Nigerian mini-grid market offers $8 billion revenue annually
The Nigerian mini-grid market which the federal government is vigorously trying to develop with the aim of having stable power supply in the country offers revenue opportunity of $8 billion a year.
According to a report which highlights the potential of the mini-grid market in the country, it says installing several hundred mini grids can reduce costs by around 60% in 2020, increasing annual revenue by $5 billion and unlocking a large rapidly expanding market.
Currently 10 commercial mini grids with a combined capacity of 364kW can serve 2000 households and 250 businesses. Installing 10,000 mini grids of 100kW each will only satisfy 30% of anticipated demand over the next 10 years.
The report which was conducted by Rural Electrification Agency and Rocky Mountain Institute, highlights Nigeria’s potential as the biggest and most attractive off-grid opportunity in Africa, with the country also being recognised as one of the best locations in the world for mini grids.
Off-grid applications represent a quickly growing segment of the global power solutions market, and Nigeria is no exception. To this end, the federal government instituted the Rural Electrification Fund (REF) to enable more private sector participation in power projects such as grid extension, interconnected mini-grid, isolated mini-grid, isolated micro/nano grids and stand-alone systems.
A minimum of $10,000 (N3.5m) and maximum of $300,000 (N106m), or 75 per cent of the total project cost, whichever was less, could be given as grant.
The world Bank investment in Nigeria’s off grid electricity market is one of the banks largest ever, about $1billion investment.
Under this arrangement there is $150 million for mini off grid, a $300 million opportunity for private investors that may want to make investments in other relevant aspects of mini grid.
The aim of federal government’s Off Grid Electrification Strategy is to provide access to clean and sustainable electricity to millions of Nigerians.
It is also to develop a data driven off grid model for Nigeria that will become an exemplar for Sub Saharan Africa; utilise the funding from the Nigerian Electrification Project (NEP) as a catalyst to scale up rapid implementation of off- grid solutions across Nigeria and to increase gender inclusion in the Nigerian power sector.
Part of the plan also is for it to be used to promote the use of a decentralised, multi-demographic approach to power infrastructure delivery; to develop 10,000 mini grids by 2023 which will provide power to 14% of the population; increase economic growth in critical sectors such as Agriculture.
Another important and strategic objective of the government in respect of the off grid scheme is to provide reliable power supply for 250,000 Small and medium enterprises (SMEs); to provide uninterrupted power supply in Federal Universities and University Teaching Hospitals and deploy five million solar standalone systems for residential and SMEs by 2023; it is also intended to supports the FGN’s climate change obligations under the Paris Agreement.
Commenting recently on the off grid scheme of the federal government, Anita Otubu, head of Special Projects, Rural Electrification Agency (REA) noted: “Our sole mission at the REA is to provide access to reliable electric power supply for rural dwellers, and the launch of EXERON in Nigeria is a welcome development as it would contribute significantly to the realization of our objectives.”