30 September 2016, Sweetcrude, Lagos — In a bid to address erratic power supply and effective regulation in the power generation, Nigerian Electricity Regulatory Commission, NERC has produced a draft regulation for Mini-Grids.
The object of the 140 pages Regulation according to NERC is to accelerate electrification in areas without existing Distribution Network (“Unserved areas”) and areas with an existing but poorly electrified or non-functional distribution grid (“Underserved areas”) by attracting participation of private sector, communities, Non-Governmental Organisations in achieving nationwide electrification.
The Regulation seeks to minimize major risks associated with Mini-Grid investments such as: (1) Sudden tariff changes, as tariffs would have been agreed in advance by the relevant parties; and (2) Stranded Mini-Grid Operator investments due to extension of main grid to cover the Mini-Grid area.
In such cases, NERC said a fair compensation mechanism would be applied for Mini-Grid Operators that choose to exit.
The Regulation provides for Permit and tariff approval procedures which will ease the administrative burden on the Mini-Grid Operator and ensure the process of obtaining the Permit in a timely manner. The Distributed Power of the Mini-Grid determines the regulatory procedure to be followed.
“For Distributed Power of up to 100kW, a Permit is optional for the Mini-Grid Operator; while for Distributed Power of over 100kW and installed Generation Capacity of up to 1MW a Permit, will be required. Beyond that limit, a full licence is required which is outside of the scope of this Regulation and is taken care of by other already existing Regulations,” NERC said.