The current conventional electricity model based on a central national power generation and long-distance transmission grids with its attendant losses is no longer sustainable particularly in isolated rural communities where the cost of building transmission lines and transporting fuels is high. The utilization of minigrids to provide an efficient source of power in Nigeria with a population of over 200 million people have begun. However, it appears this is not sufficient to stimulate the growth of minigrid adoption in Nigeria especially as there is a large disparity between the present minigrid and the national grid price of electricity (N250 - N300/kWh versus N53-N76/kWh), this currently serves as a deterrent to minigrids adoption, viability, and sustainability in Nigeria.

This paper examined the factors that contribute to the high cost of electricity generation from minigrids as well as provided recommendations to reduce the cost of electricity generation from minigrids by carrying out a technical and economic simulation of an existing 85KW solar based renewable energy minigrid project in Nigeria. This paper used HOMER software for the simulation using Solar PV (PV), Storage Battery(B), Diesel Generator (DG) and Converter as the basecase scenario and other alternative scenarios were also modelled using CNG (Compressed Natural Gas) and LPG (Liquified Petroleum Gas) as alternate sources of fuel

A structured analysis of the results obtained from the model show that fuel costs accounts as one of the key drivers of the minigrid systems tariff cost, the use of LPG as a source of fuel reduced the tariff cost by about 14% and CNG by about 38%. Based on these findings, this paper proposes the use of LPG and CNG as substitute fuels instead of diesel to reduce the current minigrid systems tariff costs.

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