NERC Launches Tariff Tool to Support Mini-Grid Expansion in Nigeria
The Nigerian Electricity Regulatory Commission (NERC) has just adopted a new tariff tool for mini-grids from the African Forum for Utility Regulators. This announcement was made public through a statement on the commission’s official X handle last Friday. The Nigerian Electricity Regulatory Commission announced that it has officially adopted and released the mini-grid Tariff Tool developed by the African Forum for Utility Regulators.
The Nigerian Electricity Regulatory Commission (NERC) said it has adopted a new tool to ensure fair pricing for mini-grid projects. Developed in collaboration with the African Forum for Utility Regulators (AFUR) and other stakeholders, the tool according to them will enhances the process of determining cost-reflective tariffs, promoting fair and efficient pricing. NERC stated that the newly adopted tool, created in collaboration with AFUR and other key stakeholders, will streamline the process of setting tariffs for mini-grid projects, thereby promoting transparency, fairness, and efficiency in pricing.
“The tool aligns with the implementation of the revised 2023 Mini-Grid Regulations by incorporating innovative features, including Portfolio Applications, which enable developers to register multiple mini-grid sites simultaneously through a single application. “This streamlined approach simplifies procedures, enhances regulatory efficiency, and leverages economies of scale, ultimately leading to lower tariffs for end-users of mini-grid projects.
The AFUR mini-grid tariff tool is set to be implemented in 30 African countries in the near future, which will help to promote regulatory harmony in the mini-grid sector and facilitate cross-border operations for project developers.
The commission expects the adoption of this tool to standardize regulations in the mini-grid sector, and simplify cross-border operations for project developers. As stated in the release, the tool, slated for rollout in 30 African countries, aims to lower end-user tariffs for mini-grid projects, thereby increasing access to affordable and reliable electricity.
As of Monday, December 16, 2024, the Nigerian Electricity Regulatory Commission (NERC) requires all mini-grid developers to utilize the AFUR mini-grid tariff tool when submitting permit applications.
A mini-grid is a localized, small-scale energy system that supplies electricity to a specific community, village, or consumer group. It usually functions independently of the national grid, serving a limited number of users. Mini-grids often harness renewable energy sources like solar, wind, hydro, and biomass.
According to experts, the expansion of mini-grids can help alleviate Nigeria’s power challenges, particularly given the frequent failures of the national grid. Notably, the Rural Electrification Agency has made significant progress, having constructed approximately 103 mini-grids nationwide through the Nigeria Electrification Project initiative. This development is expected to enhance the regulatory framework for mini-grids, as outlined in the amended Mini-Grid Regulations 2023 by NERC. Effective implementation could boost growth in the renewable energy sector and improve Nigeria’s electricity supply.