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Tariff Calculation Tool For Mini-Grids

The document discusses the Multi Year Tariff Order (MYTO) tool used by the Nigerian Electricity Regulatory Commission (NERC) to regulate electricity tariffs for Nigeria's main power grid. It explains that NERC has developed a similar MYTO Mini-Grid tool to calculate tariffs for mini-grid projects based on cost data inputs. The tool is available online and allows mini-grid developers to enter project cost information and obtain a tariff calculation to help set customer prices.

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265 views

Tariff Calculation Tool For Mini-Grids

The document discusses the Multi Year Tariff Order (MYTO) tool used by the Nigerian Electricity Regulatory Commission (NERC) to regulate electricity tariffs for Nigeria's main power grid. It explains that NERC has developed a similar MYTO Mini-Grid tool to calculate tariffs for mini-grid projects based on cost data inputs. The tool is available online and allows mini-grid developers to enter project cost information and obtain a tariff calculation to help set customer prices.

Uploaded by

olisamc_628730283
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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THE TARIFF CALCULATION TOOL

FOR MINI-GRIDS

Mohammed UMAR
(Renewable Energy/Rural Electrification)
PRS Division
Outline

The Multi Year Tariff Order or MYTO

The MYTO Mini-Grid

The MYTO in the NERC Mini-Grid Regulation, 2016

Metering Code

The MYTO Mini-Grid on the NERC Online Tool


• The Multi Year Tariff Order or MYTO
MYTO Tool

The MYTO (Multi Year Tariff Order) is a tool set up and used by
NERC to regulate the electricity tariffs for the main grid sector.

Based on the data provided by the generation, transmission


and distribution (DisCo) companies, NERC uses the MYTO to
set wholesale and retail prices for electricity in the industry.
http://www.nerc.gov.ng/index.php/home/myto
The MYTO : Short Overview
 The MYTO is a complex tool based on Excel that requires a wide range of inputs

 The tool is accessible on the NERC Website


(http://www.nerc.gov.ng/index.php/library/documents/MYTO-2015/)
Screenshot of the MYTO Tariff Summary

OVERALL INDUSTRY

Export Sales (Avg


Costs)

Uncollected Sales
(NGN/kWh - nominal)

Non-Tech Losses

Distribution Losses

Transmission Losses

Distribution Tariff

Transmission Tariff

Generation Tariff

2015 2016 2017 2018 2019


The Tariff Model
The Tariff Model
used in the MYTO
is very similar to a
Cost Plus Method.
Based on the costs • profitable enough for the electricity companies
and the amount of • reasonable for the end customers.
electricity
produced, the
MYTO calculates a
tariff that is both :
• Cost recovery/financial viability - regulated entities should recover their
(efficient) costs, including a reasonable rate of return on capital.
• Certainty and stability of the pricing framework which encourages an
efficient level of investment.
Objectives of
• Incentives for improving performance – It provides incentives to reduce
MYTO costs, improve quality of service and encourage efficient use of the
network.
• Allocation of risk – It promotes the efficient allocation of risks.
• Simplicity and cost-effectiveness – It is easy to understand and implement.
Regulated Tariff for the End-Customers on the Grid
 Regions are defined and
include several states within
a DisCo franchise area

 Customers Classes are approved


by NERC

 Tariff is set for 5 years


The MYTO Mini-Grid
The MYTO for Mini-Grids

For the Mini-Grid sector, the idea is


to apply the same principles like
the Grid sector.

A Calculation Tool based on the


MYTO principles was therefore
developed by NERC
Screenshot of the MYTO Mini-Grid

11
Differences between the MYTO and the MYTO Mini-
Grid
The tariff methodology remains the same as the MYTO Mini-Grid is based on the MYTO
directly. However, due to the differences of size in the projects, some adjustments have
been done:

Only the Generation and Distribution sections of the MYTO are used (there is no
transmission considered)

A Tariff is calculated for either one or a cluster of villages that are located in the same area.

