Nigeria is at an important inflection point in its electricity-sector reform journey.
For decades, our national conversation has rightly focused on a stubborn 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 difficult?
Today, something important is beginning to change.
Distributed renewable energy has moved from the margins of Nigeria’s electricity sector towards its mainstream. Mini-grids are becoming commercially viable infrastructure. Private developers are investing.
Nigerian financial institutions are entering the market. States are assuming greater responsibility for electricity. Renewable Energy Service Companies are emerging. Local manufacturing is expanding. 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 presently exercised by the Nigerian Electricity Regulatory Commission, the Rural Electrification Agency and the Rural Electrification Fund to the new institution. Public reports also indicate a proposal to allocate 40 per cent 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 for renewable energy. Nigeria certainly needs to accelerate renewable-energy deployment.
However, good intentions must ultimately be tested against market realities.Having spent years at the implementation end of Nigeria’s energy-access challenge, I believe the proposed architecture requires fundamental reconsideration.
It risks attempting to solve a coordination problem by creating another coordination problem; attempting to eliminate institutional overlap by establishing overlapping jurisdiction; and attempting to accelerate investment by introducing precisely the kind of regulatory uncertainty that private capital avoids.
The question is therefore not whether renewable energy deserves greater attention. It unquestionably does.
The question is whether creating another regulatory institution will produce one additional megawatt of electricity, one additional connection, one additional manufacturing plant or one additional naira of private investment. That is the test we should apply.
The first problem is conceptual. Renewable electricity is no longer a discrete sector capable of being neatly separated from the wider electricity market.
Consider a modern interconnected mini-grid. It may comprise solar generation, battery energy storage, smart meters, distribution infrastructure and digital payment systems while simultaneously operating in conjunction with a Distribution Company network. Which regulator should regulate such a system?
If NARE regulates the renewable generation component while NERC or a State Electricity Regulatory Commission regulates the distribution network into which that electricity is injected, who determines the tariff? Who approves interconnection? Who resolves technical disputes? Who protects the consumer? Who ultimately carries regulatory responsibility?
These are not academic questions. They go directly to project bankability. Capital dislikes ambiguity. Every additional regulatory interface introduces another approval, another interpretation, another potential disagreement and another risk that must eventually be priced into the cost of capital and, ultimately, the price paid by electricity consumers.
Nigeria should therefore be simplifying the journey from capital to kilowatt, not making it more complicated.
There is another important reality where we are already managing a historic decentralisation. The Electricity Act 2023 fundamentally changed Nigeria’s electricity architecture by enabling States to establish 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 institutions specifically to address legal, policy and regulatory harmonisation, culminating in the creation of an inter-agency committee to manage emerging implementation issues. That tells us something important.
Nigeria’s present challenge is not an absence of regulators. It is how to make an increasingly decentralised regulatory system work coherently.
At a time when we are carefully managing the relationship between a federal regulator and emerging State regulators, introducing another federal regulator organised around a technology creates a new axis of jurisdiction.
We could end up with NERC, State Electricity Regulatory Commissions, NARE, NEMSA and other institutions interacting with different aspects of the same electricity project.
That is not simplification. It is fragmentation.
The timing is particularly consequential because Nigeria’s distributed-energy market is beginning to demonstrate what is possible when public policy deliberately crowds in private enterprise.
The World Bank-supported Distributed Access through Renewable Energy Scale-up programme DARES is a US$750 million programme designed to provide new or improved electricity access to more than 17.5 million Nigerians, with a target of 1,225 mini-grids and 465MW of renewable generation. Critically, its development objective explicitly places private-sector-led distributed renewable energy generation at the centre of delivery.
This builds on the Nigeria Electrification Project, through which more than 7.8 million Nigerians were impacted with clean energy and more than 1.1 million households received new or improved electricity services.
We are therefore no longer discussing renewable energy theoretically.
We have spent years building an ecosystem of developers, financiers, technology providers, communities, regulators, development partners and government institutions around an increasingly sophisticated market.
Today, more than 1,000 mini-grids are under development through the programmes being implemented by REA. And something even more significant is happening.
Nigeria’s domestic financial institutions are beginning to recognise distributed renewable energy 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 domestic financing commitments around an industry that, not long ago, depended overwhelmingly on government and international development finance.
This is exactly the transition Nigeria should be accelerating.
Private capital does not principally ask whether a country has a dedicated renewable-energy authority. Capital asks different questions. Who licenses my project? Who determines my tariff? Which regulation applies? Can that regulation change halfway through my investment? Which authority governs my interconnection agreement? If my project operates within a State electricity market, does the State regulator or federal renewable-energy regulator have jurisdiction? What happens to existing licences, grants, contracts and concessions? How are disputes resolved?
Those questions determine bankability. An investor contemplating a 15- or 20-year infrastructure investment must have confidence that the institutional framework governing that investment will remain understandable and predictable.
Every ambiguity becomes a risk. Every additional risk increases the required return. Every increase in the cost of capital eventually appears somewhere — in tariffs, subsidies or projects that simply never reach financial close.
