Assessment of the Viability of Wind Farm Projects in Northern Nigeria

Abstract

This thesis focused on investigating the viability of commercial wind farm projects in northern Nigeria. Potential location for wind farms projects were identified based on reported wind resource availability in the region. In addition, a concise evaluation of the power sector in Nigeria was carried out detailing the regulatory framework guiding the electricity industry as well as opportunities for Renewables. At the end of the thesis, the planning, siting as well as energy yield calculations of a 103 MW wind farm were carried out using the Wind Atlas Analysis and Application Program (WAsP). In conclusion, an economic analysis to show the economic viability the of the wind farm was done. All three sub-sectors (generation and distribution) of the Nigerian Electricity Supply Industry (NESI) except transmission have been privatized. Ownership as well as management of key assets have been transferred to the private sector. On the regulatory side, the Nigerian Electricity Regulation Commission (NERC) is the key agency in charge of the technical and economic regulation of the NESI and issues licenses to the different participants based on their activities. There are numerous incentives by the FGN and well as other development organizations which RE generators can benefit from. Some of this are support mechanisms targeted at RE while others are for investors generally. Nonetheless, these policies are still largely uncoordinated and short of the market-oriented policies necessary to increase RE investment. Also, the three subsectors still have unique infrastructure and operational problems that can stall the successful deployment of RE. In pursuit of a solution, the Federal Government of Nigeria together with Siemens AG, have signed in 2019 and already kickstarted the Nigeria Electrification Roadmap. The simulation using WAsP produced an AEP of 412 GWh and an average shading loss between turbines of about 2%. The P90 AEP is about 315.92 GWh and this amount to a capacity factor of 34%. The LOCE of the project was 0.069 USD/kWh and the cashflow analysis produced a positive NPV ($17,874,395.08) and a 15.13% return on equity was achieved. The IRR on equity is 13.85%, considering our discount rate is 6.5%, it shows that the project can be profitable. Additionally, a sensitivity analysis was conducted with the selling price by varying to 0.065 $/kWh and 0.075 $/kWh. The result demonstrated clearly that the selling price of electricity is a very important factor in the economic health of the project and effort should be made to negotiate the best price possible.