- NERC has defined tariff components, settlement rules, and payment obligations for interconnected mini-grids, reducing investor risk.
- The framework facilitates the faster deployment of renewable and distributed energy solutions, thereby improving electricity access and reliability.
Nigeria’s power sector has taken a decisive step forward with the introduction of a new regulatory framework by the Nigerian Electricity Regulatory Commission (NERC). Notably, the interconnected mini-grids framework appears early because it defines the policy direction.
The commission has issued fresh guidelines to remove commercial uncertainties affecting interconnected mini-grids. As a result, investors and operators can now plan projects with greater confidence.
The new rules, titled Guidelines on the Commercial Framework for Interconnected Mini-Grids, 2025, came into effect in December 2025. Notably, NERC issued them under powers granted by the Electricity Act 2023.
According to the commission, the guidelines apply across the electricity value chain. Specifically, they cover Distribution Companies (DisCos), mini-grid developers, operators, and project planners. Consequently, all stakeholders now operate under a single commercial structure.
The framework clearly defines settlement arrangements between DisCos and interconnected mini-grid operators. Therefore, disputes over tariffs and payments are expected to decrease significantly. Additionally, the rules support grid-connected mini-grids, which improve supply reliability.
NERC explained that the Electricity Act requires it to promote the adoption of renewable energy. Furthermore, the Act empowers the commission to streamline licensing and market operations. These provisions underpin the new framework.
The commission also linked the guidelines to the April 2024 Supplementary Multi-Year Tariff Order (MYTO). That order directed DisCos to improve service bands using distributed energy resources. As a result, interconnected mini-grids now align with broader tariff reforms.
The interconnected mini-grids framework aims to accelerate the deployment of decentralised power nationwide. Therefore, Nigeria can close its electricity access gap faster. At the same time, communities should enjoy a more stable supply.
Although the Mini-Grid Regulations 2023 expanded access in underserved areas, challenges remained. NERC observed that commercial disputes limited wider adoption. Consequently, many viable projects stalled.
Unresolved issues included rental fees, DUoS charges, and energy costs. In addition, legacy debt treatment discouraged private developers. The new framework addresses these concerns directly.
To resolve pricing gaps, NERC introduced a two-part tariff structure for interconnected mini-grids:
- Rental Fee: a fixed charge for capital recovery on distribution assets allocated to mini-grids.
- Cost of Energy: a variable charge covering pass-through energy expenses.
Under this system, mini-grid operators pay the Rental Fee to DisCos regardless of power flow. Therefore, asset costs receive predictable recovery. Meanwhile, energy costs remain transparent and adjustable.
Overall, the guidelines strengthen investor confidence and regulatory clarity. As a result, interconnected mini-grids can scale faster across Nigeria. Ultimately, the power sector gains reliability, resilience, and cleaner energy solutions.