…as energy reforms attract over $2bn investment

…’Using diesel generators as primary power source will end soon’, minister promises manufacturers

Minister of Power, Joseph Tegbe, has said Nigeria is positioning itself for a major transformation of its electricity sector, with plans to grow installed power capacity to 277 gigawatts by 2060 while leveraging renewable energy and private sector investment to drive industrial competitiveness.

  Speaking at the Lagos Chamber of Commerce and Industry (LCCI) Renewable Energy Outlook Conference 2026 at Commerce House in Lagos yesterday, Tegbe said the country’s energy transition agenda was designed not only to tackle climate concerns but also to address energy poverty, improve industrial productivity and unlock economic growth.

  The conference, themed “Powering Nigeria’s Energy Transition: Policy, Investment and Industrial-Scale Deployment,” brought together policymakers, investors, manufacturers, energy developers and financial institutions to discuss pathways for transforming Nigeria’s power sector.

  Tegbe described Nigeria’s electricity sector as a paradox, noting that despite being Africa’s largest economy and most populous nation, with over 13,000 megawatts of installed generation capacity, less than half of that capacity currently reaches consumers reliably.

According to him, the consequences have been severe for businesses, with manufacturers spending a significant proportion of operating costs on diesel and petrol generators.

  “This invisible shadow grid, consuming billions of naira annually in imported fuel, represents a structural tax on Nigerian competitiveness that we can no longer afford to pay,” he said.

  He said recent nationwide grid disturbances and collapses recorded in late 2025 and early 2026, which affected commercial centres, underscored the urgent need for comprehensive reforms, identifying the Electricity Act 2023 as the foundation of the sector’s transformation. For the first time, he said, electricity has been removed from the Exclusive Legislative List, allowing states generate, transmit, distribute and regulate electricity within their territories.

  Tegbe disclosed that about 20 states have already enacted subnational electricity laws, while 12 states have either assumed or are advancing the transfer of regulatory oversight from the Nigerian Electricity Regulatory Commission (NERC). He also highlighted the approval of the National Integrated Electricity Policy by the Federal Executive Council in May 2025, describing it as a comprehensive replacement for the country’s outdated 2001 electricity policy framework.

   According to him, government has intensified investment in grid infrastructure, installing 82 power transformers between 2024 and 2025, adding over 8,500MVA of transmission capacity.

  He added that more than 30 transmission projects were completed within the same period, increasing the national grid’s wheeling capacity to approximately 8,700 megawatts.

Tegbe further disclosed that a $1.16 billion grid digitalisation project is currently 69 per cent complete, with over 3,000 kilometres of fibre optic cable deployed and more than 100 substations upgraded with advanced monitoring systems.

   He said the establishment of the Nigerian Independent System Operator (NISO) in 2025 would further strengthen grid management and market efficiency.

On Nigeria’s long-term energy transition agenda, Tegbe said the country aims to achieve net-zero emissions by 2060 while simultaneously eliminating energy poverty and supporting industrial expansion.

  He noted that the Energy Transition Plan projects that moving towards a power mix dominated by renewable energy could deliver fuel savings of about $121 billion and achieving the target would require $10 billion annually in additional investment above current spending levels.

  According to him, solar energy will play a dominant role in the future energy mix, pointing out that Nigeria and South Africa led Africa’s solar power growth in 2025. He attributed this to expanding private sector participation, supportive policies and Nigeria’s high solar irradiation potential.

  Tegbe also described natural gas as Nigeria’s transition fuel, noting that the country possesses approximately 202 trillion cubic feet of proven gas reserves capable of supporting baseload electricity generation while renewable capacity is scaled up.

   He revealed that power sector reforms have already attracted over $2 billion in fresh private investment. He said the electricity market revenues nearly doubled between 2023 and 2025, increasing from about N850 billion to more than N1.5 trillion following tariff reforms.

  He added that the Presidential Power Initiative, being implemented with Siemens, is expected to upgrade transmission infrastructure to reliably handle up to 7,000 megawatts of electricity. “The era of the diesel generator as your primary power source is drawing to a close,” he promised industrialists, urging businesses to take advantage of embedded generation, industrial mini-grids, renewable energy procurement agreements and direct connections to independent power producers now enabled under the Electricity Act.

  LCCI President, Leye Kupoluyi, lamented the contradiction between Nigeria’s vast energy resources and its persistent electricity deficit. He noted that Nigeria possesses approximately 37 trillion cubic feet of proven natural gas reserves and receives average solar irradiation of about 5.5 kilowatt-hours per square metre per day, among the highest globally.

  Despite these advantages, available grid capacity remains only about 4,901 megawatts for a population exceeding 220 million people. “A nation endowed with energy resources has no business tolerating energy poverty,” he said.

   He said unreliable electricity supply continues to constrain productivity, increase operating costs and limit business expansion across multiple sectors of the economy. According to him, renewable energy presents a strategic opportunity not only to close the country’s electricity access gap but also to enhance energy security, promote economic diversification and accelerate industrial development.

  Kupoluyi stressed that achieving a successful energy transition would require a deliberate combination of sound policy frameworks, large-scale private investment, infrastructure development and industrial-scale deployment of renewable energy technologies.

   Also speaking, Managing Director, Rural Electrification Agency (REA) Dr. Abba Abubakar Aliyu, urged stakeholders to move beyond viewing renewable energy merely as a rural electrification solution and instead position it as a driver of industrial growth and economic transformation.

 He noted that global renewable energy deployment is expanding at unprecedented levels, with solar energy accounting for the majority of projected renewable capacity additions worldwide through 2030.

  He pointed out that global electricity demand is increasingly being driven by data centres, artificial intelligence, digital services, electric mobility and advanced manufacturing. According to him, global data centre electricity demand is projected to more than double by 2030, highlighting the importance of reliable and affordable electricity for future economic competitiveness.

   He said mini-grids, solar-plus-storage systems, embedded generation and distributed energy resources should now be treated as strategic industrial infrastructure capable of powering agro-processing clusters, industrial parks, commercial hubs, markets, healthcare facilities and digital economy assets. He warned, however, that renewable energy deployment must be matched by effective regulation, grid planning, storage investments and market reforms.

   Highlighting recent regulatory developments, he noted that NERC’s Mini-Grid Regulations 2026 now permit isolated mini-grids of up to 5MW and interconnected mini-grids of up to 10MW, creating opportunities for larger commercial and industrial applications.

  He also welcomed the emerging Net Billing framework, which allows eligible electricity consumers generate renewable power for their own use and export excess electricity into distribution networks.

  He also argued that Nigeria must build local manufacturing capacity for solar panels, batteries, inverters, meters and related technologies rather than remain dependent on imports. He said initiatives such as the Distributed Access through Renewable Energy Scale-Up (DARES) programme, public sector solarisation projects, Energising Education Programme and healthcare electrification schemes should serve as catalysts for local manufacturing and supply chain development.

   He further urged financial institutions to expand support for renewable energy through green bonds, blended finance mechanisms, project preparation facilities, local currency financing and carbon market instruments.

  According to him, the Lagos-Ogun industrial corridor presents one of the most significant opportunities for renewable-powered industrialisation in Nigeria, given its concentration of manufacturing, logistics, finance, technology and port activities.

  He maintained that the future of Nigeria’s electricity sector would depend on a hybrid model combining the national grid, gas-fired generation, hydropower, solar energy, storage technologies, mini-grids, embedded generation and private capital.

   “The next phase of Nigeria’s energy transition will not be measured only by installed capacity. It will be measured by what that capacity enables: factories, jobs, food preservation, healthcare, competitiveness and economic growth,” he said.