Nigerian Electricity Regulatory Commission Mini-Grid Regulation 2016

In the end of 2016 Nigeria adopted the Mini-Grid Policy in order to regulate a sector of mini-grids and to create enabling environment for further investments in order to speed up electrification process.

The mini-grids are defined as electricity supply systems with its own power generation capacity between 0 kW and 1 MW size supplying power to more than one customer. The mini-grids can be either isolated (standalone) or interconnected (connected to the network).

Isolated mini-grids up to 100 kW can either apply for a mini-grid permit or register with NERC in order to be able to operate. Therefore, receiving permit is not obligatory. For projects between 100 kW and 1 MW size projects must apply and obtain permit from the NERC.

The interconnected systems must apply and obtain the permit with the NERC and to execute a tripartite contract with the community and the Distribution Licensee (DisCo).

In case of the national grid arrival to the area of the mini-grid operation the project owner has two possibilities: 1) either turn its mini-grid from isolated to an interconnected in the nature or 2) transfer all project assets to the national grid operator in return for a financial compensation. In the case asset transfer the financial compensation must be equivalent to the remaining depreciated value of the assets additionally increased by an equivalent of all the revenues gained over 12 months preceding the transfer.

The policy is structured in order to ease administrative burden on mini-grid developers and to shield the investors from the depreciating value of their assets in case of the national grid arrival. 

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