Disputes Arise Over Proposed Net Billing Scheme for Electricity in Nigeria, According to Experts
In a significant move for Nigeria's power sector, the Nigerian Electricity Regulatory Commission (NERC) has proposed a regulation that would allow solar power users to sell excess electricity back to the national grid. This regulation, if implemented, could be a game-changer, according to Dr. Funke Olayemi, a renewable energy consultant.
The proposed framework, dubbed net billing, allows 'prosumers' - individuals or organisations that both produce and consume electricity - to connect to the national grid and sell excess electricity. The fixed charge for this service is based on the average tariff of grid-connected hydropower plants, while the variable charge reflects interconnection costs incurred by the prosumer, excluding the renewable energy system itself.
However, the implementation of such a complex framework is not without challenges. Dr. Sam Amadi, former Chairman of NERC, has cautioned against its premature adoption, citing concerns about Nigeria's electricity sector's readiness. Dr. Amadi highlighted several persistent problems in the market, including inaccurate billing systems, inadequate metering of consumers, weak customer service frameworks, poor regulatory enforcement, and the absence of a solid data infrastructure for electricity distribution companies.
Dr. Amadi urged NERC to prioritise its core mandate of protecting consumers and enforcing service standards rather than being distracted by ambitious but impractical innovations. He argued that Nigeria must first get the basics of a functional electricity market right before adopting complex frameworks.
Despite these challenges, some experts believe the regulation could unlock new financing opportunities for renewable energy installations. In 2023, solar panel imports were valued at over $200 million in Nigeria, indicating a growing interest in renewable energy.
Engr. Charles Ugwu, an energy policy analyst, argues that the regulation could help stabilise the grid in the long run. However, Dr. Amadi raised concerns about the risks of over-reliance on renewable energy in Nigeria's fragile grid, warning that excess solar power could drive up costs if not properly managed.
In the proposed NERC framework, energy consumed from a Distribution Licensee will be billed at the applicable end-user tariff. Excess energy exported back to the grid will be credited through a net metering tool. Dr. Amadi described net billing arrangement as an important tool for the renewable energy market, but warned that it requires comprehensive preparation, including infrastructure upgrades and stakeholder coordination, before implementation.
The net billing arrangement is seen as a significant step towards a more sustainable and consumer-friendly power sector in Nigeria. As the regulatory body considers the proposal, stakeholders and experts alike are urging caution and thorough preparation to ensure a smooth transition and long-term benefits for the sector and the consumers.
