NERC orders tripartite pacts for interconnected mini-grid licenses

…says mini-grid locations must be unserved, without interference with DisCos

The Nigerian Electricity Regulatory Commission (NERC), in a bid to expand electricity access, especially in unserved and underserved areas, has unveiled a new framework for off-grid power generation, making tripartite agreements a mandatory requirement for the approval of interconnected mini-grids.

Under the new regulatory directive, which was signed by Musiliu Oseni, Chairman of NERC, and sighted by BusinessDay, any developer looking to operate an interconnected mini-grid within a distribution licensee’s network must now secure a formal pact involving community representatives and the relevant DisCo.

This move is aimed at protecting investments and ensuring seamless integration between mini-grid developers and the national grid.

It stated that mini-grids below 100 kilowatts (kW) can be registered, but those above 100kW require a permit from NERC.

According to the regulation, a registered mini-grid operator who intends to operate as a mini-grid permit holder shall use the mini-grid tariff model, or such other methodology as may be approved by the Commission, in the determination of the tariff.

Also, where a registered mini-grid proposes any expansion, design modification, change in technology, change in point of common coupling, or capacity increase, the mini-grid developer shall apply to the Commission for an amendment or conversion of its registration, permit, or approved tripartite agreement, as applicable.

“The Commission may register the tripartite agreement and grant the mini-grid permit where the retail tariff is determined in accordance with the mini-grid tariff model and agreed by the parties, subject to the Commission’s approval; the interconnection agreement complies with the Technical Codes as applicable to the nature and size of the proposed interconnection; and the connected community has provided its consent in the manner prescribed under these Regulations.

“For a proposed interconnected mini-grid above 1 MW, or for any interconnected mini-grid for which the Commission so directs, the mini-grid developer shall submit a System Impact Study (SIS) in the form prescribed by the Commission.

“For the purpose of these Regulations, interconnected mini-grids of 1MW or below using solar photovoltaic, seeking to rely on the simplified interconnection pathway, shall be assessed by reference to the applicable operating mode and the standard technical conditions prescribed by the Commission.

“The mini-grid permit holder shall comply with the Act, terms and conditions of the mini-grid permit, the tripartite agreement, the agreement with the community or connected community as applicable, customer contracts, the rules and regulations, as well as the decisions, orders, and directions of the Commission.

“The mini-grid permit holder shall grant the Commission and its duly authorised representatives access to its sites and provide any information requested by the Commission.”

It also noted that if an audit reveals that a developer’s actual costs or revenues differ from their initial projections, the Commission will adjust the tariff model. Consequently, both the customer tariffs and the asset depreciation values will be recalculated and updated to reflect the actual value.

It added that the new tariffs, as adjusted, shall be applied within 30 business days of approval by the Commission.

“A mini-grid permit holder may request an account inspection by the Commission to update its tariffs and depreciated assets value by filing a formal request with the Commission. A community or connected community may request an inspection of accounts of the mini-grid operator by the Commission for the purpose of triggering a review of its tariffs, including a review of the fair value of any addition and/or retirement of capital assets, by filing a formal request,” it added.

For isolated mini-grids, the Commission said that the proposed mini-grid must be located in a designated unserved area and must not materially conflict with a distribution licensee’s network expansion plan approved by the Commission.

It added that where the proposed project area is expressly covered by a Performance Improvement Plan, investment plan, or other Commission-approved network expansion plan of the distribution licensee, the applicant shall submit written consent or a no-objection from the distribution licensee.

It also stated that the intended geographic location must not have been assigned to an Independent Electricity Distribution Network Operator (IEDNO), another mini-grid developer, or any other person authorised by the Commission to provide electricity service in that area.

“Any confirmation, objection, consent, or no-objection required from a distribution licensee under subsection (1)(b) of this section shall be addressed to the Managing Director of the distribution licensee and served at its headquarters, and the distribution licensee shall respond within fifteen (15) business days.

“Where the distribution licensee neglects, fails, or refuses to respond within the period specified in subsection (2) of this section, the distribution licensee shall be deemed to have issued a no-objection to the proposed isolated mini-grid for the purpose of these Regulations,” it stated.