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NERC Plans Incentives for Renewable Energy

NERC Boss

The Nigerian Electricity Regulatory Commission (NERC) has indicated its preparedness to promote investments in renewable energy sources to boost Nigeria’s capacity to supply electricity to its teeming population through various energy mixes. NERC, which recently flagged off works at a 30 megawatt (mw) solar power plant project sited at Kankiya local government of Katsina State that is being executed on the platform of the Nigerian-German Energy Partnership, stated that it had proposed a number of incentives to engender investment in renewable energy sources within Nigeria.

Chairman of NERC, Dr. Sam Amadi, explained that the commission has proposed incentives such as a guaranteed market for renewable energy supplies, simplified licensing process, access to land and most importantly a robust feed-in- tariff that is enough to allow for operators to recover costs over a period of time. Amadi noted that the coming of the Katsina project was a major milestone in Nigeria’s quest to achieve sustainable energy production and supply via renewable sources, adding that investment in renewable energy had never been attractive due to the high capital requirement.

According to him, investors have often evaluated certain critical concerns when setting up a power plant amongst which is cost recovery. He however stated that through a wholesale tariff that allows for reasonable rate of return on investment, such concerns are often addressed. “In order to promote investment in the area of renewable energy, NERC had the feed-in-tariff which is designed to enable producers of renewable energy sell their power to the grid at considerably higher prices than those of conventional means such as gas, hydro or coal powered plants.

An average retail price is calculated from this mix, and this is what constitutes the retail consumer tariff. Another incentive proposed by NERC that has been approved and already in effect is the complete import duty waiver for parts required for power generation,” Amadi said.

In line with the national energy policy and the draft renewable energy master plan, other incentives that are derivable from investments in renewable energy projects within Nigeria include, excess and preferential rate of return within the lifespan of the project, as well as other fiscal incentives ranging from exemptions income and withholding tax on imports, provision of soft loans at concessionary lending rates and subsidy on production. Such investments will also attract waiver on purchase taxes and other tax holidays.

Source: Power Nigeria

http://www.power-nigeria.com/en/IndustryNews/NERC-Plans-Incentives-for-Renewable-Energy-/