Therefore, if our objective is to mobilise billions of dollars into renewable energy, our institutional architecture must become simpler, clearer and more predictable, not more layered.
There is also a fundamental institutional-design question. A regulator should regulate. A market-development institution should develop markets. These are different functions requiring different incentives and institutional cultures.
NERC regulates electricity markets. REA develops markets where commercial electricity provision has historically been difficult. It aggregates opportunities, supports project preparation, structures interventions, mobilises concessional resources and private capital, and helps developers enter underserved markets.
Combining renewable-energy promotion, project development, licensing, tariff regulation, technical oversight and dispute resolution within a single institution risks blurring the important distinction between market participant, market facilitator and market referee. Rather than creating institutional clarity, such concentration could create new conflicts and uncertainties.
The proposal concerning the Rural Electrification Fund deserves particularly careful consideration. The REF exists fundamentally to address an access and market-failure problem.
There are communities across Nigeria where electricity can transform agriculture, healthcare, education and local enterprise but where customer density, purchasing power or initial demand may not immediately produce commercially attractive returns. Public intervention helps bridge that viability gap.
Renewable technology is frequently the most efficient solution, but the objective of the Fund is ultimately electricity access, not the promotion of a particular technology. Diverting a substantial portion of the Fund to finance the operations or mandate of another institution risks confusing the instrument with the objective.
Every naira allocated from an electricity-access fund should be evaluated against a straightforward question: How many additional Nigerians will this connect to reliable electricity?
Perhaps the most encouraging development is what is happening beyond government programmes. Nigeria is witnessing the emergence of Renewable Energy Service Companies – RESCOs – capable of financing, constructing and operating distributed-energy infrastructure.
Fintech companies are developing specialised solutions for mini-grid monitoring, collections, revenue assurance and asset management. Developers that gained experience in Nigeria are increasingly capable of operating elsewhere in Africa. And Nigeria now has an emerging renewable-energy manufacturing pipeline estimated at approximately 3.7GW.
This is how industries are created. The government creates an enabling environment; private enterprise responds; capital enters; skills develop; supply chains emerge; technology improves; competition increases; and costs decline. At this stage, institutional stability becomes an economic asset. We should be extremely cautious about resetting the rules just as the market is beginning to respond to them.
None of this means that Nigeria’s renewable-energy institutional framework is perfect. It is not. There are genuine coordination problems. Project approvals can be improved. Federal-State interfaces require further clarification. Data need to be better integrated. Standards must continue to improve. Domestic financing must deepen. Local manufacturing requires stronger support. And project development timelines must become shorter.
The solution to coordination failure is better coordination not necessarily another regulator. Indeed, the Federal Government and National Assembly have themselves recently emphasised complementary regulatory roles in Nigeria’s emerging multi-tier electricity market.
If there is a compelling case for a dedicated national renewable-energy institution, then we should consider designing it around functions that are presently underserved: renewable-energy investment promotion, green-finance mobilisation, research and innovation, resource mapping, manufacturing and supply-chain development, carbon-market development, skills development and inter-governmental coordination.
Those functions can strengthen the ecosystem without creating a parallel electricity regulator. Nigeria needs an institution that helps renewable-energy companies navigate the market, not another institution they must navigate.
The Electricity Act 2023 is barely three years old. The market it created is still taking shape. States are building regulatory capacity. Investors are adjusting. Federal institutions are learning how to operate within a decentralised framework. Private capital is entering. Development partners have structured long-term programmes around the existing institutional architecture.
This is the moment to consolidate, clarify and accelerate not fragments. The National Assembly has an important opportunity as it considers this amendment. Legislative scrutiny should examine not merely the desirability of renewable energy on which there is broad agreement but the second-order consequences of the proposed institutional architecture.
We should conduct detailed regulatory-impact analysis. We should listen to the States. We should listen to investors and lenders. We should listen to developers who actually finance and build mini-grids. We should examine the implications for existing World Bank, African Development Bank and other development-finance commitments.
And above all, we should ask whether the proposed arrangement reduces or increases the number of institutional interfaces required to move a renewable-energy project from conception to operation.
Nigeria does not suffer from a shortage of institutions. Our challenge is making institutions work together around a clear market architecture. The future we are building is one in which the Federal Government, States, regulators, financiers, developers, manufacturers, technology companies and communities participate in a dynamic electricity market capable of mobilising capital at unprecedented scale.
We should protect that momentum. We should strengthen what works, correct what does not, eliminate genuine duplication and create greater certainty for investors.
However, we should resist the temptation to equate the creation of a new institution with the solution to a market problem.
The measure of reform is not how many agencies we create. It is how many homes we connect, how many businesses we power, how many megawatts we deploy, how much private capital we mobilise and how much more reliable electricity becomes for Nigerians.
That is the reform Nigeria needs.
And that should be the standard against which every proposed amendment to the Electricity Act is judged.
Dr. Abba Aliyu is the Managing Director/Chief Executive Officer of Rural Electrification Agency (REA).