1. Progress and Reform Momentum
- Increase in generation capacity: Nigeria recently surpassed 6,000 MW of available daily power generation, indicating progress from around 4,000 MW just two years ago according to the sources in references [1], [2], [3].
- Policy overhauls and structural reform: The Electricity Act 2023 and the National Integrated Electricity Policy (NIEP) are enabling decentralised, state-level markets and solar/wind/hydrogen mix planning, backed by a bold roadmap aimed at mobilizing over $122 billion in investments through 2045 [1], [4].
- Transmission company unbundling: The Transmission Company of Nigeria (TCN) has been separated into two distinct entities, NISO (system operations) and TSP (physical infrastructure) to enhance transparency and efficiency [4].
- Metering and revenue tracking: Nigeria is closing its metering gap through the Presidential Metering Initiative (PMI), aiming to deploy millions of smart meters by 2030 to improve energy flows accounting, billing and revenue flows [2], [5], [6].
2. Tackling Legacy Debt and Financial Strain
- Sector debt challenges: Distribution companies (DISCOS) owe roughly ₦4 trillion to power generators, severely hindering operations and investment potential. This prompted the Government to approve a ₦4 trillion (approximately $2.6 billion) refinancing plan to stabilize the sector according to references [1], [5], [7].
- Corporate stress: Several major DISCOS including Ikeja Electric and KEPCO Energy Resources have been placed under receivership due to mounting financial distress, heightening concerns over future private sector participation in the electricity distribution value chain according to Reuters [8].
3. Generation Sources: Fossil, Hydro, Solar, and Beyond
- Installed vs actual capacity: While installed capacity reached nearly 14 GW in 2024, actual daily output averaged just over 4 GW, highlighting inefficiencies due to gas shortages, grid deterioration, and vandalism according to IEA 2025 report on Nigeria [3].
- Hydropower milestones: The recently completed 700 MW Zungeru hydropower project, the 360 MW Gurara II project and the 3,050 MW Mambilla station (expected by 2030) are promising further growth in the renewable energy generation capacity [9].
- Solar initiatives: The planned 200 MW Ashama Solar Power Station in Delta State represents West Africa’s largest PV project to date [10] and other Solarization Projects by the Energy Commission of Nigeria are increasing deployment of solar PV systems across the Country [11].
- Mini-grids & rural electrification: The Rural Electrification Agency (REA) is implementing over 1.26 GW worth of decentralized solar projects (mini-grids & standalone installations) to expand rural access [3], [12].
- Regulatory support for renewables: Investor-friendly incentives like tax holidays, streamlined licensing by the Nigerian Electricity Regulatory Commission (from 90 to 45 days), and one-stop permitting portals are accelerating clean energy adoption [14].
4. Oil & Gas Landscape: Turbulence and Transition
- Domestic operator resurgence: As global oil giants pull back, local companies including Seplat, Renaissance and Heirs Energies are stepping up, revitalizing production using existing infrastructure and deep community ties [15].
- NNPC reshuffle: In 2025, the Tinubu administration overhauled the leadership at the Nigerian National Petroleum Company to enhance transparency, efficiency, and investor confidence [16].
- Utilizing gas resources: Reforms and new investments, such as infrastructure built under the “Decade of Gas,” and the Midstream and Downstream Gas Infrastructure Fund domiciled within the Nigerian Midstream and Downstream Regulatory Authority are positioning Nigeria to better leverage its abundant gas reserves for increased utilization, energy generation and exports [3], [17].
- Refinery infrastructure revival: With the Dangote refinery now onstream and plans to rejuvenate NNPC’s refineries, Nigeria aims to reduce fuel import dependence and strengthen energy supply resilience according to the Petroleum Price 2025 Nigeria Energy Outlook [14].
5. Barriers Still Loom Large
- Grid infrastructure fragility: Aging and under-capacity transmission and distribution networks lead to frequent blackouts and limit energy distribution.
- Skill shortages: The transition to renewables is hampered by a shortage of skilled electricians, technicians, and engineers. Investment in training is urgently needed [18].
- Financial and regulatory complexity: High interest rates, currency volatility, and institutional bureaucratic inertia continue to deter energy investments, electricity value chain investments and large-scale solar/renewable investments [19].
- Environmental and social concerns: Legacy damage in oil-rich regions like the Niger Delta raises both cleanup and community trust issues as new operators take over [19].
Looking Forward: Nigeria’s Energy Horizon
What’s working:
- Accelerated generation improvements and infrastructure upgrades.
- Bold policy reforms enabling decentralization and private sector engagement.
- Major strides in metering, billing, and funding strategies.
- Clear diversification into renewables, hydropower, solar, mini-grids, and gas.
What remains fragile:
- Financial stability of GENCOS and DISCOS.
- Grid resilience amid vandalism, theft, and underinvestment.
- Scaling human capital and institutional capacity for renewable growth.
- Balancing investment, affordability, and environmental equity, especially in rural and marginalized areas.
- Institutional bureaucracy poses challenges to the efficient coordination of governmental initiatives within both primary energy and secondary sectors such as electricity.
Nigeria’s energy sector is transitioning to a period of commendable progress. Guided by clearer policy direction, relative gains in investment activities, and the expansion of diverse energy sources, the country is in sight of the long-awaited transformation of the energy sector.
However, sustaining these gains, depends on effectively addressing debt management, enhancing institutional capacity, and advancing inclusive development to provide reliable energy for households and industries while fostering sustainable economic growth.
