In recent times, the North Core Project has been a prominent feature in various news media, and Nigerians are responding with massive outcry over Nigeria’s investment in the Project. The North Core Project is a 330kV cross-border electricity transmission line running from Nigeria, through Niger and Benin to Burkina Faso. The Project which is being implemented by the ECOWAS-backed West African Power Pool (WAPP), will export electricity from Nigeria to these West African countries when completed.
Though the funding of the circa $600 million project is hugely supported by the World Bank Group and the African Development Bank, many Nigerians have continued to question Nigeria’s commitment to the Project and the economic importance of an investment whose main objective is to supply Nigeria’s electricity to other countries when Nigeria’s overall electricity generation capacity is still nowhere near the national consumption demand. So why invest in an export infrastructure for a commodity that the country doesn’t have in sufficient amount?
Notwithstanding the shortfall in Nigeria’s electricity generation, the North Core transmission project will benefit the Nigeria’s electricity sector and the country in several ways.
First, the Project will benefit large-scale operational power assets in Nigeria. Many of these assets currently operate below capacity as they are most times forced to curtail output due to transmission constraints of the national grid infrastructure. Besides curtailment, these assets also struggle with cashflows as NBET constantly fails to fully settle invoices for outputs delivered to the grid. However, with North Core transmission line, these power generation assets can operate at full capacities and export excess electricity to neighbouring countries. This would in turn improve cashflows, facilitate further investments and jobs creation.
Also, the North Core transmission line will improve the economic viability of new large-scale power generation projects in Nigeria. This is because most of the economic indicators and investment attractiveness are based on projected cashflows from the sale of generated electricity. So, with cashflow risks partly mitigated by North Core infrastructure, new projects would more likely be sanctioned than ever before.
Furthermore, the electricity export will be transacted in US Dollars, which means foreign exchange earnings for the country, thereby reducing the pressure on Naira against the USD.
Other benefits derivable from such unrestricted cross-border electricity grid interconnection include promotion of regional cooperation and trade. Such electricity market cooperation facilitates the grid integration of renewable energies, supports the adoption of renewables technologies, improves market opportunities and offers market participants the opportunity to access larger regional market pool including participation in regional renewable energy auctions.
On security of electricity supply, the North Core transmission line will provide a fallback option for Nigeria in an unforeseen event of power plants failure in the country. Electricity can be imported to the country through the North Core transmission line.
In conclusion, interconnectors are very important infrastructure that benefit the economies of participating countries. This is even more important as the global energy system goes through transition to low-carbon alternatives and renewables. Interconnectors ensure solar energy generated in areas of high solar resources are transmitted and utilised in areas without adequate sunshine. Areas of high wind resources are also able to supply those without sufficient wind speed through transmission interconnectors. This explains why countries like Egypt with high renewable energy generation potential are facilitating mega interconnector projects, such as the 3GW High Voltage Direct Current (HVDC) interconnector between Egypt and Saudi Arabia, and the 2GW EuroAfrica HVDC Interconnector connecting Egypt, Cyprus and Greece. When completed, these interconnectors will make Egypt a major clean electricity exporter to these countries.
So, with all these benefits and opportunities, it is very clear that the North Core Project is a great initiative, which in fact, should be scaled across the region and beyond.
Author: Uchenna Ibe CEng MBA