Mini grid regulation could dent Nigeria’s power challenge

Nigeria could add as much as 700 new mini grid projects over the next five years following the pace of interests in investments in the country’s off-grid market. This has come about through the conscious effort of the Federal Government to get out of the way of local investors. Through effective regulation, Nigeria has insulated investors from the regressive power sector administration.

Nigeria’s mini grid regulation allows investors to build mini grids of less than 100kW without obtaining a permit but require registration with National Electricity Regulatory Commission (NERC). It provides also that all mini grids greater than 100kW but less than 1MW require NERC permit.

The rule also contains a net-metering for very small capacities (typically below 1MW); feed-in tariff for capacities up to 5MW of solar, 10MW of wind, 10MW of biomass, and 30MW of small hydro; as well as competitive tender for capacities above these thresholds to be procured through the Nigerian Bulk Electricity Trading Plc (NBET).

As soon as the regulation came in force, investors went to work as it provided clarity for investment recovery, a key challenge in the current system where DisCos are compelled to price power on other factors beyond market considerations.

Babatunde Fashola, Minister of Power, Works and Housing, said recently that the regulation was bearing fruit leading to two new investments in less than three months. One of the projects that will be sited in Abuja would provide stable electricity to 145 households and five businesses by Havenhill Synergy Ltd. There is also another one scheduled for completion and commissioning in Kano.

The success of mini grid regulations approved in August shows what the country can achieve if it allows market dictate the pace of business and investment policies. Contracts in the mini grid areas are between willing sellers and buyers and, in one instance (Ajima farms), the community even chose what time of the day they want power, from 5pm-7am.

ISAAC ANYAOGU