A solar energy auction framework is a mechanism used to facilitate the procurement of solar energy generation capacity. In an auction, solar energy developers bid to supply a certain amount of solar energy capacity at a specified price. The auction framework typically includes procedural rules for conducting the auction, evaluating bids, awarding contracts, and ensuring transparency and fairness throughout the process.
The Nigerian Electricity Regulatory Commission (“NERC”) is collaborating with the World Bank (“WB”) under the solar energy auction framework. The WB goal is to identify optimal connection points within Nigeria’s electricity network and develop an optional framework based on successful international models, such as Brazil, where over 20 times more power has been procured using the auction process.
The solar auction study process in Nigeria began in 2023 with the evaluation and selection of consultants to investigate and establish a framework for Nigeria to engage in solar auctions. A study tour was conducted in Brazil to gather insights and learning. The World Bank identified substations in Nigeria capable of receiving solar energy. Engagements have so far been held with the Director-General of the Governors’ Forum to explore how states can integrate solar into their energy mix and NERC has issued a renewable energy purchase obligation target.
The WB has so far provided about $4.4 billion to the Nigerian Electricity Supply Industry (“NESI”) covering areas such as transmission, sector reforms and DARES. The grid-scale solar programme is the key focus now. The benefits of the grid-scale solar programme is majorly that solar auctions can reduce the cost of power moreso as the legal and regulatory framework in Nigeria supports solar auctions with the potential for secondary regulations.
