Nigeria is at an vital inflection level in its electricity-sector reform journey.
For many years, our nationwide dialog has rightly centered on a cussed problem: how do we offer dependable electricity to tens of millions of Nigerians, notably these dwelling and dealing in communities the place typical grid growth is both too sluggish or economically tough?
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 coming into the market. States are assuming larger duty for electricity. Renewable Energy Service Companies are rising. Local manufacturing is increasing. Digital platforms are remodeling 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 obligations presently exercised by the Nigerian Electricity Regulatory Commission, the Rural Electrification Agency and the Rural Electrification Fund to the brand new establishment. Public stories 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 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 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 get rid of institutional overlap by establishing overlapping jurisdiction; and making an attempt to speed up funding by introducing exactly the type of regulatory uncertainty that personal capital avoids.
The query is due to this fact not whether or not renewable power deserves larger 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 not a discrete sector able to being neatly separated from the broader electricity market.
Consider a contemporary interconnected mini-grid. It could comprise photo voltaic technology, battery power storage, sensible meters, distribution infrastructure and digital fee programs whereas concurrently working along with a Distribution Company community. Which regulator ought to regulate such a system?
If NARE regulates the renewable technology 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 should not tutorial questions. They go on to mission 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, in the end, the value paid by electricity shoppers.
Nigeria ought to due to this fact be simplifying the journey from capital to kilowatt, not making it extra difficult.
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 handle 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 is just not an absence of regulators. It is easy methods to make an more and more decentralised regulatory system work coherently.
At a time after 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 might find yourself with NERC, State Electricity Regulatory Commissions, NARE, NEMSA and different establishments interacting with totally different elements of the identical electricity mission.
That is just not 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 non-public enterprise.
The World Bank-supported Distributed Access by means of 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 technology. Critically, its growth goal explicitly locations private-sector-led distributed renewable power technology on the centre of supply.
This builds on the Nigeria Electrification Project, by means of which greater than 7.8 million Nigerians have been impacted with clear power and greater than 1.1 million households obtained new or improved electricity providers.
We are due to this fact 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 means of the programmes being carried out 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 business 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 totally different questions. Who licenses my mission? Who determines my tariff? Which regulation applies? Can that regulation change midway by means of 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 current licences, grants, contracts and concessions? How are disputes resolved?
Those questions decide bankability. An investor considering a 15- or 20-year infrastructure funding will need to 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 improve 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 basic institutional-design query. A regulator ought to regulate. A market-development establishment ought to develop markets. These are totally different capabilities requiring totally 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 vital distinction between market participant, market facilitator and market referee. Rather than creating institutional readability, such focus might create new conflicts and uncertainties.
The proposal in regards to the Rural Electrification Fund deserves notably cautious consideration. The REF exists basically to handle an entry and market-failure downside.
There are communities throughout Nigeria the place electricity can rework agriculture, healthcare, training and native enterprise however the place buyer density, buying energy or preliminary demand could not instantly produce commercially enticing returns. Public intervention helps bridge that viability hole.
Renewable expertise is often essentially the most environment friendly answer, however the goal of the Fund is in the end electricity entry, not the promotion of a selected 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 must 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 firms 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 atmosphere; non-public enterprise responds; capital enters; abilities develop; provide chains emerge; expertise 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 principles simply because the market is starting to answer them.
None of which means Nigeria’s renewable-energy institutional framework is ideal. It is just not. There are real coordination issues. Project approvals could 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 develop into shorter.
The answer to coordination failure is healthier coordination not essentially one other regulator. Indeed, the Federal Government and National Assembly have themselves just 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 capabilities which are 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 capabilities can strengthen the ecosystem with out creating a parallel electricity regulator. Nigeria wants an establishment that helps renewable-energy firms navigate the market, not one other establishment they have to navigate.
The Electricity Act 2023 is barely three years previous. The promote it created remains to be taking form. States are constructing regulatory capability. Investors are adjusting. Federal establishments are studying easy methods to function inside a decentralised framework. Private capital is coming into. Development companions have structured long-term programmes across the current 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 look at 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 hearken to the States. We ought to hearken to traders and lenders. We ought to hearken to builders who really finance and construct mini-grids. We ought to look at the implications for current 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 undergo from a scarcity of establishments. Our problem is making establishments work collectively round a transparent market structure. The future we’re constructing is one through which the Federal Government, States, regulators, financiers, builders, producers, expertise firms 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, get rid of real duplication and create larger 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 is just not 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 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).