There is no customer classification imposed by NERC

Both Technical and non-technical losses have a maximum of 10% (S. 20(3)a & b).
Metering Code

13
Compliance with Metering Code
 Chapter IV section 18 (2) “The Metering Code
shall be mandatory for all registered MGs &
Isolated MGs operated under a Permit &
Interconnected MGs operated under a
Tripartite Agreement. The Commission may on
request of the MG operator grant a
Derogation where it deems fit”

14
Derogation- Metering Code vs Mini-
Grids Regulation (1/2)

 Change Metering Code  specify acceptable


deviations for Mini-Grids
 Use Section 1.1.3 f of the Distribution Metering
Code and prepare a standardized template
(maybe as annex to the Mini-Grid regulation) for
application for a derogation:
1.1.3 f: “Notify NERC of all Metering Systems where the
Distributor cannot comply with this Distribution
Metering Code and shall seek derogation from the NERC,
and NERC may or may not grant such derogation and
may impose any conditions as it reasonably sees fit”.
15
Derogation-Metering Code vs Mini-
Grids Regulation (2/2)
• Section 1.2.5 “To the extent of any derogation
granted, the distributor shall be relieved from
its obligation to comply with the applicable
provision of the DMC and shall not be liable
for failure to so comply but shall comply with
any alternate provisions asset forth in the
derogation”.

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Possible Technical Difference
Requiring Derogation
Distribution Grid Meters Mini-Grid Meters

High accuracy in low power range (0 W to some hundred


High accuracy in medium power range (some 100 W to some kW W) with cost of 10 USD – 50 USD/meter
range) with cost of 50 – 250 USD/meter

1 - 2 VA burden due to small LED lighting loads per


household
5 VA burden (2.2.7)

Class 2.0 in order to reduce costs on metering


technology; high accuracy especially in low power range
Class 1.0 (2.2.7)

Certification adds to meter costs, thus manufacturer


Calibration needs to be certified by authority (1.1.3 c) / type tested calibration should be enough
(3.1.2)

Load and demand management functions are a


Load and demand management functions through PLC/ZigBee requirement (can be based on PLC/ZigBee or grid
frequency control)

17
 The MYTO in the NERC Mini-Grid
Regulation, 2016
When does the MYTO Mini-Grid apply?
(1/2)
 Depending on the type of mini-grid, the NERC Mini-Grid Regulation, 2016 refers
to different articles.

Isolated Mini-Grid Isolated Mini-Grid Interconnected Mini-Grid

Size (distributed power) < 100 kW < 1 MW < 1 MW

Type of Application Registration Permit Tripartite Contract

Article in the Regulation S. 20(4) S. 7(1) g S. 9(1)b

According to the regulation, the tariff calculation based on the MYTO Methodology has to
be used for all interconnected mini-grids and for isolated mini-grids with a permit.

In case of registered isolated mini-grid, the mini-grid developer decides whether he wants
to use tariff calculation based on the MYTO Methodology (S. 20(4)a) or not (S. 20(4)b)
When does the MYTO Mini-Grid Apply?
(2/2)

The NERC Mini-Grid Regulation, 2016


mentions the use of the MYTO Mini-Grid
in two other articles.
• In case a registered isolated mini-grid want to apply
for a permit, he will have to use the tariff calculation
using the MYTO methodology (S. 20(4)a and b).
• In case of a tariff revision (S. 13(3)a) initiated by one
of the parties, the tariff calculation using the MYTO
methodology shall be adjusted
The MYTO Mini-Grid on the NERC
Online Tool
The User Interface of the MYTO Mini-Grid

• This User Interface allows the


The MYTO collection of the different types of
Mini-Grid inputs that the MYTO Mini-Grid
has been requires to perform the tariff
developed calculation.
with a user • The User Interface contains 5
interface different tables of inputs.
for • Once all are filled, the macro can be
developers: launched and it calculates the tariff
for the mini-grid project.
The MYTO Mini-Grid on the NERC Online Tool

An online interface similar to the one available


in the MYTO Mini-Grid will be available on the
NERC Online Tool. It allows the developer to
focus on what is important for him:
Enter the relevant variables of his
project:
• Generation Assets & Project Obtain the results of the MYTO
Development Costs tariff calculation displayed on the
• Distribution Assets
• O&M Costs for the Generation Side
project page of the Online Tool.
• O&M Costs for the Distribution Side
• Customers Number & Load
Screenshot of the Input Sheet for the Tariff Calculation
Once finished, go
Possibility to adjust
the next stage
former inputs

Possibility to add as many


items as required

The design presented here is not final.


THANK YOU
Contact us at:
Adamawa Plaza, Plot 1099 First Avenue,
Off Shehu Shagari Way,
Central Business District,
Abuja

Website: www.nerc.gov.ng
E-mail: [email protected]
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