Energy Focus Report Q2 2025 - Renewable Energy Sector

FORGING NIGERIA'S CLEAN ENERGY FUTURE: REGULATORY MOUS AND THE ENERGY TRANSITION PLAN AS CATALYSTS FOR SUSTAINABLE DEVELOPMENT

INRODUCTION

Nigeria stands at a vital moment in its energy evolution, where ambitious regulatory frameworks and strategic partnerships are converging to reshape the national power landscape. Through the signing of Memorandum of Understanding (MOUs), the Nigerian government is actively fostering renewable energy collaborations aimed at diversifying its energy mix and reducing carbon emissions. Simultaneously, the country's Energy Transition Plan outlines a guideline to lift millions of people out of energy poverty, while steering towards a low-carbon, inclusive economy. Together, these initiatives signal a coordinated approach where policy, private investment, and sustainable development goals align to drive Nigeria's clean energy future, ensuring environmental sustainability and socio-economic empowerment for future generations.

UNDERSTANDING THE ENERGY TRANSITION PLAN (ETP)

The Energy Transition Plan (ETP) signifies Nigeria's commitment to eliminating the dual crises of energy poverty and climate change. It seeks to deliver Sustainable Development Goal 7, which is to ensure access to affordable, reliable, sustainable, and modern energy for all by 2030 and simultaneously attain net-zero carbon emissions by 2060. The plan aims to address energy poverty and promote inclusive economic growth. This plan is deeply rooted in a commitment to balance environmental sustainability with national development goals. Essentially, the plan is built on three key pillars. First, it prioritises universal energy access, ensuring that all citizens, especially those in underserved rural areas, have reliable and affordable energy. Second, it emphasises a massive scale-up of renewable energy, including solar, wind, and hydro, to reduce dependence on fossil fuels and enhance energy security. Third, the plan focuses on jobcreation and local manufacturing, fostering a green economy that generates employment and builds domestic capacity for energy technologies.

Nigeria's Energy Transition Plan (ETP) aims to achieve net-zero emissions by 2060, a target adjusted from an initial 2050 goal, due to significant financial, social, and technological considerations.

The ETP is driven by several key objectives which includes Providing reliable and modern energy services to all Nigerians; Lifting 100 million Nigerians out of poverty and fostering economic growth through sustainable development; Managing job losses in the oil sector while creating new opportunities in emerging energy sectors; 2 Positioning Nigeria as a leader in Africa's energy transition, advocating for a fair and inclusive approach that includes natural gas as a "transitionary fuel."; Optimizing and aligning government initiatives related to energy transition for a cohesive national strategy.

The ETP provides a detailed framework for emissions reduction across five key sectors responsible for 65% of Nigeria's greenhouse gas (GHG) emissions which aims for an approximate 100% emissions decrease by phasing out diesel/petrol generators. The plan involves an initial expansion of gas generation, followed by a rapid increase in renewables (especially solar PV), and significant investments in energy storage and hydrogen production; targets a nearly 98% reduction in emissions, by shifting from traditional fuels to cleaner alternatives. The short-term strategy focuses on Liquefied Petroleum Gas (LPG), with a transition to biogas and electric cooking after 2030; projects an approximately 97% decrease in emissions through the widespread adoption of Electric Vehicles (EVs) in both passenger and public transport; the oil and gas sector targets an 87% emissions decrease due to declining global fossil fuel demand, reduced flaring, and improved efficiency. The industrial sector aims for a 97% decrease, achieved by promoting natural gas and integrating renewable energy sources.

The ETP estimates an additional cost of approximately $10 billion annually, totaling around $410 billion in incremental funding between 2021 and 2060, with a total investment requirement of $1.9 trillion to achieve net zero emissions by 2060. Nigeria sought an initial $10 billion support package for implementation. The Energy Transition Office (ETO), established in 2022, has mobilized over $3.6 billion in investments to date. Despite this, a significant funding deficit persists, with an estimated annual financing gap of $10 billion to $27.2 billion, highlighting a critical challenge in aligning financial resources with the ETP's ambitious goals.

THE ROLE OF REGULATORY MOUS IN DRIVING RENEWABLE ENERGY

Memoranda of Understanding (MOUs) have emerged as powerful instruments in accelerating renewable energy development, particularly in markets where regulatory clarity and investment security are evolving. As "soft law" mechanisms, MOUs do not carry the binding force of contracts, but serve as strategic tools for fostering collaboration between governments, agencies, and private sector actors. In the context of renewable energy, MOUs provide a structured yet flexible framework for public-private engagement, speeding up innovation, investment, and scalable project deployment.

In Nigeria, a series of strategic Memoranda of Understanding (MOUs) and partnerships are actively catalysing on-the-ground implementation of the ETP:

