Developers set to profit as Okra Solar Mesh-grids approved by REA for Output-Based Funding subsidy

Rural Electrification Agency of Nigeria (REA) has approved Okra Solar’s proprietary Mesh-grid technology for Output based funding subsidy under its $550m intervention program (NEP) launched in collaboration with the African Development Bank (AfDB) and the World Bank (WB) to provide subsidies for energy developers.

The Nigerian Electrification Program (NEP) two key components, Performance-Based Grant and the Output-Based Fund, which have collectively spurred growth in the sector for developers deploying Solar mini-grids, SHS and energising educational institutes will now include mesh-grids for the first time.

Mesh-grids are an innovative technology that allows high-power solar home systems to interconnect and form modular power-sharing networks; thereby combining the speed and flexibility of SHS with the reliability and energy abundance of mini-grids, proven to reduce the cost of last-mile delivery by up to 60%.

Under the NEP, the OBF subsidy ranges from $55.20/connection for tier 1 systems, all the way to $1,945.60/connection for tier 5 systems. Tiers refer to the World Bank’s Multi-Tier Framework for energy access, Tier 1 systems supply a minimum of 3W power and Tier 5 offer 2kW and above of power. Mesh-grids which are currently being deployed fall under tiers 3 and 4, which receive a $346.50/connection and a $1,0003.50/connection subsidy respectively.

This allows developers to offer flexible tariff structures, such as a “cost-reflective” tariff, which can be adjusted on a project-by-project basis according to variance in community size, location and off-taker load profiles, amongst other factors. This “cost-reflective” tariff allows developers to compete with each other and serve communities in areas that were previously unfeasible– meaning that Developers can charge what they need in order to run a sustainable business.

Nigeria remains the largest off-grid energy market in the world, with 80 million people waiting to be connected to reliable energy. So it comes as no surprise that all stakeholders across the globe are watching Nigeria, eagerly anticipating a massive leap towards eradicating global energy poverty. And with more than 100 private energy development companies in Nigeria who are addressing the market by deploying standalone solar home systems (SHS), mini-grids and more recently, mesh-grids, the Giant of Africa is well on the path to becoming the most successful off-grid energy market in the world.

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