A commercial and settlement framework has been launched by the Nigerian electricity regulatory commission (Nerc) to guide distribution companies “discos” and other operators who may want to link decentralized renewable energy sources with the national grid.
Integrating grid power with local renewable sources like solar and battery energy storage, a process called interconnected mini grids (IMGs), can improve Nigeria’s electricity reliability, cut costs and dramatically expand access. Up to 60% of Nigerians are still without access to reliable electricity, according to Rocky Mountain Institute (RMI).
Despite the obvious potential of IMGs to address Nigeria’s substantial electricity access deficit, the approach has remained underutilised due to significant barriers like rental fees, cost of energy fees and legacy debt that IMGs are most likely to inherit.
The Commission said these guidelines, effective 11 December 2025, are meant to provide a transparent and standardised framework for IMGs deployment and that they apply to all discos, IMG developers or operators and any entities involved in the planning, installation or operation of such interconnected systems in Nigeria.
The initiative aligns with sections 63, 164, 165 and 226 of the Electricity Act which mandate the commission to promote the adoption of renewable energy to ensure efficient operation of the electricity market. Nigeria aims to increase its renewable energy share to 40% by the end of the current decade.
In its April 2024 supplementary multi-year tariff order, Nerc had also directed discos to improve service reliability by deploying distributed energy resource solutions and migrating customer-feeders to higher service bands.
Nerc said that since the issuance of the Mini-Grid Regulations 2023, a number of companies have “actively leveraged its provisions to deploy Mini-Grid solutions, either independently or through collaboration”, that have expanded electricity access in previously unserved areas and improved service quality in underserved communities.
Earlier this year Nigeria successfully implemented four IMG pilots (consisting of 3MWp and 3MWh BESS), courtesy of funding support from the EU and other partners, that provided a proof-of-concept for scaling IMG deployment across underserved areas.
The IMG projects executed by PowerGen, Bagaja, Darway Coast and GVE for over $9.2m, were sited in four locations: Toto (Nasarawa), Zawaciki (Kano), Robiyan (Ogun) and Wuse (Abuja). Over 6,000 connections across urban and peri-urban centres in these areas have been served.
“The initial IMG projects demonstrate that through strong partnerships between developers and DisCos, we can deliver reliable and affordable electricity to communities,” said Suleiman Babamanu, Nigeria Programme Director at RMI.
But RMI had also flagged critical challenges within the Nigerian power sector that may not allow the IMG adoption to go smoothly, including inadequate grid infrastructure, regulatory bottlenecks and high upfront capital costs.
Under the Nerc guidelines, a two-part pricing regime is proposed for service to the IMG including a fixed component for capital recovery (rental fee) and a variable component for pass-through energy costs (cost of energy).
Regarding verified legacy debt that Discos may have incurred in a designated area prior to the commencement of the IMG operations, Nerc said the IMG operator and DisCo shall execute a Debt Recovery Agreement specifying not more than 10% of debtor-customers’ vending to be allocated towards debt recovery.
To this effect, “customers shall be notified in writing, and any disputes arising from the implementation of this provision shall be resolved in accordance with the Consumer Protection Regulations, Nerc said.