[vc_row type=”vc_default” full_width=”stretch_row_content_no_spaces” css=”.vc_custom_1500547593342{padding-right: 100px !important;}” el_class=”noPaddinRow”][vc_column width=”1/6″ el_class=”noPaddingLeft” offset=”vc_hidden-md vc_hidden-sm vc_hidden-xs”][vc_raw_html]JTNDZGl2JTIwY2xhc3MlM0QlMjJtYWluLXN0cmlwJTIyJTNFJTBBJTNDZGl2JTIwY2xhc3MlM0QlMjJibHVlLXN0cmlwMCUyMiUzRSUzQyUyRmRpdiUzRSUwQSUzQ2RpdiUyMGNsYXNzJTNEJTIyYmx1ZS1zdHJpcDElMjIlM0UlM0MlMkZkaXYlM0UlMEElM0NkaXYlMjBjbGFzcyUzRCUyMmJsdWUtc3RyaXAyJTIyJTNFJTNDJTJGZGl2JTNFJTBBJTNDJTJGZGl2JTNF[/vc_raw_html][/vc_column][vc_column width=”5/6″ el_class=”justifyText” css=”.vc_custom_1530310305478{padding-right: 310px !important;}” offset=”vc_hidden-md vc_hidden-sm vc_hidden-xs”][vc_empty_space height=”50px”][vc_row_inner el_id=”newsletters”][vc_column_inner width=”1/6″][/vc_column_inner][vc_column_inner width=”2/3″][vc_custom_heading text=”Overview of the NERC’s Regulations on Embedded Generation and Independent Electricity Distribution Networks” font_container=”tag:h1|font_size:22|text_align:justify|color:%236699cc|line_height:1.8″ use_theme_fonts=”yes”][/vc_column_inner][vc_column_inner width=”1/6″][/vc_column_inner][/vc_row_inner][vc_empty_space height=”25px”][vc_column_text]INTRODUCTION
The recent Regulations on Embedded Generation and Independent Electricity Distribution Networks issued by the Nigerian Electricity Regulatory Commission ‘NERC’ (pursuant to its powers to make regulations under the Electric Power Sector Reform Act, 2005) confirm the commitment of the Federal Government to tackling the inefficiencies in Nigeria’s power sector.
The Regulations were issued as part of the effort to improve power generation and realise the Federal Government’s target of achieving a generation capacity of 40,000 MW by the year 2020 (often described as “vision 20:20” in the Nigerian parlance). Another compelling reason was the need to provide electricity for about 60% of Nigeria’s population without access to electricity as many communities have no access to the national grid. Furthermore, many of the areas connected to the grid experience very frequent power outages.
OVERVIEW OF THE REGULATIONS
i. Regulations for Embedded Generation
Embedded generation is defined in the Regulations as “the generation of electricity that is directly connected to and evacuated through a distribution system which is connected to a transmission network operated by a System Operations Licensee” in simple terms this means the generation and evacustion of electricity via the grid . This may not be an apt definition given that the Regulations appear to make provision for the ability of embedded generators with a capacity above 5MW to evacuate power to isolated Independent Electricity Distribution Networks (IEDNs) (i.e. IEDNs that are not connected to the grid) and also for direct evacuation through the grid.
The Regulations apply to all existing embedded generators licensees, applicants for embedded generation and prospective embedded generators, and is designed to encourage a greater generation output and supplement the existing allocation from the national grid. In the current market stage, due to insufficient power supply, the successor distribution companies unbundled from the Power Holding Company of Nigeria ‘PHCN’ have to depend on what electric power is allocated to them by the Bulk Trader. With the introduction of the Regulations on Embedded Generation, the embedded generator can supplement the allocation of the bulk trader and give the distribution companies access to more power. Embedded generators can also supply power to Independent Electricity Distribution Networks, particularly those in isolated rural or urban areas.
A person or company seeking to obtain an embedded generation licence must comply with the provisions of the NERC Application for Licences Regulations and the NERC Licence and Operating Fees Regulations. Distribution licensees who wish to procure power through embedded generation are also required to apply to the Commission and fulfill conditions of the Market Rules relevant to procurement of more electric power above the amount allocated by the Bulk Trader. A few issues come up here: the process under the Market Rules1 appears to be strictly regulated by the NERC and would also be governed by bilateral contracts which would have to be approved by the NERC. Furthermore, Distributors are also required by the Market Rules to follow a competitive process of procurement supervised by the NERC. As such, the probability of the NERC oversight being a bureaucratic clog in the wheel for investors is very high.
