General government authorisation

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

  • A generation licence, required to operate a renewable energy project and sell electricity;
  • an environmental impact assessment performed by the Nigeria Environmental Standards Regulation Enforcement Agency and the relevant state agency where the plant is located;
  • an environmental and social impact assessment especially for projects seeking funding from international lenders and development finance institutions (DFIs);
  • a building or development permit for the construction of the power project. This is issued by the relevant state building control agency in the state where the power plant is being constructed;
  • an evacuation certificate from the TCN for on-grid projects; and
  • a water licence for hydroelectric projects.
Offtake arrangements

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

The offtaker for on-grid generated power in Nigeria is NBET, also known as the bulk trader, which through a vesting contract carries out the resale of power to the DisCos. By a recent ministerial declaration the eligible customer (end user) can now buy directly from generation companies. NBET enters into and executes PPAs with generation companies and the resale of power to distribution companies through vesting contracts.

Procurement of offtaker agreements

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

NERC regulations require long-term PPAs to be procured via a competitive tender. A few years ago, realising the need to jump-start greenfield generation, NERC issued a notice allowing for unsolicited tender. This culminated in the signing of a PPA with 14 front-runner IPPs for solar projects with an expected total capacity of 1,125MW. A later notice released by NERC reactivated the provision for competitive procurementwith limited exceptions. Not all renewable projects are subject to feed-in tariffs. The Regulation for feed-in tariffs for renewable energy issued by NERC applies to projects with specific technologies and capacities. Lower capacities below 1MW shall be procured by net metering, while large capacities shall be by competitive procurement. The feed–in tariff is applicable to projects with the following capacity cap: a wind projectis 10MW, small hydro is 30MW, biomass is 10MW and solar PV is 5MW. Competitive tenders will be used for capacities above these thresholds and they are to be procured through NBET.

Operational authorisation

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

To operate a renewable project and sell electricity from a renewable project, the government authorisations required are:

  • a generation licence, required to operate a renewable energy project and sell electricity;
  • an environmental impact assessment certificate;
  • work permits and expatriate quota from the Nigerian Immigration Service where expatriates will be employed;
  • a certificate from the National Office for Technology Acquisition and Promotion, certifying registration in respect of the transfer of technology contracts;
  • compliance with the Market Rules, Grid Code, Metering Code, Health and Safety Regulations and other regulatory instruments issued by NERC; and
  • annual compliance audits on the activities of the generation company and reports to be filed with NERC.

Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

The use of renewable energy to generate power is still in its early stages in Nigeria, and until recently the most prevalent source of renewable was hydropower. Biomass, wind and solar are not being fully utilised. Currently, there are no laid down laws or legal requirement for the decommissioning of renewable energy projects in Nigeria.