Nigeria is at an vital inflection level in its electricity-sector reform journey.
For a long time, our nationwide dialog has rightly centered on a cussed problem: how do we offer dependable electricity to thousands and thousands of Nigerians, significantly these residing and dealing in communities the place standard grid growth is both too gradual or economically troublesome?
Today, one thing vital is starting to alter.
Distributed renewable power has moved from the margins of Nigeria’s electricity sector in the direction of its mainstream. Mini-grids have gotten commercially viable infrastructure. Private builders are investing.
Nigerian monetary establishments are getting into the market. States are assuming higher accountability 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 accountability to repeatedly enhance our legal guidelines, and I perceive the intention behind creating a stronger institutional focus for renewable power. Nigeria actually must speed up renewable-energy deployment.
However, good intentions should finally be examined towards market realities.Having spent years on the implementation finish of Nigeria’s energy-access problem, I consider the proposed structure requires elementary reconsideration.
It risks trying to resolve a coordination downside by creating one other coordination downside; trying to remove institutional overlap by establishing overlapping jurisdiction; and trying to speed up funding by introducing exactly the sort of regulatory uncertainty that personal capital avoids.
The query is subsequently not whether or not renewable power deserves higher consideration. It unquestionably does.
The query is whether or not creating one other regulatory establishment will produce one extra megawatt of electricity, one extra connection, one extra manufacturing plant or one extra naira of personal funding. That is the take a look at we must always apply.
The first downside is conceptual. Renewable electricity is now 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 power storage, sensible meters, distribution infrastructure and digital fee methods whereas concurrently working along with a Distribution Company community. Which regulator ought to regulate such a system?
If NARE regulates the renewable era part 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 buyer? Who finally carries regulatory accountability?
These aren’t educational questions. They go on to challenge bankability. Capital dislikes ambiguity. Every extra regulatory interface introduces one other approval, one other interpretation, one other potential disagreement and one other danger that should finally be priced into the price of capital and, finally, the value paid by electricity shoppers.
Nigeria ought to subsequently be simplifying the journey from capital to kilowatt, not making it extra sophisticated.
There is one other vital actuality the place we’re already managing a historic decentralisation. The Electricity Act 2023 basically 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 vital.
Nigeria’s current problem isn’t an absence of regulators. It is how one can make an more and more decentralised regulatory system work coherently.
At a time once we are rigorously managing the connection between a federal regulator and rising State regulators, introducing one other federal regulator organised round a expertise creates a brand new axis of jurisdiction.
We may find yourself with NERC, State Electricity Regulatory Commissions, NARE, NEMSA and different establishments interacting with completely different elements of the identical electricity challenge.
That isn’t simplification. It is fragmentation.
The timing is especially consequential as a result of Nigeria’s distributed-energy market is starting to show what is feasible when public coverage intentionally crowds in non-public enterprise.
The World Bank-supported Distributed Access by Renewable Energy Scale-up programme DARES is a US$750 million programme designed to supply 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 power 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 power and greater than 1.1 million households obtained new or improved electricity providers.
We are subsequently now not discussing renewable power theoretically.
We have spent years constructing an ecosystem of builders, financiers, expertise suppliers, communities, regulators, growth companions and authorities establishments round an more and more subtle market.
Today, greater than 1,000 mini-grids are below growth by the programmes being applied by REA. And one thing much more vital is going on.
Nigeria’s home monetary establishments are starting to recognise distributed renewable power 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 precisely the transition Nigeria ought to 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 challenge? Who determines my tariff? Which regulation applies? Can that regulation change midway by my funding? Which authority governs my interconnection settlement? If my challenge 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 extra danger will increase the required return. Every enhance in the price of capital finally 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 power, our institutional structure should develop into less complicated, clearer and extra predictable, no more layered.
There can also be a elementary 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 troublesome. It aggregates alternatives, helps challenge preparation, buildings interventions, mobilises concessional assets and personal capital, and helps builders enter underserved markets.
Combining renewable-energy promotion, challenge growth, licensing, tariff regulation, technical oversight and dispute decision inside a single establishment risks blurring the vital distinction between market participant, market facilitator and market referee. Rather than creating institutional readability, such focus may create new conflicts and uncertainties.
The proposal in regards to the Rural Electrification Fund deserves significantly cautious consideration. The REF exists basically to deal with an entry and market-failure downside.
There are communities throughout Nigeria the place electricity can remodel agriculture, healthcare, training and native enterprise however the place buyer density, buying energy or preliminary demand might not instantly produce commercially enticing returns. Public intervention helps bridge that viability hole.
Renewable expertise is often essentially the most environment friendly resolution, however the goal of the Fund is finally electricity entry, not the promotion of a specific expertise. 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 ought to be evaluated towards a simple query: How many extra Nigerians will this hook up with dependable electricity?
Perhaps essentially the most encouraging growth is what is going on past authorities programmes. Nigeria is witnessing the emergence of Renewable Energy Service Companies – RESCOs – able to financing, establishing 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 surroundings; non-public enterprise responds; capital enters; expertise develop; provide chains emerge; expertise improves; competitors will increase; and prices decline. At this stage, institutional stability turns into an financial asset. We ought to be extraordinarily cautious about resetting the foundations simply because the market is starting to answer them.
None of which means that 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 must be higher built-in. Standards should proceed to enhance. Domestic financing should deepen. Local manufacturing requires stronger help. And challenge growth timelines should develop into shorter.
The resolution to coordination failure is best 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 contemplate designing it round features which might be presently underserved: renewable-energy funding promotion, green-finance mobilisation, analysis and innovation, useful resource mapping, manufacturing and supply-chain growth, carbon-market growth, expertise 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 need to navigate.
The Electricity Act 2023 is barely three years outdated. The promote it created continues to be taking form. States are constructing regulatory capability. Investors are adjusting. Federal establishments are studying how one can function inside a decentralised framework. Private capital is getting 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 vital alternative because it considers this modification. Legislative scrutiny ought to study not merely the desirability of renewable power 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 truly 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 challenge 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 wherein the Federal Government, States, regulators, financiers, builders, producers, expertise corporations and communities take part in a dynamic electricity market able to mobilising capital at unprecedented scale.
We ought to defend that momentum. We ought to strengthen what works, right 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 companies we create. It is what number of houses we join, what number of companies we energy, what number of megawatts we deploy, how a lot non-public capital we mobilise and the way far more dependable electricity turns into for Nigerians.
That is the reform Nigeria wants.
And that ought to 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).
