By Seun Ibiyemi
The Managing Director and Chief Executive Officer of the Rural Electrification Agency (REA), Dr Abba Aliyu, has cautioned against the proposed establishment of a National Authority for Renewable Energy (NARE), warning that the move could create regulatory overlaps, increase investment risks and slow Nigeria’s electricity access drive.
Aliyu, in an article examining the proposed Electricity Act (Amendment) Bill, 2025, argued that creating another federal institution to oversee renewable energy could complicate Nigeria’s evolving electricity market rather than accelerate investment and power generation.
The proposed legislation seeks to establish NARE by transferring renewable-energy responsibilities currently exercised by the Nigerian Electricity Regulatory Commission (NERC), REA and the Rural Electrification Fund (REF) to the new institution.
Public reports have also indicated a proposal to allocate 40 per cent of the annual Rural Electrification Fund to the proposed authority.
While acknowledging the National Assembly’s responsibility to strengthen the country’s legal framework for renewable energy, Aliyu said legislative reforms should be assessed against their practical impact on electricity access, investment, manufacturing and power generation.
According to him, the critical question is whether the proposed authority would deliver additional electricity connections, increase renewable generation capacity or attract more private capital into the sector.
“The question is whether creating another regulatory institution will produce one additional megawatt of electricity, one additional connection, one additional manufacturing plant or one additional naira of private investment,” he said.
Aliyu argued that renewable electricity had evolved beyond a standalone segment of the power industry, with modern mini-grids increasingly combining solar generation, battery storage, smart meters, distribution infrastructure and digital payment systems.
He noted that some mini-grids also operate in conjunction with electricity distribution company networks, raising questions about how responsibilities would be divided between NARE, NERC and state electricity regulatory commissions.
He asked which institution would determine tariffs, approve grid interconnections, resolve technical disputes and protect consumers when a single project involved renewable generation and electricity distribution.
According to him, unresolved jurisdictional questions could undermine project bankability by creating additional approval requirements, regulatory disagreements and uncertainty for investors.
“Capital dislikes ambiguity,” Aliyu said, warning that increased regulatory risks could raise the cost of capital and ultimately affect electricity tariffs or prevent otherwise viable projects from reaching financial close.
He maintained that Nigeria should be simplifying the process of converting investment into electricity generation and connections rather than introducing additional regulatory layers.
The REA chief executive also pointed to the Electricity Act 2023, which enabled states to establish and regulate intrastate electricity markets, arguing that the country’s immediate challenge was coordinating existing institutions rather than creating another regulator.
He cited NERC’s reported transfer of electricity-market regulatory oversight to 16 states by July 2026, alongside federal and state efforts to harmonise the emerging regulatory framework.
According to Aliyu, introducing another federal regulator organised around renewable-energy technology could create an additional layer of jurisdiction at a time when federal and state institutions were still adjusting to the decentralised electricity market.
He warned that interactions among NERC, state electricity regulatory commissions, NARE and other technical and regulatory institutions could make it more difficult for developers to determine which rules applied to their projects.
Rather than eliminating duplication, he argued, the proposal could introduce new areas of overlap and complicate the relationship between federal and state authorities.
Aliyu said Nigeria’s distributed renewable-energy market was beginning to attract greater private-sector participation and domestic financing, making regulatory certainty increasingly important.
He cited the World Bank-supported Distributed Access through Renewable Energy Scale-up (DARES) programme, valued at $750 million, which aims to provide new or improved electricity access to more than 17.5 million Nigerians.
The programme targets 1,225 mini-grids and 465 megawatts of renewable generation, with private-sector-led distributed energy identified as a central component of its delivery strategy.
He also highlighted the Nigeria Electrification Project, through which more than 7.8 million Nigerians were reportedly impacted by clean energy interventions, while over 1.1 million households received new or improved electricity services.
According to Aliyu, more than 1,000 mini-grid projects are under development through programmes being implemented by REA.
He further disclosed that the agency had signed financing memoranda of understanding with four Nigerian financial institutions: FCMB for ₦100 billion, Lotus Bank for ₦100 billion, Alpha Morgan for ₦50 billion and Stanbic IBTC for ₦100 billion.
The combined potential financing commitments amount to ₦350 billion.
Aliyu described the development as an indication that domestic financial institutions were increasingly recognising distributed renewable energy as an investible asset class.
