By Modupe Gbadeyanka
A new business model that can provide reliable and clean electricity supply to large customers has been identified by the Abuja Electricity Distribution Company (AEDC) and RMI.
The two organisations conducted research, and they discovered that large commercial and industrial customers (C&I) customers could get regular power supply from distribution companies (DisCos) and distributed energy resource (DER) developers through collaborations.
The report, Improving Electricity Supply for Large Customers in Nigeria, showed that the model could quickly improve electricity supply and sectoral viability for the C&I sector, which is crucial to Nigeria’s economy, enabling financial savings, reducing risk and drastically reducing CO2 emissions.
Industrialisation is growing in many sub-Saharan African countries. However, large C&I customers continue to be hampered by unreliable electricity supply.
Inadequate and expensive electricity provision is reported to increase costs, disrupt production and reduce profitability. Consequently, most large C&I customers have resorted to fossil fuel-powered self-generation.
“By fostering collaboration between DisCos and DER developers, this innovative business model enables ‘win-win-win’ opportunities by reducing costs for large C&I customers, improving DisCos’ revenues and providing DER developers with access to a larger pool of customers,” said Suleiman Babamanu, RMI Nigeria program director.
“We believe this will accelerate the growth of the C&I solar market in Nigeria and make reliable electricity supply more efficient and affordable for a wider range of C&I customers.”
On his part, the head of financial performance management at AEDC, Mr Collins Chukwuma, stated that, “Innovative business models of this nature will help AEDC improve its operating revenue, reduce technical, commercial, and collection losses whilst ensuring the security of supply to increasing number of customers requiring reliable power for their homes and businesses.”
To support the broader sector in considering the model’s use, the report includes template contract documents to provide a starting point for collaborative project development.
These include: a generic request for proposal (RFP) to enable DisCos and their large C&I customers to
jointly procure a qualified DER developer; a generic tripartite agreement to stipulate the contract terms among the DER developer, the DisCo, and the customer throughout the project’s installation, operation and maintenance; and a scoring matrix to assist in evaluating proposals received in response to the RFP.
Although this model holds great promise for improving the power supply in Nigeria, a demonstration is needed. There is a clear opportunity for innovation and collaboration across the sector, where stakeholders — including DisCos, developers, policymakers, investors and development partners — can share insights from these pilot projects to refine and scale implementation.
Adedapo Adesanya