Abstract
The Nigerian power grid had been owned and controlled by a vertically integrated state company - the Power Holding Company of Nigeria (PHCN) - before deregulation, because of the Electric Power Sector Reform Act (EPSRA) of 2005, happened. It stipulated the breaking down of PHCN into different entities responsible for the different functions of the electricity supply value chain - generation, transmission and distribution. Six GENCOs and eleven DISCOs, with private ownership all resulted from this process. The Transmission Company remained under the control of the government and became the transmission provider and system's operator as stipulated by the EPSRA. Many of these transitions did not fully take effect till 2013. Nigerians had already gotten used to generating their own electricity from diesel and gasoline generators. Today over 60 million Nigerians own some kind of generating sets. From small 2.2KVA gasoline generators to utility sized 1000 KVA diesel generators, these gensets provide the necessary electrical energy to run the Nigerian economy, but they do so very inefficiently. The DISCOs with monopolized service territories experience a plethora of problems. They never have enough capacity to meet the demands of their customers and end up shedding load extensively. A study done on a Nigerian university campus, showed that by utilizing the power generating plants owned and operated by the university on its campus in a cluster and by optimally allocating its loads, the university was able to capture underutilized capacity from its generating plants, which significantly reduced the cost of operating those assets. In this paper, utilizing some lessons learned from that study and the energy and capacity market designs from the organized markets of North America a different approach which involves the participation of the local discos and privately owned gensets is proposed to improve the reliability of the distribution company's grid.