Nigeria Signs First Solar Power Purchase Agreements

The west African nation of Nigeria took a major step recently towards the integration of utility-scale solar power projects into its grid.

Government-owned Nigeria Bulk Electricity Trading (NBET) recently announced that it signed the first power purchase agreements with solar power project developers. The NBET signed more than 10 PPAs with projects of more than 975 MW cumulative capacity; some more PPAs may be signed in the neat future.

The first project to sign a PPA with NBET is 75 MW solar PV project being developed by Pan Africa Solar. The developer expects to achieve financial closure for the project by next year. The developer has signed 20-year PPA with NBET to which it shall sell electricity at US¢11.5/kWh.

It is interesting to note that Nigeria has not taken the competitive auctions route to select projects, rather international project developers themselves approached the government with intentions of setting up large-scale solar power projects.

One of the reasons that project developers and investors are interested in the nascent solar power sector in Nigeria is the strong regulatory support for the promotion of renewable energy. Late last year, the Nigerian Electricity Regulatory Commission approved feed-in tariff regulations for renewable energy sourced electricity. As per the provisions of the regulations, electricity distribution companies will be required to source at least 50% of their total procurement from renewable energy sources. The Commission also mandated that the balance 50% electricity would have to be sourced from NBET.

In 2014, the Nigerian Government received pledges from three companies to set up a total of 1 GW of solar power capacity across the country. The entire program will include large utility-scale power projects as well as distributed power projects.

Also, SkyPower and FAS Energy signed a series of agreements to set up 3 GW of solar power capacity in the country. This capacity will be added through utility-scale projects and represents an investment worth $5 billion.

In late November 2014, two US-based companies pledged to set up a total solar power capacity of 1.2 GW by 2017. The projects will require a cumulative investment of $2 billion dollars and once operational will generate enough power to meet the demands of 1 million homes in the country.

Skip to toolbar