The National Electricity Regulatory Commission (NERC) established the Mini Grid Regulation 2016 which serves as guideline to DISCOs to use mini grids to expedite electrification in areas without existing or poor performing distribution grids.
The mini grid regulation was designed to fast-track electrification in areas without an existing distribution grid, such as rural areas.
The mini grid developer will need to apply for a mandatory permit if power distributed is larger than 100kW. Meanwhile, a plant is not a mini grid if its generation capacity is beyond 1MW.
NERC, however, added that tariffs would be higher than the current electricity distribution company’s retail tariffs. But these tariffs would be lower than any electricity supply of the same quality generated from conventional sources.
“This regulation is suitable for any business model or technology that mini grid operators may wish to implement,” the Commission said.
“The Discos [distribution companies] stand to benefit from mini grid operations. Some of these benefits include the development of the Discos’ licensing areas.
“At such time, demand would have increased to attractive levels for profitable operation, and customers will be used to paying for electricity and complying with the safety requirements.”