In a landmark move to bolster Nigeria’s transition to sustainable energy, the Nigerian Electricity Regulatory Commission (NERC) has unveiled draft net billing regulations aimed at enhancing the integration of renewable energy into the national electricity grid. This development, announced on Thursday, September 4, 2025, marks a significant step toward harnessing Nigeria’s burgeoning solar energy sector and enabling consumers to actively participate in the energy market by exporting surplus power. The draft regulations, designed to establish a standardized framework for renewable energy interconnection, come at a time when Nigeria’s solar energy adoption is experiencing unprecedented growth, driven by both government initiatives and private sector investments. This article explores the details of NERC’s initiative, its implications for Nigeria’s energy landscape, and the broader context of renewable energy development in the country.
Background: Nigeria’s Solar Energy Boom
Nigeria’s energy sector has long been characterized by challenges, including unreliable grid supply, high dependence on fossil fuels, and significant energy access gaps, particularly in rural and off-grid areas. However, the country has made remarkable strides in recent years to diversify its energy mix, with solar power emerging as a key pillar of this transition. According to NERC, Nigeria imported over 4 million solar panels in 2023, valued at more than $200 million. By the first quarter of 2025, the value of imported solar panels had reached approximately ₦125.29 billion (around $82 million), reflecting the growing appetite for renewable energy solutions.
In 2024, Nigeria added 63.5 megawatts (MW) of solar capacity, bringing the country’s total installed solar capacity to 385.7 MW. This expansion has been driven by a combination of government policies, private sector innovation, and increasing consumer demand for affordable and reliable energy alternatives. Rural and off-grid communities, in particular, have embraced solar power as a viable solution to chronic electricity shortages, with solar home systems and mini-grids gaining traction. The growth in solar adoption has prompted stakeholders to advocate for mechanisms that allow consumers to contribute to the grid, leading to NERC’s development of the draft net billing regulations.
The Draft Net Billing Regulations: Objectives and Framework
The primary objective of NERC’s draft net billing regulations is to create a standardized framework for the interconnection of renewable energy installations, particularly solar, at customer premises to the electricity distribution network. This framework enables customers to export surplus power generated from their renewable energy systems to the grid under a credit-based billing system. Unlike traditional net metering, which typically offsets energy consumption on a one-to-one basis, net billing involves a financial compensation mechanism for excess electricity fed into the grid, providing commercial value to prosumers (consumers who also produce energy).
The regulations aim to address several key challenges in Nigeria’s energy sector, including grid instability, limited renewable energy integration, and the need for equitable participation in the energy market. By allowing consumers to sell excess power, NERC seeks to incentivize the adoption of renewable energy systems, reduce reliance on fossil fuel-based generation, and enhance energy access across the country. The draft regulations are also aligned with the Electricity Act 2023, specifically Sections 46 and 48, which mandate NERC to conduct consultations and public hearings to ensure stakeholder input in regulatory processes.
The draft document, available on NERC’s official website, outlines the technical, financial, and operational requirements for net billing arrangements. It includes provisions for metering, billing, and grid interconnection standards, ensuring that the process is transparent and efficient. NERC has invited public comments on the draft, with a deadline for submissions set for September 26, 2025, via email to netbillingregulations@nerc.gov.ng. This participatory approach underscores NERC’s commitment to inclusive policymaking and ensuring that the regulations reflect the needs and perspectives of all stakeholders, including consumers, distribution companies (DisCos), and renewable energy developers.
Stakeholder Engagement and Public Participation
NERC’s call for public input is a critical component of the regulatory development process. By engaging stakeholders, including industry experts, renewable energy advocates, and the general public, NERC aims to refine the draft regulations to ensure they are practical, effective, and widely accepted. The commission has emphasized the importance of constructive contributions, noting that the regulations will play a pivotal role in shaping Nigeria’s renewable energy future. The public consultation process is expected to address key concerns, such as the financial implications for DisCos, the technical feasibility of grid integration, and the potential impact on electricity tariffs for consumers.
Stakeholder engagement has been a recurring theme in NERC’s efforts to promote renewable energy. The recent Summit on Accelerating Scale-Up of Renewable and Distributed Energy Resources in Nigeria, held in July 2024, highlighted the need for collaborative efforts to drive renewable energy adoption. During the summit, NERC Chairman Sanusi Garba emphasized the commission’s commitment to creating regulatory frameworks that support investors in renewable and distributed energy generation. The summit also provided a platform for stakeholders to discuss strategies for promoting energy access, enhancing energy security, and fostering inclusive growth.
Broader Context: NERC’s Renewable Energy Initiatives
The draft net billing regulations are part of a broader suite of initiatives by NERC to accelerate renewable energy integration in Nigeria. In April 2024, NERC introduced a regulation mandating all electricity distribution companies (DisCos) to procure at least 10% of their contracted energy from embedded generation sources, with half of this amount sourced from renewable energy by April 1, 2025. For example, the Abuja DisCo is required to procure at least 61.1 MW from embedded generation, with 31 MW coming from renewable sources. This mandate is designed to diversify Nigeria’s energy mix, reduce dependence on fossil fuels, and promote sustainability.
Additionally, NERC has been working on revising mini-grid regulations to facilitate the expansion of renewable and distributed energy solutions. Mini-grids, which provide electricity to off-grid communities, have become a cornerstone of Nigeria’s energy access strategy, particularly in rural areas. The commission’s efforts to streamline mini-grid regulations aim to attract investment, improve operational efficiency, and ensure affordability for consumers.
NERC has also organized workshops and summits to showcase studies and frameworks related to renewable energy integration. For instance, a recent workshop in Abuja highlighted findings from the Variable Renewable Energy (VRE) Integration Study and the Solar Auction Framework Study, which are part of Nigeria’s efforts to launch its first utility-scale solar auction. These initiatives demonstrate NERC’s proactive approach to addressing technical and financial barriers to renewable energy adoption.
