The Nigerian Electricity Regulatory Commission (NERC) has set forth a comprehensive framework for licenses and permits under the 2023 Electricity Act. These licenses are designed to govern activities related to the generation of electricity up to 1 megawatt (MW) and the operation of electricity distribution networks up to 100 kilowatts (KW). Let’s take a closer look at these licenses and what they entail:
1. Generation License:
– On-Grid Generation License:
This license is for those connected to the national grid. It involves long-term agreements with the Transmission Company of Nigeria (TCN) and off-takers.
– Embedded Generation License:
These generators are directly connected to the distribution system and have agreements with privatized distribution companies (DisCos) and independent electricity distribution networks (IEDNs).
– Off-Grid Generation License:
Intended for those generating power for sale to single buyers.
2. Transmission License:
– Authorizes the transmission and conveyance of electric power over a high-voltage transmission system.
– Permits transmission at high voltages (≥132kV) within or between systems, including the use of transformers, switchgear, and other related infrastructure.
3. Supply License:
– This authorizes the sale of electricity to license holders or consumers. It’s important to note that electricity supply is distinct from distribution.
4. Distribution License:
– Allows for the construction, operation, and maintenance of a distribution system that delivers electricity to consumers.
5. Trading License:
– Permits the licensee to engage in the purchasing, selling, and trading of electricity.
6. System Operation License:
– Authorizes the operation of one or more transmission systems. This license manages generation scheduling, commitment, and dispatch. It also plays a crucial role in the administration of the wholesale electricity market and settlement payments.
7. Permits and Authorizations:
– Eligible Customer:
These customers can purchase power from a licensee other than a distribution licensee.
– Mini-Grid:
Refers to an electricity supply system with its own generation capacity not exceeding 1MW.
– Captive Power Generation Permit:
For those generating electricity exceeding 1 MW for self-consumption.
– Meter Asset Provider (MAP):
Entities approved by the Commission to provide metering services, including financing, procurement, supply, installation, maintenance, and replacement.
– Meter Service Provider (MSP):
Individuals certified by the Commission as manufacturers, suppliers, vendors, or installers of electric energy meters and/or metering systems.
These licensing rules, as outlined in the 2023 Electricity Act, mark a significant step forward for Nigeria’s electricity sector. They are expected to promote embedded power generation, hybridized generation, co-generation, and the use of renewable energy sources such as solar, wind, small hydropower, biomass, and other renewables.
The Act also aims to address post-privatization issues within Nigeria’s electricity sector, strengthen the regulatory framework, and tackle issues of bankruptcy within distribution companies (DisCos). It is a vital move towards enhancing the efficiency and sustainability of the nation’s power supply infrastructure, and it holds the potential to open up new avenues for clean and reliable energy sources.
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