1. Lagos-GreenPlinth Clean Cookstoves Project: A significant MOU was signed in June 2025 between the Lagos State Government and GreenPlinth Africa for the distribution of 80 million clean cook stoves across Nigeria, with an initial 6 million to be distributed free in vulnerable communities in Lagos. This initiative aims to drastically reduce harmful indoor air pollution, promote clean energy access, combat deforestation, and is projected to create over 35 million green jobs. It is a scaled-up version of Nigeria's earlier success under a UNFCCC program, demonstrating the potential for local action to contribute to national and international climate goals.
2. Nigeria Governors' Forum (NGF) & Energy China Renewable Energy Infrastructure MOU: Signed in April 2025, this MOU between the NGF and Energy China, a major Chinese firm renowned for its work in renewable energy and gas production, aims to enhance energy planning at the sub national level. The scope includes the deployment of solar, wind, and hydro infrastructure and the establishment of a Nigeria-China Renewable Energy Research Centre to drive innovation, technology transfer, and capacity-building. This partnership is expected to accelerate energy access, support job creation, and attract investment, particularly in off-grid communities.
3. REA-FCMB Partnership: A strategic collaboration formalized in June 2025, where the Rural Electrification Agency (REA) and First City Monument Bank (FCMB) launched a ₦100 billion loan facility. This facility, catalysed by $750 million in World Bank DARES funding, is designed to accelerate electricity access for approximately 2 million households through decentralized renewable energy projects. FCMB will finance up to 70% of approved project costs, while REA will de-risk transactions by domiciling performance-based grant payments into a reserve account, thereby encouraging private sector participation in rural electrification.

A wide array of international partners are actively supporting Nigeria's energy transition:

1. Sustainable Energy for All (SEforALL) & Global Energy Alliance for People and Planet (GEAPP): These organizations are crucial partners, supporting the Energy Transition Implementation Working Group (ETWG) through the dedicated Energy Transition Office (ETO), which is housed within the Office of the Vice President.
2. World Bank: A significant financier, having invested over $2 billion in Nigeria's power sector in the last f ive years and preparing an additional $1.5 billion commitment. The World Bank supports key initiatives like the Nigeria Electrification Project (NEP) and the DARES project ($750M).
3. United Nations Development Programme (UNDP): Partners with Nigeria to strengthen institutional readiness for carbon market development and addresses policy and regulatory challenges in the mini-grid sector across Africa.
4. African Development Bank (AfDB): Supports the Mission 300 initiative, aiming to provide electricity to 300 million Africans by 2030, and is a partner in the Nigeria Electrification Project (NEP) and the Africa Minigrids Program.
5. International Renewable Energy Agency (IRENA): Collaborated with Nigeria's Energy Commission on the Renewable Energy Roadmap for Nigeria (REMap), which indicates that renewables could meet 60% of Nigeria's energy demand by 2050.
6. Germany (KfW Development Bank) & Africa Enterprise Challenge Fund: Committed €20 million to boost Nigeria's clean energy revolution, focusing on improving energy access, vocational training in renewables, and reducing fossil fuel dependence.

The recent MOUs and project launches demonstrate a dynamic relationship between policy formulation and on-the-ground implementation. These agreements translate high-level policy objectives into concrete, funded projects, indicating a maturing ecosystem where regulatory frameworks are actively catalysing private sector and sub-national engagement.

THE IMPLEMENTATION PROGRESS AND SECTORAL IMPACT

Nigeria's Energy Transition Plan (ETP) shows tangible progress in several key sectors, emphasizing off-grid and decentralized solutions to meet energy access goals and leverage its abundant renewable resources.

Power Sector Transformation: There is rapid growth in off-grid solar, with the Nigerian Electricity Regulatory Commission (NERC) approving nine off-grid generation licenses. Initiatives like the Rural Electrification Agency's (REA) Nigeria Electrification Project (NEP) and Distributed Access through Renewable Energy Scale-Up (DARES) project have provided clean energy to millions, significantly reducing household energy expenditures. The REA aims to deploy 10,000 mini-grids and 5 million solar standalone systems by 2023. The DARES project alone anticipates over 340,000 connections and 47 MW of clean electricity. The NEP has already impacted 7.8 million lives and deployed 94 MW of PV capacity. The ETP also targets a 72% phase-out of diesel generators by 2030, though detailed progress data for 2024 and 2025 is not widely documented.

Clean Cooking Initiatives: Nigeria's Clean Cooking Policy (March 2024) addresses over 95,000 annual deaths from kitchen smoke, targeting 20% clean cooking from electric sources and 54% from LPG by 2030. A June 2025 MOU aims to distribute 80 million clean cook stoves nationwide, with 6 million free in Lagos. These initiatives will significantly reduce harmful indoor air pollution, combat deforestation, avoid 590K tonnes of CO2e, and improve family economics, by saving money and cooking time.

E-Mobility Advancement: As of early 2025, Nigeria has 15,000-20,000 EVs on its roads, a notable increase. Targets are 7.5% EV penetration by 2025 and 40% by 2050. However, growth has been slower than anticipated due to a policy redirection favouring Compressed Natural Gas (CNG) vehicles, which could impact long-term decarbonisation. The charging infrastructure is nascent, with about 180 stations primarily in Abuja and Lagos as of early 2024. While expansions are planned, the unreliable national grid remains a significant challenge. The 2050 Auto Policy Agenda and National Action Plan for EV Development support EV adoption through incentives like reduced import duties and tax breaks for local production.

Carbon Market Development: Nigeria finalized its Carbon Market Activation Policy in April 2025, aiming to attract up to $2.5 billion in high-integrity carbon credit investments by 2030. An operational national carbon registry (since 2024) aligns with Article 6 of the Paris Agreement, focusing on forestry, improved cook stoves, renewable mini-grids, and methane reduction projects. Nigeria will revise its Nationally Determined Contributions (NDCs) by September 2025 to embed the new carbon market framework.

