Why proposed electricity act amendment risks setting back Nigeria’s renewable energy revolution

By: Abba Aliyu

NIGERIA is at an important inflection point in its electricity sector reform journey.

For decades, our national conversation has focused on a persistent challenge: how do we provide reliable electricity to millions of Nigerians, particularly those living and working in communities where conventional grid expansion is either too slow or economically challenging?

Today, something significant is beginning to change.

Distributed renewable energy has moved from the margins of Nigeria’s electricity sector to the mainstream. Mini-grids are becoming commercially viable infrastructure. Private developers are making investments, Nigerian financial institutions are entering the market, states are taking on greater responsibility for electricity, Renewable Energy Service Companies are emerging, local manufacturing is expanding, and digital platforms are transforming metering, monitoring, and revenue assurance.

Against this backdrop, the proposed Electricity Act (Amendment) Bill, 2025, seeks to establish a National Authority for Renewable Energy (NARE), transferring renewable energy responsibilities currently held by the Nigerian Electricity Regulatory Commission, the Rural Electrification Agency, and the Rural Electrification Fund to this new institution. Public reports also indicate a proposal to allocate 40 percent of the annual Rural Electrification Fund to NARE.

I respect the National Assembly’s constitutional responsibility to continuously improve our laws, and I understand the intention behind creating a stronger institutional focus on renewable energy. Nigeria certainly needs to accelerate renewable energy deployment.

However, good intentions must ultimately be tested against market realities. Having spent years addressing Nigeria’s energy access challenges, I believe the proposed structure requires fundamental rethinking. It risks creating yet another coordination problem while attempting to solve a coordination issue. It may try to eliminate institutional overlap by establishing overlapping jurisdictions and seeks to accelerate investment while introducing the regulatory uncertainty that private capital often avoids.

The question is not whether renewable energy deserves greater attention—it certainly does. The crucial question is whether creating another regulatory institution will lead to one additional megawatt of electricity, one additional connection, one additional manufacturing plant, or one additional naira of private investment. This is the test we should apply.

The first issue is conceptual. Renewable electricity is no longer a discrete sector that can be neatly separated from the broader electricity market.

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Consider a modern interconnected mini-grid. It may comprise solar generation, battery energy storage, smart meters, distribution infrastructure, and digital payment systems while simultaneously working in conjunction with a Distribution Company’s network. Which regulator should oversee such a system?

If NARE regulates the renewable generation component while the Nigerian Electricity Regulatory Commission (NERC) or a State Electricity Regulatory Commission oversees the distribution network into which that electricity is fed, who determines the tariff? Who approves interconnections? Who resolves technical disputes? Who protects the consumer? Who ultimately carries regulatory responsibility?

These are not merely academic questions; they directly impact project bankability. Capital dislikes ambiguity, and every additional regulatory interface introduces another layer of approval, interpretation, potential disagreement, and risk that must eventually be factored into the cost of capital and, ultimately, the price paid by electricity consumers.

Nigeria should simplify the journey from capital to kilowatt rather than complicate it.

Another important reality is that we are already managing a historic decentralization. The Electricity Act 2023 fundamentally reshaped Nigeria’s electricity architecture by enabling states to establish and regulate intrastate electricity markets.

By July 2026, NERC reported that regulatory oversight for electricity markets had already been transferred to 16 states. Subsequently, the federal government convened federal and state institutions specifically to address legal, policy, and regulatory harmonization, culminating in the creation of an inter-agency committee to manage emerging implementation issues. This indicates a significant trend.

Nigeria’s current challenge is not a lack of regulators; it is how to make an increasingly decentralized regulatory system work cohesively.

At a time when we are carefully managing the relationship between a federal regulator and emerging state regulators, introducing another federal regulator centered around a specific technology creates a new axis of complexity.

Aliyu is the Managing Director/Chief Executive Officer, Rural Electrification Agency