Is NESI embracing automation? Part II

The nation’s power grid lacks adequate automation. Nigeria’s electricity is generated from hydro and thermal sources, whose transmission lines have been continually subject to vandalism. As such, there has been a longtime failure to detect faults during distribution, adversely impacting power generation forecasting and electricity supply. This situation is why fully modernizing the Nigerian Electricity Supply Industry (NESI) for real-time monitoring and control of distribution systems is vital to achieving a reliable electricity supply. The first part of this series highlighted automation benefits. This part explores the challenges.

Challenges

Automation comes with several challenges. These challenges include cybersecurity risks, financial implications, and regulatory and workforce gaps. For a country like Nigeria, navigating these challenges necessitates political and economic balancing due to its complex composition. The nation’s institutions, governance structures, and social, political, and economic dimensions are heavily interdependent. Thus, seamless automation may be challenging.

Cybersecurity

Electricity is an integral part of all modern economies, and as electricity sectors become more digitalized, threats of cyberattacks rise. In 2021, 71% of organizations suffered cyber-attacks, with 44% paying an average cost of $3.43 million as ransom to protect sensitive data. These figures indicate the importance of an appropriate cybersecurity regulatory framework to protect against threats. There are several policies and laws for cybercrime activities in Nigeria, and the primary legislation for cybersecurity is the Cybercrime (Prohibition, Prevention, etcetera) Act 2015. Despite the efforts of the Nigerian government to combat cybercrime, there are still stumbling blocks that limit cyber-attacks, such as infrastructure and inadequate regulatory frameworks. On the former, automating the power system requires responsive incident response centres, cybersecurity training facilities and development centres. Whilst on the latter, relevant regulations must be continually reviewed and updated to address current and emerging cybersecurity threats.

Financial costs

The capital investment required to implement automation technologies is exorbitant. As noted in Series I, the Transmission Company of Nigeria (TCN) estimated $65 million to automate the national grid with a new SCADA system in 2018. This figure has likely increased. Nigeria’s electricity sector’s costs far exceed its revenues, and the deficit has widened. The Federal Government of Nigeria allocated ₦239 billion to the power sector in 2023, highlighting ₦232,620,744 832 as the capital costs for running the sector. According to the National Bureau of Statistics, the revenue collected by distribution companies in the last quarter of 2023 was ₦202.62 billion. Operational costs are typically 10 times the sector’s revenue or higher in most emerging countries. For instance, Iraq’s total explicit operational costs amounted to $9.3 billion, equivalent to 4.0 per cent of its GDP, with revenues totalling less than 800 million dollars. While similar power sector financial challenges exist in other emerging countries, Nigeria faces particularly substantial financial gaps, as evidenced by its market illiquidity. 

Regulatory and policy framework

Several regulatory overhauls have been implemented to increase liquidity in Nigeria’s power sector. These changes aim to improve financial liquidity, fostering an enabling environment for significant automation in the sector. Among these changes is the approval of the Fifth Bill (No.33), the Devolution of Powers (National Grid System), which amends the 1999 Nigerian Constitution. This amendment, signed by former President Muhammadu Buhari, empowers states to generate, transmit, and distribute electricity in areas covered by the national grid. Furthermore, the Electricity Act 2023 stimulates investments for automation by promoting indigenous capacity in technology for renewable energy sources. This regulatory framework signals Nigeria’s readiness to enhance financial feasibility for full-scale automation. Nevertheless, the efficacy of these initiatives is significantly dependent on their implementation.

A phased approach to automation

Nigeria’s power systems rely on manual tap changers, leading to increased power outages and reduced system safety. Many transmission and generation stations lack supervisory control, data acquisition (SCADA), and telecommunication systems. Automating the electrical power distribution system, including procuring a new SCADA system and integrating the Internet of Things (IoT) into transmission operations, is crucial to swiftly address power sector issues like power outages and revenue losses.