GE: Why Grid Solutions are Critical to Africa
With renewable energy technologies getting cheaper, the Vice-President, Commercial Solutions at General Electric, Mr. Stephane Cai and the President/CEO of GE Nigeria, Dr. Lazarus Angbazo spoke exclusively to Ejiofor Alike on how GE’s innovative grid solu
Nigeria is a good example of why grid solution is absolutely critical to the industry and economy of Africa, and as we know, this is a country that over the years has invested billions of dollars in ‘power’, largely in power generation. We have a population of over 180 million right now, our consumption per capita is one of the lowest in the world. Now, why is that? It is not for lack of trying, it is because of the bottlenecks in the value chain, largely the transmission and the distribution. We have focused on generation, government has focused on generation
GE is very strong in generation, and over the years we have been hearing about GE based on generation. Nigeria’s problem is now largely transmission and distribution. So, Mr. Cai, how is GE going to help Nigeria? Specifically, we are trying to bring solutions, we are teaming up with partners, going from the generation outlet of power plants, through transmission, all the way to the city doorsteps where we have the first distribution sub-stations. We created projects that complement whatever the government is already considering through the World Bank.
We try to reach out to governments that can finance like France. We try to explore all the ECA that will be available to fund this project. So, right now, on this front, I think we are making good progress; we got institutions that are willing to finance, it is now left to convince the leaders in government and the ministry is conscious of that. We just need to translate this recognition into real project. So right now we are at this point, where we have technological solutions across the electricity value chain, we have managed to figure out the financing, we just need to convince the agencies responsible for implementing the projects to progress with us in implementing the projects.
Some other investors are complaining of the operating environment with some investors even relocating to other countries, but GE is showing increasing interest in Nigeria. Mr. Cai, could what is attracting GE to Nigeria that you are even increasing your investment? We see Africa in general, and Nigeria as the biggest country in particular, as the market of the future; it is like the new frontier we need to invest in. In other developing countries and regions, we already hold pretty strong positions like in India and Latin America where we are number one. Our focus now is to help Africa to meet her needs; this is the last largest market we needed to develop. We have recognised the particular difficulties in this country and we believe we are a good position to bring solutions that can help eliminate these problems. It is not the same way we do business in Europe; in Europe, customers will call us, they are funded, they just need us to build. But here, on top of bringing the available technical solution, we have to think of how to finance the project, and GE as a company is strong in doing both. So, we feel we have all the strength to help develop Africa.
Now, Mr. Cai, does GE have experience in the area of transmission and distribution - has GE done it successfully elsewhere? Actually, with our Grid Solutions portfolio, this is what we do, and what we have been doing for more than a century. We are a technology leader in many places, in network management system, substation automation, and even in high voltage equipment we are among the top three players in the world. We support markets like India which went through a similar path; they are a little bit ahead. India also built big generation capacity, but transmission and distribution remains a bottle neck for them. So, it’s the same with Nigeria. We saw this in India and participated in the solution. We are executing a large High Voltage Direct Current line to bring 3,000mw over 1,000km just to facilitate the transition. So, we do this and our experience over there can be beneficial to African development.
Coming back to renewable, it is an area that is becoming increasingly popular globally, but a country like Nigeria is still very far behind. What can you bring to the table, I mean, specific solution in terms of renewable? I believe that things are changing so fast in this area. For instance, a year ago in India, people would have the same opinion like people in Nigeria; they think solar is too expensive for India, so they thought a year ago. Now, government set a target, they started to incentivize with some subsidy to encourage utility size solar, 50mw unit. A year later, they won’t need to subsidise anymore because the competition is such that the price can beat the central power. It happened so fast and cost of material for solar are going down; every five years, the prices are halved. I am very hopeful that a day will come, sooner than we think, that the economics will be demonstrated, and solar for Africa is much more promising than you think.
Is your focus for Nigeria is terms of renewable solar? Actually, we don’t make the solar panels, they are mostly made in China. We do projects, and on top of that we want to face the new challenges brought to grid by renewable. The difference between renewable and a gas fired power plant is intermittent generation which is a challenge to the grid. Maybe you have heard of the experience in California and Australia, where the government there pushed solar to up to 30 percent of total generation capacity and it resulted in total blackout. It happened because the network was not able to control and manage the stability and this is the new challenge we are addressing. We brought solution to California and Australia to enable the growth of renewable in the generation mix. These are the kind of situations GE brings technological solution People only think of generation, they just think of adding more solar panels, because it will make the grid to collapse. So we needed to bring solution in the grid space to enable that.
For GE to achieve what it came to Nigeria to for, what are your expectations from the government and other stakeholders? I think the government needs to realise what the bottlenecks are and set the right priority. Right now, I think the World Bank share the same analysis like us. Their next priority for funding transmission and distribution (T&D), and afterwards, we can add generation. Now, the generation capacity is in excess of the transmission capacity. So, we need the government to push for the project to kick off, because when it starts we know how to execute. So right now, we cannot really act; we can do some preliminary work, we have done some intensive network study to know which transmission line is of more priority than others to bring power to consumers, that much we can do for now
Dr. Angbazo, over to you now; please why do you think Nigeria is a good choice for grid solution? Nigeria is a good example of why grid solution is absolutely critical to the industry and economy of Africa, and as we know, this is a country that over the years has invested billions of dollars in ‘power’, largely in power generation. We have a population of over 180 million right now, our consumption per capita is one of the lowest in the world. Now, why is that? It is not for lack of trying, it is because of the bottlenecks in the value chain, largely the transmission and the distribution. We have focused on generation, government has focused on generation. But I will like to pay special tribute to the Vice president, Minister of power and the Chief of Staff to the president, because these individuals have recognised that thinking about the power solution of Nigeria in silos is not sustainable and they themselves have come up with this concept of end-to-end solution, that is from generation to distribution, and this is the conversation GE has been having with the government on how to work with the DISCOS and TCN under the guidance and encouragement of the office of the Vice president, and Minister of power, and along with the industrial council of the President which are really focused on infrastructure.
You commended the efforts of the Vice President, Minister for Power and Chief of Staff to the President. What other areas do you think they can do more so that GE can achieve its aims? The amazing thing we have here is that multi-lateral donor institutions like the World Bank, the French Development Agency have earmarked millions of dollars, for the T&D space in Nigeria. They require TCN in particular to package the projects to meet their eligibility criteria; that is a process that is underway, but it can go faster. I think this is an area we can help our cause as a country, and the team at TCN are doing an honest job trying to make things happen, but they need all the support and encouragement of government, as well the support and encouragement of people like us, and we are ready. We have reached out to them in partnership, but I think together we can all move faster so that we can access this limited pool of fund. If we don’t use it, other countries will use it.
So, I think the message is that the problem is a fixable one, the TCN is key to it, the leadership of TCN is key to it; they are good people but they need to move forward. If those tenders were out and those projects put there, the things the Vice President, Chief of Staff and the Minister want to achieve in 12 to 18 months are achievable, which is incremental consumption of power, not generation; that means we solve all those bottlenecks issues. But it’s a team sport. We are here, we are ready, but things need to move faster.