Gas Flaring Reduction and Hydrogen Development: Nigeria has achieved a 70% reduction in gas flaring by 2020, moving from the second-highest flaring country in 2008 to the ninth-largest in 2023, with a target to cease f laring entirely by 2030. However, this reduction has not yet significantly decreased overall GHG emissions. Nigeria is positioned to lead Africa's hydrogen economy due to abundant natural gas and solar resources. The 5 ETP plans for hydrogen production facilities (5 GW by 2040, 22 GW by 2050), with an optimal path involving a phased approach using blue hydrogen initially and scaling green hydrogen as costs decline. Hydrogen infrastructure is at an early stage, hindered by ambiguous regulations, underdeveloped infrastructure, limited f inancing, and lack of a clear national hydrogen strategy.

CHALLENGES AND FUTURE OUTLOOK

A critical challenge is the substantial annual financing gap of $10 billion (totalling $410 billion incrementally by 2060, or $1.9 trillion overall), with current climate finance flows falling significantly short. High reliance on debt based investment is a concern given Nigeria's debt burden. Also, the unreliable national grid, frequent outages, and underdeveloped EV charging and hydrogen infrastructure hinder progress; frequent policy changes and inadequate regulatory frameworks for new technologies create uncertainty for investors; significant skill gap in the renewable energy sector, especially for skilled technicians and engineers, requires urgent investment in training programs and high upfront costs of clean technologies and cultural preferences for traditional methods present barriers for many Nigerians.

Despite these challenges, the future holds promising opportunities. The emergence of the Energy Transition Plan and Regulatory MOUs provides a new avenue for funding clean energy projects through emissions trading and carbon credit schemes. These mechanisms can motivate sustainable practices, while generating revenue for renewable investments. Moreover, the energy transition is expected to drive green job creationacross sectors such as construction, manufacturing, and energy services, offering economic benefits alongside environmental gains. With coordinated action and strategic investment, these challenges can be transformed into catalysts for a more inclusive and sustainable energy future.

RECOMMENDATIONS

To accelerate its clean energy transition and achieve sustainable development, Nigeria must enhance policy coherence and stability. This means aligning short-term strategies, like the focus on Compressed Natural Gas (CNG), with long-term net-zero goals, to avoid deterring investment. Consistent policy implementation, regardless of administrative changes, is key to building investor confidence. Furthermore, mobilizing diversified and de-risked financing is crucial to address the significant funding gap. This calls for exploring innovative models like green bonds and debt-for-climate swaps, leveraging international climate finance through de-risking instruments, and mobilizing domestic capital from pension funds and local financial institutions.

Nigeria also needs to accelerate infrastructure development, prioritizing modernization and expansion of the national grid to integrate renewables, and rapidly building out EV charging networks and hydrogen infrastructure. Completing key gas infrastructure projects, like the AKK pipeline, is also vital for the transition period. Simultaneously, investing in human capital and local content is non-negotiable, requiring scaled-up vocational training in renewable energy, e-mobility, and hydrogen; to build a skilled local workforce and reduce reliance on imports. Finally, strengthening multi-stakeholder collaboration among government, private sector, 6 development partners, academia, and local communities, and optimizing carbon market mechanisms through robust measurement and verification, will ensure projects are sustainable, equitable, and attract essential climate finance.

CONCLUSION

Forging Nigeria's clean energy future requires a bold and coordinated action. Regulatory MOUs and the ETP serve as vital catalysts, laying the foundation for sustainable development by aligning policies, attracting investment, and enabling a more resilient energy system. With consistent implementation, these tools can accelerate Nigeria's shift to a cleaner, more inclusive energy future.

THE NATIONAL INTEGRATED ELECTRICITY POLICY 2025: LEGAL FOUNDATIONS FOR NIGERIA'S TRANSITION TO RENEWABLE ENERGY

INTRODUCTION

On 5 May 2025, the Federal Executive Council, approved the National Integrated Electricity Policy (NIEP) as mandated by Section 3 of the Electricity Act 2023, the Policy establishes a statutory framework for integrating renewable energy into the national grid, expanding off-grid access, and aligning power sector development with Nigeria's climate goals. The NIEP replaces the outdated National Electric Power Policy (NEPP) 2001, charting a modern legal directive for sector transformation.

The policy is designed to be reviewed every five years. It marks a pivotal step in Nigeria's legal and regulatory commitment to transitioning towards a sustainable and decentralized energy system. Within this context, the NIEP aims not only to stabilize the finances of the Nigerian Electricity Supply Industry (NESI), but to also build a legal foundation for an extensive shift towards renewable energy, cementing Nigeria's commitment to energy transition and climate goals.

KEY HIGHLIGHTS OF THE NIEP 2025

The Policy outlines several objectives and makes recommendations to help actualize the itemised objectives.

1. Universal Access & Least-Cost Planning

The Policy aims to achieve universal electricity access by 2030, with a focus on providing affordable, reliable, and sustainable energy.This involves connecting all Nigerian States at various voltage levels (330kV/132kV/33kV/11kV), which will enable distribution and supply licensees in each State to enter into contracts for bulk supply via the National Wholesale Electricity Market (NWEM).

Currently, 55% of the Nigerian population, lack access to electricity, with the vast majority residing in rural communities. This constitutes the largest energy access deficit in sub-Saharan Africa. While electricity is recognized as a public good, its provision is envisioned within a commercial, market-driven, and private sector-led framework. However, given the significant access deficit, the policy acknowledges the necessity of targeted Federal and State Government interventions, particularly in the form of capital subsidies for infrastructure development, to accelerate electricity access. The Federal Government may also opt to subsidize consumption as part of its pro-poor agenda.

