Developers submit response to Expression of Interest

• The developers were given 30 days to prepare and submit an expression of interest.
• REA setup an evaluation committee to evaluate the submissions
• They used a transparent process ensured through formal observers
• Online

This is the first step in the application process whereby prospective developers are given 30 days to prepare and submit an expression of interest. This is the first step to determine if prospective developers meet the minimum requirements to qualify for the following round. Developers submit basic information on their balance sheet, and experience in deploying mini-grids.  This information is submitted online via a portal hosted by REA and hard copies are also submitted to the REA in line with Nigeria’s Public Procurement Act of 2007.

In parallel to developers preparing their expression of interest, an evaluation committee is established by REA. This committee is composed of REA staff members from different departments. To ensure full transparency of the process, security personnel from the Department of State Security, Economic and Financial Crimes Commission, as well as representatives from multilateral development organisations and members of civil society act as observers when the committee evaluates the expression of interest received.

In the first bidding window, 94 applications were received for mini-grids, 87 for SHS and 61 for grid extension – totaling 242.

Kick off stakeholder engagement workshop

REA engaged with developers in a workshop. The workshop communicated:

• The procurement process
• Expectations
• Criteria
• Evaluation process
• From this engagement developers could ascertain whether they were eligible before they started to put together a response to the expression of interest.

Before the bidding window is launched, REA hosted a workshop with prospective developers to discuss: i) the expectations; ii) the process; iii) the timeline; iv) the evaluation criteria; v) the due diligence process; vi) the terms of the agreement with the regulator; and vii) the type of subsidy made available and the threshold. From this engagement developers can ascertain whether they are eligible before they start working on an expression of interest. This step is essential to communicate with prospective developers and help them understand the calibre of developers needed to deliver energy access.

Process design

Key to the design process was consultation with various stakeholder groups including several governmental departments and ministries, regulator, distribution companies, private sector players, and multilateral development organisations that are active in the energy sector in Nigeria. Through these consultations, REA was able to assess the policies in place and develop interventions to overcome the barriers identified collectively. In collaboration with the above-mentioned stakeholders, REA has developed the operational guidelines to the competitive procurement process for both the REF 1 call and currently, the  Mini-Grids Acceleration Scheme (MAS). The design processes leveraged the experience of the Nigerian Energy Support Programme (NESP), financed and implemented by GIZ, which has been instrumental in guiding REA in creating a conducive environment towards mini-grid development. Importantly, existing on-grid Distribution Companies (DisCos) also played an instrumental role in the mini-grid planning process to understand their rollout plan and prevent stranded assets in the future in the prospect communities where mini-grid implementation is to occur.

As a result of the prevailing tariff regime in Nigeria, market conditions dictated the tariffs agreed upon by the developer with the recipient community. It is up to the prospective developer to assess the potential energy demand, and the ability and willingness to pay, to establish cost-reflective tariffs. Tariffs need to be lower than the various energy alternatives used in that particular community to increase their willingness to pay. An agreement is then signed between the developer and the community for at least 15 – 20 years – based on the expected life span of the energy system.

Priority geographical zones for energy access are demarcated at the macro scale at the outset of the bidding window and left up to the developer to identify recipient communities. This engagement process is time-consuming with high upfront costs to be borne by the developer; however, it ensures that they work in communities that have met their criteria in terms of the ability and willingness to pay the established tariffs. In order to build the skills and expertise in the sector, only local companies can bid under the competitive procurement process.

 Creating a conducive regulatory environment

The rapid transformation to improve energy access in Nigeria has been underpinned by policy reforms and implementation strategies. Policy reforms were necessary to create a fertile enabling environment that would support the deployment of clean energy systems to bridge the electrification gap in the country. A conducive regulatory framework included the development of the National  Renewable Energy and Energy Efficiency Policy (2015), National Renewable Energy Action Plan (2015), Rural Electrification Strategy and Implementation Plan (2016), Rural Electrification Fund Operational Guideline (2017), and the mini-grids regulations (2016). In addition to the regulations, licensing guidelines were implemented, which only requires mini-grid systems over 99 kW to obtain permits from the regulator. The above-mentioned policy and strategic documents have been instrumental in supporting the deployment of mini-grids in the country.

