Exploring the Demand-Supply Gap of Electricity in Nigeria: Locational Evaluation for Capacity Expansions

Abstract

To address the gross deficit in electricity demand and supply in Nigeria requires a pragmatic and sequential approach to expanding generation capacity. Numerous studies have expatiated on the underlying problems with solution strategies that are comprehensive. However, many of those suggested solutions are either too steep cost-wise or the system is limited in the adaptive capacity to incorporate them. This paper proffers a stepped approach at expanding the capacity of supply as a function of the energy locational distance of the states and regions in the country. In this research, we interpret energy locational distance as a measure that is derived from the answer to two questions. First, how much is generation below the output capacity of the existing generating plants that are stationed across the country serving the national grid? Second, what is the minimum threshold of capacity expansion to achieve a set energy density or energy per person index across the regions of the country differentiated by energy poverty? With this exploration, energy planners in Nigeria, rather than seeking to address the dearth of electricity supply in the country in one step, could consider a piecemeal approach that indeed offers tremendous and relatively significant expansions in capacity. This outcome offers guidance to policy makers and investors on how to craft their investment efforts in a manner that is akin to viewing the problem at the proverbial context of effecting changes at the tree level rather than seeking to change the forest.