The policy emphasizes aligning renewable energy targets at both federal and state levels, consistent with the Energy Transition Plan (ETP) and Vision 30:30:30. This includes promoting Renewable Energy Feed-in Tariffs (REFIT), net metering, green energy purchase obligations, and developing a robust domestic carbon credits framework. The physical implementation of universal access schemes will be guided by a coherent and harmonized data platform for visibility and planning, utilizing national and sub-national Integrated Resource Plans (IRPs). Version 1 of the National IRP is nearing completion in Q4 2024 and will serve as the basis for the Strategic Implementation Plan (SIP) that accompanies this policy. The policy's explicit reliance on data and integrated planning signifies a critical shift from ad-hoc 8 investments to data-driven, needs-based planning. This implies that investment decisions will increasingly rely on the availability and credibility of these IRPs and associated data, requiring legal counsel to advise clients not only on regulatory compliance, but also on leveraging these planning documents for market entry strategies, project identification, and due diligence.

2. Healthy Capitalization

Healthy capitalization of the NESI is identified as a fundamental element for establishing a credible and sustainable market.This requires that all licensed entities have access to capital raised either through their balance sheets or via their shareholders on commercial terms. A significant hurdle to achieving this goal is the substantial volume of outstanding debts owed by stakeholders across the electricity value chain, including to gas suppliers. The policy outlines measures to resolve these liabilities, such as factoring or selling some debts, writing off others, and establishing mechanisms for repayment over time. These efforts are intended to facilitate a smooth transition away from the Nigerian Bulk Electricity Trading Company (NBET) and towards the decentralized State markets. The explicit commitment to settling accumulated liabilities and establishing mechanisms for timely payment indicates a recognition that the historical debt overhang has been a major deterrent to attracting high-quality capital, management, and governance capacity. The policy's emphasis on innovative project insurance instruments, rather than traditional sovereign guarantees, further signals a shift towards market-led risk mitigation, which is essential for attracting serious private investors wary of government payment defaults. This shift will likely lead to increased legal advisory work related to debt restructuring, securitization, and the development of new financial instruments, as well as guidance on navigating the transition from sovereign-backed guarantees to market-based risk allocation.

Strengthening payment discipline through robust enforcement and revenue assurance mechanisms is also crucial. The policy underscores the necessity of securing sustainable cash flows through innovative financing mechanisms, cost-reflective tariffs, and potential government support for critical infrastructure projects. The policy acknowledges the unsustainability of electricity subsidies and advocates for cost-reflective tariffs. However, it also recognizes that affordability remains a significant issue for most customers, particularly the 46% of Nigerians living in poverty, which exacerbates access challenges. This creates a tension between commercial viability and social equity. The policy suggests targeted federal and state government interventions to subsidize capital investments in infrastructure development, and potentially federal consumption subsidies, as part of a pro-poor agenda.Law firms advising on energy projects must navigate this delicate balance, structuring deals that are commercially attractive, while incorporating mechanisms for social impact, potentially through blended finance models that combine commercial capital with development finance or government grants. Legal expertise will be vital in designing and implementing these structures and ensuring compliance with Gender Equality, Poverty, and Social Inclusion (GESI) objectives.

Furthermore, clarifying the full extent of States' rights to equity allotments in the DisCos and any additional successor companies created under Section 230(4) of the EA 2023 is a significant legal and commercial undertaking. This involves determining the precise split of shareholding and the transfer of 9 associated assets and liabilities. Strategic collaboration among various Ministries, such as Finance, Power, and Petroleum, as well as the National Council on Privatization and other regulatory agencies, is deemed vital to enhance public sector accountability and ensurecoordinated implementation of policy initiatives and legal provisions.

3. Electricity Reliability

The third core objective is electricity reliability, defined as the assurance that electricity sold is of the contracted quality and supplied with an adequate reserve margin. A primary challenge to reliability within the NWEM is the inconsistent natural gas supply, often due to issues with payment for gas invoices and inadequate gas supply infrastructure. Initiatives to address this include domesticating the trading currency for gas-to-power contracts (using Naira for local components) and fostering collaboration among the Federal Ministry of Power (FMoP), NERC, the Ministry of Petroleum (Gas), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to exploit Non-Associated Gas (NAG) resources. This approach recognizes the deep interdependence of fuel supply, infrastructure, and market discipline. The proposed decoupling of gas pricing to use Naira for local components directly attempts to mitigate foreign exchange risk, which has historically exacerbated payment issues and impacted gas supply reliability. Legal advice will be essential in drafting and enforcing these firm contracts and structuring payment assurance mechanisms that move away from sovereign guarantees.

The Transmission Company of Nigeria (TCN)-owned grid currently suffers from manual operations, a shortage of essential ancillary services, frequent blackouts, and equipment obsolescence. The policy calls for significant upgrades, including the integration of modern automated systems like Supervisory Control and Data Acquisition/Energy Management System (SCADA/EMS) and investment in reliable ancillary services. The emphasis on the full liberalization of the ongoing SCADA/EMS project underscores that digitalization is not merely an improvement, but a fundamental prerequisite for a reliable, modern grid capable of handling intermittent renewable energy sources. This creates significant opportunities for legal firms in technology and infrastructure, involving advice on contracts for SCADA/EMS implementation, data security and privacy laws, and facilitating investments in digital infrastructure.

