Nigeria is at an essential inflection level in its electricity-sector reform journey.
For many years, our nationwide dialog has rightly targeted on a cussed problem: how do we offer dependable electricity to thousands and thousands of Nigerians, significantly these dwelling and dealing in communities the place typical grid growth is both too sluggish or economically tough?
Today, one thing essential is starting to vary.
Distributed renewable vitality has moved from the margins of Nigeria’s electricity sector in direction of its mainstream. Mini-grids have gotten commercially viable infrastructure. Private builders are investing.
Nigerian monetary establishments are coming into the market. States are assuming higher duty for electricity. Renewable Energy Service Companies are rising. Local manufacturing is increasing. Digital platforms are reworking metering, monitoring and income assurance.
Against this backdrop, the proposed Electricity Act (Amendment) Bill, 2025 seeks to determine a National Authority for Renewable Energy (NARE), transferring renewable-energy duties presently exercised by the Nigerian Electricity Regulatory Commission, the Rural Electrification Agency and the Rural Electrification Fund to the brand new establishment. Public experiences additionally point out a proposal to allocate 40 per cent of the annual Rural Electrification Fund to NARE.
I respect the National Assembly’s constitutional duty to constantly enhance our legal guidelines, and I perceive the intention behind creating a stronger institutional focus for renewable vitality. Nigeria definitely must speed up renewable-energy deployment.
However, good intentions should in the end be examined towards market realities.Having spent years on the implementation finish of Nigeria’s energy-access problem, I consider the proposed structure requires basic reconsideration.
It risks making an attempt to resolve a coordination downside by creating one other coordination downside; making an attempt to remove institutional overlap by establishing overlapping jurisdiction; and making an attempt to speed up funding by introducing exactly the type of regulatory uncertainty that non-public capital avoids.
The query is subsequently not whether or not renewable vitality deserves higher consideration. It unquestionably does.
The query is whether or not creating one other regulatory establishment will produce one further megawatt of electricity, one further connection, one further manufacturing plant or one further naira of personal funding. That is the take a look at we must always apply.
The first downside is conceptual. Renewable electricity is not a discrete sector able to being neatly separated from the broader electricity market.
Consider a contemporary interconnected mini-grid. It might comprise photo voltaic era, battery vitality storage, good meters, distribution infrastructure and digital cost techniques whereas concurrently working along side a Distribution Company community. Which regulator ought to regulate such a system?
If NARE regulates the renewable era element whereas NERC or a State Electricity Regulatory Commission regulates the distribution community into which that electricity is injected, who determines the tariff? Who approves interconnection? Who resolves technical disputes? Who protects the patron? Who in the end carries regulatory duty?
These will not be tutorial questions. They go on to mission bankability. Capital dislikes ambiguity. Every further regulatory interface introduces one other approval, one other interpretation, one other potential disagreement and one other danger that should ultimately be priced into the price of capital and, in the end, the value paid by electricity customers.
Nigeria ought to subsequently be simplifying the journey from capital to kilowatt, not making it extra difficult.
There is one other essential actuality the place we’re already managing a historic decentralisation. The Electricity Act 2023 essentially modified Nigeria’s electricity structure by enabling States to determine and regulate intrastate electricity markets.
By July 2026, NERC reported that electricity-market regulatory oversight had already been transferred to 16 States. The Federal Government itself subsequently convened federal and state establishments particularly to deal with authorized, coverage and regulatory harmonisation, culminating within the creation of an inter-agency committee to handle rising implementation points. That tells us one thing essential.
Nigeria’s current problem isn’t an absence of regulators. It is methods to make an more and more decentralised regulatory system work coherently.
At a time once we are fastidiously managing the connection between a federal regulator and rising State regulators, introducing one other federal regulator organised round a know-how creates a brand new axis of jurisdiction.
We might find yourself with NERC, State Electricity Regulatory Commissions, NARE, NEMSA and different establishments interacting with completely different facets of the identical electricity mission.
That isn’t simplification. It is fragmentation.
The timing is especially consequential as a result of Nigeria’s distributed-energy market is starting to reveal what is feasible when public coverage intentionally crowds in personal enterprise.
The World Bank-supported Distributed Access by Renewable Energy Scale-up programme DARES is a US$750 million programme designed to offer new or improved electricity entry to greater than 17.5 million Nigerians, with a goal of 1,225 mini-grids and 465MW of renewable era. Critically, its growth goal explicitly locations private-sector-led distributed renewable vitality era on the centre of supply.
This builds on the Nigeria Electrification Project, by which greater than 7.8 million Nigerians had been impacted with clear vitality and greater than 1.1 million households obtained new or improved electricity companies.
We are subsequently not discussing renewable vitality theoretically.
We have spent years constructing an ecosystem of builders, financiers, know-how suppliers, communities, regulators, growth companions and authorities establishments round an more and more subtle market.
Today, greater than 1,000 mini-grids are beneath growth by the programmes being applied by REA. And one thing much more important is occurring.
Nigeria’s home monetary establishments are starting to recognise distributed renewable vitality as an investible asset class. REA has signed financing MoUs with FCMB for ₦100 billion, Lotus Bank for ₦100 billion, Alpha Morgan for ₦50 billion and Stanbic IBTC for ₦100 billion.
That is ₦350 billion in potential home financing commitments round an trade that, not way back, depended overwhelmingly on authorities and worldwide growth finance.
This is strictly the transition Nigeria must be accelerating.
Private capital doesn’t principally ask whether or not a rustic has a devoted renewable-energy authority. Capital asks completely different questions. Who licenses my mission? Who determines my tariff? Which regulation applies? Can that regulation change midway by my funding? Which authority governs my interconnection settlement? If my mission operates inside a State electricity market, does the State regulator or federal renewable-energy regulator have jurisdiction? What occurs to present licences, grants, contracts and concessions? How are disputes resolved?
