Minigrid Business Model in Nigeria Shows Utility and Developer Can Collaborate

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  • Successful deployment of Nigeria’s first rural commercial undergrid minigrid shows power developers need not be seen as competition to utilities when it comes to delivering reliable electricity to far-flung communities.

A case study presentation on the partnership between Rocky Mountain Institute (RMI), Ibadan Electricity Distribution Company (IBEDC) and Nayo Tropical Technology on the second day of the Enlit Africa digital event, showed how the three organisations joined forces to make sure all participants profited.

Not only did the residents of Mokoloki Village gain access to a reliable power supply but IBEDC and Nayo Tropical Technology created a profitable partnership that can be extended.

Town’s regular supply of electricity attracts investment

Nayo Tropical Technology created a technical island with a 100kW solar system with a 192kWh battery and 99kW diesel backup. The scalable system is not only considered best practice in the minigrid sector, but reliability is reported at 99,9%.

Two-hundred-and-thirty residential, 48 commercial, 11 public and one anchor load customers were connected within three months of operation commencement. While four additional major productive use loads are anticipated to come online over the next year.

Tobi Busari, Team Lead for embedded generation and renewable energy for IBEDC, explained the lengthy process they went through to ensure community buy-in. Not only did they have to persuade the villagers to pay for electricity, which they had not been doing before, but education around how smart meters had to be created and locals trained to help run the system. But, it all paid off in the end.

“The town now enjoys a regular supply [of electricity]which is attracting locals to invest,” explained Busari.

Innovative minigrid business model

Nayo Tropical Technology’s CEO, Anayo Nas, said they were attracted by the opportunity to be the first power developer to try such an experiment. “Looking at the overall energy situation in Africa, and Nigeria in particular, we found captive, embedded power, clean, renewable energy is a very important component to accelerating access to energy in Nigeria. That was the initial attraction to going into under-grid power.”

“It was interesting finding ourselves in a situation of people who were used to not paying for power, but also to not having access to power at the same time.

“Also, the opportunity to have a disco who found this to be an opportunity … they see the platform from a social impact point of view, but also a business opportunity. It was a convergence of opportunities for all stakeholders,” said Nas.

Fellow panelist Albert Butare, CEO of African Energy Services, said as a person who has engaged will all manner of minigrid business models across the continent he found this model to be an innovative idea. Firstly, he commended the courage of power developer Nayo Tropical Technology and utility IBEDC to combining their thinking to create a successful synergy.

“Second, the trust and readiness of the grid operator to allow the operator an under-grid development, and use his network, in other words cooperating instead of competing, which is not typical. Third, the commitment of the main grid operator to ensure the community was served,” said Butare.

Compelling model

David Riposo, Energy Access Office for Power Africa, agreed that he found the business case to compelling for several reasons. At the most basic level it was encouraging to notice the creation of economic opportunities for productive use of energy and how access to reliable power attracted business to the village.

This validates Power Africa’s hypothesis about the link between providing electricity and kick-starting economic development in communities. “It’s nice to see that validation of our investment hypothesis.”

He added: “Beyond just the validation of energy access as a precondition for economic activity, I was compelled by this model in particular. This particular model seems to thread the needle between the needs of the distribution utility and the needs of the private utility, two parties who share very similar ambition, very similar business models, but in so many markets find themselves at loggerheads.”

“This model seems to provide a methodology which not only those two parties can benefit but perhaps most significantly, the rate payers in that village could benefit most significantly,” said Riposo.

Nas shared that the success of the pilot project has already attracted interest from power developer and utilities within and outside of Nigeria to replicate and scale up the business model in other regions. Session moderator, Principal for RMI’s Africa Energy Program, James Sherwood, said the business model was created to be scalable and replicable and he was happy to see their research was proven in such a positive way.

Catch the last day of Enlit Africa 2021 tomorrow. There is a jam pack programme: 

Thursday, 10 June:

  • The role of Africa in the global hydrogen-generation market
  • Roundtable: How solar PV is changing the commercial and industrial energy landscape in Africa
    Expert interview: Engineering your future – student success matters!
  •  The role of LPG in Africa’s energy transformation
  • Nigeria’s metering sector – an update
  • Catalysing the green economy for SMMEs with GreenCape
  •  Lucy Electric on the next steps in the digitalisation journey for Africa’s power sector
To view the programme and to access all the sessions, register on the Enlit Africa-Connect platform, click here.

PLEASE NOTE: All Enlit Africa sessions are available on demand on the event platform.

Author: Bryan Groenendaal


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