Promoting decentralized energy solutions and energy efficiency is also encouraged to reduce reliance on traditional power sources and optimize overall system performance. States are encouraged to develop their own reliability schemes through Variable Renewable Energy (VRE) grid integration and the promotion of micro and mini-hydropower generation. The EA 2023's provision for private investments in the transmission sub-sector is seen as a major boost for mobilizing financing for both public-private partnerships (PPPs) and private sector project finance in transmission and distribution assets.TCN is incentivized to assess its Performance Improvement Plan (PIP), develop a bankable capital expenditure (capex) plan, and engage financial institutions, prioritizing the completion of existing critical projects 10 over new ones to relieve current network limitations.

Finally, strengthening payment discipline throughout the NESI, from Gas Supply Agreements (GSAs) to end-user service delivery contracts, is critical. Regulators are urged to collaborate on ensuring contract adherence, implementing effective business continuity measures for defaults, and prescribing penalties for unacceptable behavior.

4. Redefying the Electricity Market: National, State and Off- Grid Dynamics

National Wholesale Electricity Market (NWEM): The Electricity Act 2023 moves the Nigerian Electricity Supply Industry (NESI) beyond a bulk buyer model (previously dominated by NBET) towards a transparent, efficient, and competitive electricity market. The NWEM will be regulated by the Nigerian Electricity Regulatory Commission (NERC), while individual State Electricity Markets (SEMs) will emerge as states develop their own markets. NERC will regulate retail and distribution in states without their own markets. The Transmission Company of Nigeria (TCN) will be unbundled to enhance transmission efficiency, separate system operator functions from transmission services, and boost private sector participation.

The transition involves novating existing Power Purchase Agreements (PPAs) to the Energy Exchange, ensuring transparency for the nascent Nigerian Independent System Operator (NISO), implementing real-time trading systems, and attracting significant investment for transmission grid improvement. A crucial shift involves moving from sovereign guarantees to market-led guarantees, with a commitment to negotiate and settle accumulated liabilities, addressing historical financial instability. The NWEM emphasizes investment in transmission infrastructure and technology for system operations, digitized trading, and ancillary services. It aims to create an enabling environment for private investment through clear market rules and an integrated resource plan. The policy seeks to recover installed generation capacity and allow surplus captive generation (minimum 10MW) to be sold to the national grid. Electricity transmission will be open to private investment through Independent Electricity Transmission Network (IETN) operators, classifying these assets as "green investments" to access diverse financing. Payment discipline will be strengthened through firm contracts across the value chain.

State Electricity Markets (SEMs): The Electricity Act 2023 empowers States to operate their own electricity trading mechanisms, promoting competition, efficiency, and universal access at the local level. States can develop their own legal, policy, and regulatory frameworks for electricity within their territories, provided they do not interfere with the NWEM. States face challenges in building capabilities for policy-making, regulatory alignment, infrastructure development, financing, and managing commercial and socio-political factors. Establishing effective State Electricity Regulatory Commissions (SERCs) with capable personnel is critical. Many states have narrow customer bases limiting pricing options, and unlike the Federal Government, they lack sovereign guarantees for market de-risking, relying instead on sound policy and sustainable subsidies. They also assume responsibilities for universal access schemes and consumer protection.

Policies for SEMs aim to attract investment and foster interaction with other SEMs and the NWEM. NERC will collaborate with States for responsibility transfer, including DisCo corporate structure and 11 technical boundaries. States are encouraged to enforce policies promoting competition, transparency, and consumer protection, ensuring regulatory independence. An intergovernmental body will coordinate principles for regulatory risk reduction, and the functions of the Power Council will be clarified for federal-state coordination. States are encouraged to develop Integrated Resource Plans (IRPs) for procuring generation capacity, promote private investment in grid modernization, and leverage surplus captive generation (minimum 5MW) for SEM demand. Licensing Electricity Service Companies (ESCOs) will encourage trade, and State Electricity Regulators will drive competition through open access to distribution networks. Clarification of State ownership in jointly owned entities like DisCos and NDPHC is prioritized. Rural electrification policies will be reviewed to recognize the States' role in expanding access, and consumer protection measures will be enhanced.

Off-Grid Markets: Off-grid markets are vital for achieving universal electricity access, especially in remote and underserved areas where grid extension is not commercially viable. These markets operate independently of the national grid, primarily using renewable energy (solar, wind, mini-hydro), and are promoted by the Rural Electrification Agency (REA) to increase access, enhance sustainability, diversify the energy mix, and reduce carbon emissions. The main challenge is ensuring commercial viability for mini-grid operators while maintaining affordability for communities. This requires innovative financing models, robust policy frameworks, and broad stakeholder participation (State Governments, DFIs, private investors, consumer buy-in). Policies aim to reduce capital expenditure (capex) through targeted subsidies, tax incentives, and grants to make tariffs affordable. This environment necessitates clear regulations, reliable data, simplified licensing, transparent funding mechanisms, and collaboration among stakeholders.

Off-grid projects must integrate business models that electrify agricultural productive uses to ensure longevity and economic development. Communities are encouraged to contribute equity (land, labor, capital) to reduce capex and ensure affordability, fostering community ownership and payment compliance. Key policy measures to drive the establishment of off-grid electricity markets include establishing clear regulatory frameworks to standardize solutions, ensuring cost-reflective and transparent tariffs, and utilizing subsidies and tax incentives are crucial. Data-driven investments, integration of off-grid development into State IRPs, and coordinated stakeholder approaches are emphasized. States should leverage global climate financing for off-grid investments, direct economic development projects to remote areas, and strengthen incentive structures like Renewable Energy Feed In Tariffs (REFIT) and Net Metering.

