The distribution grid operates mainly on 33 kV and 11 kV level, i.e. medium voltage (MV) and low voltage level (LV). The distribution network accounts for an additional 12.5% of technical losses before electricity reaches the final consumer. In the wake of the power sector privatization that took place in 2103, 11 distribution companies covering a regional grid were sold to new private owners. Notwithstanding the privatization, most of the distribution companies do not receive sufficient electric power to operate at high enough volumes and recover their investment cost.
Seeing that 85% of the power generation infrastructure in Nigeria is fossil fuel-based, mainly natural gas, the gas infrastructure plays a leading role in enhancing energy security in the country. Although Nigeria has abundant gas reserves, low levels of gas feedstock supply to the thermal power plants in the country have remained an issue; leading to fewer thermal plants being made operational. Despite huge volumes of natural gas production daily, only approximately 9%; 0.8bscpd (Billion Standard Cubic feet of gas per day) gets delivered to the power plants. Certain factors can be attributed to the insufficient gas supply such as insufficient gas-processing and pipeline infrastructure, lack of investment in gas-processing facilities, and failure to complete already funded projects. Another factor responsible for low levels of gas supply to the thermal power plants is the regular vandalism of existing pipeline infrastructure by militants. Due to low domestic gas prices, investment in gas development to enhance the supply of natural gas feedstock to the power plants by upstream oil and gas companies are reportedly economically unviable.
There is a specific tariff for each of the Distribution Companies (DisCo’s) to address the cost reflectiveness of power generation and transmission of electricity in the value chain. The tariff for each DisCo is set by the Nigeria Electricity Regulation Commission (NERC). The charges are comprised of three parts: a fixed monthly charge; for capital cost recovery, demand charge; for applied pressure (load amount) on the system, and an individual energy charge (for variable cost recovery). The tariff class depends on the consumption measured in kWh. the retail tariffs are denominated in Naira. The electricity consumers are divided into 5 subcategories.
Residential: This category is strictly for residential energy consumers; R1 (lifeline), R2 (single and three-phase), R3 (LV maximum demand), R4 (HV maximum demand)
Commercial: This category is for consumers, whose premises are used for SMEs business e.g offices, beauty parlors, etc. C1 (single and three-phase), C2 (LV maximum demand), C3 (HV maximum demand).
Industrial: This category uses its premises for manufacturing and other production processes. D1 (single and three-phase), D2 (LV maximum demand), D3 (HV maximum demand).
Street lighting: This category includes S1 (single and three-phase).
Special tariff: These consumers include the following; religious houses, government buildings, educational establishments, hospitals, agro-allied industries. A1 (single and three-phase), A2 (LV maximum demand), A3 (HV maximum demand).
Off-grid electrification initiatives in Nigeria are gradually emerging. In February 2017, the Federal Government of Nigeria launched an initiative to distribute 20,000 solar-powered lighting systems to rural communities in the country. Additionally, Nigeria Intended Nationally Determined Contribution (INDC) to the United Nations Conference of Parties 21 (COP21) shows that the Federal Government plans to work towards adding 13GW of off-grid solar power by 2030. On a state level, Lagos state government through the Lagos Solar project, a joint investment of Lagos State Electricity Board (LSEB) and the UK Department for International Development (DFID), has installed nearly 5 MWp of solar-generated off-grid power for 172 schools and 11 clinics within Lagos State. An additional 1.5 MWp is being installed at public health clinics in Kaduna State under the Solar Nigeria program by DFID. Several other off-grid schemes with support from international partners are gaining traction across the country.