The Nigerian Electricity Regulatory Commission (NERC) has outlined several licenses and permits under the 2023 Electricity Act. According to the Commission, these licenses are to be issued for various activities that generate 1 megawatt (MW) and below or an electricity distribution network of 100 kilowatts (KW) and below.
The licenses include:
Generation License
This allows the construction, operation, ownership and maintenance of generation stations, and supply of electricity.
- On-Grid Generation License: This connects to the national grid, long-term agreements with the Transmission Company of Nigeria (TCN) and off-takers.
- Embedded Generation License: Directly connected via distribution system, agreements with privatized distribution companies (DisCos) and independent electricity distribution networks (IEDNs).
- Off-Grid Generation License: This generates and sells power to single buyers.
Transmission License
- This authorizes the transmission and conveyance of electric power over a high-voltage transmission system.
- This authorizes the transmission of high voltage (≥132kV) within or from one system to another, including transformers switchgear and other works.
Supply License
- This authorizes the sale of electricity to license holders or consumers.
- Electricity supply is a separate activity from distribution.
Distribution License
This allows the construction, operation and maintenance of a distribution system, and delivers electricity to consumers.
Trading License
Permits the licensee to engage in the purchasing, selling and trading of electricity.
System Operation License
This authorizes the operation of one or more transmission systems.
Manages generation scheduling, commitment and dispatch.
Administration of the wholesale electricity market and settlement payments.
Permits and Authorizations
Eligible Customer: can purchase power from a licensee other than a distribution licensee.
Mini-Grid: Electricity supply system with its own generation capacity not exceeding 1MW.
Captive Power Generation Permit: Generation of electricity exceeding 1 MW for self-consumption.
Meter Asset Provider (MAP): Entities approved by the Commission to provide metering services with roles that may include financing, procurement, supply, installation, maintenance and replacement.
Meter Service Provider (MSP): They are people certified by the Commission as manufacturers, suppliers, vendors or installers of electric energy meters and/or metering systems.
What you should know
The licensing rules under the 2023 Electricity Act are expected to provide a background for the promotion of embedded power generation, hybridized generation, co-generation and the generation of electricity from renewable sources such as solar energy, wind, small hydropower, biomass and other renewable sources.
The Act will also help to address post-privatization issues in Nigeria’s electricity sector. It will strengthen the regulatory structure in the sector. It will also address issues of bankruptcy within the distribution companies (DisCos).
Solution to electricity wahala in the country is by metering at least 95% of connected consumers. Once this target is attained the system will adjust automatically. The economy will be better for it and Gencos,TX and Discos will be strengthened while consumers will see reason to pay their bills.