Felix Chibuzor, a Nigerian real estate investor, is building a six-floor condominium in an upscale district of the capital, Abuja. But for the power supply, he does not plan to connect to the national grid.
The building plan includes a solar power capacity of 100 kilowatts (KW), well above the building’s needs. The excess will be sold to neighbours, nearby mini-grids or even the national grid.
This business plan was made possible by the Nigerian Electricity Regulatory Commission’s (NERC) Mini-Grid Regulations 2026, published in April. It is a blueprint for a regulatory shift away from dependence on a centralised national grid toward a decentralised power system, including off-grid and mini-grid supplies powered by renewables, mainly solar. Even home-solar owners will be able to sell their surplus to the grid.
There is a growing market in Nigeria for off-grid renewable power, mainly solar. Nigeria saw the addition of 803 megawatts (MW) of new solar power in 2025, a more than two-fold increase from the previous year, the report said. The latest regulatory response looks to tap into privately generated power to meet long-starved national demand.
“Poor power supply has been one of the critical problems of real estate development in Nigeria,” said Chibuzor. “This policy change allows the developer to solve it themselves.”
New power regulations
Under the new regulations announced by the NERC, homes and businesses are allowed to generate and supply 100 KW or less by merely registering with the regulator. There would be no need for a formal licence.
The NERC also changed the classification of mini-grids, raising the minimum size of isolated grids to 5 MW from 1 MW while increasing the size of interconnected grids, which can connect to existing distribution systems, to 10 MW. Where in the past they needed separate licences for generation, transmission and distribution, only one unified licence is now needed.
“Scaling mini-grids and solar infrastructure for industrial production is not about choosing between the grid and off-grid systems,” Abba Aliyu, managing director of the Rural Electrification Agency, and a prominent advocate of the policy, told the Lagos Chamber of Commerce on June 24.
“It is about designing a smarter power system that uses every viable tool available.”
States’ rights
The new regulations are the latest instalment in the set of changes triggered by the 2023 amendment of the Electricity Act. Top among them is that electricity stopped being the exclusive legislative responsibility of the federal government – states now share that power.
Since then, 15 of the country’s 36 states have set up their own electricity regulatory agencies, issuing power generation and distribution licences as well as setting their own electricity markets. They are also creating separate fiscal terms to attract investors, in the process offering more diversity of options and a competitive power sector
The changes mark the latest evolution of Nigeria’s power industry. The state-owned utility was broken into 10 distribution and five generation companies sold to private investors in 2013 as privatisation was touted as the panacea to the ailing sector’s woes.
More than a decade later, the grid power supply has not improved in Nigeria. Despite installed capacity to generate about 15,000 MW, data from the power ministry show actual generation amounts to less than 5,000 MW, with the transmission system unable to carry more than 4,500 MW at a time even if more was available. In the past five years, the national grid collapsed at least once every quarter.
The result is that an estimated 85 million Nigerians still lack access to electricity, with a supply gap of more than 40,000 MW. For decades, businesses relied on alternative power sources such as diesel and petrol generators. But falling solar installation costs and cheaper battery storage have made renewable energy cheaper for homes and businesses, favouring the switch to a decentralised power mix combining grid, off-grid and mini-grid approaches.
The reforms embarked on in Nigeria’s power industry represent a “generational transformation,” according to minister of power Joseph Tegbe. The minister told business leaders in Lagos that Nigeria’s power sector had was largely troubled by poor governance.
“The foundation of our transformation is legislative,” Tegbe said. “The Electricity Act has fundamentally altered the governance of Nigeria’s electricity sector.”
The drive toward a decentralised, diversified grid system has received the support of the World Bank with a $750m in funding through the Distributed Access Through Renewable Energy Scale-Up initiative. Implemented through the government’s Rural Electrification Programme, the objective is the deployment of 1,350 mini grids to connect 2.5 million households with an estimated 17.5 million people, part of the effort to reach underserved communities.
Push for private capital
The initiative is designed to unlock as much as $1.1bn in private capital for a decentralised off-grid and mini-grids electricity supply. At the Spring meetings of the World Bank and the International Monetary Fund in Washington in April, the International Finance Corporation announced the provision of a separate $83m long-term funding to support the decentralised grid system.
A blend of concessional, commercial and climate finance, the beneficiaries include PriVida Power, GVE Projects, Darway Coast, Prado Power and StarTimes Smart Energy – companies that have already invested in off-grid renewable energy supply.
For the Nigerian government, the expected outcomes include rapid adoption of renewable, improved access to electricity through a more resilient and sustainable power system and the associated boost in economic productivity, according to Eric Orji, a Lagos-based economist and market analyst.
“The decision to decentralise puts the entire national capacity to use and ends the dichotomy between privately generated and utility-supplied power,” Orji said.
“It should’ve been done earlier.”