Article by ESI Africa

The Nigerian Electricity Regulatory Commission approves the adoption of mini grids to boost electricity supply to households, businesses and institutions in the country.

Last week, through a Draft Mini Grid Regulation 2016, the Nigerian Electricity Regulatory Commission (NERC) stated that electricity distribution companies could now use mini grids as a bridge technology to accelerate their electrification activities, reports the Financial Watch.

According to the media, the Commission said the mini grid regulation was specifically designed to fast-track electrification in areas without any existing distribution grid.

The regulation is also intended for areas with an existing but poorly electrified or non-functional distribution grid, such as rural areas, NERC stated.

“If the power distributed by the isolated mini grid is larger than 100kW, the mini grid developer will need to apply for a mandatory permit. If the generation capacity of the power station installed is larger than 1MW, the plant is not a mini grid under this regulation and other regulations apply,” NERC explained.

Mini grid regulation for cost-reflective tariffs

Media also reported that, to promote this initiative, the Commission indicated that cost-reflective retail tariffs would be utilised.

NERC, however, added that tariffs would be higher than the current electricity distribution company’s retail tariffs but also noted that the tariffs would be lower than any electricity supply of the same quality generated from conventional sources in such areas.

“This regulation is suitable for any business model or technology that mini grid operators may wish to implement,” the Commission said.

It added: “The Discos [distribution companies] stand to benefit from mini grid operations and some of these benefits include the development of the Discos’ licensing areas, which are not being exploited at no cost to the Discos pending when they are ready to extend their operations to such areas.

“At such time, demand would have increased to attractive levels for profitable operation, and customers will be used to paying for electricity and complying with the safety requirements.”

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