References/Further Reading
[1] Muyiwa Lucas, “Power sector reforms raise hopes, yet challenges linger,” The Nation, 2025. Accessed: Aug. 20, 2025. [Online]. Available: https://thenationonlineng.net/power-sector-reforms-raise-hopes-yet-challenges-linger/
[2] “Nigeria Power Sector Reforms 2025: Minister Adelabu Outlines Bold New Roadmap at Press Briefing.” Accessed: Aug. 20, 2025. [Online]. Available: https://www.eduweb.com.ng/nigeria-power-sector-reforms-2025-minister-adelabu-outlines-bold-new-roadmap-at-press-briefing/
[3] Andikan Willie, “Energy in Africa: Five Key details in New IEA Report for 2025on Nigeria’s Electricity Sector,” 2025, Accessed: Aug. 20, 2025. [Online]. Available: https://energyinafrica.com/insight/five-key-details-on-nigerias-electricity-sector/
[4] “Electricity Reforms: New policies to restructure power operations in Nigeria – Power Line Magazine.”
[5] “Nigeria Hits ₦700bn Power Revenue, Breaks 6,000MW Record, Grid Stable for Four Months – JKNewsMedia.” Accessed: Aug. 20, 2025. [Online]. Available: https://jknewsmedia.com/2025/04/nigeria-power-sector-2025-q1-report/
[6] “A Year of Transformation: Nigeria’s Energy Reforms in 2024 – Federal Ministry of Information and National Orientation.” Accessed: Aug. 20, 2025. [Online]. Available: https://fmino.gov.ng/a-year-of-transformation-nigerias-energy-reforms-in-2024/
[7] “Nigeria approves $2.6 billion electricity sector debt refinancing plan | Reuters.” Accessed: Aug. 20, 2025. [Online]. Available: https://www.reuters.com/sustainability/boards-policy-regulation/nigeria-approves-26-billion-electricity-sector-debt-refinancing-plan-2025-08-14/?utm_source=chatgpt.com
[8] “Lenders appoint receiver for major Nigerian power firms, notice shows | Reuters.” Accessed: Aug. 20, 2025. [Online]. Available: https://www.reuters.com/sustainability/boards-policy-regulation/lenders-appoint-receiver-major-nigerian-power-firms-notice-shows-2025-08-06/
[9] Carmen, “Gurara, Nigeria: Profile of Gurara II Hydroelectric Power Station,” Power-Technology.com, Dec. 2021, Accessed: Aug. 20, 2025. [Online]. Available: https://www.power-technology.com/marketdata/gurara-nigeria/
[10] “Ashama Solar Power Station – Wikipedia.” Accessed: Aug. 20, 2025. [Online]. Available: https://en.wikipedia.org/wiki/Ashama_Solar_Power_Station
[11] “ECN DG Hosts Governor Ododo as Commission Deepens Commitment to National Energy Impact Through Renewed Hope Solarization Projects || Energy Commission of Nigeria.” Accessed: Aug. 20, 2025. [Online]. Available: https://www.energy.gov.ng/news-detail.php?slug=ecn-dg-hosts-governor-ododo-as-commission-deepens-commitment-to-national-energy-impact-through-renewed-hope-solarization-projects
[12] “Opportunities and Challenges in Navigating Nigeria’s Energy Transition – SAO Energy.” Accessed: Aug. 20, 2025. [Online]. Available: https://saoenergy.com/opportunities-and-challenges-in-navigating-nigerias-energy-transition/
[13] “How strategic reforms are energising the power sector – The Nation Newspaper.” Accessed: Aug. 20, 2025. [Online]. Available: https://thenationonlineng.net/how-strategic-reforms-are-energising-the-power-sector/
[14] “2025 Outlook: Renewable Energy Investments and What It Means for Nigerians – iTelemedia.” Accessed: Aug. 20, 2025. [Online]. Available: https://itelemedia.com/2025-outlook-renewable-energy-investments-and-what-it-means-for-nigerians/
[15] “Nigeria moves to restart oil production in vulnerable region after Shell sells much of its business | AP News.” Accessed: Aug. 20, 2025. [Online]. Available: https://apnews.com/article/nigeria-shell-divestment-niger-delta-ogoni-4ceb760d5d84e8d58b04d24d2d20893a
[16] “Nigeria’s Oil Industry in 2025: Key Reforms Driving Energy Transition | Afritech Biz Hub.” Accessed: Aug. 20, 2025. [Online]. Available: https://afritechbizhub.com/business/nigerias-oil-industry-in-2025-key-reforms-driving-energy-transition/2025/05/28/
[17] “2025 Oil and Gas Outlook: Challenges, and Projections |.” Accessed: Aug. 20, 2025. [Online]. Available: https://blog.petroleumprice.ng/2025-oil-and-gas-outlook-challenges-and-projections/
[18] “How bridging the skills gap can boost Africa’s green energy transition | Reuters.” Accessed: Aug. 20, 2025. [Online]. Available: https://www.reuters.com/sustainability/climate-energy/how-bridging-skills-gap-can-boost-africas-green-energy-transition-2024-11-19/
[19] “Nigerians press for solar jobs and electricity, but see little success | AP News.” Accessed: Aug. 20, 2025. [Online]. Available: https://apnews.com/article/nigeria-solar-grid-electricity-jobs-outages-cf157e9b321fd1ad8ad5e92f7b5d3355