WHAT IS A MINI-GRID?
A mini-grid here means an integrated local generation and distribution system with installed capacity below 1MW, capable of serving numerous end‐users independent of the national grid. It may be ‘isolated’ with no link to any other network or ‘interconnected’ with the main grid such that energy exchange is possible between them.
THE MINI-GRID REGULATION 2016
The major barriers against investment in mini-grid for rural electrification vary depending on the stakeholder concerned – investors, consumers, etc. One of the investors’ concerns is the fear that the main grid may arrive faster than expected and result in their customers being taken over by main grid operator, or that competitors might take away good sites (especially an issue when subsidies start to be available).
The second concern being lack of clarity about whether cost-reflective tariffs can be charged. On the other hand, the consumers need confidence that mini-grid is safe, its power is reliable and not too expensive. These concerns have been adequately addressed in the Mini-grid Regulation. First, the regulation allows the developer to legally reserve a site through an exclusivity agreement while it prepares the project. The permit issued by NERC entitles the developer to adequate compensation in event that main-grid arrives too early and are ready to take over the mini-grid network and customers.
For very small projects below 100kW, only a simple registration with NERC is mandatory. However, an interested investor may voluntarily obtain a permit. The difference between a registration certificate holder and a permit holder is that while the latter enjoys exit compensation like larger systems, the former does not. To be qualified for a permit, however, the project must adhere to minimum network technical and safety standards.
A simple tariff calculation tool is available here, that allows both developers and customers to agree on a project specific tariff path. In any case NERC will consider and approve for the mini-grid, a cost reflective tariff baring any grant or counterpart contributions. The regulation also contains service quality standards and dispute resolution frameworks.
HOW DO I BECOME A MIN-GRID DEVELOPER?
Mini-grids are classified by size into:
1. Those with distribution capacity above 100kW and Generation capacity below 1MW. They are required to go through our simplified permitting procedure. At the arrival of the main-grid (DisCo networks) the permit holder will be entitled to a compensation equivalent to the depreciated value of the mini-grid network investment plus one year revenue.
2. Those below 100KW distribution capacity which requires only simple registration with NERC but may opt for a permit in consideration for the regulatory incentives for permit holders.
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