The Embedded Generation unit sizes are classified into small size units of small (1-6MW), large size units (6-20MW) and units greater than 20MW. Investors accordingly can undertake power generation projects depending on their capacity. Units generating above 20 MW are required to evacuate power through the transmission network.
Under the Regulations, the tariff pricing for an end-user customer is dictated by the negotiations between the embedded generator and such end-user customer.
Embedded generators are not restricted in their modes for generating power i.e they could use renewable power sources such as solar energy, small hydro, biomass, and wind power. The use of diverse energy sources to meet generation targets including using renewable energy power systems would be very strategic as this energy sources are highly under-developed in Nigeria. The Regulations in this regard provide for feed-in-tariffs for renewable power sources approved by the NERC. This we believe is in a bid to incentivise investors. This policy mechanism (which ensures price certainty and the award of long-term contracts to investors) is intended to accelerate investment in renewable energy technologies.
The Regulations also allow the embedded generator to recover cost incurred for any reinforcement or extension executed on the distribution system to enable it evacuate power generated into the network pursuant to the connection Agreement with the distribution licensee, where the distribution licensee is unable to undertake the reinforcements or extension.
In providing a balance between the embedded generator and the distribution licensee, cost of distribution losses is borne by the party responsible for such losses. Further distribution losses are allotted using distribution loss factors determined by the System Operator. In addition, the Regulations make metering compulsory for customers and embedded generators.
An embedded generator is prohibited from engaging in the business of distribution, transmission, trading and systems operation as these are differently regulated under the Electric Power Sector Reform Act. However, where NERC is satisfied that there would be no abuse of market power, a holding or subsidiary company of the embedded generator may be licensed to engage in these regulated activities. Similarly, a distribution licensee can incorporate a separate legal entity to undertake embedded generation where it intends to engage in embedded generation.
It is envisaged that while a lot of the National Integrated Power Projects ‘NIPP’, Independent Power Producers ‘IPPs’ and generator successor companies are coming on stream, a lot of the successor distribution companies (when they are privatised) and IEDNs would rely on embedded generators to meet their power requirements.
ii. Regulations for Independent Electricity Distribution Networks ‘IEDN’ 2012
The Independent Electricity Distribution Network (IEDN) Regulations ’ facilitates the operation of independent power distribution networks by individuals or groups other than the successor distribution companies, and permits communities, local and state governments to invest in electricity distribution networks in areas without access to the grid or distribution network, and areas poorly serviced.
An IEDN Network is defined in the Regulations to mean a distribution network not directly connected to a transmission system operated by the System Operator. The Regulations provide for the licensing of an IEDN Network Operator, licensed to operate the distribution system facilities and empowers independent power distribution companies to distribute power to the public not currently served by the national grid, and applies to all independent electricity distribution systems, and the owners, operators and users of the distribution system.
An IEDN may be structured as an isolated off-grid rural IEDN, isolated off-grid urban IEDN, or embedded IEDN. In the case of an isolated off-grid or urban IEDN, the areas covered by the IEDN will be areas not connected to a distribution network that is connected to the grid. Conversely, the embedded IEDN is an IEDN connected to a distribution network that is connected to the transmission system operated by the system operation licensee.
Before a licence can be issued to construct, own, operate and maintain a distribution system in a geographical area within the sphere of coverage of a successor distribution company, the applicant must satisfactorily undertake that the facility of the existing distribution licensee will not be used in its business; that there will be no parallel overhead lines to the existing facility; must have a minimum distribution capacity of 5,000kW; and have the ability to provide generation capacity for the IEDN.
Tariffs and other charges due to a licensee for distribution services pursuant to the Regulations are determined based on the methodology for determination of distribution tariffs used by NERC except where NERC accepts a proposal by the licensee on charges, tariffs and tariff methodologies in special circumstances. However, feed-in-tariffs would apply to renewable power systems connected to an IEDN.
The Regulations on IEDN gives no indication of how NERC plans to mitigate the challenge of Independent Electricity Networks encroaching into the areas under the operations of the successor distribution companies. NERC in making a decision on an application for IEDN licence may need to consider the expansion plans of the existing distribution companies.
CONCLUSION
The promotion of embedded generation and distribution in line with the Regulations may promote competition, efficiency and ultimately make the “vision 20:20” power sector roadmap realisable. Indeed, the liberalisation of the energy sector is the way to go in providing adequate electricity to Nigerians.
