COMPONENT 1 – SOLAR HYBRID MINI GRIDS - DARES
To support the development of private sector mini grids in unserved and underserved areas that have high economic growth potential. The component consists of three subcomponents:
-
Minimum Subsidy Tender (MST)- This sub-component aims to
aggregate demand and prepare portfolios of mini grid projects for
tender. The mini grids will be privately financed, owned, and
operated, and the tender will select the developer that needs the
lowest subsidy to do so. Three separate MST pipelines will be used:
- Isolated mini grids - based on new customer connections (USD/end users)
- Interconnected mini grids - based on a percent or an absolute value of the overall CAPEX cost expressed in USD/MW or kW
- Solar rooftops - based on a percent of his overall CAPEX cost under an energy as a service model (EAAS)
- Performance Based Grant (PBG) - This sub-component will provide administratively set PBGs to mini grid operators based on new customer connections (US$/end users) for isolated mini grids and the percentage of or an absolute value of CAPEX expressed in US$/MW or kW for interconnected (grid-connected) mini grid projects. Performance-based grants will be made available to mini grid developers on a rolling basis and differentiated based on geographic and socio-economic factors (determined by existing mini grid activity) and consumer classes (residential, PUE). Eligible projects must have minimum commercial or productive loads to ensure sustainability overall.
- Total funding available for the component is US$410 million
- Total of US$215million has assigned for the MST
- Total of US$195million has been assigned for the PBG programme
APPLICATION PROCESS – SOLAR HYBRID MINI GRIDS - DARES
Qualification
- The interested applicants register for the programme through the REA – DARES solar hybrid mini grid website (https://nep.rea.gov.ng/mini-grid-performance-based-grant/), to receive log in information for the Odyssey platform.
- The applicant is to log onto the platform to access fully detailed information on the programme and application guidelines for all stages. Templates are also provided for the qualification stage.
Site Specific
- After the applicant has passed all requirements from the qualification stage, they are notified to progress to the site-specific stage with details on the site, generation and distribution designs, and targeted number of connections for each site they intend to electrify.
- Site location and targeted number of connections in 24 months
Grant Agreement Signing
- Standardized and non-negotiable and are granted per site approved under Site specific stage
- Grant period: 24 months
- Grant will terminate after 12 months if the Grantee has not commissioned the mini grid or has not connected any customers
- Grant agreement will contain clauses on enforcement of program requirements (service standards, minimum technical specifications, and E&S requirements), and on reporting requirements
Verification and Disbursement
- Detailed on slides 4-7
APPLICATION SUBMISSIONS – SOLAR HYBRID MINI GRIDS - DARES
Qualification
- Data Sharing Agreement (Form to be signed on Odyssey)
-
Eligibility:
- Signed application Letter (Template on Odyssey);
- Power of Attorney for Representative;
- Certificate of Company Registration;
- Certificate of Tax Clearance;
- Pension Clearance Certificate (for Nigerian companies);
- Nigeria Social Insurance Trust Fund Clearance Certificate;
- Industrial Training Fund Clearance of Compliance (for Nigerian companies);
- Incase of a JV or Consortium, a letter of to form a JV.
-
E&S compliance:
- Environmental and Social Management System of Company (Template on Odyssey);
- Workers Code of conduct against Sexual Exploitation and Abuse/Sexual Harassment (SEA/SH) (template on Odyssey)
- Health and Safety Policy of Company.
-
Technical capacity:
- Form EXP 3.1 – Evidence of Designing and Constructing at least 3 Mini grids of 10KW or One (1) mini grid of at least 50kW in generation capacity within the preceding 60 months (Template on Odyssey);
- Evidence in the form of Letter of Completion/ Completion Certificate
- Form EXP 3.2 – Evidence of Operating and Maintaining at least 3 Mini grids of 10KW or One (1) mini grid of at least 50kW in generation capacity within the preceding 60 months (Template on Odyssey);
-
Financial capacity:
- Fully Audited Financials of past 3 years showing total assets exceed total liability for the past two years and liquid assets of at least USD50,000;
- Form FIN 2 – Evidence of Ability to raise finance of at least USD250,000 for at least 1 project in infrastructure within the preceding 60 months (Template on Odyssey).
- Evidence of securing finance.
-
Business plan:
- Organizational chart.
- CVs of the key personnel: technical lead, financial lead, director(s), CEO, E&S staff, Project Manager, Renewable Energy Expert, Data officer.
