New law allows Nigerians sell surplus solar power to DisCos in historic shift

Nigeria’s electricity regulator has officially launched a framework allowing businesses and industrial customers to generate their own solar power and sell excess electricity back to the national grid, a move that could reshape how the country’s chronically underpowered commercial sector manages its energy costs.

The Nigerian Electricity Regulatory Commission announced the commencement of the Net Billing Regulations 2026 on Thursday, establishing what regulators describe as the country’s first structured legal pathway for so-called prosumers, customers who both consume and produce electricity — to participate in the distribution network.

The rules, years in the making, arrive as Nigerian businesses have grown increasingly reliant on diesel generators and off-grid battery storage to compensate for an unreliable national grid.
The country’s power sector has struggled for decades with generation, transmission, and distribution bottlenecks, leaving large manufacturers and commercial operators exposed to energy costs that frequently run multiples above what competitors in peer economies pay.

Under the new regulations, eligible participants must install renewable energy systems, primarily solar photovoltaic arrays, with a minimum capacity of 50 kilowatt-peak and a ceiling of 1.5 megawatt-peak.

That range effectively targets mid-to-large commercial and industrial customers: factories, logistics hubs, shopping complexes, and office campuses that have the roof space and capital to deploy meaningful generation capacity.

“This is the segment of the economy that has been self-generating at enormous cost for a long time,” said one energy consultant who advises multinational companies operating in Lagos and Abuja. “If the tariff structure is right, this creates a real incentive to invest in solar rather than just run a backup generator.”

The Commission did not publish specific export tariff rates alongside Thursday’s announcement, stating only that exported energy would be credited at rates it approves. That detail will be closely watched.

In comparable markets across sub-Saharan Africa and Southeast Asia, the spread between the retail import tariff and the export credit rate has been a decisive factor in whether net billing schemes attract meaningful private investment or remain largely dormant on paper.

To participate, companies must first apply to their distribution licensee, one of Nigeria’s eleven electricity distribution companies, for a technical feasibility assessment.

Approval triggers a formal Net Billing Agreement, after which participants register directly with NERC. Approved sites will be fitted with bidirectional metering equipment capable of tracking both electricity drawn from and pushed onto the distribution network.

The regulatory requirements that systems meet applicable technical standards and obtain distribution company sign-off before activation address a concern that has shadowed earlier distributed generation initiatives in Nigeria: the risk of uncontrolled or incompatible injections into a low-voltage network already prone to voltage instability and equipment failures.

NERC framed the regulations around five objectives: promoting renewable energy adoption, improving energy security, attracting private capital into distributed generation, reducing greenhouse gas emissions, and enabling orderly technical integration of solar systems into distribution infrastructure.

Nigeria generates a fraction of the electricity its population requires. The country of roughly 220 million people has an installed grid capacity of approximately 13,000 megawatts, though actual power available to consumers has rarely exceeded 5,000 megawatts in recent years due to gas supply shortfalls, aging transmission infrastructure, and distribution losses.

The gap has made Nigeria one of the largest markets globally for private diesel generation, with businesses and households collectively spending billions of dollars annually on fuel that contributes heavily to urban air pollution.

The net billing framework represents a shift in regulatory posture from treating distributed solar as a standalone off-grid solution toward integrating it into the broader grid architecture.

The 1.5-megawatt upper limit is notably more modest than prosumer thresholds in some other markets, which observers suggest reflects NERC’s intention to stress-test the framework with a defined initial cohort before expanding eligibility.

Industry groups representing renewable energy developers had lobbied for clearer rules governing grid-tied solar for commercial customers for several years, arguing that regulatory ambiguity was suppressing investment even among companies willing to commit capital.