Nigeria’s electricity sector has been grappling with significant challenges, including insufficient generation capacity, severe electricity shortages, an underperforming transmission grid and frequent, long blackouts. To address these, the country is undertaking reforms to turn the sector around, increase the share of renewable energy sources in the energy mix to 30 per cent by 2030 (and at least 60 per cent by 2060), achieve universal electricity access by 2030, and provide affordable, reliable and sustainable energy.
Nigeria’s Electricity Act, 2023 (EA 2023) reformed the power sector by consolidating and codifying legislation on the electricity supply industry in order to encourage private sector investments, provide guidance on post-privatisation operations and achieve the long-standing objective of consistent and reliable electricity access across the country. The EA 2023 emphasises the need for investment in grid infrastructure, firm gas supply agreements and regulatory reforms to improve reliability and encourage renewable energy integration. Two key developments under the act are the establishment of the Nigerian Independent System Operator (NISO) following the unbundling of the government-owned Transmission Company of Nigeria (TCN); and the release of the National Integrated Electricity Policy (NIEP) and National Integrated Resource Plan (NIRP), providing a comprehensive plan for modernising Nigeria’s electricity infrastructure. These two documents were prepared by the Federal Ministry of Power (FMoP) in partnership with the UK Foreign, Commonwealth and Development Office and the UK Nigeria Infrastructure Advisory Facility. The NIRP acts as a high-level planning instrument and will form the basis for the Strategic Implementation Plan, which will set out in detail the various plans and programmes to be undertaken to meet NIEP objectives.
In early April 2025, the Nigerian government formally inaugurated the board and management of NISO, marking TCN’s official unbundling into two separate entities. This took place one year after the Nigerian Electricity Regulatory Commission (NERC) established NISO through an order. Under the new structure, TCN will retain its transmission service provider licence and continue overseeing its physical infrastructure. Meanwhile, NISO will take charge of TCN’s system operations, managing load allocation from generation companies to distribution companies and eligible customers. In mid-March 2025, the Nigerian president appointed Dr Adesegun Akin-Olugbade as NISO board chairman, with Abdu Mohammed Bello as managing director. He also appointed four executive directors for systems operation, planning, market operations, and finance and corporate services; as well as five non-executive directors for generation, distribution, market and transmission; in addition to the permanent secretary at the FMoP. This separation aims to improve efficiency, reduce conflicts of interest and enhance transparency in the sector. NISO is expected to inject new standards and practices into grid management, while still being regulated by the NERC to ensure accountability.
In terms of regulatory reforms, in line with the EA 2023, which promotes decentralisation, the NERC has already transferred regulatory oversight of the electricity market to state regulators in four states, and the process is under way in six other states. The NERC will continue to issue orders for the remaining states in the near future. To take an active role in energy planning, the states are strengthening collaboration. In April 2025, all 36 state governors and the Energy Commission of Nigeria (ECN) signed an MoU with the China Energy Engineering Corporation for renewable energy deployment and the establishment of a Nigeria-China Renewable Energy Research Centre to drive innovation, technology transfer and capacity building.
NIEP: Key highlights
The key objective of the NIEP is to turn the Nigerian electricity supply industry, which is currently facing multiple challenges due to heavy reliance on gas-fired capacity (accounting for 80 per cent of the energy mix) and low availability of supply capacity (only 3.5-4.2 GW of the 13 GW of installed capacity), into a fully liberalised and competitive market. The EA, 2023 authorises the NERC to declare market stages depending on the level of privatisation and competition in the industry, in consultation with the FMoP.
The federal government’s initiatives to establish a strong National Wholesale Electricity Market (NWEM) will focus on a market-driven, commercially viable and economically efficient regulatory and commercial framework; the full utilisation of gas within an energy mix; a comprehensive energy transition strategy that recognises the importance of rapid renewable energy transition; financial stability and market development; and encouraging and supporting states to take responsibility for consumer protection and credible electricity distribution market operations.
Key actions include investing in electricity transmission infrastructure and technology for systems operations for real-time trading and settlement; developing a holistic integrated resource plan for the NWEM; fully recovering generation capacity and putting in place frameworks to deliver surplus captive power to the grid; opening transmission to private investment by licensing independent electricity transmission network operators to build 132 kV and 330 kV networks; classifying grid assets as green investments as they facilitate the phase-out of diesel generators; and strengthening payment discipline. Similar measures must be taken to strengthen state electricity markets across the value chain, particularly in the distribution business.
NIRP: Key highlights
The first NIRP is based on a simplified generation-transmission zonal model developed to provide indicative results, which will be enhanced once detailed transmission data from TCN’s Transmission Master Plan (to be delivered in 2025) becomes available. Under the NIRP scenario, which considers a five-year delay in achieving universal electrification and the phasing out of self-generation goals to 2035, the share of renewables is expected to increase to 37 per cent in 2030 (6 GW) from 18 per cent in 2024 (2 GW), exceeding the national target of 30 per cent, and indicating that greater renewable energy generation is the least cost solution. The share is further expected to increase to 75 per cent by 2045 (83 GW) (excluding 3 GW of storage capacity), and will involve an investment of $4.23 billion by 2030, increasing to $120 billion by 2045. The figure will be revised upwards once transmission investments from TCN’s master plan are included later this year.
The newly formed NISO will be responsible for the future NIRP after receiving approval from the NERC, which will ensure, through a focused Power Planning Monitoring Committee (PPMC), that the NIRP is periodically updated through a dynamic process. The PPMC will have mid-level officials from the FMoP, NERC, TCN, NISO, ECN and various states.
The recent policy developments indicate that a collaborative effort is required among federal and state governments, regulatory bodies, industry stakeholders, and consumers for the transformation of Nigeria’s electricity sector.