Transcript Document

Future Electricity Outlook for
Lagos State
by
Prof. Adeola Adenikinju, Akande Abiola and Olayiwola
Saheed
Centre for Petroleum, Energy Economics and Law
Electricity and Economy of Lagos State
“As the bedrock of any development agenda, this administration has
always considered the provision of stable power supply as being of the
utmost priority. The provision of potable water, functional
telecommunication services, uninterrupted information and
communication services, security operations, traffic management,
healthcare and education are all dependent on the availability of
constant and stable electricity…the people of Lagos State have been
deprived of one of the essentials of decent living;…for too long. This
problem has its roots amongst other things in the lack of accurate data
as to the actual power/energy requirements of the people of Lagos
State.”
- Mr. Babatunde Raji Fashola (SAN)
Introduction
Energy plays a vital role in the economic, social and political
development of an nation. History of economic development
shows that there is a direct linkage between energy
consumption and economic development process.
A State that cannot control its energy sources cannot control
its future development. Energy shortages could be a binding
constraint on the economic development ambition of any
nation. Adequate access to energy is crucial for the economic
transformation of the any State. It is one of the fastest ways to
cut rural poverty, boost productivity among women, and
accelerate education and health outcomes, especially among
the people living in rural and semi-urban centres.
(UNDP,2005). Being the commercial and economic capital of
Nigeria implies that Lagos State requires a lot of electricity to
thrive.
Introduction
Being a hub of sort in Nigeria, as well as in the West-African subregion, it is obvious that the economic activities in Lagos State would
definitely keep driving energy (electricity) consumption upwards in
the coming years. This is particularly with the desire for the State to
propel Nigeria into becoming one of the BRICS (BRINCS) countries
by 2020.
To achieve this, how much of electricity is required to meet the
demand of the Mega city ? How will the gap be filled? What is the
cost implication of the electricity? These are fundamental questions
that need answers.
BRINCS = Brazil, Russia, India, Nigeria, China and South Africa. BRINCS countries are
those countries that are considered as emerging economies in the global
communities.
Introduction
Being a hub of sort in Nigeria, as well as in the West-African subregion, it is obvious that the economic activities in Lagos State would
definitely keep driving energy (electricity) consumption upwards in
the coming years. This is particularly with the desire for the State to
propel Nigeria into becoming one of the BRINCS countries by 2020.
To achieve this, how much of electricity is required to meet the
demand of the Mega city ? How will the gap be filled? What is the
cost implication of the electricity? These are fundamental questions
that need answers.
BRINCS = Brazil, Russia, India, Nigeria, China and South Africa. BRINCS countries are
those countries that are considered as emerging economies in the global
communities.
Objectives of the State Energy Policy…
The objective of this study is to examine the future
electricity demand for Lagos State (capacity
needed) and what is the cost implication.
Interface in the Energy Planning and Management
Framework for Energy Planning and Management
INPUT
EXPECTED
OUTCOME
SYSTEM
PPP
EXOGENOUS
FACTORS
Environment
FINANCING
Capacity building
Energy Planning and
Management
Bilateral Relations
Institutional and
Regulatory Issues
Energy
Utilization
Short-Medium-Long
term Programs
Residential
ENDOGENOUS
FACTORS
Transport
Wind
Electricity
Policies
Supply Side
Solar
Oil & Gas
Hydro
Biomass
Other Renewables
Agriculture
Strategies
Objectives
Commercial/
Service
Conceptual Issues
Lagos State accounts for about 37% of the country’s urban population, tending
towards becoming the 3rd largest Mega-City in the world by 2015 with an
estimated population of 18 million growth at an annual rate of 5.2%
The State’s GDP is put at about US$34 billion, with per capita income of US$2,225
as against the national GDP of US$273.042 billion and a per capita income of
US$1,657.
Lagos State is the economic capital as well as the financial and commercial centre
of Nigeria contributing about 32% of Nigeria’s Gross Domestic Product (GDP).
Also, Lagos State is the nation’s lead contributor in the non – oil sector with 19%
attainment, which is equal to the contribution of 31 Nigerian States.
