The Nigerian Electricity Regulatory Commission (NERC) has unveiled innovative guidelines that establish a comprehensive commercial and settlement framework for interconnected mini-grids (IMGs). This transformative move seeks to eliminate long-standing uncertainties that have hampered private investments and impeded the advancement of distributed energy solutions throughout the nation.
The regulatory document, titled ‘Guidelines on the Commercial Framework for Interconnected Mini-Grids, 2025,’ was released in December 2025, exercising the authority granted to the commission under sections 63, 164, and 226 of the Electricity Act 2023 (“EA” or the “Act”).
As per NERC, these guidelines are applicable to all Distribution Licensees (DisCos), IMG developers and operators, as well as organizations involved in the strategic planning, installation, and functioning of interconnected mini-grids within Nigeria’s distribution networks.
The commission articulated that the framework provides essential clarity on the commercial arrangements and settlement mechanisms between DisCos and IMG operators, especially in regions where grid-connected mini-grids are implemented to bolster reliability and broaden accessibility.
In the context of these guidelines, the commission highlighted that Sections 63, 164, 165, and 226 of the Electricity Act mandate it to advocate for the adoption of renewable energy solutions, streamline licensing protocols, and issue regulatory instruments to guarantee efficient operations within the electricity marketplace. It also referenced the April 2024 Supplementary Multi-Year Tariff Order (MYTO), which instructed DisCos to enhance service reliability and transition feeders to higher service tiers by deploying distributed energy resources within the IMG and Embedded Generation frameworks.
With the guidelines coming into effect in December 2025, they are anticipated to play a pivotal role in hastening the rollout of interconnected mini-grids as Nigeria endeavors to bridge its electricity access divide and elevate supply reliability through decentralized and renewable energy initiatives.
While acknowledging that the Mini-Grid Regulations 2023 have facilitated broader electricity access in previously neglected and underserved communities, NERC stated, “The full potential of IMGs to address Nigeria’s significant electricity access deficit remains underexploited.”
The commission recognized that a major hurdle lies in persistent commercial disparities, including rental fees, distribution use of system (DUoS) charges, cost of energy (CoE), and the management of legacy debts inherited by mini-grids.
To remedy these shortcomings, the new guidelines introduce a two-part pricing structure for IMG services. This framework includes a fixed component for capital recovery, termed the Rental Fee, and a variable element pertaining to pass-through energy costs, identified as the Cost of Energy. Under this structure, the Rental Fee is mandated to be paid by IMG operators to DisCos irrespective of energy flow, designed specifically to recuperate the capital costs linked to distribution assets assigned to the mini-grid.
