81322602 - International Consultancy for the Development of off-grid Renewable Energy Projects - Lot 2

NESP is currently in its third phase (June 2023 - May 2027) and still funded by the European Union (EU) and the German Federal Ministry for Economic Cooperation and Development (BMZ). The programme is implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in collaboration with Nigeria"s Federal Ministry of Power. Its core objective is to foster investments in domestic renewable energy (RE) and energy efficiency (EE) markets while improving electricity access for disadvantaged, mostly rural communities, including those in conflict-affected areas.

Background With a fast-growing population now estimated at 227 million, Nigeria is the most populated country in Africa. With only 60% of Nigeria"s population connected to the main grid, the rest remains unconnected. Power supply shortages do not only affect the living standards of Nigerians, but also the competitiveness of Nigeria"s businesses and industries.

In most cases, Nigerians resort to expensive and polluting captive diesel generation to satisfy their power needs. As a result, Nigeria has become one of the largest markets for diesel generators in the world. With its huge natural and fossil resources, Nigeria is Africa's energy giant and energy exports are essential for the Nigerian economy transition.

However, due to the destabilization of oil prices there is an increasing interest by Nigeria to accelerate the energy transition by increasing investments in sustainable energy. The Energy Transition Plan (ETP) that was adopted in February 2022 provides an ambitious, long-term strategy for the energy transition. It builds on the Sustainable Energy for ALL (SEforALL) Action Agenda and its Vision 30:30:30, setting the target to increase power generation capacity to 30 gigawatts (GW) and the RE share in the electricity mix to 30% until 2030.

Important climate policy documents, particularly the Nationally Determined Contributions (NDC) and the National Policy on Climate Change, have been updated to show a higher level of ambition. Despite reforms in the past decade, Nigeria"s energy sector still faces significant challenges. On-grid generation is limited by weak transmission infrastructure, while the distribution side suffers from DisCos" liquidity crises and high technical and commercial losses.

Electricity demand is estimated at 30,000 MW, compared to an average peak generation of 5,000 MW. Off-grid progress, particularly in mini-grids, is hindered by barriers such as limited forex access and technical capacity. To address these gaps, the Nigerian government passed the Electricity Act, 2023, repealing the Electric Power Sector Reforms Act, 2005.

The Act decentralises the electricity market, empowering state governments to establish State Electricity Markets (SEMs). It prioritises RE deployment and aims to attract private investment into the Nigerian Electricity Supply Industry (NESI). Several states are already setting up SEMs, but most lack the tools, skills, and resources to implement them effectively.

Therefore, NESP is providing targeted technical support that will focus on the following key output indicators: On-grid (Premium Grids) Output indicators:

1. Identification and mapping of suitable areas for premium grid projects in cooperation with DisCos
2. Promote awareness and experiences with an implemented premium grid project with RE generation component.
3. Support to DisCos to develop and implement economically sound business models and project implementation plans, network analysis and develop contractual documents Framework (Energy Transition Policy and State Electricity Market support) 1.

New or improved laws, regulations or instruments to achieve the energy policy goals prioritised in the Nigerian Energy transition plan (e.g, energy access, renewable energy) 2. Support 5 states on their respective State Electricity Market through the development of policies, laws, or instruments to advance RE investment. The procedure is divided into two lots.

This is Lot 2.