Page 43 - Energize October 2021

VIEWS AND OPINION

at various levels to safeguard a project ecosystem that requires constant monitoring and
validation. Keeping abreast of developments requires continuous contact and resilience,
mobilizing full time resources to stay in the game.
Mitigating project development risk with a 360° approach
Major energy infrastructure projects are multi-million-dollar transactions that require
long cycles to develop and even longer to payback. Having a reliable turnkey solution
provider, with the experience of international project development, can make a
significant difference for future IPP projects.
Independent power producers (IPPs) must also, beyond the capability to mobilise
technical resources, such as engineering, engine manufacturing, construction and service
teams, work with consultants and advisors to bring expertise on environmental and social
topics, on connecting infrastructures, primary fuel supply legal matters and accordingly, to
contribute to internal and external project development costs.
From engineering, procurement and construction (EPC) through to operation and
maintenance (O&M), successful project finance relies upon complex back-to-back
contractual agreement structures to secure access to the gas, the grid and the offtake of
the generated power. Once a bankable model has been designed, only then can projects
raise finance from international development finance institutions (DFIs), international and
local commercial banks and other accessible funds.
In addition to coordinating project finance, and to mobilizing internal and external
resources, the ability of the IPP to share the development risk by taking minority equity
stakes in projects is also paramount.

Selecting the right technologies in a challenging environment
Gas fuels more than 80% of the nation’s power generation capacity in Nigeria, but
in order to generate reliable power from gas in a challenging environment, not all
technologies are equal.
For instance, the challenging conditions of gas transportation and distribution,
combined with the fluctuating electricity loads, makes it difficult for traditional large gas-
turbine based power plant projects to operate efficiently.
Gas turbines operate on a continuous combustion process, requiring a constant
supply of gas and a stable dispatched load to generate consistent power output.
Supply from the Escravos-Lagos Pipeline System (ELPS), which forms the backbone
of Nigeria’s gas transportation system, is subject to disruptions due to a number of
upstream constraints and its own operational challenges. This makes it challenging to
respond to the daily variations in customer demand. The result is stranded generation
assets and transmission bottlenecks causing shutdowns at some of the country’s
largest power plants.
Power plants with reciprocating gas engines, however, can run with lower gas
pressures and provide high efficiency at Nigerian site conditions with high temperatures
and humidity. Medium-sized projects of 250 MW can make a significant contribution to
meeting the country’s energy demand as they are able to operate with a large spectrum
of gas qualities and other liquid fuels, provided through other supply infrastructures.
More importantly, they can provide the flexibility and resilience required to accommodate
varying loads either due to consumption patterns or to challenged transmission and
distribution infrastructures. As renewable projects are progressively integrated into the
mix of Nigerian grid connected power plants, the need for flexibility and agility to adapt to
intermittent sources of electricity such as solar and wind will increase.

Enabling the “Decade of Gas” vision
While there is no single solution or quick fix to solve the challenges of Nigeria’s power
sector, the ability to deploy the appropriate power production technologies combined
with proven project management know-how will go a long way to overcome these The next generation in
barriers and take advantage of the government’s “Decade of Gas” vision. High-quality pole-mounted transformer
IPP projects based on gas engine technology will contribute to meeting the country’s
unserved energy demand, whilst reducing dependence on expensive diesel generators protection.
and drastically reducing CO 2 emissions.
Tel: 018 468 5080
Send your comments to rogerl@nowmedia.co.za
E: kevin@liveline.co.za
www.liveline.co.za
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