For an electricity distribution company (Disco) to take over investments in a mini grid electricity system within its network, it would have to adequately reimburse its investors for giving up the system, the Nigerian Electricity Regulatory Commission (NERC) has disclosed in a summary of its recent mini grid regulation.
According to the NERC, a Disco that eventually extends its electricity network to areas covered by a mini grid system, would have to pay its investors the value of the system, and an extra one year worth of the system’s revenue.
Additionally, the mini grid investor may decide to take away its generation facility, or become an embedded generator within the network.
In its explanation of the available exit path for an investor in mini grid systems upon the arrival of a Disco’s network at its site, the NERC said: “Disco takes over the mini grid network, compensate the mini grid (salvage value of network + 1 year revenue), mini grid may take away its generation facility or become embedded/emergency generator.”
The NERC had in pursuance of the National Policy on Renewable Energy and Energy Efficiency, issued three investment windows within which mini grid renewable energy projects could thrive in Nigeria.
It said the three windows included the net-metering for very small capacities below 1 megawatt; the feed-in tariff for capacities up to 5 megawatts of solar power, 10 megawatts of wind and biomass and 30 megawatts of small hydro; and then capacities above these thresholds which would be subjected to competitive tender to be procured through the Nigerian Bulk Electricity Trading Plc. (NBET).