• Friday, June 21, 2024
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BusinessDay

Nigeria’s micro-grid investments trapped on framework regularisation delay

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The inability of the Federal Ministry of Power and Nigerian Electricity Regulatory Commission to commence the operation of mini grids in industrial clusters to ease power challenges, one year after the policy initiative was announced is halting progress in the  country’s industrial sector, increasing manufacturing cost and hindering investments.

This failure may have cost the country some of the over $90million in investments the World Bank and other groups have invested in other African countries including Kenya, Liberia, Mali and Tanzania according to data sourced from the World Bank.

On July 29, the Nigerian Electricity Regulatory Commission (NERC) and the Manufacturers Association of Nigeria (MAN) formed a technical committee with nominations from the commission and MAN to develop the framework that would surmount associated financial and technical impediments to realising the objective.

“NERC said it has submitted the proposal to the ministry of power to draft regulations that will make it operational. I don’t know whether the regulations are out, but I don’t think anything has been done apart from what we submitted to NERC which they said was submitted to the ministry of power,” said Ambrose Oruche, director, economics and statistics department, MAN in response to BusinessDay enquiries.

A source contacted at NERC confirmed that the committee was raised but cannot say if anything tangible has been achieved from it. “A press release will be sent out if anything happens on it,” the source said.

Consequent upon the decision reached last year, a technical committee with nominations from NERC would be coordinated by MAN, to develop the framework that would surmount associated financial and technical impediments to realising the objective.

The committee considered the option of an arrangement to upgrade licenses of captive electricity generators with excess capacities, to supply firms within their vicinity through commercial arrangements that would be jointly beneficial to the electricity distribution companies and the industries.

The framework on the micro grid is expected to adapt the NERC’s regulations on Embedded Generation, which is applicable when electricity is generated and consumed within a distribution network and Independent Electricity Distribution Network, which permits development of electricity distribution to an area yet to be developed by a distribution company.

Lack of regularisation of this policy is hurting industries whose operating costs have skyrocketed. Frank Udemba Jacobs, national president of MAN, recently said that his members have been spending an average of N9bn daily to generate electricity in their factories.

Data from Genset Import/Export Trade indicate that Nigerians spent N10 billion in 2015 on importation of diesel generating sets to power factories.

Micro grid projects currently in operation in the country are those run by the Bank of Industry (BoI) like the 24kilowatts (kw) micro-grid solar solutions in some states including Osun, Anambra, etc, Schneider Electric and GVE Projects Limited in some northern states.

Elsewhere, mini grids represent the next frontier of investments, as failing national grids and transmission infrastructure make mini-grids an attractive investment.

Navigant Research, a US-based market research and consulting team, which analyses global clean technology markets, reported that worldwide revenue from the technologies that enable micro-grids to function is expected to grow to $26 billion in 2023.

“Mini grids are most attractive in very remote areas where it is just very expensive to extend the grid,” said Alexander Ochs, director of the Climate and Energy Programme at Worldwatch Institute.

The World Bank and other multilateral partners are financing mini grid investments under the Energy Sector Management Assistance Programme (ESMAP) mini grid facility for technical assistance.

“We believe mini grids can offer a promising solution to provide electricity to many rural communities and we are committed to working with these communities to explore their viability,” said Diaretou Gaye, World Bank Country Director for Kenya.

ISAAC ANYAOGU