What is an Independent Power Producer (IPP)?

What is an Independent Power Producer (IPP)?

An IPP in full means Independent Power Producer. An IPP refers to a producer of electrical energy (power plant) that is not a public utility but which makes electricity available for sale to utilities or the general public.

An IPP is also referred to as a Non-Utility Generator (NUG). They can be privately-held facilities, cooperatives or non-energy industrial concerns capable of feeding excess energy into the national electric grid system

In recent times, public utility companies are working towards devolving the task of power generation to private companies. IPPs are contracted to deliver an amount of power at a particular time and are protected using Power Purchase Agreements. IPPs are really helpful in a country’s energy sector. They invest in generation technologies and recover their cost from the sale of the electricity to end-users.

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Some IPPs currently in Nigeria are: Shell-operated – Afam VI (642MW); Agip operated – Okpai (480MW), Ibom Power, NESCO and AES Barges (270MW).

In Nigeria, there are two types of IPPs – On-grid and Off-grid. A major difference between the two is that one is connected to the national grid and the other is not. Other differences are:

ALSO READ: What is a Captive Power Plant?

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