Where do you look to find a competitive mini-grid market?

It is estimated that some 83 million Nigerians do not have access to modern electricity, with millions more suffering from chronic undersupply resulting from frequent loadshedding and power outages. In response to this challenge, the mini-grid market has taken hold.

This article first appeared in ESI Africa Issue 2-2020.
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The lack of access to energy is directly affecting livelihoods, lowering quality of life and hindering socioeconomic development, states Dr Sanusi Ohiare, the Executive Director, Rural Electrification Fund of Nigeria’s Rural Electrification Agency (REA) and expert panellist at the upcoming African Utility Week and POWERGEN Africa conference and exhibition in Cape Town in November.

To support the Federal Government of Nigeria’s rural electrification strategy outlined in the Rural Electrification Strategy and Implementation Plan (RESIP), the Agency established a Rural Electrification Fund (REF) to help finance rural electrification expansion in Nigeria, explains Dr Ohiare.

Under his direct supervision, funds are used to promote costeffective expansion of electricity access in un-electrified rural areas, evenly, across the different geopolitical zones using both centralised and decentralised electrification solutions through partial one-off capital grants and/or technical assistance.

Dr Ohiare, tell us more about current and future REA projects that are motivating the rise of mini-grid development.

The Rural Electrification Fund Call 1 is ongoing. This is funded from the National budgetary allocation. With this, 12 mini-grid projects ranging between 30kW and 100kW with a total capacity of 1,016kW would be generated to provide over 5,528 connections; and 14 solar home system projects with a total capacity of 245W, which would provide 20,000 units; both to be deployed across the six geopolitical zones in Nigeria. While plans are already in place to commission completed mini-grid projects, Rural Electrification Fund Call 2 has commenced.

With our innovative approach to achieving a more equitable regional access to electricity in Nigeria, and with support from the European Union and the German Government through the Nigerian Energy Support Programme (NESP), we are developing the mini-grid and the inter-connected mini-grid market in Nigeria through the Mini-Grid Acceleration Scheme (MAS) and the Inter-connected Mini-Grid Acceleration Scheme (IMAS). This would provide access to electricity to 21,000 and 15,000 customers across Nigeria with funds of €6 million and €3 million respectively.

This programme is also implemented by REA via a non-site specific open competitive tender as well as supporting the piloting of Interconnected Mini-Grid (business models) projects in 10 Disco regions by September 2020 with an in-kind partial capital grants of €3 million covering meters and up to 50% of grid refurbishment/extension (cables and poles).

Today we are exploring other opportunities to improve electricity access in Nigeria. Hence, we encourage collaborations between and within key stakeholders in the electricity supply industry, private developers, community groups and other relevant ministries, departments and agencies to gradually lead us to achieving the government’s electrification targets. These targets are increasing the proportion of the Nigerian population with access to electricity from about 40% today to 75% by end 2020 and 90% by 2030 with at least 30% of renewable energy technologies.

I am also particularly excited about the prospects of a new programme we are working on, themed: Energising Agriculture Programme. It promises to revolutionise farming in Nigeria, increase productive activities and create jobs, as well as build capacity of renewable energy.

Apart from rural electrification efforts, what progress has Nigeria achieved in the energy sector and what is being done at the moment?

Nigeria has made remarkable efforts in the last three years in the power and energy sector. The privatisation of the power sector in November 2013 is the basis for a transition into a rule-based, efficient and reliable electricity market. Under the umbrella of the Electric Power Sector Reform Act, new institutions have been established and policies have been designed that will mainstream these new principles into the different sub-sectors. Also, the approval of the National Renewable Energy and Energy Efficiency Policy is a clear sign that the potential of clean energy technologies for the promotion of a reliable and sustainable electricity sector has been recognised. It is an important step toward harmonising the previously scattered policy landscape in the clean energy sector.

The Nigerian Government has prepared the Power Sector Recovery Programme (PSRP) to address the causes of poor performance in grid-connected electricity service delivery. Approved by the Federal Executive Council in March 2017, the PSRP includes measures to improve the financial viability of sector companies, increase power supply, and strengthen sector governance and contract enforcement, de-risking the sector for private investment and putting it on a path to long-term sustainability.

The President approved the Rural Electrification Strategy and Implementation Plan (RESIP) in July 2016. The RESIP calls for a particular focus on underserved rural populations and rural institutions such as schools, health centres, and administrative buildings as well as rural businesses, farms and enterprises for job creation and economic development. The strategy aims to facilitate the entry of new market participants, especially the private sector. Furthermore, it provides for diverse approaches, including a bottom-up approach through spontaneous initiatives by project proponents as well as a top-down approach through organised large-scale procurements.

How important are mini-grids to achieve these goals?

The mini-grid sector in Nigeria started to develop only recently as most operators were established in the past five years.

Today, we have several mini-grids in the country and we continue to attract investments into this space every day. This is largely due to the efforts at developing a legal and institutional framework for mini-grids by the Regulator and REA. In 2017, the Nigerian Electricity Regulatory Commission (NERC) adopted the Regulations for Mini-Grids (the Regulations).

The Government has made recent efforts to establish a comprehensive framework for mini-grids to increase its penetration in Nigeria. We are committed to rolling out several hundred mini-grids to connect un-electrified customers. Our model is to incentivise and create an enabling environment for the private sector to lead this rollout. We are providing grants both to solicited and unsolicited mini-grids. Finally, my office, the REF, has released its operational guidelines, which were approved in October 2017, and issued its first call for expression of interest for off-grid projects.

At the upcoming African Utility Week and POWERGEN Africa you are part of the session on funding for effective mini-grid project rollout and scale up – can you give us a sneak preview of what your message will be at the event?

My message would centre on the need for investors to look to Africa as a ready and viable ground for their investments in renewable energy. The African mini-grid market today has reached an inflection point – costs are competitive with alternatives like diesel and petrol generators, and projects are moving away from grant funding to commercial investment.

There is a clear path to scale for mini-grids in Nigeria and in Africa at large, which builds on the foundation of experience with projects to date; the time is right for investment in Africa as we have enormous market potential to support such growth. Investors should open to provide access to finance and also encourage mini-grid development.

Good governance is also a fundamental prerequisite to get the bilateral and multilateral funding needed to develop large infrastructure projects. In general, regional cooperation involving inter-state agreements can make large projects viable by aggregating demand to the level necessary for a viable commercial case for investment. It also offers opportunities to share the output and benefits among countries to address electricity supply deficits and support economic development. ESI

Feeling inspired by the unlimited and life-changing potential of mini-grids? Meet renewable pioneers like Dr Sanusi Ohiare (pictured right) at the African Utility Week and POWERGEN Africa conference in Cape Town. www.african-utility-week.com

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