Naturally, it follows that the State will dominate energy utilization to meet up this
high profile status it holds in the country.
The economy of the state is divided into four key categories to record energy
utilization pattern
These sectors are: Industry, Transport, Commercial/Service, Residential and
Agriculture.
Conceptual Issues….
Electricity is the most important energy type for socio-economic growth.
There are documented evidences of crisis situation in the industrial
sector where electricity is in short supply.
Lagos State socio-economic growth and industrial development will be
seriously constrained in the absence of adequate electricity supply.
The state currently consumes roughly 50% of all electricity produced
within Nigeria, yet with inadequate per capita consumption, in absolute
and relative terms to other similar cities.
About 116 years ago (1896), Lagos was consuming an average of 60 MW
of electricity.
Today, Lagos needs a minimum of 10,000 MW of electricity to power both
domestic and industrial power needs. (Adenikinju,2012)
Current national supply is about 4,500 MW, meaning Lagos gets about
2250 MW only
Lagos State is presently the only state in Nigeria whose electricity supply
need is met through two distribution companies, namely Ikeja and Eko
DISCOS respectively, underscoring her consumption level.
Lagos State Energy Demand Profile…
Total Energy Demand (PJ) by Energy Source in Lagos State Economy 2009 - 2011
Year
2009
2010
2011
Electricity
10.64
14.55
14.12
Petroleum Products
Total
Petrol
(PMS)
Diesel
(AGO)
Kerosene
(HHK)
149.80
218.15
239.97
59.78
66.42
70.94
48.07
51.68
77.52
Liquefied
Petroleum
Gas (LPG)
2.10
3.60
5.10
270.39
354.4
407.65
Electricity consumption pattern for Lagos State (kWh)
Distribution
Company
Eko
Ikeja
Total
2009
2010
2011
877,543,943.1
2,077,149,468
2,954,693,411
1,200,128,992
2,840,709,364
4,040,838,356
1,165,177,109
2,757,978,140
3,923,155,249
Energy Demand (PJ) by Sector in Lagos State Economy: 2009 – 2011(without fuelwood)
Year
2009
2010
2011
Sector Energy Consumption PJ
Agriculture Industry
Transportation
Commercial
Residential
1.35
1.77
2.04
1.89
2.48
2.85
54.89
71.94
82.75
132.49
173.66
199.75
79.77
104.55
120.26
Total
270.39
354.40
407.65
Annual
%
Growth
31%
15%
25 Years Quantitative Targets…
Percentage Contribution of Energy Mix
100
90
80
70
60
50
40
30
20
10
0
2011
2020
2037
Source of Electricity Generation (% Contribution)
2011
2020
2037
Hydro
14%
15%
15%
Gas
55%
65%
70%
Renewables
Auto generation
1%
30%
5%
15%
10%
5%
Methodology
 The bottom up approach is employed in the projection of the demand
and supply for electricity in Lagos. The approach was based on some
assumptions. The assumptions revolve around the population,
economics growth and government goals which are identified as the
driver of electricity in Lagos.
Table 1:Features of the assumptions made
Type of
Scenarios
GDP Growth
Rate
2011-2037
Targeted
Electricity Access
by 2037
Commencement
of Electric
powered Trains
Energy Intensity
Share of Renewables
in electricity
Generation by 2037
Low growth
scenario
5%
80%
2022
Stable
10%
Reference
Case(BAU)
6%
90%
2019
Varied
10%
High
growth
scenario
Green
economy
scenario
10%
95%
2017
Varied
10%
6%
90%
2019
Varied
20%
Methodology : Demand Projection
The projected electricity consumption for the State over the next 27 years for the
Reference scenarios is depicted in Figure 6.2
Figure 6.2: Projected Electricity Demand for Lagos State
Lagos State Electricity Demand(GWh)
250000
GWh
200000
150000
100000
50000
0
Years
Low Growth
Reference
Optimistic
As at 2007, New York city was already consuming about 170,000GWh which is far more than
what is expected of Lagos State by 2037.The values obtained are far less to what was obtained
in most industrialized mega cities.