Implications for Nigeria’s Energy Sector
The introduction of net billing regulations has far-reaching implications for Nigeria’s energy sector. First, it empowers consumers to become active participants in the energy market, transforming them from passive users to prosumers who can generate and sell electricity. This shift is expected to drive investment in solar home systems, rooftop solar installations, and other renewable energy technologies, particularly among households and small businesses. By providing financial incentives for exporting surplus power, the regulations could accelerate the adoption of clean energy solutions and reduce the strain on the national grid.
Second, the regulations are likely to enhance grid stability by encouraging distributed energy generation. By allowing consumers to feed excess power into the grid, net billing can help balance supply and demand, particularly during peak periods. However, this will require significant upgrades to Nigeria’s aging grid infrastructure to accommodate bidirectional power flows and ensure reliable integration of renewable energy sources.
Third, the regulations align with Nigeria’s broader energy transition goals, including the target of achieving 30 gigawatts (GW) of power supply capacity by 2030, with 30% derived from renewable energy sources. This ambition, outlined in President Bola Ahmed Tinubu’s Renewed Hope Agenda, underscores the government’s commitment to sustainable development and energy security. The net billing framework is a critical step toward achieving these targets, as it incentivizes private sector participation and fosters innovation in the renewable energy space.
Challenges and Considerations
While the draft net billing regulations represent a significant advancement, several challenges must be addressed to ensure their successful implementation. One key concern is the financial burden on DisCos, which may face increased operational costs due to the integration of renewable energy sources. Analysts have noted that mandating DisCos to procure renewable energy could lead to higher electricity tariffs for consumers if not managed efficiently. To mitigate this, NERC has encouraged DisCos to leverage financial and technical support from programs like the World Bank-Nigeria Distributed Access through Renewable Energy Scale-Up (DARES) Programme, which provides up to $750 million in funding.
Another challenge is the technical capacity of the grid to handle distributed energy generation. Nigeria’s electricity grid has historically struggled with inefficiencies, including frequent outages and transmission losses. Integrating large volumes of renewable energy, particularly from decentralized sources, will require significant investments in smart grid technologies, advanced metering infrastructure, and grid modernization. NERC’s regulations must address these technical requirements to ensure seamless interconnection and reliable power supply.
Additionally, public awareness and education will be critical to the success of the net billing framework. Many consumers, particularly in rural areas, may lack the knowledge or resources to invest in renewable energy systems or participate in net billing arrangements. NERC and its partners must prioritize capacity-building initiatives, such as training programs for solar installers and awareness campaigns for consumers, to drive adoption.
Economic and Environmental Benefits
The adoption of net billing regulations is expected to yield significant economic and environmental benefits for Nigeria. Economically, the regulations will stimulate investment in the renewable energy sector, creating jobs in solar panel installation, maintenance, and related industries. The growth of the solar market, as evidenced by the $200 million in imports in 2023, demonstrates the potential for economic diversification and reduced dependence on oil revenues.
Environmentally, the shift toward renewable energy will help Nigeria reduce its carbon footprint and meet its climate commitments under the Paris Agreement. By incentivizing clean energy production, the regulations will contribute to lower greenhouse gas emissions and improved air quality, particularly in urban areas where diesel generators are commonly used. Additionally, the expansion of renewable energy in rural areas will reduce reliance on biomass and kerosene, improving health outcomes and reducing deforestation.
Global Context and Comparative Analysis
Nigeria’s net billing initiative aligns with global trends in renewable energy adoption. Countries like Germany, Australia, and the United States have successfully implemented net metering and net billing programs, enabling consumers to contribute to the grid and receive compensation for excess power. These programs have driven significant growth in rooftop solar installations and decentralized energy systems, providing valuable lessons for Nigeria.
For example, Germany’s feed-in tariff system, introduced in the early 2000s, played a pivotal role in making the country a global leader in solar energy. By guaranteeing fixed payments for renewable energy fed into the grid, Germany incentivized widespread adoption and attracted significant private investment. Nigeria’s net billing framework could adopt similar principles, ensuring that compensation rates are cost-reflective and attractive to investors.
However, Nigeria must tailor its approach to its unique context, including its economic constraints, grid limitations, and energy access challenges. Unlike developed countries with robust grid infrastructure, Nigeria must prioritize grid upgrades and technical training to ensure the success of its net billing program. Additionally, affordability remains a critical consideration, as many Nigerian households operate on limited budgets and may struggle to invest in solar systems without financial support.
Future Outlook
The introduction of NERC’s draft net billing regulations marks a turning point in Nigeria’s energy transition. By creating a framework for consumers to export surplus power, the regulations have the potential to transform the energy landscape, fostering greater adoption of renewable energy and enhancing energy access. The success of this initiative will depend on several factors, including stakeholder collaboration, grid modernization, and effective implementation of the regulations.
In the short term, NERC’s public consultation process will be critical to refining the draft regulations and addressing stakeholder concerns. The commission’s commitment to transparency and inclusivity bodes well for the development of a robust and effective framework. In the long term, the regulations could pave the way for a more decentralized and resilient energy system, empowering consumers and reducing reliance on fossil fuels.
As Nigeria continues to navigate its energy challenges, the net billing regulations represent a bold step toward a sustainable future. By leveraging its abundant solar resources and fostering private sector innovation, Nigeria has the opportunity to become a leader in renewable energy in Africa. The coming years will be critical in determining the success of this initiative, as stakeholders work together to overcome technical, financial, and operational challenges and build a brighter, cleaner energy future for the country.
