Nigeria has promised to make clean and stable electricity supply accessible to 300,000 homes and 30,000 business outfits in the country in the next four years, its Rural Electrification Agency (REA) confirmed this in a news release.
REA, which is saddled with the task of taking electricity to the country’s unconnected communities and people, explained that it has launched a private sector led mini grid program to ensure this happens.
It said electricity access remains low in Nigeria, with 80 million people lacking access, particularly in rural areas, and that to fix this, it would implement a World Bank-backed Nigeria Electrification Project (NEP) – aiming to scale up investment in mini grid and off-grid solutions.
The REA noted that the NEP would have mini grid and solar home system components in its offering, adding that the mini grid component aims to extend electricity services to 300,000 households and 30,000 enterprises in rural areas by 2023.
“The component is private sector led and provides viability gap subsidies to mini grid developers under two funding windows,” said the REA, which explained the first window will distribute viability gap subsidies to 250 sites selected by it through a minimum subsidy tender to help kick-start the industry at scale.
“Under the second window, developers can apply for performance-based grants of US$350 per connection for sites of their choice on a rolling basis,” it further stated.
Mini grid minimum subsidy tender
Providing more details on the funding windows, REA said the mini grid tender will be implemented in two phases, with the first phase already launched in April, and expected to become operational in 57 sites across four states – Ogun; Cross River; Sokoto; and Niger, for which detailed market intelligence will be provided to the developers through a secure, web-based platform.
It stated: “These sites will be packaged into four lots (one per state) to achieve economies of scale. In the second phase, the remaining sites will be included, to achieve a total of 250 sites.”
Successful bidders, it clarified will be required to build, own, and operate solar hybrid mini grids in the sites they were awarded, while proposals will be evaluated based on quality technical and commercial business plan, as well as price to serve a pre-defined number of customers in each site.
The REA said it will also provide performance-based grants per connection, with the amount determined competitively through the tender.
“The grants will be disbursed after verification of customer connections and satisfactory service delivery,” it said.
Mini grid performance-based grant program
On the other hand, REA stated there would be the mini grid Performance-Based Grants (PBG) Program, aimed at closing the viability gap for mini grids developed on a spontaneous basis.
“Grants of US$350 per connection are available on a first-come first-served basis. Eligible projects are solar hybrid mini grids in unserved areas. Applications for performance-based grants will be accepted on a rolling basis until available funds are exhausted (US$80 million). The grants will be disbursed after verification of customer connections and satisfactory service delivery,” it explained.