- New York Energy Master Plan, 2009.
Methodology : Demand Projection …
The projected electricity consumption for the State over the next 27
years based on sectors using the Reference scenarios is depicted in
Figure 7.2.
140000
Electricity Consumption(GWh) at 6% GDP
120000
80000
Transportation
60000
Agriculture
40000
Services
20000
Manufacturing
Residential
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
GWh
100000
Years
Trends of per capita energy consumption and Per capita GDP
Low Growth Rate Case (Pessimistic)
Year
Per capita
Electricity
(Kwh)
2011
2014
2016
2020
2025
2032
2037
Per capita Income
(US$)
299.62
394.14
504.81
841.26
1257.05
1805.58
2163.68
Business as Usual Case
( Reference)
Per capita
Electricity
(Kwh)
1543.42
1588.37
1619.06
1698.53
1828.77
2036.29
2198.79
High Growth Rate Case
(Optimistic)
Per capita
Income (US$)
299.62
403.92
521.1
987.91
1424.29
1987.92
2379.27
Per capita
Electricity (Kwh)
1543.42
1603.35
1697.64
1849.79
2088.29
2484.78
2813.29
Per capita Income
(US$)
299.62
424.83
574.78
1188.62
1941.89
3346.79
4525.65
1543.42
1826.26
2043.06
2581.69
3501.56
5408.92
7370.6
Source: Author’s computation
Projected Trend in Electricity Supply up to year 2037 using two approaches (MW)
70000
60000
50000
40000
30000
20000
10000
5% GDP growth rate (Lower Band)
Source: Author’s computation
10% GDP growth rate (Upper Band)
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
0
Methodology
Figure 7.3 portrays the optimal fuel supply mix to meet the projected electricity supply. It is
obvious that natural gas will dominate the optimal supply mix. Natural gas is expected to
account for about 70%, hydro (15%), renewable (10%) and auto-generation (5%). This will
result in efficient and more friendly environmentally energy mix. This is in line with the
resource endowments of the State and supports the goals of the State administration in
relation to the energy sector.
Figure 7.3 : Optimal Fuel Mix for meeting projected electricity supply
Power Generation - Mix
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Autogeneration
Coal
Hydro
Solar,Wind,Small Hydros, Biomass
Gas
Investment Requirement
The variables considered in the investment profile are capital expenditure(CAPEX),
operating expenditure(OPEX), fuel expenditure(FUELEX), transmission &
distribution and Gas transportation costs. These costs vary with respect to the set
objectives and GDP growth rate. Therefore, the reference scenario is considered.
CAPEX
OPEX
FUELEX
T/D
GAS TRANSP
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
2014
US $ million
Investment Requirement
Investment Requirement…
Figure 9.3: Investment Structure for Lagos State
Investment Structure, AD 2014-2035
TRXEX
13%
OPEX
33%
CAPEX
54%
Investment Requirements
Electricity Demand, Capacity Needed and Required Investment Cost for Lagos State
2011
Electricity
Demand 6156.35
2015
2020
2025
2030
2035
10698.99
28614.06
48901.44
76606.74 108692.26
3006
8040
13741
21526
(GWh)
Total Capacity
1730
30542
Needed(MW)
Investment Cost ($m):
1,360
2,347
3,254
4,191
6,090
805
1319
1448
1525
2300
GAS Trans.
8
9
11
22
32
Elect T/D
267
190
354
342
464
FUELEX
151
444
746
1160
1610
OPEX
130
385
695
1143
1687
CAPEX
Recommendations
Aiming at making Lagos State competitive amongst the world’s mega
city, it is recommended that it pursues these five goals:
1. Promote a diverse portfolio of new, clean, in-State generation
2. Expand In-State Electricity Resources
3. Capitalize on emerging technologies for transportation and
power production
4. Maintain support for the renewable energy portfolio standard
of 20% of total energy requirement from renewable sources by
2037
5. Promote Cost-Effective Conservation and Energy Efficiency
Programmes
Thank You