FG plans new renewable energy companies to compete with DisCos

The Federal Government has announced plans to license a new category of electricity providers that will compete with existing power distribution companies (DisCos). The Rural Electrification Agency (REA) is leading the initiative, which aims to expand access to clean, uninterrupted power through utility-scale renewable energy projects across underserved Nigerian communities.

Government shifts from mini-grids to interconnected renewable networks

REA Managing Director Abba Aliyu made the announcement 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 moving away from isolated mini-grid projects. Instead, developers will now build interconnected renewable energy systems comprising 20 to 50 mini-grids that can power entire towns and local government areas.

At the heart of the new plan is the creation of Renewable Energy Service Companies (RESCOs). Aliyu believes these companies will emerge as viable competitors to traditional DisCos within the next 10 to 15 years. 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.

Consumers will get freedom to choose power providers

Aliyu said consumers would eventually have the freedom to choose renewable energy providers instead of depending solely on conventional thermal power supplied through existing DisCos. He 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.

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.

DARES programme already deploying mini-grids nationwide

Under the Distributed Access for Renewable Energy Scale-Up (DARES) programme, numerous mini-grid projects are already being deployed nationwide. Developers are working alongside distribution companies to serve communities currently outside the conventional grid. Aliyu 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.

Such projects would require approval from the Nigerian Electricity Regulatory Commission (NERC), which would grant operators exclusive rights to supply electricity within designated areas. The arrangement is designed to encourage private investment while preventing infrastructure duplication and service conflicts.

Cost-reflective tariffs key to stable electricity supply

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. Similar service levels can gradually be extended to other customer categories if the sector becomes financially sustainable.

Quality control and safety measures for solar 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. 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.

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. She noted that while Nigeria's extractive industries remain critical to the economy, protecting the environment is essential for public health and long-term national development.

What this means for Nigerian consumers and businesses

For the naira and Nigerian businesses, the entry of RESCOs could reduce reliance on expensive diesel generators, cutting operating costs for firms and easing pressure on household budgets. More competition in the power sector may also drive down electricity tariffs over time as renewable energy costs continue to fall. However, the shift depends on consumers accepting cost-reflective pricing and regulators enforcing quality standards to protect buyers.