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Since the Nigerian Electricity Regulatory Commission (NERC) has created the window of Off-grid (Mini-grid) electricity delivery services to serve populations away from the national grid, a lot of investors have cashed in.
The Founder and Chief Executive Officer, Energy Mix Hub (EMH), Mona Garrick is one of the pioneer investors in the sub-sector and the company has deepen its service delivery with three power supply models.
In an interview, Garrick averred that with a population of more than 180 million people, solar is slowly infiltrating every part of the society. “Presently, we have utility-scale solar plants, rooftop solar, mobile electricity systems as well as mini-grid solar systems all making an impact within the sector in one way or another. “Furthermore, collaboration between the Nigerian Rural Electrification Agency (REA), the World Bank and the Rocky Mountain Institute (RMI), recently found out that developing off-grid alternatives to complement the nation’s grid could create a $9.2billion/year (N3.2trillion) market opportunity for mini-grids and solar home systems investors that will save $4.4billion/year (N1.5trillion) for Nigerian homes and businesses. “However, common barriers to off-grid market growth include investors viewing the Nigerian market as being too risky in operational and financial terms, leading to poor access to project financing.” “Clarifying the issues around in the sector and providing solutions through this particular workshop from financial, operational, legal and regulatory perspectives will allow for better appreciation of the opportunities involved.”
According to him, “It is awakening entrepreneurial instincts, giving life to innovative payment models and promising to restore some hope in the Nigerian government’s ultimate goal of providing electricity to citizens who are used to frequent blackouts or no power at all.
Apart from Off-grid window, NERC also created another investment opportunity in the Mini-grid sub sector.
By law, Mini Grid Regulation is specifically designed to accelerate electrification in areas without any existing distribution grid (unserved areas) and areas with an existing but poorly electrified or non-functional distribution grid, especially but not limited to rural areas.
Key provision of the regulation include the promotion of “The engagement of the private sector, communities, non-governmental organisations and other stakeholders in achieving nationwide electrification, and it seeks to minimise major risks associated with mini grid investments such as: Sudden tariff changes, as tariffs would have been agreed in advance by the relevant parties; and stranded mini grid operator investments due to the connection of the main grid to mini grid in circumstances where the main grid has been extended to cover the mini grid area. In such cases, a fair compensation mechanism would be applied for mini-grid operators that choose to exit.
“Isolated mini-grids up to 100kw of distributed power require registration, while isolated mini-grids larger than 100kw of distributed power and up to 1mw of generation capacity require permit.” “Interconnected mini-grids larger than 100kw of distributed power and up to 1mw of generation capacity, the connected community the Mini Grid Developer and the distribution licensee have to sign a tripartite contract which becomes binding for all parties upon approval by the commission, permit is required, while, all mini-grids larger than 1MW must apply for a full licence.”
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