1 VIABILITY OF SOLAR ENERGY BASED ELECTRICITY GRID- REGULATORY CHALLENGES AND OPPORTUNITIES Nigerian Electricity Regulatory Commission, Abuja Presentation at the Nigeria Solar PV conference held at the Lagoon, Ozumba Mbadiwe, Victoria Island, Lagos. 13 th November 2014

2 Outlines 1. Introduction 2. Solar Energy-Based Power Supply 3. Barriers 4. Policies/Regulatory Framework 5. Incentives 6. The challenges of Grid Connected Solar Energy Power 7. Conclusion

3 Introduction l Electricity is a required input for economic growth and an indicator of the level of development of a country l A successful economy depends on secure, safe and efficient supply and use of electricity l Access to electricity in the rural area will reduce the rural – urban drift and enhance development of rural economy l Nigeria has enormous solar energy potential as shown in the map below. l However it is not currently exploited in significant capacity

4 Yearly average of daily sums of global irradiation in Nigeria Source: European Commission, Joint Research centre

Barriers l Grid supplies are usually the cheapest option in areas with high load densities, as well as in areas near the grid. l However, a number of challenges militates against grid- connected solar-energy- sources Electricity supply  High costs of installation and wiring provided by utilities are high,  Large land area required  Not dispatchable (can not respond to automatic generation control signals from the control center)  Connecting small, isolated villages to a grid can be expensive because of the necessary investment in transmission lines, poles, transformers, and other infrastructure  Solar PV power come in relatively small size and are best connected to low voltage lines whereas NBET buys power only at transmission voltage 5

6 Policies l The National Energy Policy provides for :  Increase renewable share of power supply  The Draft Renewable energy master plan provides for 18% of the electricity Installed capacity from renewable energies not including the existing large hydropower by the year  Key policies to drive the development of solar are as follows: –The nation shall effectively harness solar energy resources and integrate them with other energy resources. –The nation shall promote the use of efficient solar energy conversion technologies, such as use of photo-voltaic and concentrated solar panels for power generation. –The nation shall promote solar energy generation for productive use. –The nation shall intensify efforts to increase the percentage of solar energy in the present energy mix.

General Incentive l The following incentives are implied in the feed-in tariff.  Guaranteed market  Priority Grid connection and offtake  Simplified Licensing /permit process  Concessionary tariff rates  Facilitated land acquisition/ site access l Other recommended policy incentives include  Tax holidays  Import duty exemptions  Investment Tax Credits 7

Regulatory instruments provided by NERC l Feed in Tariff methodology l Draft Standard PPA l Draft Licensing guideline l Interconnection guidelines l Draft Incentive proposal for RE l Embedded generation regulation. 8

Feed-in Tariffs l Feed-in tariffs refer to a minimum guaranteed price per unit of produced electricity as approved by the regulator, to be paid to the producer, or as a premium in addition to market electricity prices. l Regulatory measures are usually applied to impose an obligation on electricity utilities to pay the (independent) renewable energy power producer a price as specified by the government. l The level of the tariff is commonly set for a number of years to give investors security on income for a substantial part of the project lifetime 9

10 Conclusion l Nigeria is currently assessing the various regulatory, policy and incentive options, given that each approach has its pros and cons.

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