Developing Reliable and Cost-Effective Grids Chibueze Ekeh Managing Consultant April 2019

Change in Philosophy is Important Old Philosophy (external focus) New Philosophy (internal focus)

Democratizing the Nigerian Power Distribution Landscape Embedded Generation Mini-grids SHS ‘Traffic-light’ decision approach Discos must: Play to strength Seek partnerships Suitable opportunities for Discos Reliability over access Embedded Generation (1MW – 20MW) Suitable opportunities for Others Interconnected Mini-grids (100kW – 1MW) Isolated Mini-grids (<100kW) Solar Home Systems (sparse population) For reliable & cost-effective grids, Discos must: Rank & prioritize feeders Enumerate all communities in franchise area Source: EU Energy Initiative Partnership Dialogue Facility (2014). Minigrid Policy Toolkit

Rank & Prioritize Feeders Based on Investment Analyses… DEMAND Simple investment analysis methods: Discounted Cash flow Discounted Payback Period Some feeders overlap boundaries Most feeders are in underserved communities High Low In Discos’ Expansion Plans? Island with Stable Grid Supply? Island with Embedded Generation? In Discos’ Expansion Plans? Interconnected Mini-Grids? Low LOSSES High NOT in Discos’ Expansion Plans? Interconnected Mini-grid? Isolated Mini-Grids? Solar Home Systems? In Discos’ Expansion Plans? Interconnected Mini-Grids?

…then Associate Feeders with Communities For each 33kV/11kV feeder: For communities connected to grid Where are these communities? How many? How is performance? power supply? Collection? What supply augmentation partnerships are feasible? Embedded Generation? Interconnected Mini-grid? Which financial arrangements? Fixed Fee? Per-unit Fee? Profit-sharing? Is community within the 5-year Distribution Network Expansion Plan? For communities NOT connected What is the number of households per community? Is community within the 5-years Distribution Network Expansion Plan plan? Can partners be invited to tender for different LOTS? Community D Community C Community B Feeder X Community A Source: PowerGen Renewable Energy

Key Factors for Achieving Reliable and Cost-Effective Grids Minimize the cost of supplying electricity Make it affordable for the poor at the same time (are all customers worth the stress for Discos?) Minimize technical and commercial power system losses (especially due to meter tampering) Achieve near-zero collection loss (through smart metering) Maximum collection of electricity bills Aim to achieve high collection rates (98% - 100%) What can we learn from customer engagement approach adopted by Mini-grid developers? Increasing tariffs First target large- and medium-sized consumers Improve service quality Augment national grid supply