5. Energy Transition and Climate Change:

Nigeria is actively transforming its energy sector to address climate change and achieve national development goals.

Nigeria's climate commitments and the Energy Transition Plan (ETP): Nigeria is committed to global climate agreements like the UNFCCC, Kyoto Protocol, and Paris Agreement. In 2021, it pledged to reduce greenhouse gas (GHG) emissions by 20% unconditionally and 47% with international support by 2030. This commitment spans seven key sectors: agriculture, power, oil and gas, transport, industry, waste, and water. National policies reinforce these goals:

• The Climate Change Policy and Response Strategy (2012) promotes a low-carbon, climate-resilient economy.
• The Climate Change Act 2021 establishes a legal framework to achieve net-zero emissions by 2060, ensuring financial and environmental accountability.

The Nigeria Energy Transition Plan (ETP), launched in 2023, is a comprehensive roadmap for low carbon development across five areas: Power, Clean Cooking, Transport, Industry, and Oil and Gas. This ambitious plan aims to impact over 65% of Nigeria's emissions, requiring over $1.9 trillion to reach net-zero by 2060, with an additional $410 billion (approximately $10 billion annually)above projected spending. The ETP has a dual objective: universal energy access by 2030 and net-zero emissions by 2060. This highlights that Nigeria's energy transition is not just about reducing emissions, but also about lifting "100 million Nigerians out of poverty and driven economic growth." Renewable energy is central to these plans. The National Renewable Energy and Energy Efficiency Policy (NREEEP) 2015set specific generation targets for hydro, solar, and wind. The Long-Term Low Emission Development Strategy (LT-LEDS)targets a minimum 60% renewable energy mix by 2060, including significant contributions from various renewable sources and nuclear.

Opportunities in Renewable Energy, Carbon Markets, and Clean Technologies: The power sector contributes 27% of Nigeria's carbon emissions. The ETP projects a need for 250GW of installed solar generation capacity to achieve net-zero targets, with significant deployment of Distributed Renewable Energy (DRE) for universal electricity access by 2030. Nigeria's abundant sunshine makes it ideal for solar investment. Significant progress has been made in the off-grid sector through initiatives like the Nigerian Electrification Project (NEP)and theNigeria Distributed Access through Renewable Energy Scale-up (DARES) project, which have improved electricity access for millions.

Electrification also offers cross-sector synergies for decarbonization:

• Transport: The largest CO2 emitter (60% of national emissions), the sector is transitioning to electric vehicles (EVs) and e-buses. Policy moves like duty waivers for EV imports and financing schemes for e-bus assembly are crucial.
• Clean Cooking: With 161 million Nigerians lacking access to clean cooking solutions, the ETP prioritizes a shift to electric cooking, which can reduce emissions by 30% and prevent health issues. The Carbon Markets Opportunity is emerging as a significant financial mechanism. The Africa Carbon Market Initiative (ACMI) and Nigeria's National Carbon Market Activation Plan (NCMAP) aim to develop carbon markets and potentially carbon taxes, generating revenue for energy sector reinvestment. This presents opportunities for legal practitioners in advising on carbon market participation, transactions, compliance, and tax implications.

Regulatory Frameworks for Emissions Management: Nigeria has implemented proactive measures for emissions management in the oil and gas sector. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has developed guidelines for managing fugitive methane and greenhouse gas emissions, including the Leak Detection and Repair (LDAR) policy. TheMinistry 13 of Environmentlaunched a National Methane Emissions Reduction Strategyin September 2023. Climate change and energy transition policies emphasize a "people-centered approach", ensuring equitable access, industrial growth, and decarbonisation. This requires collaboration between federal and state authorities, investment in renewable energy, and access to grant and concessional finance. Enhancing data management platforms to monitor emission reductions against NDC targets is also crucial. The Electricity Act 2023 grants autonomy to State Governments, offering significant scope to accelerate clean energy development across the electricity value chain and leverage cross-sectoral opportunities in transportation and clean cooking.

6. Human Resource Capability Development: Building a Skilled Workforce

The Nigerian Electricity Supply Industry (NESI) faces significant human resource challenges that hinder its growth and competitiveness. These challenges are categorized into technical, non-technical, funding, and legal/regulatory issues, stemming largely from the lack of a comprehensive Capacity Development Framework and inadequate funding. To address these, the NIEP-SIP proposes several strategic policy statements:

Technical Skills Development & Enhancement: Implement continuous professional development and specialized training, emphasizing multi-skill competencies and gender equality; Formalize on-the job training for skills acquisition and certification. Integrate State Electricity Markets (SEMs) into the Capacity Building Framework for alignment; Develop knowledge transfer and mentorship programs to preserve institutional knowledge; Establish a Power Industry Research and Incubation Centre for innovation; Create platforms to integrate learning, expand training facilities, and align educational institutions' courses with sector needs.

Non-Technical Skills Development & Enhancement: Introduce incentive programs, career advancement opportunities, and competitive compensation to attract and retain talent; Foster continuous learning through workshops, webinars, and e-learning, focusing on soft skills like leadership and teamwork.