Nigeria has pledged to deploy up to 30 GW in clean energy solutions by 2030 in their Nationally Determined Contributions (NDCs). Recognising energy access as a key enabler of socio-economic development, there has been significant political backing to improve energy access in Nigeria. The electoral campaign undertaken in early 2019 saw all major candidates pledging to accelerate energy access in the country.

The privatisation of the energy sector in 2013 sent a clear signal to the private sector in terms of their role in achieving energy access. The move towards a conducive environment and the market opportunity, estimated at $8 billion/year (RMI, 2018), has attracted many private developers. To further open up the mini-grids market, the Rural Electrification Agency (REA) has launched a Mini-Grid Acceleration Scheme, which is a competitive procurement process for mini-grids in the country. Through several bidding window, REA intends to  provide access to electricity to 100,000 rural dwellers using new off-grid solar mini-grids by local private project developers.

Under the first bidding window, approximately 890 kW is currently  been procured with the smallest system at 30 kW and the largest one at 100 kW.

Understanding ‘bankability’ and unlocking climate finance for climate compatible development

This working paper focuses on understanding the concept of ‘bankability’ in support of the development of quality ‘bankable’ project proposals – to assist countries’ access to international climate finance.

The Green Climate Fund is currently the largest multilateral climate fund, and climate change and development practitioners alike are focused on seeing these resources flow. The Green Climate Fund represents a critical source of climate finance for developing countries and the fund has been at the centre of future prospects for financing climate change action. The climate finance landscape extends beyond the parameters of the Green Climate Fund, however, and the availability of funding from various sources – national and international, public and private – means that the climate finance arena is a complex and dynamic one to navigate.

If countries are going to access the scale of funding required, it is critical to consider the full spectrum of funding sources and their requirements, as well as the different mechanisms available from them, and how they can be combined. This makes the process of accessing climate finance especially complex.

The critical challenge remains for developing countries to ensure access to those funds, in order to adapt to the impacts associated with the current and future climate, and to support the implementation of their Nationally Determined Contributions (NDCs). This challenge, particularly in relation to meeting the stringent requirements of prominent funds like the Adaptation Fund and the Green Climate Fund in particular, is evident in the slow absorption of the available finance flows.

Download the working paper here: Understanding ‘bankability’ and unlocking climate finance for climate compatible development

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Agriculture, Forestry and Other Land Use Community of Practice (AFOLU CoP)

Countries in Africa are championing efforts to catalyze low emission climate-resilient development. As a key aspect of their efforts, countries are leading work in the AFOLU sector that align with key socio-economic development goals. To further these efforts and enable peer learning and application of learning to key policy measures and actions, the Africa LEDS Partnership, Africa LEDS project team, and the AFOLU working have partnered to launch an Africa AFOLU Community of Practice (CoP).  

The Africa AFOLU CoP is intended to be an interactive network comprised of national and subnational governments, technical institutions, businesses, non-profits and other international organizations addressing real-time policy and technical challenges and solutions related to the AFOLU sector. It is a platform for ongoing collaboration to allow for deeper learning and sustained participation, continuous access to tools and expert assistance, and to foster champions that will serve as role models for other countries in the regions. The AFOLU CoP is designed to be demand driven to meet members’ needs and will offer support and solutions to early movers as needs emerge. Objectives of the CoP are highlighted below.

Objectives

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• Enabling countries to achieve key socio-economic objectives through catalytic action in the AFOLU sector.
• Supporting peer learning and knowledge sharing on key topics within the AFOLU sector in Africa based on demand-driven interest and needs and with a focus on translating robust analysis into concrete policies and other actions.
• Building the capacity of hub institutions to continue the work of the CoP over time and transfer capacity to other institutions on the continent.

In 2018, the CoP activities were launched in collaboration with 8 partner countries through the Africa LEDS Project: Cameroon, Cote D’Ivoire, DRC, Ghana, Kenya, Morocco, Mozambique and Zambia and in collaboration with a broader set of countries through the Africa LEDS Partnership. Initial priority topics were chosen in relation to demand-driven consultations with the 8 countries since the start of the project. Following the initial launch event in April 2018, the CoP was expanded to include other countries throughout the African region. In 2018, the AFOLU CoP focused on peer learning, knowledge exchange, and expert assistance on key topics.

AFOLU CoP Resources

Download the AFOLU Concept Note 2020 here