REA Disburses Capital Grant for Solar Home Systems (SHS)

The Rural Electrification Agency (REA), Nigeria Electricity Project (NEP) has commenced the disbursement of grants under the Output Based Fund (OBF) sub-component of the Standalone Solar Home Systems (SHS) effective December 2019 under the World Bank-financed Nigeria Electrification Project (NEP). An estimated N270 million has been disbursed as capital grants for over 60,000 verified installed systems by ten private participating companies under the sub-component. 90% of these systems have been sold to and deployed in households, with the remaining 10% deployed in Micro-Small-Medium Enterprises (MSME). The systems range from 6Wp to 75Wp. 

The SHS Component is a $75million ring-fenced fund providing capital grants upon verified installation of SHS equipment in unserved and underserved Nigerian households and MSMEs; enabling them access to reliable energy services at relatively lower costs.

It has two sub-components and structured as private sector and market-led:

  1. Output Based Fund (OBF) ($60million) provides grants of up to 20% of the capital cost payable upon verification of equipment installations and operation.  It is designed to support rapid deployment of SHS by energy access companies at scale.
  2. Market Scale-Up Challenge Fund ($15million) will provide lump sum grants in support of strong business plans and other investor co-funding initiatives.

The SHS grant payment is to enable recipient companies reduce costs associated with deployment of infrastructure provided that deserving grantee developers and energy access companies would have been successfully assessed and qualified to participate in NEP and are further required to submit evidence of systems sold on a monthly basis. Upon verification of their deployment and operation, a grant amount of up to 20% is paid on the nominal retail price of each system.

The OBF expires when the funds are fully exhausted or when the NEP ends in 2023.
The Rural Electrification Agency is the Implementing Agency of the Federal Government of Nigeria tasked with the electrification of unserved and underserved communities. The Nigeria Electrification Project (NEP) is an innovative programme to catalyse off-grid development in Nigeria, through the provision of grant funding, detailed market data and technical assistance, financed by the World Bank ($350m) and the African Development Bank ($200m). The NEP components are Solar Hybrid Mini Grids, Solar Home Systems (SHS) and the Energizing Education Programme (EEP).

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