The Regulations potentially should provide an enabling environment to boost power supply, reduce distribution and transmission losses (as embedded generation plants are usually located close to the points where the power generated is used) and hopefully revive the economy.
[/vc_column_text][/vc_column][/vc_row][vc_row type=”vc_default” full_width=”stretch_row_content_no_spaces” css=”.vc_custom_1500547593342{padding-right: 100px !important;}” el_class=”noPaddinRow”][vc_column el_class=”noPaddingLeft” offset=”vc_hidden-lg vc_hidden-xs”][vc_raw_html]JTNDZGl2JTIwY2xhc3MlM0QlMjJ0YWItbWFpbi1zdHJpcCUyMiUzRSUwQSUzQ2RpdiUyMGNsYXNzJTNEJTIydGFiLWJsdWUtc3RyaXAwJTIyJTNFJTNDJTJGZGl2JTNFJTBBJTNDZGl2JTIwY2xhc3MlM0QlMjJ0YWItYmx1ZS1zdHJpcDElMjIlM0UlM0MlMkZkaXYlM0UlMEElM0NkaXYlMjBjbGFzcyUzRCUyMnRhYi1ibHVlLXN0cmlwMiUyMiUzRSUzQyUyRmRpdiUzRSUwQSUzQyUyRmRpdiUzRQ==[/vc_raw_html][vc_empty_space height=”25px”][vc_row_inner][vc_column_inner width=”1/6″][/vc_column_inner][vc_column_inner width=”2/3″][vc_custom_heading text=”Overview of the NERC’s Regulations on Embedded Generation and Independent Electricity Distribution Networks” font_container=”tag:h1|font_size:22|text_align:justify|color:%236699cc|line_height:1.8″ use_theme_fonts=”yes”][vc_column_text]INTRODUCTION
The recent Regulations on Embedded Generation and Independent Electricity Distribution Networks issued by the Nigerian Electricity Regulatory Commission ‘NERC’ (pursuant to its powers to make regulations under the Electric Power Sector Reform Act, 2005) confirm the commitment of the Federal Government to tackling the inefficiencies in Nigeria’s power sector.
The Regulations were issued as part of the effort to improve power generation and realise the Federal Government’s target of achieving a generation capacity of 40,000 MW by the year 2020 (often described as “vision 20:20” in the Nigerian parlance). Another compelling reason was the need to provide electricity for about 60% of Nigeria’s population without access to electricity as many communities have no access to the national grid. Furthermore, many of the areas connected to the grid experience very frequent power outages.
OVERVIEW OF THE REGULATIONS
i. Regulations for Embedded Generation
Embedded generation is defined in the Regulations as “the generation of electricity that is directly connected to and evacuated through a distribution system which is connected to a transmission network operated by a System Operations Licensee” in simple terms this means the generation and evacustion of electricity via the grid . This may not be an apt definition given that the Regulations appear to make provision for the ability of embedded generators with a capacity above 5MW to evacuate power to isolated Independent Electricity Distribution Networks (IEDNs) (i.e. IEDNs that are not connected to the grid) and also for direct evacuation through the grid.
The Regulations apply to all existing embedded generators licensees, applicants for embedded generation and prospective embedded generators, and is designed to encourage a greater generation output and supplement the existing allocation from the national grid. In the current market stage, due to insufficient power supply, the successor distribution companies unbundled from the Power Holding Company of Nigeria ‘PHCN’ have to depend on what electric power is allocated to them by the Bulk Trader. With the introduction of the Regulations on Embedded Generation, the embedded generator can supplement the allocation of the bulk trader and give the distribution companies access to more power. Embedded generators can also supply power to Independent Electricity Distribution Networks, particularly those in isolated rural or urban areas.
A person or company seeking to obtain an embedded generation licence must comply with the provisions of the NERC Application for Licences Regulations and the NERC Licence and Operating Fees Regulations. Distribution licensees who wish to procure power through embedded generation are also required to apply to the Commission and fulfill conditions of the Market Rules relevant to procurement of more electric power above the amount allocated by the Bulk Trader. A few issues come up here: the process under the Market Rules1 appears to be strictly regulated by the NERC and would also be governed by bilateral contracts which would have to be approved by the NERC. Furthermore, Distributors are also required by the Market Rules to follow a competitive process of procurement supervised by the NERC. As such, the probability of the NERC oversight being a bureaucratic clog in the wheel for investors is very high.
