The Nigerian Independent System Operator (NISO) has ruled out the centralisation of electricity markets in Nigeria, proposing instead a model of joint planning with state governments to ensure seamless integration within the national grid.
Abdu Bello Mohammed, the Managing Director/CEO of NISO, clarified this position during a presentation on Thursday. He emphasised that the goal is to allow states to manage their own power sectors without compromising the technical and economic stability of the interconnected system.
This stance addresses the ongoing tension between federal oversight and the increasing autonomy of states following the enactment of the Electricity Act 2023. While states are now legally empowered to regulate their own electricity markets, the need for a unified grid remains a technical necessity to prevent systemic failures and ensure national energy security.
Coordinating state-led electricity markets
The proposed approach seeks to move away from a top-down command structure in favour of a collaborative framework. Under this model, NISO will act as the coordinator that ensures various state-level markets function as parts of a single, cohesive national market. This coordination is intended to manage electricity flows, balance supply and demand across state borders, and maintain grid frequency.
Mohammed noted that centralising the market would stifle the ability of states to innovate and respond to local energy needs. By opting for joint planning, NISO intends to provide the technical standards and market rules that allow state-controlled distribution and generation to interact with the wider grid. This is designed to prevent the emergence of isolated “islands” of power that cannot communicate with the national infrastructure.
The shift toward state-led regulation has seen several governments, including Lagos and Edo states, move to establish their own electricity regulatory commissions. These bodies are tasked with attracting investment and managing local distribution networks. However, the challenge for NISO is to ensure that these diverse regulatory environments do not create technical barriers to the movement of power across state lines.
For investors in the Nigerian power sector, the NISO proposal offers a degree of predictability. A market that is integrated rather than fragmented allows for larger-scale power purchase agreements and more reliable off-take arrangements. The move suggests that while states will hold the keys to their local markets, the technical “rules of the road” will be harmonised through NISO’s coordination efforts.
The implementation of this joint planning framework will require extensive technical engagement between NISO, the Nigerian Electricity Regulatory Commission (NERC), and the various newly formed state electricity regulatory agencies. The success of this model will depend on the ability of these institutions to agree on common market rules and technical standards for grid connection.
Explore more Business stories from Business Elites Africa.
