The objective of Standalone Solar Home Systems for Households and MSMEs component is to help millions of unserved and underserved Nigerian households and Micro Small Medium Enterprises (MSMEs) access better energy services at an affordable cost, via stand-alone solar systems through the private sector companies. This in-turn will significantly scale up the market for SHS in Nigeria. Grids for Rural Economic Development.
The target beneficiaries are people in off grid locations or underserved customers that have inefficient and unreliable energy access.
The grant support provided through NEP will aim to leverage other sources of finance such as: company’s own equity, equity/debt from investors, and facilitate access to credit by reducing risk to lending entities, which will consequently promote the maturity of the market.
The component consists of two funding windows
Output Based Fund: providing fixed incentive grants of up to 20% of the cost of the system to the grantees per each eligible system installed and verified. Applications for the OBF are on a rolling basis until funds are exhausted.
Market Scale-Up Challenge Fund: providing lump sum grants paid in quarterly tranches; awarded against strongest and ambitious business plans capable of delivering at scale. Grant amount depends on business needs and capability/performance of firm, but no more than 20-30% of total funding plan (financial leverage requirement)
Output Based Fund (OBF).
USD$60 million is allocated to this sub component. This fund will provide fixed incentive grants in the range up to 20% of the costs of the system to the grantees, per each eligible system installed and verified.
This support will enable the firms to finance the required investment in people, training, advertising, processes, and logistics inclusive of gender workforce integration and disaggregation as informed by the government gender program.
The grant amount will be fixed for each system size/ level of service category, and continually reduced over the life of the program.
Market Scale-up Challenge Fund.
USD$15 million is allocated to this sub component.
This fund will offer up-front lump sum grants and other investor co-funding to the most capable providers with strong business plans to accelerate their sales to Nigerian households and MSMEs.
These grant funds can also be used by grantees to provide additional direct working capital to enable faster investment in the activity and inventory needed to move quickly.
Disbursement of grant will be phased against grantees meeting their commitments per their business plans.
Output Based Fund Sub-component
Pre-qualification for Output Based Grants aims to ensure that the applicant has the capacity required to deliver quality assured products service and after sales service to customers and will have the internal integrity and rigor to cope with the reporting and audit requirements attached to the grant.
Interested applicants can register via the link provided on the REA website. Login details to the Odyssey application platform will be sent via e-mail following registration.
The evaluation process of the Output Based Fund (OBF) consists of evaluating the company and the product. The company evaluations are divided into 9 sections detailing various aspects of their company and its business model.
In addition, all the products to be accepted into the program must be quality verified, products must pass the Quality Verification Framework for the NEP and be certified by either Lighting Global (LG) or International Electro-technical Commission (IEC).
It is important to know that for the OBF evaluation, firms are not ranked but rather admitted or rejected subject to either passing or not passing the minimum average score of 70%, across the criteria below. However, companies are allowed to re-apply to the program. Provided they are able to address the issues raised by the evaluation committee.
The NEP team will be available to provide all necessary support and guidance to companies applying to the program.
|Company||Identify company, governance structures, and key personnel. Confirm regulatory compliance. Financial standing.|
|Customer Tracking||Evidence of the ability to meet the requirement to identify, track and report customers and SHS.|
|Customer Services||Evidence of ability to effectively provide pre- and after- sales service to those customers that are acquired, including easy and practical warranty service.|
|Operational scale||Evidence of ability to achieve the minimum required level of sales.|
|Skills and experience||Relevant experience or company and key people for building scale in the private SHS market.|
|Product||Identify SHS products, verify Lighting Global quality certifications (from independent laboratories)|
|Environmental Management||Evidence that environmental and social risks are mitigated.|
|Gender Inclusion||Evidence of promoting gender inclusion in all the company’s programme.|
|Background Checks||Consent to conduct background checks on the applicant company, associated companies, and key individuals.|
|Declarations||Declarations to comply with key terms. Consent for background checks on company and key people.|
Market Scale Up Challenge Fund Sub-component
In addition to the pre-qualification criteria applied to the Output-based grants, access to the Challenge Fund will require strong evidence that the applicant possesses all of the capabilities necessary to scale massively and rapidly.
Solar companies that bid for the grants will have to show that they have been able to /are in the process of leveraging equity or debt financing to support their growth in their core market.
Additional criteria will emphasize business plan that is investment worthy and of international standard; senior management team that is deep and capable across all key disciplines including consumer marketing, consumer finance, IT, logistics, financial management, business process management; commitment to high sales targets; credible pathway to mobilizing the substantial capital required to grow.
OBF Grant Unit Rate
The Output Based Grant will be paid as a pre-defined amount per system (Unit Rate) for each system installed.
Once a company is eligible and has met all the criteria listed above, each product will be categorized into several Tiers based on capacity and service. Within each Tier of SHS, a single unit rate of Output Based Grant will be set to be paid against all systems.
The grant amount per system (Unit Rate) varies across several categories of solar product.
Evaluation and Administration
A competitively selected Grant Administration Firm (GA) will handle the day-to-day communication with the grantees and will report to the NEP Project Management Unit (PMU) at the REA. The GA will be responsible for tracking the grant allocations to the grantees, screening applicants against eligibility criteria at the pre-qualification stage, and tracking progress toward meeting the milestones and results achieved by the grantees.
The Selection Panel (SP) established by REA and consisting of in-depth knowledge of the business of SHS in the private sector covering all business models and all aspects of the business will select the companies to be awarded the MSCF. The panel will be selected in their personal and professional capacity and appointed after approval by the REA and no-objection by the World Bank.
Market intelligence is the information relevant to a company’s market, gathered and analyzed specifically for the purpose of accurate and confident decision-making in determining strategy in areas such as market opportunity, market penetration strategy and market development. To enable the Nigerian market for SHS, we understand the importance of accurately analyzed data. Therefore, we have pooled various sources of readily available data to support market growth.