The Embedded Generation unit sizes are classified into small size units of small (1-6MW), large size units (6-20MW) and units greater than 20MW. Investors accordingly can undertake power generation projects depending on their capacity. Units generating above 20 MW are required to evacuate power through the transmission network.
Under the Regulations, the tariff pricing for an end-user customer is dictated by the negotiations between the embedded generator and such end-user customer.
Embedded generators are not restricted in their modes for generating power i.e they could use renewable power sources such as solar energy, small hydro, biomass, and wind power. The use of diverse energy sources to meet generation targets including using renewable energy power systems would be very strategic as this energy sources are highly under-developed in Nigeria. The Regulations in this regard provide for feed-in-tariffs for renewable power sources approved by the NERC. This we believe is in a bid to incentivise investors. This policy mechanism (which ensures price certainty and the award of long-term contracts to investors) is intended to accelerate investment in renewable energy technologies.
The Regulations also allow the embedded generator to recover cost incurred for any reinforcement or extension executed on the distribution system to enable it evacuate power generated into the network pursuant to the connection Agreement with the distribution licensee, where the distribution licensee is unable to undertake the reinforcements or extension.
In providing a balance between the embedded generator and the distribution licensee, cost of distribution losses is borne by the party responsible for such losses. Further distribution losses are allotted using distribution loss factors determined by the System Operator. In addition, the Regulations make metering compulsory for customers and embedded generators.
An embedded generator is prohibited from engaging in the business of distribution, transmission, trading and systems operation as these are differently regulated under the Electric Power Sector Reform Act. However, where NERC is satisfied that there would be no abuse of market power, a holding or subsidiary company of the embedded generator may be licensed to engage in these regulated activities. Similarly, a distribution licensee can incorporate a separate legal entity to undertake embedded generation where it intends to engage in embedded generation.
It is envisaged that while a lot of the National Integrated Power Projects ‘NIPP’, Independent Power Producers ‘IPPs’ and generator successor companies are coming on stream, a lot of the successor distribution companies (when they are privatised) and IEDNs would rely on embedded generators to meet their power requirements.
ii. Regulations for Independent Electricity Distribution Networks ‘IEDN’ 2012
The Independent Electricity Distribution Network (IEDN) Regulations ’ facilitates the operation of independent power distribution networks by individuals or groups other than the successor distribution companies, and permits communities, local and state governments to invest in electricity distribution networks in areas without access to the grid or distribution network, and areas poorly serviced.
An IEDN Network is defined in the Regulations to mean a distribution network not directly connected to a transmission system operated by the System Operator. The Regulations provide for the licensing of an IEDN Network Operator, licensed to operate the distribution system facilities and empowers independent power distribution companies to distribute power to the public not currently served by the national grid, and applies to all independent electricity distribution systems, and the owners, operators and users of the distribution system.
An IEDN may be structured as an isolated off-grid rural IEDN, isolated off-grid urban IEDN, or embedded IEDN. In the case of an isolated off-grid or urban IEDN, the areas covered by the IEDN will be areas not connected to a distribution network that is connected to the grid. Conversely, the embedded IEDN is an IEDN connected to a distribution network that is connected to the transmission system operated by the system operation licensee.
Before a licence can be issued to construct, own, operate and maintain a distribution system in a geographical area within the sphere of coverage of a successor distribution company, the applicant must satisfactorily undertake that the facility of the existing distribution licensee will not be used in its business; that there will be no parallel overhead lines to the existing facility; must have a minimum distribution capacity of 5,000kW; and have the ability to provide generation capacity for the IEDN.
Tariffs and other charges due to a licensee for distribution services pursuant to the Regulations are determined based on the methodology for determination of distribution tariffs used by NERC except where NERC accepts a proposal by the licensee on charges, tariffs and tariff methodologies in special circumstances. However, feed-in-tariffs would apply to renewable power systems connected to an IEDN.
The Regulations on IEDN gives no indication of how NERC plans to mitigate the challenge of Independent Electricity Networks encroaching into the areas under the operations of the successor distribution companies. NERC in making a decision on an application for IEDN licence may need to consider the expansion plans of the existing distribution companies.
CONCLUSION
The promotion of embedded generation and distribution in line with the Regulations may promote competition, efficiency and ultimately make the “vision 20:20” power sector roadmap realisable. Indeed, the liberalisation of the energy sector is the way to go in providing adequate electricity to Nigerians.
The Regulations potentially should provide an enabling environment to boost power supply, reduce distribution and transmission losses (as embedded generation plants are usually located close to the points where the power generated is used) and hopefully revive the economy.
