Nigeria’s renewable energy stakeholders are calling for a unified regulatory and operational framework to align off-grid power generation with the specific needs of the country’s manufacturing and Small and Medium Enterprise (SME) sectors. The call for better coordination comes as the federal government and private investors attempt to bridge a massive energy deficit that leaves nearly 90 million Nigerians without reliable grid access.
Industry experts, speaking at recent policy dialogues in Abuja and Lagos, noted that while the off-grid sector has seen significant investment in recent years, much of the deployment remains fragmented. This lack of synergy between the Rural Electrification Agency (REA), the Nigerian Electricity Regulatory Commission (NERC), state governments, and private developers is reportedly slowing the transition from basic domestic lighting to productive industrial use.
The push for coordination is increasingly viewed as a prerequisite for the success of the $750 million Distributed Access through Renewable Energy Scale-up (DARES) project. Funded by the World Bank, the initiative aims to provide electricity to over 17.5 million Nigerians through various off-grid technologies. However, stakeholders argue that the economic impact of such funding will be capped unless the energy generated is specifically directed toward industrial clusters and manufacturing hubs.
For manufacturers, the incentive to switch to off-grid solar or hybrid minigrids is purely economic. With the rising cost of diesel and the instability of the national grid, businesses are seeking cheaper, predictable energy. Yet, developers often focus on residential rural electrification where the load profile is lower, rather than the high-capacity, stable power required for industrial processes like milling, welding, or cold storage.
Bridging the Gap Between Power Supply and Industrial Demand
The core of the coordination challenge lies in the implementation of the Electricity Act 2023. The legislation effectively decentralised the power sector, granting state governments the authority to regulate their own electricity markets. While this was hailed as a breakthrough for regional energy independence, it has created a complex patchwork of 36 different potential regulatory environments that private sector operators must navigate.
Stakeholders argue that without a central coordinating body or a harmonised template for state-level regulation, the cost of doing business for off-grid developers will rise. This overhead is ultimately passed on to the SMEs and manufacturers who are meant to benefit from the power. Industry leaders suggest that an Integrated Energy Planning (IEP) tool should be adopted nationally to identify where manufacturing demand exists and guide developers to those specific locations.
Data from the Nigerian Electricity Regulatory Commission suggests that the proliferation of minigrids has increased, but the focus on Productive Use Equipment (PUE) remains a secondary consideration. PUE refers to electrical equipment that enables users to generate income, such as agricultural processing machines or commercial refrigerators. Stakeholders suggest that unless energy providers and equipment manufacturers work together, many off-grid sites will remain commercially underutilised.
The manufacturing sector’s participation is also hampered by the high upfront costs of renewable infrastructure. While long-term operational costs are lower than fossil fuels, the initial capital expenditure remains a barrier for most Nigerian SMEs. Coordination between development partners and commercial banks is needed to create specialized credit facilities that allow businesses to finance solar transitions over five to ten years.
Furthermore, the current lack of alignment affects the standardisation of equipment. Without clear national standards for off-grid components, the market is vulnerable to sub-standard products that fail prematurely, eroding investor confidence. Stakeholders have urged the Standards Organisation of Nigeria (SON) to work more closely with energy agencies to enforce quality control across the supply chain.
What happens next depends largely on the speed of state-level regulatory formation. As more states establish their own electricity boards, the REA is expected to pivot from a primary implementer to a facilitator that ensures federal funding and international grants align with state-specific industrial goals. The ultimate objective, according to industry advocates, is to move Nigeria away from a model of ‘energy for lighting’ to a robust model of ‘energy for production.’
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