FEED-IN TARIFF REGULATION IN NIGERIA

Dr. YUSUF , ABDSSALAM

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 Introduction
The positive attributes of generating electricity from
renewable energy sources are widely acknowledged
environmental concern,
energy security,
Off-grid supply to small isolated loads especially in rural areas
applications in niche markets where conventional electricity
supply is not feasible.
Peak shaving
Suitable for SMEs.
solar, is particularly suitable for small size day time energy
demand which is exactly the type of energy demand profile of
small and medium scale enterprises, such as hair dressing/
barbing salon, tailoring etc. ironically, the situation in Nigeria
every enterprise depend of fossil fuel generator as stand-bye
power source.

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 Other Areas of possible application of RE to support
economic development
Support agriculture and rural economic empower and
reduce rural-urban migration through:
powering agro processing industries
Support irrigation
solar crop drying
Power SMEs in the peri-urban areas
Mini-grid and stand alone power for informal sector
producers
NERC is currently working on mini-grid electric supply
regulation
 Introduction (cntd)
However RE power are still to be
commercially competitive with the
fossil fuels which are currently
subsidized and enjoy the economies of
scale.
Other barriers to relates to the facts
that :
operators are usually small scale
unit cost of renewable energy is relatively high

Renewable energy systems are vulnerable

to climate risks
Consequently, special policy instruments are required to
enhance market penetration of RE into electrify4 market.
 RE in the National Energy
Policy
National Electric Power policy(2001) position is that:
Nigerian electricity fuel mix will include all viable fuels and
renewables will continue to play significant role
National Energy Policy (2003)
The nation shall maintain an interest in other emerging
sources of renewable energy.
Establishment of a set of regulations and guidelines to
promote and sustain the local solar, biomass and other
renewable energy industries.
The national renewable energy & Energy Efficiency
policy (2015) proposes policy and regulatory
mechanism of promoting renewable energy based
power

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 Mechanisms in the NREEEP
2015

Net Feed-in tariffs

(FIT)
Metering
Small Renewable energy Feed-in tariffs (FIT),
producers feed to the grid typically incentivize electricity
and are credited against
Renewable producers by offering more
their consumption from Portfolio favourable pricing for
the grid using a special electricity produced through
bi-directional meters
Standards renewables
(RPS)
% of energy
traded that must
Bidding come from Power
renewables by a Production Tax
rounds given target year
Credit to RES-E
Holding national renewable Public IPPs
energy IPP tendering
programme Benefits Fund
(PBF)
Mandatory or voluntary
contribution to special fund
dedicated for supporting RE
projects
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 RE Feed-in Tariff
A Feed-in-Tariff (FiT) incentivizes renewable energy
sources by allowing sale of renewable energy
sourced electricity (RES-E) to a distributor at a
predetermined fixed tariff guaranteed for a given
period of time, usually 15 to 20 years.
The objectives of the FiTs system are to:-
facilitate resource mobilization by providing investment
security and market stability for investors in RES-E
reduce transaction and administrative costs by
eliminating the conventional bidding processes
encourage private investors to operate the power plant
prudently and efficiently so as to maximize its returns.

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 Renewable Energy Feed-In
Tariff
Features
The main aspects of a REFIT regulatory framework, are as
follows:
Purchase Obligation
Renewable Energy Power Generator
Qualification Criteria
Tariffs for the different qualifying
technologies
Tariff are Sufficiently Differentiated
For Differing Technologies
For Differing Sizes & location
Objective of the Nigerian RE
FIT
Establish a guaranteed price RES-E for a fixed
period of time that provides a stable income
stream and an adequate return on investment;
provide priority access to the grid RES-E
Establish an obligation to purchase qualifying
RES-E
Establish a level playing field for renewable and
conventional electricity generation;
Attract private sector investment to support the
establishment of a self-sustaining renewable
market.
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 Qualifying Technology and Size
Range
The programme cap for the REFIT program is 1000MW
Subject to the capacity limits contained in table 1 for each
source:

Technology Minimum Maximum

capacity Capacity (MW)
(MW)
Wind 1 10
Small hydro 1 30
Biomass(including 1 10
municipal solid waste)
Solar Photovoltaic 1 5

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 Purchase Obligation
Subject to the costs being met by the developer, the Off-taker shall
connect to accredited plants generating electricity from eligible
renewable energy sources. The Off-taker shall treat as must buy all
electricity supplied by such renewable energy projects within the capacity
limits defined in this regulation.
There is no obligation to purchase capacities outside these limits and such
procurement may be done through other complementary mechanisms,
with separate PPAs.
The Feed-in-Tariffs values set in this regulation include a
standardised allowance for interconnection costs.
The costs of connection, including the costs of construction,
upgrading of transmission/distribution lines,
substations, and associated equipment are therefore to be borne by the developer.
The Renewable Energy Power Generators shall be responsible for all
shallow connection costs required to take the power to the point of
connection to the grid/distribution networks .

