Evaluation of Mini-Grid Technology, Policy and Regulatory Framework in Nigeria

Abstract

The NERC 2016 since coming into force has received very little academic attention. This paper provides an evaluation of mini-grid technology, policy and regulatory framework in Nigeria. The study utilized one primary study area (Aba-Gbooro), and 37 secondary locations, one in each of the 36 states of the Federation and one in the Federal Capital Territory (FCT). Two load profile scenarios were considered: the base case load and a second scenario that incorporated Anchor and Business load at the same peak load. The paper utilized HOMER for the simulation using Solar PV (PV)), Diesel Generator(G), Storage Battery(B), Converter and Hydro (H). The Hybrid of PV+G+B+C architecture was recommended for 25 states while for 11 states with mini hydro (H) potential, hybrid of PV+G+B+C+H was recommended for few locations with hydro potential. The LCOE for the PV+G+B+C at 25% interest rate was $0.481, higher than for the PV+G+B+C+H with LCOE of $0.302 for the same load profile. The LCOE was also found to be higher at higher at higher interest rates. Renewable energy (RE) penetration also increased with lower interest rates. Subsidy as high as 75% (on capital costs only) did not lead to tariff parity with the grid. The paper then made a case for feed-in tariff as a complementary policy to increase investment in mini-grid and increase RE penetration. Anchor and Business load gave rise to increase in the load factor from 0.4 to 0.86 and resulted in lower LCOE compared to the base case. This suggests stronger SME initiative support in the rural areas is germane for mini-grid development.