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Repositioning On-Grid Power Supply in Nigeria: How renewable energy can solve electricity gap

By Musa Yaji

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Nigeria, considered as the most populous nation in Africa is endowed with large oil, gas, hydro and solar resources. Its energy sector alone has a huge capacity of generating thousands of megawatts of electricity to serve its teeming population and creating employment opportunities.

However, there are several factors hindering the effective growth and development of the sector ranging from insufficient and faulty distribution and transmission lines as well as inadequate knowledge, resources and financing to deploy innovative solutions.
According to the International Trade Administration, the power generation mix in Nigeria comprises of 80% thermal and 20% hydro.

Also, according to the Nigerian Electricity System Operator, the country’s installed power generation capacity is about 13,014 Megawatts from its grid-connected generating plants. Sadly, it is only able to dispatch around 4,000 MW daily, which is insufficient for a country of over 195 million people, due to insufficient transmission and distribution lines amongst other challenges.

As a result, the support for mini-grid development has increased. Mini-grids which are stand-alone power generation systems have capacity to provide electricity to multiple consumers through a distribution network. They are different from independent power plants connected to the central grid.
Indeed, the mini-grid regulation of 2016, is designed to promote investments in rural electrification.

Repositioning On-Grid Power Supply in Nigeria: How renewable energy can solve electricity gap

It also provides a framework for engagement between mini-grid developers, rural community stakeholders and existing distribution companies. Furthermore, in an effort to bridge the huge infrastructural gap in the power sector, the Federal Government of Nigeria (FGN) in July 2021 signed an implementation agreement with the Siemens Company of Germany.

In the agreement, Siemens promised to create an electrification roadmap in a bid to resolve existing challenges in the sector and expand Nigeria’s capacity to manage the future power needs. Thus, Siemens is to deliver 7,000 megawatts of electricity by 2022.

In complementing the efforts of the FGN, the Nigerian Energy Support Programme (NESP) -a technical assistance programme co-funded by the European Union and the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in collaboration with the Federal Ministry of Power – sets as one of its overall objectives to contribute to the improvement of the energy sector especially on on-grid power generation.

As part of the drive to improve capacity of on-grid power, NESP introduced the Premium Grids concept which is an innovative concept with a holistic vision to develop on-grid clusters in particular areas that deliver premium services to end-users.

It combines two major regulatory arrangements which are Electricity Distribution Franchising and Embedded Generation, with a view to ensure sustainable power supply in specific ring-fenced feeders.

Electricity distribution franchising on the one hand entails the business model applied by a distribution company to authorize a third party to take partial or full control of its functions, duties, and responsibilities with regards to the provision of electricity services within a pre-defined area.

Embedded generation on the other hand, according to the regulation in Nigeria, is a generation system (1 – 20MWP) that is directly connected to and evacuated through a distribution network.

Premium Grid (PG) generally means any electricity distribution franchising project supplied by a combination of power delivered by the Distribution Company (DisCos) and an Embedded Generator that aims to deliver a 24/7 reliable power to a ring-fenced area.

As a result of the efforts put in by NESP, the Programme was able to provide technical assistance to 3 DisCos (Abuja, Kaduna and Kano) towards the development of PG projects, including the preparation of Walk-Through Audits which revealed the technical, economic and financial potentials of the projects. In total, these projects if completed, could lead to about 94 MW generated by solar PV.

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In the same vein, the NESP programme developed PG training modules, and delivers capacity building workshop series to empower and create more awareness on the concept of Premium Grids across the public and private sector including DisCos, private developers and public and financial institutions.

Similarly, it successfully deployed the Interconnected Mini-Grid Acceleration Scheme (IMAS) which is an initiative managed by the Rural Electrification Agency, with the support from NESP in partnership with Distribution Companies across Nigeria. Following the completion of the tender process, NESP now provides in-kind grants and technical assistance to 8 selected developers to develop interconnected solar mini-grid projects in selected rural/peri-urban areas in the different DisCo regions.

As the term already implies, Interconnected Mini-Grids are directly linked to a distribution network, which makes them a good solution to provide underserved communities with reliable and affordable electricity supply. Depending on the ability of the private sector, between 18 and 24 solar mini-grid projects will be deployed in 2022 under the IMAS project, serving clean electricity to around 138,000 people in Nigeria.

The supported developers are: A4&T Power Solutions, ACOB Lighting Technology Ltd, Darway Coast, GVE Projects Limited, Havenhill Synergy Ltd, NAYO Tropical Technology Ltd, Sosai Renewable Energies Company, and Rubitec Solar Ltd.

During the programme implementation, these mini-grid developers received trainings and participated in workshops on interconnected mini-grids (IMG) project development, which will facilitate the deployment, scale-up and replication of the projects in a sustainable manner.

Consequently, the framework for IMGs was further supported by the development of a Distribution Use of System Fee calculation tool approved by the Nigerian Electricity Regulation Commission (NERC) and published on the NERC website. The tool supports with facilitating the negotiation between DisCos and developers, as well as provides input to calculate end-user tariffs for the IMG.

Subsequently, the Programme gave birth to the development of agreement templates to facilitate project development as well as the preparation of Information Memos and Pitch Decks for investment outreaches in support to accessing finance for the project development.

It will be recalled that since 2018, NESP indirectly contributed to sector efficiency, through direct contribution of market intelligence data, most notably in following areas: mapping of existing distribution grid (11 kV and 33V), identifying and mapping extents of settlements in Nigeria, along with provisioning of socio-economic data within rural areas.

The achievement on these giant strides has seen 22 Nigerian states so far fully covered under the mapping scheme with over 60,000 km of electricity grid data collected, more than 300,000 settlements identified, and virtually 4,000 settlements and 3,2 Mio buildings mapped in greater details. All data can be accessed on the Nigeria SE4All Platform (www.nigeriase4all.gov.ng).

The collected data will support private developers and DisCos in identifying potential renewable energy project sites across the country and its accurate planning.

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