[/vc_column_text][/vc_column_inner][vc_column_inner width=”1/6″][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row type=”vc_default” full_width=”stretch_row_content_no_spaces” css=”.vc_custom_1500547593342{padding-right: 100px !important;}” el_class=”noPaddinRow”][vc_column el_class=”noPaddingLeft” offset=”vc_hidden-lg vc_hidden-md vc_hidden-sm” css=”.vc_custom_1530310494373{padding-right: 75px !important;padding-left: 60px !important;}”][vc_raw_html]JTNDZGl2JTIwY2xhc3MlM0QlMjJtb2ItbWFpbi1zdHJpcCUyMiUzRSUwQSUzQ2RpdiUyMGNsYXNzJTNEJTIybW9iLWJsdWUtc3RyaXAwJTIyJTNFJTNDJTJGZGl2JTNFJTBBJTNDZGl2JTIwY2xhc3MlM0QlMjJtb2ItYmx1ZS1zdHJpcDElMjIlM0UlM0MlMkZkaXYlM0UlMEElM0NkaXYlMjBjbGFzcyUzRCUyMm1vYi1ibHVlLXN0cmlwMiUyMiUzRSUzQyUyRmRpdiUzRSUwQSUzQyUyRmRpdiUzRQ==[/vc_raw_html][vc_empty_space height=”25px”][vc_row_inner][vc_column_inner width=”1/6″][/vc_column_inner][vc_column_inner width=”2/3″][vc_custom_heading text=”Overview of the NERC’s Regulations on Embedded Generation and Independent Electricity Distribution Networks” font_container=”tag:h1|font_size:22|text_align:justify|color:%236699cc|line_height:1.8″ use_theme_fonts=”yes”][vc_column_text]INTRODUCTION
The recent Regulations on Embedded Generation and Independent Electricity Distribution Networks issued by the Nigerian Electricity Regulatory Commission ‘NERC’ (pursuant to its powers to make regulations under the Electric Power Sector Reform Act, 2005) confirm the commitment of the Federal Government to tackling the inefficiencies in Nigeria’s power sector.
The Regulations were issued as part of the effort to improve power generation and realise the Federal Government’s target of achieving a generation capacity of 40,000 MW by the year 2020 (often described as “vision 20:20” in the Nigerian parlance). Another compelling reason was the need to provide electricity for about 60% of Nigeria’s population without access to electricity as many communities have no access to the national grid. Furthermore, many of the areas connected to the grid experience very frequent power outages.
OVERVIEW OF THE REGULATIONS
i. Regulations for Embedded Generation
Embedded generation is defined in the Regulations as “the generation of electricity that is directly connected to and evacuated through a distribution system which is connected to a transmission network operated by a System Operations Licensee” in simple terms this means the generation and evacustion of electricity via the grid . This may not be an apt definition given that the Regulations appear to make provision for the ability of embedded generators with a capacity above 5MW to evacuate power to isolated Independent Electricity Distribution Networks (IEDNs) (i.e. IEDNs that are not connected to the grid) and also for direct evacuation through the grid.
The Regulations apply to all existing embedded generators licensees, applicants for embedded generation and prospective embedded generators, and is designed to encourage a greater generation output and supplement the existing allocation from the national grid. In the current market stage, due to insufficient power supply, the successor distribution companies unbundled from the Power Holding Company of Nigeria ‘PHCN’ have to depend on what electric power is allocated to them by the Bulk Trader. With the introduction of the Regulations on Embedded Generation, the embedded generator can supplement the allocation of the bulk trader and give the distribution companies access to more power. Embedded generators can also supply power to Independent Electricity Distribution Networks, particularly those in isolated rural or urban areas.
A person or company seeking to obtain an embedded generation licence must comply with the provisions of the NERC Application for Licences Regulations and the NERC Licence and Operating Fees Regulations. Distribution licensees who wish to procure power through embedded generation are also required to apply to the Commission and fulfill conditions of the Market Rules relevant to procurement of more electric power above the amount allocated by the Bulk Trader. A few issues come up here: the process under the Market Rules1 appears to be strictly regulated by the NERC and would also be governed by bilateral contracts which would have to be approved by the NERC. Furthermore, Distributors are also required by the Market Rules to follow a competitive process of procurement supervised by the NERC. As such, the probability of the NERC oversight being a bureaucratic clog in the wheel for investors is very high.
