Precious Anga
Lagos — Nigeria’s Electricity Act 2023 has fundamentally reshaped the country’s power sector, handing states unprecedented authority to regulate electricity markets and opening fresh opportunities for renewable energy investment. However, two years after the landmark legislation came into force, industry stakeholders say bureaucratic delays, regulatory coordination challenges and financing constraints continue to limit the pace of implementation.
Signed into law by President Bola Tinubu on June 9, 2023, the Electricity Act repealed the Electric Power Sector Reform Act of 2005 and decentralised the electricity industry by empowering states to legislate, regulate and oversee electricity generation, transmission, distribution and supply within their jurisdictions. The reform has been widely regarded as the most significant structural overhaul of Nigeria’s electricity market in nearly two decades.
The legislation has already triggered a wave of state-level electricity reforms. According to the Nigerian Electricity Regulatory Commission, NERC, 16 states have now transitioned to regulating their own electricity markets through State Electricity Regulatory Commissions, while several others are finalising their transition frameworks. States including Enugu, Ekiti, Ondo, Lagos, Ogun, Oyo, Edo, Kogi, Plateau, Abia, Bayelsa and Nasarawa have enacted electricity laws, with Enugu, Ekiti and Ondo among the first to assume full regulatory control of their intrastate electricity markets.
The decentralisation is expected to stimulate investment in renewable energy, particularly solar power, mini-grids and independent distribution networks. Under the new framework, states can issue licences for electricity projects within their borders, develop dedicated electricity markets and attract private investors without relying entirely on federal approvals.
The United Nations Development Programme described the legislation as a decisive shift from a federal-dominated electricity landscape to a decentralised, multi-tier market capable of accelerating access to reliable power. According to the agency, many states are actively establishing sub-national electricity markets to manage generation, distribution and, in some cases, transmission independently.
Industry experts believe the reform could significantly accelerate renewable energy deployment, particularly as Nigeria struggles with chronic electricity shortages. Although Nigeria has an installed generation capacity of more than 13,000 megawatts, actual power generation frequently remains below 5,000MW due to gas constraints, ageing infrastructure, transmission bottlenecks and distribution inefficiencies.
The new regulatory environment has encouraged states to pursue ambitious renewable energy programmes. Lagos has expanded rooftop solar initiatives and utility-scale renewable projects, while several northern and southern states are promoting mini-grid deployment to electrify underserved communities. Industry analysts say decentralisation provides states with the flexibility to tailor electricity solutions to local economic realities rather than depending solely on the national grid.
However, the transition has exposed new challenges. While the Electricity Act provides states with greater autonomy, developers continue to complain about overlapping approvals, inconsistent regulatory processes and coordination gaps between federal and state institutions.
PwC Nigeria noted that although decentralisation has strengthened competition and investment prospects, differences in regulatory readiness among states could create uncertainty for investors if harmonisation is not maintained. The firm stressed that the successful evolution of Nigeria’s multi-tier electricity market would depend on regulatory consistency, commercial sustainability and effective collaboration between federal and state authorities.
NERC has also emphasised that while states regulate intrastate electricity activities, the commission retains responsibility for interstate electricity operations, the national grid, transmission and system operation, underscoring the need for close coordination between both levels of government.
Financing remains another significant hurdle. Renewable energy developers continue to grapple with high borrowing costs, currency volatility and limited access to long-term capital, making many large-scale projects difficult to finance despite growing investor interest.
Despite these challenges, analysts maintain that the Electricity Act represents Nigeria’s strongest opportunity yet to transform its electricity sector. They argue that sustained policy consistency, streamlined licensing procedures, improved coordination among regulators and continued support for renewable energy investment could help states deliver more reliable electricity, expand access and stimulate industrial growth.
With more states expected to establish independent electricity markets over the coming months, the success of the Electricity Act will ultimately be judged not by the number of new laws enacted but by its ability to deliver stable, affordable electricity to millions of Nigerians while accelerating the country’s transition towards cleaner and more resilient energy systems.
