Unit cost of electricity in Nigeria: A cost model for captive diesel powered generating system

A credible and acceptable pricing template for electricity tariff has been identified as critical to the survival of the deregulated Nigerian power sector. Excess off grid electricity from diesel powered captive systems constitutes a substantial source of electricity for many power distribution companies. This work develops a costing model for determining the unit cost of electricity from diesel generators as a basis for appropriate pricing. Relevant variables and parameters of power system were identified and characterized. A Life Cycle Cost based unit cost mathematical model was developed and coded using electronic spreadsheet for ease of application. Data from users of diesel generators and the literature were used for model validation. At the prevailing diesel pump price of $3.7 per gallon the unit cost of electricity varies between $0.28/kW h and $0.33/kW h depending on the generator capacity. While with compressed natural gas (CNG) fueling, the unit cost, at the prevailing $2 per Diesel Gallon Equivalent (DGE), varies between $0.14/kW h and $0.16/kW h. The study concluded that Nigeria needs to invest on the expansion of her natural gas distribution infrastructures to take advantage of the nation׳s abundant natural gas resources for captive power generation.