He warned, however, that regulatory uncertainty could discourage lenders and investors considering infrastructure projects with investment horizons of 15 to 20 years.
He said investors needed clarity on licensing, tariffs, interconnection agreements, applicable regulations, dispute-resolution mechanisms and the treatment of existing licences, grants, contracts and concessions.
According to him, uncertainty in these areas could increase financing costs, undermine project viability and delay investment decisions.
The REA chief executive also questioned the institutional logic of combining renewable-energy promotion, project development, licensing, tariff regulation, technical oversight and dispute resolution within a single organisation.
He argued that regulatory institutions and market-development agencies perform distinct functions and should maintain clear institutional boundaries.
While NERC regulates the electricity market, REA focuses on expanding electricity access in underserved communities by aggregating opportunities, supporting project preparation, mobilising concessional financing and attracting private investment.
Aliyu said combining these responsibilities within a single institution could blur the distinction between market facilitator, market participant and regulatory authority.
He argued that such an arrangement could create conflicts of interest and undermine institutional clarity.
According to him, Nigeria needs a framework in which regulators provide clear and predictable rules, while market-development institutions help businesses enter underserved communities and mobilise the resources required to expand electricity access.
Aliyu also raised concerns about the reported proposal to allocate 40 per cent of the annual Rural Electrification Fund to the proposed authority.
He said the fund was established to address electricity-access challenges in communities where low customer density, limited purchasing power and weak initial demand could make commercial investment unattractive.
According to him, public financing helps bridge the viability gap and ensures that communities with limited commercial prospects can still benefit from electricity infrastructure.
Although renewable energy may offer the most efficient solution in many underserved areas, Aliyu argued that the fund’s ultimate objective should remain electricity access rather than the promotion of a particular technology or institution.
He warned that diverting a substantial portion of the fund to support another institution’s mandate could shift attention away from the people the fund was established to serve.
“Every naira allocated from an electricity-access fund should be evaluated against a straightforward question: How many additional Nigerians will this connect to reliable electricity?” he said.
Beyond financing and regulation, Aliyu highlighted the growth of Nigeria’s renewable-energy services industry, including Renewable Energy Service Companies (RESCOs), digital technology providers and local manufacturers.
He said the sector was witnessing the emergence of companies capable of financing, constructing and operating distributed-energy infrastructure, alongside fintech businesses developing solutions for mini-grid monitoring, revenue collection, asset management and revenue assurance.
He also cited an emerging domestic renewable-energy manufacturing pipeline estimated at approximately 3.7 gigawatts.
According to him, these developments demonstrate how a predictable policy environment can encourage private investment, strengthen local supply chains, develop technical skills and improve competition.
Aliyu cautioned that changing the institutional framework without adequately assessing its implications could disrupt the momentum building around the sector.
He acknowledged that Nigeria’s renewable-energy ecosystem still faced challenges, including lengthy project approvals, inadequate data integration, weak coordination between federal and state authorities, financing constraints and the need for improved technical standards.
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However, he maintained that these problems could be addressed through better coordination, clearer responsibilities and improved implementation without necessarily creating another electricity regulator.
Rather than establishing NARE as a parallel regulator, Aliyu suggested that a dedicated national renewable-energy institution, if considered necessary, could focus on functions that remain inadequately served.
These include renewable-energy investment promotion, green-finance mobilisation, research and innovation, renewable-resource mapping, manufacturing and supply-chain development, carbon-market development, skills acquisition and intergovernmental coordination.
He argued that such responsibilities could strengthen Nigeria’s renewable-energy ecosystem without creating competing regulatory jurisdictions.
“Nigeria needs an institution that helps renewable-energy companies navigate the market, not another institution they must navigate,” he said.
Aliyu also called for detailed regulatory-impact assessments of the proposed amendment, urging lawmakers to consult state governments, investors, lenders, developers and development-finance institutions before making changes to the existing framework.
He said the implications for ongoing programmes supported by the World Bank, African Development Bank and other development-finance institutions should also be examined.
The REA chief executive stressed that the Electricity Act 2023 was still relatively new and that state regulators, investors and federal institutions were continuing to adapt to the decentralised market it established.
He urged the National Assembly to prioritise institutional coordination, regulatory certainty and the removal of genuine duplication as it considers the proposed amendment.
Aliyu maintained that the success of electricity-sector reform should ultimately be measured by the number of homes connected, businesses powered, megawatts deployed and private investments mobilised, rather than the number of agencies created.
