NERC opens grid connected investment windows for feed-in tariff, net metering
The Nigerian Electricity Regulatory Commission (NERC) has opened three investments windows in net metering, feed-in tariff and capacities above earlier agreed thresholds to encourage investments in grid connected renewable energy projects in the country
Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid, while a feed–in tariff is a policy mechanism designed to accelerate investment in renewable energy technologies by offering long-term contracts to renewable energy producers based on the cost of generation.
According to information obtained from NERC’s website, the first window is the net-metering for very small capacities below 1 megawatt while the second is the feed-in tariff for capacities up to 5 MW of solar, 10 MW of wind, 10 MW of Biomass and 30MW of small hydro. The third window is for capacities above these thresholds.
“NERC is committed to stimulating investment in renewable energy generation in Nigeria. With a vast and mostly untapped potential in renewable energy resources, the Commission has set a target of generating a minimum of 2,000MW of electricity from renewables by the year 2020,” said NERC on its website.
Renewable energy industry operators have long decried the absence of net metering and feed-in tariff mechanisms in Nigeria’s electricity sector, which has discouraged investment in renewable energy to add to Nigeria’s 6,000MW grid capacity.
“A major challenge operators have, is the absence of a developed grid that will allow investors to take advantage of mechanisms, such as net metering and feed-in tariff to spur investments in the sector. In the absence of this, investors are counting on offgrid solutions,” said Yusuf Sulaiman, MD of Blue Carmel Energy, during a presentation at the Nextier Power conference held last Thursday, in Lagos.
Due to the absence of net metering and feed-in tariff, embedded generation around the country waste excess capacity produced. The net metering regulation will now allow operators who generate excess capacity feed it back to the grid and be paid according to the Multi Year Tariff Order (MYTO) 2015.
NERC says operators who want to take advantage of this regulation would be subjected to competitive tender that would be procured through the Nigerian Bulk Electricity Trading (NBET).
NERC recently approved a mini grid regulation which provides that an isolated mini grid with distributed power larger than 100kW and up to 1MW of generation capacity will require a permit, while for isolated mini grids with distributed power of up to 100kW, a permit is optional. It is however, subject to conditions including an understanding with the DisCos operating around the franchise area.
Mini-grids are electricity supply systems with their own power generation capacity, mostly from renewable energy, supplying more than one customer and can operate either in isolation from or connected to an existing distribution network.
“The Mini Grid Regulation seeks to incentivize and simplify the process for private sector participation in the Mini Grid sector of the Nigerian Electricity Market, which will in turn contribute to increasing access to electricity in unserved and underserved parts of Nigeria (rural and urban areas),” said legal analysts at Detail Commercial Solicitors who helped write the regulation, on the company’s website.
Until now, Nigeria has only paid lip service to the national renewable energy and energy efficiency policy, approved since 2015, which sets out a framework for action to address the challenges of inclusive access to modern and clean energy resources, improved energy security and climate objectives.
ISAAC ANYAOGU