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 Programme Cap
A total of 2,000 MW of RE power is envisaged to be admissible into
the grid (1,000 MW by the end of 2018 and 2,000 MW by the end
of 2020)
while the total grid capacity is anticipated to be within 10,000 MW
to 20000 MW by 2020.
Based on a total cost optimization study and using the
proportions in the Renewable master plan report for the short and
medium term targets, the following technology limits have been
established. The NBET should procure 50% of the requirement and
Disco to procure 50%. The following will be guidelines for NBET
and Discos in respect of technologies

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Schedule 2:
Target Grid-Connected Renewable Generation Capacity by the
year 2018

Technology Capacity Limit (MW)

Solar 380
Wind 100
SHP 370
Biomass 150
Schedule 3:
Allocation of Renewable Energy Capacity by Buyers up to 2018

Biomass Solar small Wind Total

Hydro
Abuja 8.6 17.3 17.3 14.4 57.5
Benin 15.8 9.0 13.5 6.8 45
Enugu 15.8 9.0 13.5 6.8 45
Ibadan 22.8 13.0 19.5 9.8 65
Jos 4.1 8.3 8.3 6.9 27.5
Kaduna 6.0 12.0 12.0 10.0 40
Kano 6.0 12.0 12.0 10.0 40
Eko 19.3 11.0 16.5 8.3 55
Ikeja 26.3 15.0 22 11.3 75
Port 11.4 6.5 9.8 4.9 32.5
Harcourt
Yola 2.6 5.3 5.3 4.4 17.5
Total(Disco) 138.5 118.3 150.0 93.3 500.0
Schedule 5:
Feed in Tariff for 2016 Base Year

Year Description Unit Solar Wind SHP Biomass

Naira/M 35,370 24,791 30,887. 22,400.

Capital cost Wh .05 .55 43 51
Naira/M 8,541.1
O&M Wh 29.49 302.73 55.92 1

FIT2016 Naira/M 35,399 25,094 30,943. 30,941.

(Naira) Total Wh .54 .28 35 62

Capital cost $/MWh 176.85 123.96 154.44 112.00

O&M $/MWh 0.15 1.51 0.28 42.71

FIT2016
(US$) Total $/MWh 177.00 125.47 154.72 154.71
 REFIT Procurement Process
Licensing
Step 1: on receipt of an application, NERC determines whether the application should
be placed in the active queue (i.e., all of the available capacity for the appropriate
renewable energy type has not yet been assigned under the REFIT program), or in
the reserve queue if the active queue is full;

Step 2: NERC evaluates the application in two ways:

Does the application meet the licensing requirements? If no, identify if there is
data missing that is required to complete the evaluation. NERC has developed
application checklists for this purpose
Does the application meet the REFIT program requirements?

Step 3: if there are data deficiencies, request missing data from applicant. If all data
is provided, and the application is still deficient, then the license application is
rejected and the project is removed from the applicable REFIT queue. The queue is
updated to transfer an application from the reserve queue to the active queue.

Step 4: If all data is provided and meets the licensing and REFIT program
requirements, NERC issues the license (this could be a conditional license), and
issues the final license upon receiving the Notice of Approval from the Buyer and
also approves the REFIT based PPA.
REFIT License
Application to participate in REFIT
Process
Program
Generation License Application
Place in
Has cap for REFIT Yes Reserve
technology been met? Queue
Remove
application
from queue Update Active Queue
by Technology Type
Remove
application
Reque from
No Evaluate Application
st data queue
Is data Yes
missing? No
Does REFIT
No Does license application meet
application meet REFIT program
requirements? requirements?

Yes Yes
Issue license
PENALTIES
The Commission may establish such
penalties in line with the provisions
of the Act or any of the Commissions
regulations, to ensure the effective
discharge of its duties, and to
promote compliance with this
Regulation.
Penalties for Default

1st six months of Non $15/MWh Naira equivalent or

Compliance difference between cost of
or partial compliance renewable energy and average
cost of the non renewable sourced
electricity whichever is lower
Following periods of Non $30/MWh Naira equivalent or difference
Compliance or partial between cost of renewable energy and
compliance average cost of the non renewable

sourced electricity whichever is lower

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 Conclusion
The FIT framework will bring in investors in
renewable energy based power
Green jobs will be created
It will lead to meeting the national
renewable energy target and improve the
countrys energy mix
Contribute to global emission reduction
A robust REFIT framework will make
Nigerian Electricity market the preferred
destination of RE investors.
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