NERC approves licenses for mini-grid

The Nigerian Electricity Regulatory Commission (NERC) has said power distribution firms have permission to begin the development of mini-grids to augment electricity supply to households, businesses and institutions in the country.

NERC’s position, which was contained in a Draft Mini-Grid Regulation 2016 obtained by our correspondent in Abuja, noted that on that electricity distribution companies could now use mini-grids as a bridge technology to accelerate their electrification activities.

It added that the mini-grid regulation was specifically designed to accelerate electrification in areas without any existing distribution grid and areas with an existing but poorly electrified or non-functional distribution grid, especially but not limited to rural areas.

Mini-grid means any electricity supply system with its own power generation capacity, supplying electricity to more than one customer and which can operate in isolation from or be connected to a distribution licensee’s network.

Within the regulations, the term mini-grid is used for any isolated or interconnected mini-grid generating between zero Kilowatt and one megawatt of generation capacity.

NERC said “If the power distributed by the isolated mini-grid is larger than 100 kW, 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.”

To encourage mini-grid development, the commission said cost-reflective retail tariffs would be utilised, adding that tariffs would be higher than the current electricity distribution company’s retail tariffs.

The commission, however, said the tariffs would be lower than any electricity supply of the same quality generated from conventional sources in such areas.

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

“The Discos 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.”