Legal and Regulatory Compliance: Align HR development with regulatory requirements and national energy policies; Implement robust monitoring and evaluation of training programs; Ensure federal and state regulatory authorities support human capital development and incentivize private sector investment; Establish a robust Regulatory Framework for Certification defining employee certification criteria and skill standards.

Stakeholder Engagement and Strategic Partnerships: Establish collaborations between industry and academia for curriculum development, research, and internships; Form strategic partnerships with international power sector organizations for knowledge transfer; engage government agencies, private sector, and the public, encouraging Public-Private Partnerships (PPPs) for capacity development funding.

Workforce Planning and Capacity Building: Develop a comprehensive framework to anticipate future skill needs and address current gaps; Include both technical and non-technical staff in capacity building initiatives; Implement a power sector mentorship scheme for employee development and 14 7. succession planning; Deploy predictive analytics for future skill needs and establish a centralized talent management system; Invest in continuous professional development programs and state-of-the-art training facilities at NAPTIN.

Promoting Gender Equality and Inclusivity: Ensure capacity development programs encourage equal opportunities for women and marginalized groups, including gender sensitivity training, mentorship, and targets for female leadership.

Sustainable Practices and Environmental Stewardship: Emphasize these practices across the power sector value chain in programs.

Information and Communication Technology (ICT) and Technology: Make ICT an essential requirement for work and capacity building within NESI; Invest in state-of-the-art training facilities and simulation technologies at NAPTIN and other accredited centers.

Funding and Financing: Government must prioritize continuous capacity development funding; Implement systematic Monitoring and Evaluation (M&E) for performance assessment and policy compliance.

Overall, a holistic, strategic, and sustainable alignment among stakeholders is imperative to resolve these complexities and enhance the sector's human resource capabilities.

7. Local Content Management, Research, and Development: Fostering Domestic Capacity

Nigeria's power sector aims for self-sufficiency and economic growth by enhancing local content, research, and development. This strategy seeks to decrease reliance on foreign expertise and imports, building domestic capabilities across the entire electricity value chain. Historically, Nigeria's power sector was dominated by foreign interests. While the Electricity Act 2023 (Section 228) mandates the Nigerian Electricity Regulatory Commission (NERC) to enforce local content regulations (from 2014) to promote the use of Nigerian resources, experts, and enterprises, significant challenges persist. Despite these regulations, foreign entities still largely control technology, project implementation, and equipment supply for major power projects, with limited local impact. This reliance on foreign involvement leads to: High impact of foreign exchange (FX) rates on tariffs (MYTO), driving inflation and affecting competitiveness; Repatriation of funds, diverting revenue and hindering local investment and capacity building; Vulnerability to global shocks; Limited local community engagement, leading to vandalism and poor maintenance of infrastructure; Weak regulatory enforcement, resulting in insufficient technology transfer, inefficient partnerships, and inadequate business development incentives. The NIEP-SIP proposes several policies to foster a vibrant and sustainable market for local content, research, and development:

Clear Local Content Definition and Incentives: Clearly define local content with specific parameters, prioritizing Nigerian-manufactured items and establishing measurable indices; Mandate minimum percentages for locally sourced materials, equipment, and services; Provide incentives such as tax breaks, duty exemptions, and result-based tax credits; Reduce duties and tariffs on imports that enable local manufacturing in the electricity sector.

Monitoring and Technology Transfer: Ensure effective monitoring of local content compliance and regular policy assessments; Re-establish the NESI Nigerian Content Consultative Forum (NNCCF); Facilitate technology and knowledge transfer through collaborations, international partnerships, and enforcement of technology transfer clauses in foreign contracts (referencing NIPC and NOTAP Acts); Consult sub-nationals for shared interests.

"Self-Reliant and Made in Nigeria" Initiative: Lead an initiative to build local capacity in manufacturing electrical equipment, transformers, and renewable energy components, supported by government financing; Integrate, adopt, and implement NERC's 2014 Regulation on National Content Development; Give first consideration to Nigerian companies in electricity contracts and projects, similar to the oil and gas sector; Create production and export-linked incentives for key areas like renewable energy, generation, transmission, and distribution, in collaboration with the Ministry of Trade and Investment; Prioritize bids with the highest Nigerian content that meet technical requirements.

Digital Transformation and Strategic Planning: Propose a "Digital Nigeria" program to boost digital infrastructure and smart grid technology, investing in smart grids and supporting local content in digital energy; suggest a 10-year strategic roadmap for Nigerian Content in the NESI, akin to the oil and gas sector; Require foreign companies to submit a Nigerian Content Plan to NERC for approval, with NERC publicly reporting on compliance.

Funding and Collaboration: Establish a dedicated fund for local content development, managed through a public-private partnership; Direct investments towards technology parks/clusters to foster collaboration among manufacturers and service providers; Direct communities to form electricity supply infrastructure management committees (led by youth and women) for ownership, accountability, and remuneration for reporting faults.

8. Commercial, Legal, and Regulatory Framework for Implementation

The Electricity Act 2023 (EA 2023)reshapes the Nigerian electricity sector into a two-tier system: aNational Wholesale Electricity Market (NWEM) and State Electricity Markets (SEMs). Institutional Arrangements: The National Wholesale Electricity Market (NWEM): The EA 2023 codifies existing laws and provides mandates for contemporary issues like climate resilience, energy transition, and decentralization. The Federal Government, through the Ministry of Power, will focus on enabling the NWEM. NERC's effective execution of its principal function (Section 34(1)(a) of EA 2023) in collaboration with stakeholders is crucial for NWEM success. A viable NWEM requires effective market mechanisms for dispatching generation units, long-term generation adequacy, and mitigation of local market power. Federal policy will prioritize a market-driven, commercially viable regulatory framework, full gas utilization, rapid renewable energy integration, financial stability, and encouraging states to manage consumer protection and distribution.

