
the operations of DG connected to their networks, as it
affects wider network system integrity? The main concern
will be how to stop DNOs abusing their monopoly power.
DG owners are also concerned a b u t the reliability of the
DNO networks after deregulation and privatisation, taking
their cue from the current performance of NEPA's
distribution sector. High reliability is vital. Furthermore,
NEPA's successor companies wiU face financial,
geographical and environmental constraints on quick
capacity expansion of generation, transmission and
distribution infrastructure in the country
It is unclear whether the policy of deregulation of the
electricity industry addresses the impact that DG connected
to the local distribution network has on network reliability
In addition, DG may provide services to support local DNOs
and suitable remuneration for these services must be
addressed.
In the short to medium term, demand for power in
Nigeria will continue to outstrip supply It requires
investment in distributed generation across the country W Combined heat and power (CHP)- mostly @-fired plants.
Distributed plants should be encouraged, set up close to It offers fuel operational efficienciesof 70%.
consumers by private investors and DNOs. Distributed W Advanced industrial turbines and microturbines with
generationshould also be considered as an addition to other typical efficiencies of 2140% (without using external
co-operative solutions, such as network upgrades, line exhaust heat). The exhaust heat can be used in a
uprating and integration of protection, metering, control, combined cycle to fire a small steam turbine, thereby
and voltage support. It canbe used to bring electricity to the improvingefficiency Their maintenance costs are among
masses as well as industrial concerns in rural areas. the lowest of all generating technologies.They are most
In the context of Nigeria, when there are abundant fossil suitable for light industrial and commercial
resources and year round sunshine, the best DG is: establishments, plus rural domestic use. +

IEE POWER ENGINEER 1 OCIOBEWNMIEMBER2W3 19

 Solar power - using snn-trackingmirrors to reflect and
concentrate sunlight unto a receiver where the heat is
used to drive an engine or electric generator. At a cost of
US$650 for a 55W system, this power source is not
affordable for most rural households in Nigeria.
However, it is suitable for remote rural energy supply
applications, powering telecommunication base stations
and outpost rural emergency services.
ECONOMIC AND TECHNICAL EVALUATION
In assessing a customer's energy needs, and to determine
the suitability of investment in stand-alone or grid-
connected systems, regulatory, economic and technical
issues must he considered. An approach for assessing
investment in distributed generation is shown in Figure 3.
Since DG development will not cease after deregulation,
owners of DG will need the professional services of
engineers, economists and others to negotiate with DNOs,
and to design and implement solutions. They must:
E Quantify the costs and benefits that energy produced by
DG contributes to goods and services or the quality of life
in the DNO area. Costs and benefits include ecology;
opporttmit4:risk and depletion.
E Identify a method for quantifying cost and benefits that
is more appropriate than the current distribution tariff
methodolog)!
W Identify methods for resource planning and modelling
that are responsive to real-time cost and new technology
and are compatiblewith distributed, disparate resources.
The method should be able to evolve.
E Define an operational methodology that supports and
encouragesparticipation in a deregulatedenergy market.
The method must be cost effective and developers must
define the information required.
CHALLENGES FOR DISTRIBUTED GENERATION
As countries deregulateandrestruchm,they areconfronted
with the challengesof setting up regulatory and contmctd
arrangements that promote the interest of distributed
generation within the geographical bonndaries of the DNO.
In the pmcess of deregulation of the electricity industrj:
the probable challenges confronting government officials
and their advisers fall into threebroad categories.
E Thelegalandregnlatoryfmmeworkmust offer incentives
for current and future distributed generation to
participate inelectricitytradingafterderegulation,whilst
accommodating the wider responsibilities and interests
of the DNO. '&'open access' regime and the connection
agreement hy whichthe distributed generationplant bas
access to the DNOs network must be well defined.
W In regulating network access, DG modes of operation
should be identified,along with appropriate engineering
and commercialboundaries. This will q u i r e supporting
infrastructure such as protecting relays, metering and
data collection. Payment for services provided by DG
operators to DNOs to support the system must be
provided, as well as for services provided by DNOs.
The financial environment must offer proper financial
incentives whereby the DG operator and DNO can offer
mutual assistance. An appropriate commercial forum
shouldbeestablishedinwhichDGownersandDNOscan
meet to discuss industry matters affecting their
operations.
To overcome these challenges and provide an 'enabling'
environment for DG after deregulation, f m t a defmition is
required of what constitutes distributed generation. Such a
defmition, with clear explanation of DG operators' technical
and commercial bonndaries within the DNOs geographical
area, must be included in the overall electricity reform bill
that will give legal backing to the restructuring and
nnbundlingof the electricity industry For example, a DG
owner may be mtricted to a point-topoint radial connection
to serve the demand requirement of a properly recognised
load (eg an industrial plant). In consented cases, the
agreement allows for any excess energy produced to be split
or passed on to the DNO network at a mutually agreed
quality and time. Standadisation may be considered in this
regard.
Appropriate legal and regulatory codes must he set up.
These codes will be the basis for legal contractual
arrangements that govern the interactions between a DG
operator and a DNO. The codes must govern design codes
such as connection standard,metering and payment, as well
as ancillary services such as voltage support, backup reserve
and load management. They must also cover island
operation and dispute resolution between the parties. When
a DG operator connects to DNO assets the charging
principles and mechauism should he clearly defmed. This
should be reviewed annually to make it relevant to changes
taking place in the industry and wider society
The regulatory body must be empowered to monitor the
implementation and operation of these codes and serve as
arbitrator in times of dispute. For smooth operation,
complex or deliberate loopholes in the codes should be
avoided.
Finally, information should be openly available on
network designs and expansion, to facilitate true
competition in the supply of power to industrial customers.
This will ensure a level playing field between distributed
generators and DNOs.
As Nigeria proceeds with the deregulation of the
electricity industry and privatisation of NEPA, it isessential
to learn from the experiences of other developing and
developed countries, and adapt these to the local
environment. A careful evaluation of local issues, the
concerns of DG owners and the peculiarities of the
development of Nigeria electricity industry should be
carried out. To make the overall process of deregulation a
success,a legal fmmework must be developed that gives due
weight to the benefits of distributed generation. E
Abimbola Odubiyi is with Powergen UK. Covenby, CV4 8LG. UK
Innocent E David-" is with the School of Electrical & Electmnic
Engineerin& Universityof Natal, Durban, 4041, South Africa