PowerGen has installed a new mini-grid in Nigeria and has signed a contract to develop nine more similar installations. Its investments in the country’s booming off-grid market are backed by the World Bank.
On Dec. 7, the Kenya-headquartered off-grid systems developer connected a mini-grid system in the community of Rokota, Niger State. The project serves about 3,000 people with reliable clean energy, it said. PowerGen also recently signed an agreement to develop nine more mini-grids throughout the state, which is Nigeria’s largest.
REA Nigeria said the projects are all supported by the World Bank’s $550 million program for off-grid energy development in Nigeria, which they jointly operate.
Mini-Grid Acceleration Scheme
The World Bank’s Performance-based Grant Scheme is not the only initiative aimed at ramping up Nigeria’s mini-grid sector, as REA Nigeria recently ran a tender based on its so-called Mini-Grid Acceleration Scheme (MAS). The four developers that won the MAS tender will deploy their mini-grid projects with an “in-kind partial capital grant” in the form of procured distribution and metering equipment, as well as technical assistance.”
A spokesperson for REA Nigeria said that the four winners will “build a total of 24 mini-grids to meet up with the required minimum connections of 3,500 [per lot] with each mini-grid not exceeding 1 MW.” They will build the PV-powered mini-grids in the states of Niger, Oyo, Anambra, Delta and Edo. The installations are expected to be operational by the end of July 2020.
The association emphasized the importance of the public-private partnership approach used in the MAS tender. However, private developers will own all of the projects, similar to the World Bank’s scheme. The developers and the communities will negotiate the tariffs at which the electricity will be sold, in line with Nigeria’s Multi-Year Tariff Order (MYTO).
The MYTO is a tariff model established by the Nigerian Electricity Regulatory Commission (NERC) “that seeks to reward performance above certain benchmarks, reduce technical and non-technical commercial losses, and lead to cost recovery and improved performance standards from all industry operators in the Nigerian electricity supply industry,” said REA Nigeria.
Specifically, MYTO “is used to set wholesale and retail prices for electricity in the industry by employing a unified way to determine total industry revenue requirement that is tied to measurable performance improvements and standards,” the REA Nigeria spokesperson added.
The MAS is supported by the European Union and the German government in cooperation with the Nigerian Energy Support Program (NESP) and Germany’ GIZ development agency.
The Interconnected Mini-Grid Acceleration Scheme
REA Nigeria said that the MAS should not be confused with the Interconnected Mini-Grid Acceleration Scheme (IMAS). Both programs are funded by the same stakeholders via the Nigerian Energy Support Program, but the IMAS “has both a mini-grid and a grid element where a mini-grid and grid are interconnected,” REA Nigeria explained. Just like the MAS, the IMAS is also implemented by the association via an open competitive tender that is not site-specific.
The IMAS will support interconnected mini-grid pilot projects in 10 different electricity distribution regions. It is designed to facilitate electricity access for 15,000 customers by September 2020, with in-kind partial capital grants of €3 million. It will cover meters and up to 50% of grid refurbishment and grid extension (cables and poles).
Tariffs under the IMAS will also follow the MYTO model, and REA Nigeria is expected to publish the winners of the tender in the coming months. The deadline to register for IMAS and submit bids was Aug. 14, 2019.