- Business model detailing: - Business plan with PUE incorporated - Three-year projection of profit and loss statement - Three-year projection of cashflow statement - Three-year projection of balance sheet - Three-year projection of business ratios—debt ratio and profit margin ratio
Site Specification
-
E&S compliance:
- Exclusivity Agreement with Community;
- Compliance with the ESMF Exclusion Criteria, and site screening requirement Template on Odyssey;
- Compliance with requirements for Category I sites as defined in the ESMF (Carrying out EIA and submission to Federal Ministry of Environment; Acknowledged letter of EIA receipt sufficient);
- Compliance with requirements for Category II sites as defined in the ESMF (Carrying out ESMP and submission to Federal Ministry of Environment; Acknowledged letter of ESMP receipt sufficient);
- Detailed stakeholder engagement in the form of Minutes of Engagement, Photos and singed Attendance list with phone numbers of attendees);
- Grievance Redress Mechanism document with a clear structure for collecting and attending to grievances from the community at the developers' level and at what point it is escalated to the REA.
- Waste management plan detailing compliance with resource efficiency and pollution control
- Forced labour performance declaration (template on Odyssey)
-
Technical capacity:
- Detail of required specifications and documents presented in Site Specific Guidelines presented to developer once they qualify from qualification stage (also available on Odyssey Platform)
- Financial model to be completed on Odyssey platform
- Work plan to be completed on Odyssey (and monthly for continuous updates on project development progress)
GRANT DISBURSEMENT PROCESS – SOLAR HYBRID MINI GRIDS - DARES
Two milestones will determine the grantee's eligibility for grant disbursement. For a full year following the signing of the grant contract, grants will be ring fenced to the developer and the designated site(s). The grants will be ring-fenced to enable for connections for an additional year after the developer successfully commissions their mini-grid. These milestones are summarised below:
| Item No. | Milestone | Grant to be Disbursed |
|---|---|---|
| Milestone 1 |
Successful installation and commissioning of mini-grids and connection of the targeted customers |
80% of meters fully integrated at commissioning. |
| Milestone 2 |
The remaining 20% of the grant amount (per connection) based on achieving a metric for performance within 12 months |
A ‘“minimum consumption”’ requirement (calculated using the actual number of connections*) will be the metric to prove the performance of the plant. it is also expected that all connections achieved should have consumption data above 0kWh. |
*Minimum kWh sold in a year = (30 kWh x Total Number of Connections achieved)
Grant Disbursement Processes – SOLAR HYBRID MINI GRIDS - DARES
Milestone 1 – 80% of total connections achieved on commissioning
Conditions for milestone 1
- Installed meters must be integrated to enable live readings and details of connections uploaded on the Odyssey;
- Projects must be inspected by the Nigeria Electricity Management Services Agency (NEMSA) before commissioning and grant application.
Documents required
- A Letter of Request addressed to the REA NEP Head Procurement Unit detailing the number of connections the grantee wishes to claim (template on Odyssey);
- Invoice showing Bank details (template on Odyssey);
- Approved inspection report and Acknowledged Approval letter or Certificate of Inspection from NEMSA;
- NERC Permit/Registration Acknowledged approval;
- ESIA/ESMP Acknowledged Approval;
- Land acquisition/ agreement.
Grant Disbursement Processes – SOLAR HYBRID MINI GRIDS - DARES
Milestone 2 – Upon achieving a metric for performance within 12
months
Conditions for milestone 2
- Installed meters must be integrated to enable live readings and details of connections uploaded on the Odyssey;
- all connections achieved should have consumption data above 0kWh
- Successfully verified by the Independent Verification Agency (IVA) (process detailed in slide 9)
Documents required
- A Letter of Request addressed to the REA NEP Head Procurement Unit detailing the number of connections the grantee wishes to claim (template on Odyssey);
- Invoice showing Bank details (template on Odyssey);
- NERC Permit/Registration Approval
- ESIA/ESMP Certificate
INDEPENDENT VERIFICATION PROCESSES – SOLAR HYBRID MINI GRIDS - DARES
IVA Verification Process
Odyssey Verification
- Applicable to meters with APIs linked with Odyssey;
- Consumption rates of connections submitted for disbursement will be checked to determine meters have been successfully active.
Phone Verification
- Applicable to meters with APIs linked with Odyssey, as well as meters not linked;
- Customers are contacted via phone and interviewed by the IVA to determine to verify meter connections
Field Verification
- Applicable to meters with APIs linked with Odyssey, as well as meters not linked;
- IVA visits sites to verify connections submitted by developer
