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The Nigerian Electricity Regulatory Commission has given approval for the purchase of 450 megawatts of electricity from Zungeru Hydro Electricity Generation Company Limited.
The decision was made in order to maintain grid stability and prevent the shutdown of the newly completed Zungeru hydropower plant.
The Commission's directive, issued under Order No. NERC/2024/044, aims to ensure continuous improvement in electricity supply to Nigerians.
The NERC acknowledged that low generation had been causing sub-optimal grid dispatch, affecting the ability of electricity distribution companies to deliver committed service levels to end-use customers.
The Zungeru Hydro Electricity Generation Company successfully completed its initial capacity testing on May 15, demonstrating an average generation capacity of 600MW.
Despite not having any contracts with off-takers, the company had planned to shut down the plant after the capacity test until finalizing contractual arrangements.
In order to prevent this, the regulator decided to keep the power plant connected to the grid and continue injecting power to improve service delivery to electricity consumers in Nigeria.
As a result, the commission granted a special dispensation allowing the Independent System Operator of the Transmission Company of Nigeria to handle settlement administration for power wheeled from Zungeru for an initial period of 105 days starting from May 16 at midnight.
The Zungeru Hydro Electricity Generation Company currently does not have a contract and has expressed its intention to shut down the plant after the capacity test until finalizing contractual arrangements with potential off-takers.
However, the Commission believes it is important to keep the power plant connected to the grid and continue supplying power to improve electricity service in Nigeria.
In the interest of the public, the Commission has given special permission for the Independent System Operator of the Transmission Company of Nigeria to take over responsibility for managing the settlement for power transmitted from ZHEGC for an initial period of 105 days starting from 0.00Hrs on May 16, 2024.
To prevent the recurring practice of limiting DisCos load offtake as a corrective measure for system imbalances, the commission has directed the TCN-ISO to make an interim energy sales agreement with ZHEGC for up to 450MW of energy and capacity to address the current imbalances between generation and offtake, thereby strengthening grid management.
The agreement will be on a best-effort basis.
Initially, the interim agreement will be effective from May 16, 2024, until August 31, 2024.
Regarding the administration of the agreement, the directive specifies that for each settlement cycle after the agreement begins, ZHEGC will invoice the Market Operator for capacity and energy based on the metered energy generated as outlined in the Final Settlement Statement.
The Market Operator will issue two settlement statements to the DisCos; one for the settlement of the transmission and market administration services, and the second, invoice.
