FG to License Renewable Energy Firms to Rival DisCos as 19 States Move to Have Stable Power
- Federal Government plans to license Renewable Energy Service Companies (RESCOs) to compete with traditional DisCos
- New utility-scale renewable energy networks aim for reliable electricity access across underserved Nigerian communities
- Stable electricity supply hinges on cost-reflective tariffs and improved investment in renewable energy infrastructure
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The Federal Government has unveiled plans to license a new category of electricity providers that will compete with existing power distribution companies (DisCos), as 19 states move to establish more reliable electricity systems through renewable energy.
The initiative, spearheaded by the Rural Electrification Agency (REA), is expected to reshape Nigeria's electricity sector over the next decade by expanding access to clean, uninterrupted power through large-scale renewable energy projects.
Source: UGC
The announcement was made by the Managing Director of the REA, Abba Aliyu, during the Oriental News 2026 Conference in Ikeja, Lagos.
Aliyu, represented by the agency's Executive Director of Corporate Services, Gboyega Ayoade, said the government is shifting its strategy from isolated mini-grid projects to utility-scale renewable energy networks capable of serving entire communities.
ResCos to offer alternative to DisCos
At the heart of the new plan is the creation of Renewable Energy Service Companies (RESCOs), which the REA believes will emerge as viable competitors to traditional electricity distribution companies within the next 10 to 15 years.
According to Aliyu, instead of developers installing a single mini-grid in a community, the government now wants them to build interconnected renewable energy systems comprising between 20 and 50 mini-grids that can power entire towns and local government areas.
The interconnected networks, powered mainly by solar energy and battery storage, are expected to provide round-the-clock electricity without relying on the national grid.
He said consumers would eventually have the freedom to choose renewable energy providers instead of depending solely on conventional thermal power supplied through existing DisCos.
FG: DisCos cannot meet Nigeria's power needs alone
Aliyu argued that Nigeria can no longer rely exclusively on distribution companies to achieve universal electricity access, noting that many rural and underserved communities remain without power because they are considered commercially unattractive.
He explained that in several locations, DisCos have either failed to extend their networks or lack functional feeders, leaving thousands of residents without electricity.
To bridge the gap, the REA is encouraging renewable energy developers to take over such underserved areas through negotiated agreements with existing DisCos.
Under the Distributed Access for Renewable Energy Scale-Up (DARES) programme, numerous mini-grid projects are already being deployed nationwide, with developers working alongside distribution companies to serve communities currently outside the conventional grid.
RESCOs may build their own power infrastructure
The REA boss also disclosed that renewable energy companies would be allowed to construct their own electricity infrastructure, including transmission lines, in locations where DisCos have no operational presence.
However, such projects would require approval from the Nigerian Electricity Regulatory Commission (NERC), which would grant operators exclusive rights to supply electricity within designated areas, according to a report by Punch.
The arrangement, he said, is designed to encourage private investment while preventing infrastructure duplication and service conflicts.
Stable electricity requires cost-reflective tariffs
Aliyu maintained that Nigeria's ambition to achieve stable electricity supply would depend largely on consumers embracing cost-reflective tariffs.
He argued that electricity should be treated as a commercial service rather than a government welfare programme, stressing that the Federal Government can no longer sustain the huge cost of power subsidies.
Pointing to the improved supply enjoyed by Band A customers, he said consumers paying higher, cost-reflective tariffs now receive between 18 and 24 hours of electricity daily.
According to him, similar service levels can gradually be extended to other customer categories if the sector becomes financially sustainable.
REA moves to ensure safety of renewable energy equipment
Addressing concerns over the safety of solar panels and lithium batteries, Aliyu said the REA has strengthened quality control measures to eliminate substandard products from the market.
He noted that all equipment deployed under the agency's projects undergoes rigorous testing, while the Standards Organisation of Nigeria screens imported solar panels before they are approved for use.
Source: Getty Images
The agency is also developing recycling and disposal systems for lithium batteries to reduce environmental and safety risks as renewable energy adoption accelerates across the country.
Speaking at the conference, Publisher of Oriental News Nigeria Online, Yemisi Izuora, highlighted the need to balance economic growth with environmental sustainability, noting that while Nigeria's extractive industries remain critical to the economy, protecting the environment is essential for public health and long-term national development.
How to file a complaint against your DisCo
Legit.ng earlier reported that numerous electricity users have recently expressed dissatisfaction with their electricity distribution companies over various issues, particularly service quality.
This article aims to help them identify the correct channel to follow to escalate their complaints to the appropriate authority.
Often, consumers cannot switch to other electricity distribution companies (DisCos) due to their location and must instead seek legitimate and effective methods to address their complaints.
Source: Legit.ng
