New electricity act game-changer for renewable energy –

The brand new Electrical energy Act 2003 signed into regulation by President Bola Tinubu, will for the primary time enable suppliers of vitality from renewable sources, resembling photo voltaic, wind or water, to obtain a value for what they produce based mostly on the era prices, a growth consultants say will enhance the sector.

The brand new Electrical energy Act mandates the Nigerian Electrical energy Regulatory Fee (NERC) to arrange and supply feed-in tariff charges for electrical energy generated from renewable vitality sources as a method of encouraging funding in renewable vitality energy era.

In accordance with the Act, the tariff price can be assured for a interval of 10-15 years and subsequently be topic to evaluation each two years.

In figuring out the tariff, NERC is required to issue the value differential between the acquisition value of electrical energy generated from renewable vitality sources and the value of electrical energy bought from different sources.

Beneath the brand new regulation, electrical energy era licensees are obligated to fulfill renewable era obligations as could also be prescribed by the NERC.

This means that electricity-generating firms can be mandated to generate energy from renewable vitality sources, buy energy generated from renewable vitality, or procure any instrument representing renewable vitality era thus opening the sector for important investments.

Basically, the purpose of the act is to create a marketplace for renewable vitality, thereby stimulating investments within the sector, analysts at Brickstone Africa, an infrastructure advisory service famous of their evaluation.

The brand new regulation additionally mandates the imposition of renewable buy obligations on distribution or provide licensees.

“The purpose of imposing renewable buy obligations on distribution licensees, provide licensees, and bulk clients is to foster the consumption of vitality produced from renewable vitality sources and thereby stimulate the expansion of the renewable vitality market in Nigeria,” mentioned Chinedu Kema, vitality lawyer and companion at Dentons ACAS-Legislation follow.

One other vital provision within the new act is bringing in personal funding into the sector. “Anybody could assemble, personal or function an enterprise for producing electrical energy not exceeding one megawatt (MW) in mixture at a web site or an enterprise for distribution for electrical energy with a capability not exceeding 100 kilowatts (kW) in mixture at a web site, or such different capability because the NERC could decide once in a while, with out a licence,” the act states.

The brand new act of the Nationwide Meeting now signed by President Tinubu was handed in July 2022. It seeks to repeal the Electrical energy and Energy Sector Reform Act, of 2005.

The Electrical energy Act now consolidates all legislations coping with the electrical energy provide business to supply an omnibus and splendid institutional framework to information the post-privatisation section of the Nigerian electrical energy provide business and encourage personal sector investments within the sector.

The first purpose of the invoice, as acknowledged in its very first part, is to create a complete authorized and institutional framework to information the Nigerian electrical energy provide business (NESI).

It de-monopolises the era, transmission, and distribution of electrical energy on the nationwide stage, to empower states, firms and people to generate, transmit and distribute electrical energy.

States would additionally have the ability to subject licences to non-public buyers who’ve the power to function mini-grids and energy vegetation throughout the state, however such state licences are to not lengthen to inter-state or transnational distribution of electrical energy.

Renewable vitality gives a possibility to shortly ramp up vitality entry, particularly in underserved areas. In 2022, the Rural Electrification Company formally hit and crossed the a million connections milestone via the deployment of Standalone Photo voltaic Residence Methods (SHS) for improved vitality entry throughout Nigeria.

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Some states which have created their very own electrical energy market have upheld renewable vitality as a crucial part of vitality era. In 2021, the Lagos State Ministry of Vitality and Mineral Sources issued the Lagos State Electrical energy Coverage to create a regulatory framework for and license all electrical energy market entities within the state.

By the regulation, the state seeks to considerably cut back off-grid generator emissions and foster a pure gasoline market in Lagos State via the implementation of a programme to transit from distillate fuels to pure gasoline and renewable vitality sources.

“To have a viable state electrical energy market, the significance of regulatory synergy between the NERC and the regulatory companies that can be established by states to supervise state-focused electrical energy issues can’t be overstated,” mentioned Kema.

This implies there’s a want for an organised and orderly transition of accountability for electrical energy operations from the NERC to the Lagos State-established electrical energy regulator.