This regulation will also benefit the manufacturing sector in Nigeria which is seriously struggling with epileptic power supply form the main grid. Most manufacturing hubs and organizations in Nigeria have been reliant in one way or another on a certain form of mini grids, for example a shared power plant and/or on-premise captive sources. However, the economics of procuring power from these sources cannot be as advantageous as commercial and third-party controlled distributed sources, where power providers will benefit from the economies of scale in supplying several consumers, as well as the improved efficiencies of hybrid mini grid systems (such as Solar/Diesel hybrids). These and several other incentives will be cascaded to the connected mini grid consumers. Thus as the regulation for mini grid owners/power suppliers become better, consumers in turn receive more reliable and affordable power.
In spite of this and several other already completed reforms in the solar space in Nigeria, some market players believe that the proposed mini grid regulation and earlier regulations are commendable but inadequate. Femi Adeyemo is the Founder and Managing Director of Arnergy, a mini-grid and small household solar company in Nigeria. He says ”there are incentives for market players like us but more has to be done. This is especially true when you compare Nigeria with some other solar markets in Africa. For example, while the importation of solar panels enjoys free import tariff in Nigeria, to bring in other components such as batteries used in setting up a solar power plant is subject to an unfair tariff and Value Added Tax (VAT). Kenya is a good example where the Energy Regulatory Commission (ERC) has zero-rated the import duty and removed Value Added Tax (VAT) on renewable energy equipment and accessories including solar.
Since there are very serious gaps in the local manufacturing capacity of solar components, most of them are unavoidably imported. Market players will therefore like to see improvements in solar component import tariffs and VAT as well as the way they govern solar power businesses in Nigeria.
The outlook remains positive nonetheless, as the Nigerian government works to ensure that abundant renewable resources such as solar are given the chance to be optimally developed in a country with worsening and now worrisome levels of energy poverty.