The Embedded Generation unit sizes are classified into small size units of small (1-6MW), large size units (6-20MW) and units greater than 20MW. Investors accordingly can undertake power generation projects depending on their capacity. Units generating above 20 MW are required to evacuate power through the transmission network.
Under the Regulations, the tariff pricing for an end-user customer is dictated by the negotiations between the embedded generator and such end-user customer.
Embedded generators are not restricted in their modes for generating power i.e they could use renewable power sources such as solar energy, small hydro, biomass, and wind power. The use of diverse energy sources to meet generation targets including using renewable energy power systems would be very strategic as this energy sources are highly under-developed in Nigeria. The Regulations in this regard provide for feed-in-tariffs for renewable power sources approved by the NERC. This we believe is in a bid to incentivise investors. This policy mechanism (which ensures price certainty and the award of long-term contracts to investors) is intended to accelerate investment in renewable energy technologies.
The Regulations also allow the embedded generator to recover cost incurred for any reinforcement or extension executed on the distribution system to enable it evacuate power generated into the network pursuant to the connection Agreement with the distribution licensee, where the distribution licensee is unable to undertake the reinforcements or extension.
In providing a balance between the embedded generator and the distribution licensee, cost of distribution losses is borne by the party responsible for such losses. Further distribution losses are allotted using distribution loss factors determined by the System Operator. In addition, the Regulations make metering compulsory for customers and embedded generators.
An embedded generator is prohibited from engaging in the business of distribution, transmission, trading and systems operation as these are differently regulated under the Electric Power Sector Reform Act. However, where NERC is satisfied that there would be no abuse of market power, a holding or subsidiary company of the embedded generator may be licensed to engage in these regulated activities. Similarly, a distribution licensee can incorporate a separate legal entity to undertake embedded generation where it intends to engage in embedded generation.
It is envisaged that while a lot of the National Integrated Power Projects ‘NIPP’, Independent Power Producers ‘IPPs’ and generator successor companies are coming on stream, a lot of the successor distribution companies (when they are privatised) and IEDNs would rely on embedded generators to meet their power requirements.
ii. Regulations for Independent Electricity Distribution Networks ‘IEDN’ 2012
The Independent Electricity Distribution Network (IEDN) Regulations ’ facilitates the operation of independent power distribution networks by individuals or groups other than the successor distribution companies, and permits communities, local and state governments to invest in electricity distribution networks in areas without access to the grid or distribution network, and areas poorly serviced.
An IEDN Network is defined in the Regulations to mean a distribution network not directly connected to a transmission system operated by the System Operator. The Regulations provide for the licensing of an IEDN Network Operator, licensed to operate the distribution system facilities and empowers independent power distribution companies to distribute power to the public not currently served by the national grid, and applies to all independent electricity distribution systems, and the owners, operators and users of the distribution system.
An IEDN may be structured as an isolated off-grid rural IEDN, isolated off-grid urban IEDN, or embedded IEDN. In the case of an isolated off-grid or urban IEDN, the areas covered by the IEDN will be areas not connected to a distribution network that is connected to the grid. Conversely, the embedded IEDN is an IEDN connected to a distribution network that is connected to the transmission system operated by the system operation licensee.
Before a licence can be issued to construct, own, operate and maintain a distribution system in a geographical area within the sphere of coverage of a successor distribution company, the applicant must satisfactorily undertake that the facility of the existing distribution licensee will not be used in its business; that there will be no parallel overhead lines to the existing facility; must have a minimum distribution capacity of 5,000kW; and have the ability to provide generation capacity for the IEDN.
Tariffs and other charges due to a licensee for distribution services pursuant to the Regulations are determined based on the methodology for determination of distribution tariffs used by NERC except where NERC accepts a proposal by the licensee on charges, tariffs and tariff methodologies in special circumstances. However, feed-in-tariffs would apply to renewable power systems connected to an IEDN.
The Regulations on IEDN gives no indication of how NERC plans to mitigate the challenge of Independent Electricity Networks encroaching into the areas under the operations of the successor distribution companies. NERC in making a decision on an application for IEDN licence may need to consider the expansion plans of the existing distribution companies.
CONCLUSION
The promotion of embedded generation and distribution in line with the Regulations may promote competition, efficiency and ultimately make the “vision 20:20” power sector roadmap realisable. Indeed, the liberalisation of the energy sector is the way to go in providing adequate electricity to Nigerians.
The Regulations potentially should provide an enabling environment to boost power supply, reduce distribution and transmission losses (as embedded generation plants are usually located close to the points where the power generated is used) and hopefully revive the economy.
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