Anticipated Hurdles and Risks in Establishing the NWEM: A Steering Committee (FMoP, NERC, NBET, ISO, TSPs, DisCos, Gencos, State Regulators, etc.) will be established for 1-2 years to drive the transition, set effectiveness conditions, and recommend mitigation measures. Significant infrastructure enhancements (especially distribution and transmission) are needed, with facilitated 16 private sector participation. The EA 2023 encourages private investment in transmission. TCN will assess its Performance Improvement Plan (PIP) and develop a bankable capital expenditure (capex) plan, seeking innovative financing. New projects will be discouraged unless critically needed. Bankability will be enhanced by clear cost recovery guidelines and innovative project insurance, shifting from sovereign guarantees to market-led guarantees (requiring sophisticated legal expertise). Poor gas supply (due to late payments and inadequate infrastructure) will be addressed by strengthening payment discipline across the NESI. Regulators will collaborate to enforce contracts and penalize defaults. Resetting the underlying energy value chain is non-negotiable, starting with settling accumulated liabilities through the Nigerian Electricity Liability Management Company (NELMCO). Gas supply optimization will involve enhanced payment assurance, voluntary supply with appropriate pricing, and long-term contracts. Gas pricing will be decoupled, with local components priced in Naira. Integration of renewable energy requires a clear plan for the full liberalization of the ongoing SCADA/EMS project, as the current grid cannot wheel intermittent RE without it.

Institutional Arrangements: State Electricity Markets (SEMs): The EA 2023 provides for SEMs as the other tier. NERC will collaborate with State Governments to develop an action plan for SEM establishment, guiding on State autonomy, market designs, NERC's preparatory orders for DisCos, State Integrated Resource Plans (IRPs), capacity building for State regulators, and transition plans. States are expected to communicate their stance on taking over electricity market regulation. Where a State transitions, four critical responsibilities must be managed: Empowerment of State Governments with information and guidance via an EA 2023 Transition Forum and online repository; Tariffs, market design, and market development with full State government participation; Security of assets and infrastructure through formal declaration as critical national infrastructure by both National and State Legislatures, clear responsibilities, and embedding surveillance sensors; Human capacity development for credible market operation, including State IRPs linked to the National IRP. Law firms will need to advise clients on navigating this multi-jurisdictional regulatory environment. The electricity distribution sub-sector and consumer protection will be wholly regulated by the States. NERC will transfer these responsibilities to State regulators. States should prioritize consumer protection through laws, transparency, collaboration, consumer bills of rights, awareness, feedback, and direct consumer involvement in asset monitoring. Recommended actions for States include: reviewing metering gaps, encouraging payment discipline via technology, mandating monthly performance reports, and enacting laws for community groups to manage infrastructure and address vandalism/theft (with remuneration). NERC will lead engagement with States to develop a multi-tiered market framework, leveraging its experience. The Federal Ministry of Power will consult with NERC and States to issue policy directives, including convening the intergovernmental electricity regulatory working group and engaging the Nigeria Governors' Forum (NGF) to endorse the National Power Council and the working group for standardizing policymaking and regulation. While some States may establish joint/regional markets, proper plans for a seamless transition from the NBET/single-buyer model to 17 the wholesale electricity market are crucial, including bilateral contracts simulation around the ISO and TSP. A formal mechanism, like the National Power Council, is imperative for managing interfaces between State electricity markets.

Periodic Policy Reviews and Consequential Amendments of Federal Legislation: The National Integrated Electricity Policy and Strategic Implementation Plan (NIEP-SIP) adopted an unorthodox method due to past neglect of formal policy reviews. Section 3(1) of the Electricity Act directly mandates the Federal Government to prepare and publish the NIEP-SIP within one year of the Act's commencement. The EA 2023 was necessitated by the need to codify existing electricity sector policies and give statutory effect to the constitutional amendment allowing states to establish their own electricity markets. The NIEP-SIP is expected to clarify stakeholder roles in National and State electricity markets and define initiatives to achieve strategic objectives. Regular policy reviews are crucial for effective governance in Nigeria's dynamic electricity sector to address evolving challenges and opportunities.

CONCLUSION

The NIEP provides a framework to dismantle monopolistic structures, particularly in power distribution and generation, which have long constrained market efficiency. By encouraging competition and private-sector participation, the policy opens the door for new entrants and innovations in power solutions tailored to local needs. States will be empowered to design their own electricity markets within a national coordination system, which can lead to quicker, more localized responses to energy demands.

Despite all these, the issue of the potential risks with the implementation of the Policy must be addressed. Nigeria overtime enacts laws that have brilliant provisions but implementation and enforcement has always been a constant weakness and the downfall of most of the laws. These risks have consistently dogged the pace and quality of sector reform; causing the NESI to lack quality long-term capital; in turn driving the Federal and State public sectors to continue to be involved in funding the sector through poorly administered subsidies, grants and loans.

It is hoped that the itemised recommendations will be duly taken into consideration by the appropriate authorities.

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