The Nigerian Electricity Regulatory Commission (NERC) has officially adopted the African Forum for Utility Regulators (AFUR) mini-grid Tariff Tool, a notable step in addressing electricity access challenges in the country. This innovative tool ensures fair and cost-effective pricing for mini-grid projects, enhancing the regulatory system for Renewable Energy solutions. This announcement on their official X handle on Friday marks a milestone in the country’s efforts to improve electricity delivery. Developed collaboratively with AFUR and other stakeholders, the tool streamlines the process of determining Tariffs that reflect the actual cost of mini-grid projects, thereby promoting efficiency and affordability.
Furthermore, the newly introduced tariff tool brings significant advancements, including a feature called Portfolio Applications. This feature allows developers to register multiple sites under a single application, reducing bureaucratic hurdles and promoting economies of scale. Such efficiency is expected to lower end-user tariffs, making electricity more affordable for rural and underserved communities. Another critical aspect of the tool is its potential to harmonise regulatory practices across African countries. Over the next few years, it will be rolled out to 30 nations, creating a consistent regulatory framework for local energy network projects across the continent.
Mandatory use and implementation of the new electricity development.
Starting December 16, 2024, all developers must use the AFUR local energy network Tariff Tool for their permit applications. This mandate aligns with the recently amended Mini-Grid Regulations 2023 to promote renewable energy and ensure equitable electricity distribution. However, the energy is localised energy solutions designed to serve specific communities, often isolated from the national network. They are typically powered by renewable energy sources such as solar, hydro, biomass, and wind. In the region where the national grid faces frequent breakdowns, this will offer a promising alternative for reliable electricity access.
Globally, over one billion people lack access to electricity, with a significant portion residing in rural off-grid communities. These developments are increasingly seen as a cost-effective solution to bridge this gap. According to the International Energy Agency, the option could provide electricity to more than a third of the 1.1 billion people without access. Unlike other decentralised energy solutions, such as solar lanterns or home systems, this option offers the capacity to support both basic and advanced energy needs. From lighting and phone charging to welding and milling, it delivers power comparable to the national grid.
Benefits of this new tool for ensuring sustainable energy supply.
Local energy networks present many advantages over traditional network extensions and other decentralised energy solutions. One notable benefit is their adaptability. These systems can be designed to suit specific locations, making them ideal for hard-to-reach areas like islands, mountains, and rocky regions. Moreover, it can integrate seamlessly with the national network if built to appropriate specifications. Another advantage lies in reducing power losses. Traditional power transmission over long distances leads to significant electrical losses, which are compounded by the region’s outdated infrastructure.
It, however, generates power close to where it is needed, minimising technical losses and ensuring better power quality and reliability. Hybrid local energy network systems, which combine renewable sources with backup options, offer greater reliability than the current national network. These systems ensure continuous Power Supply even when one energy source is unavailable. This makes it a dependable solution for underserved and unserved areas, contributing to improved living standards and economic progress. It’s vital in the fight against energy poverty. By delivering affordable, reliable, and scalable power, they enable communities to thrive.
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For this network to fulfill its potential, stakeholders must implement policies and regulations effectively. The AFUR new tariff tool provides a foundation for this by creating a transparent and efficient regulatory process. With proper execution, Nigeria’s renewable energy sector can witness unprecedented growth, providing millions with the electricity they need to improve their quality of life. As the world moves toward a Sustainable Energy future, this new development is emerging as a game-changing solution, particularly for remote and underserved regions.