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Trilateral Exchange between Uganda, Zambia and Nigeria on investment-friendly regulatory framework for mini-grids

Lagos, Nigeria – Over twenty policy-makers from Nigeria, Uganda and Zambia participated in a four-day exchange on “Developing and implementing an investment-friendly regulatory framework for mini-grids”. The Africa EU Renewable Energy Cooperation Programme (RECP) organised the exchange with the support of the Nigerian Energy Support Programme (NESP) from July 9-13, 2018, in Lagos, Nigeria. The objective was to exchange best practices and experiences on how to regulate mini grids while attracting private investments. The exchange included sessions with financiers and project developers in addition to a site visit to the 85kWp Gbamu Gbamu solar mini grid in Ogun State, Nigeria.

 

(Photo source: RECP)

The exchange was timely as both Uganda and Zambia are moving at different stages of master planning; rural electrification strategy development; and tendering in their efforts to promote rural energy access. Moreover, Nigeria, as host country, demonstrated its relatively advanced ‘light-handed’ regulatory framework for private sector financed mini-grids below 1MW. Since 2017, 6 isolated partly private sector financed solar mini grids were commissioned in 5 States, of which four were partly financed by crowdfunding. Participants of the exchange engaged in active discussions covering planning and site identification, regulations, due diligence requirements, tariff approval best practices, and financing.

By reflecting on the successes and challenges of mini-grid market development in Nigeria, participants explored how lessons learnt can be applied in the Ugandan and Zambian contexts. In particular, participants discussed options to ease the licensing for small mini-grids below a certain capacity, of which a simple registration process was underlined as an effective way to facilitate private sector’s participation. Other options included replacing a full environmental impact assessment with a simpler ‘project brief’ especially for solar projects. Finally, participants reflected on options for compensation when the grid arrives. Nigeria’s “Mini Grid Regulations” document inspired participants with possible solutions that can be adapted according to each country’s conditions and needs.

Discussions during the exchange concluded that besides a sound regulatory framework, there are additional underlying factors behind the success stories in Nigeria. For example, the active role of the State Government in accelerating the procurement process of mini grids was key in Nigeria. The power regulator’s efforts to raise awareness through regular campaigns –where communities engage from the first consultations to site handover– were also highlighted. It was also noted that Nigerian developers have demonstrated their competitiveness in the market. So far, they have led the development of most mini grids in the country. Therefore, Nigeria enjoys a higher local participation that affected projects’ costs positively.

RECP has been financed by the European Commission, The Netherlands, Germany, Austria and Finland.

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