Those questions decide bankability. An investor considering a 15- or 20-year infrastructure funding should have confidence that the institutional framework governing that funding will stay comprehensible and predictable.
Every ambiguity turns into a danger. Every further danger will increase the required return. Every enhance in the price of capital ultimately seems someplace — in tariffs, subsidies or initiatives that merely by no means attain monetary shut.
Therefore, if our goal is to mobilise billions of {dollars} into renewable vitality, our institutional structure should change into easier, clearer and extra predictable, no more layered.
There can also be a basic institutional-design query. A regulator ought to regulate. A market-development establishment ought to develop markets. These are completely different features requiring completely different incentives and institutional cultures.
NERC regulates electricity markets. REA develops markets the place business electricity provision has traditionally been tough. It aggregates alternatives, helps mission preparation, buildings interventions, mobilises concessional assets and personal capital, and helps builders enter underserved markets.
Combining renewable-energy promotion, mission growth, licensing, tariff regulation, technical oversight and dispute decision inside a single establishment risks blurring the essential distinction between market participant, market facilitator and market referee. Rather than creating institutional readability, such focus might create new conflicts and uncertainties.
The proposal regarding the Rural Electrification Fund deserves significantly cautious consideration. The REF exists essentially to deal with an entry and market-failure downside.
There are communities throughout Nigeria the place electricity can remodel agriculture, healthcare, schooling and native enterprise however the place buyer density, buying energy or preliminary demand might not instantly produce commercially engaging returns. Public intervention helps bridge that viability hole.
Renewable know-how is incessantly probably the most environment friendly answer, however the goal of the Fund is in the end electricity entry, not the promotion of a specific know-how. Diverting a considerable portion of the Fund to finance the operations or mandate of one other establishment risks complicated the instrument with the target.
Every naira allotted from an electricity-access fund must be evaluated towards a simple query: How many further Nigerians will this connect with dependable electricity?
Perhaps probably the most encouraging growth is what is occurring past authorities programmes. Nigeria is witnessing the emergence of Renewable Energy Service Companies – RESCOs – able to financing, developing and working distributed-energy infrastructure.
Fintech corporations are creating specialised options for mini-grid monitoring, collections, income assurance and asset administration. Developers that gained expertise in Nigeria are more and more able to working elsewhere in Africa. And Nigeria now has an rising renewable-energy manufacturing pipeline estimated at roughly 3.7GW.
This is how industries are created. The authorities creates an enabling setting; personal enterprise responds; capital enters; abilities develop; provide chains emerge; know-how improves; competitors will increase; and prices decline. At this stage, institutional stability turns into an financial asset. We must be extraordinarily cautious about resetting the foundations simply because the market is starting to answer them.
None of which means Nigeria’s renewable-energy institutional framework is ideal. It isn’t. There are real coordination issues. Project approvals will be improved. Federal-State interfaces require additional clarification. Data should be higher built-in. Standards should proceed to enhance. Domestic financing should deepen. Local manufacturing requires stronger help. And mission growth timelines should change into shorter.
The answer to coordination failure is healthier coordination not essentially one other regulator. Indeed, the Federal Government and National Assembly have themselves lately emphasised complementary regulatory roles in Nigeria’s rising multi-tier electricity market.
If there’s a compelling case for a devoted nationwide renewable-energy establishment, then we must always think about designing it round features which can be presently underserved: renewable-energy funding promotion, green-finance mobilisation, analysis and innovation, useful resource mapping, manufacturing and supply-chain growth, carbon-market growth, abilities growth and inter-governmental coordination.
Those features can strengthen the ecosystem with out creating a parallel electricity regulator. Nigeria wants an establishment that helps renewable-energy corporations navigate the market, not one other establishment they have to navigate.
The Electricity Act 2023 is barely three years previous. The promote it created continues to be taking form. States are constructing regulatory capability. Investors are adjusting. Federal establishments are studying methods to function inside a decentralised framework. Private capital is coming into. Development companions have structured long-term programmes across the present institutional structure.
This is the second to consolidate, make clear and speed up not fragments. The National Assembly has an essential alternative because it considers this modification. Legislative scrutiny ought to study not merely the desirability of renewable vitality on which there’s broad settlement however the second-order penalties of the proposed institutional structure.
We ought to conduct detailed regulatory-impact evaluation. We ought to take heed to the States. We ought to take heed to traders and lenders. We ought to take heed to builders who really finance and construct mini-grids. We ought to study the implications for present World Bank, African Development Bank and different development-finance commitments.
And above all, we must always ask whether or not the proposed association reduces or will increase the variety of institutional interfaces required to maneuver a renewable-energy mission from conception to operation.
Nigeria doesn’t endure from a scarcity of establishments. Our problem is making establishments work collectively round a transparent market structure. The future we’re constructing is one during which the Federal Government, States, regulators, financiers, builders, producers, know-how corporations and communities take part in a dynamic electricity market able to mobilising capital at unprecedented scale.
We ought to shield that momentum. We ought to strengthen what works, appropriate what doesn’t, remove real duplication and create higher certainty for traders.
However, we must always resist the temptation to equate the creation of a brand new establishment with the answer to a market downside.
The measure of reform isn’t what number of businesses we create. It is what number of properties we join, what number of companies we energy, what number of megawatts we deploy, how a lot personal capital we mobilise and the way rather more dependable electricity turns into for Nigerians.
That is the reform Nigeria wants.
And that must be the usual towards which each and every proposed modification to the Electricity Act is judged.
Dr. Abba Aliyu is the Managing Director/Chief Executive Officer of Rural Electrification Agency (REA).
