COMMENTARY ON THE NERC MINI-GRID REGULATIONS 2026

INTRODUCTION

The Nigerian Electricity Regulatory Commission (the “NERC”) issued the NERC Mini-Grid Regulations 2026 in April 2026 (the “2026 Mini-Grid Regulations”), marking a significant step in strengthening Nigeria’s decentralized electric power landscape. The 2026 Mini-Grid Regulations which replaces the NERC Mini-Grid Regulations of 2023 (the “2023 Mini-Grid Regulations”) introduces expanded capacity thresholds, streamlined permitting processes, stronger investment safeguards, and enhanced integration mechanisms between mini-grid developers and electricity distribution companies (“DisCos”), all of which collectively, aim to accelerate electrification in unserved and underserved regions. This briefing note seeks to examine some of the changes introduced by the 2026 Mini-Grid Regulations.

HIGHLIGHTS OF THE 2026 MINI-GRID REGULATIONS

1.    Expanded Capacity Limits for Mini-Grids

It is important to state that the 2026 Mini-Grid Regulations apply to isolated mini-grids that operate independently of Discos up to 5 Megawatts (“MW”) and interconnected mini-grids which are connected to and coordinated with existing distribution networks, up to 10MW.

One of the most notable reforms under the 2026 Mini-Grid Regulations, is the increased allowable capacity for mini-grid projects. Under the 2023 Mini-Grid Regulations, the capacity limits for isolated mini-grids and interconnected mini-grids were set at 1MW.[1] However, under the 2026 Mini-Grid Regulations, this capacity has now been expanded to 5MW and 10MW per site for isolated mini-grids and interconnected mini-grids respectively.[2]

2.     Permitting Requirements for Isolated and Interconnected Mini-Grids

a.    To obtain a permit for an isolated mini-grid, a developer must ensure that the project is located in a designated unserved area that does not conflict with a DisCo’s expansion plans approved by NERC.[3] As such, it would be necessary for the developer of an isolated mini-grid to obtain a written “no-objection” letter from the relevant DisCo. Importantly, where the DisCo fails to respond to the developer’s request for “no objection” within fifteen (15) business days from the date of the request, the DisCo would be deemed to have granted its consent for the establishment of the isolated mini-grid.  

Where the DisCo objects to a mini-grid permit application, the Disco’s objection will automatically lapse if:

a.    The Disco fails to commence physical construction of the electricity infrastructure to service the unserved area within 12 months of the objection.

b.    If the project is not energized or substantially completed within 24 months, unless NERC grants an extension for good cause[4].

Furthermore, the 2026 Mini-Grid Regulations requires the mini-grid developer to enter into an agreement with the host community while utilizing the NERC’s official template for isolated mini-grids.[5]

Under the 2026 Mini-Grid Regulations, an application for permits is expected to be granted by NERC within 30 business days from the date on which the applicant files an application that meets all the requirements[6], It is instructive to note however, that there are no deemed approval provisions in the 2026 Mini-Grid Regulations as it relates to NERC’s approval of permits. Accordingly, there is the likelihood that applications may be delayed beyond the timelines contemplated in the 2026 Mini-Grid Regulations. That said, Section 4(1) of the Business Facilitation Act 2022 (the “BFA”), may provide some respite in this regard given that under the said Section of the BFA, an application for approval by a Ministry, Department or Agency (“MDA”) would be deemed as approved and granted if the relevant MDA fails to communicate its approval or rejection within the timeline stipulated for issuing such approval.

b.    Regulation 9 of the 2026 Mini-Grid Regulations governs interconnected mini-grids up to 10 MW, requiring a mandatory tripartite agreement covering the transaction between the developer, the DisCo, and the duly authorised representatives of the host community where the interconnected mini-grid is to be situated.  The tripartite agreement shall be filed with the NERC.

c.     It is important to state that mini-grids below 100 kilowatts (“KW”) are exempt from the full permitting process and require only registration,[7] ensuring that small-scale rural developers, communities, and private operators can enter the market with minimal administrative barriers. Conversely, where the installed capacity will exceed 100 kW and up to 5 MW, the developer must obtain a permit from NERC before commencing operations. To secure this permit, the developer must satisfy all requirements set out in the 2026 Mini-Grid Regulation[8].

d.    To streamline scaling, the 2026 Mini-Grid Regulations introduces “Portfolio Filing[9],” enabling developers to bundle multiple sites within a single jurisdiction into one regulatory application. In addition, where a mini-grid registered or permitted under the 2026 Mini-Grid Regulations proposes any expansion, design modification, change in technology, change in the point of common coupling, or capacity increase, the developer is required to apply to NERC for an amendment or conversion of its existing approval (registration, permit, or Tripartite Agreement, as applicable).

In processing such applications, NERC will require only incremental information necessary to assess the proposed changes and may rely on previously submitted data that remains valid.

A developer may submit a single portfolio application only where:

1.     the mini-grid sites are located within the same regulatory jurisdiction[10]; and

2.    in the case of interconnected mini-grids, the sites are served by the same distribution licensee or an approved successor network operator.

e.     Developers may file separate portfolio or site-specific applications across different jurisdictions, while portfolio filings can consolidate common information if each site includes its own detailed annex. NERC may issue a single decision for the portfolio with site-specific conditions, but such approval is limited strictly to the relevant regulatory jurisdiction.

3.    Revised Reporting Obligations:

Another central innovation of the 2026 Mini-Grid Regulations is the creation of Hosting Capacity Information (“HCI”) and its mandatory publication by DisCos. This constitutes a major shift from the 2023 Mini-Grid Regulations, where developers had limited visibility into feeder capacity and often relied on case-by-case data requests. Under the new regime:

(i)     DisCos must publish feeder-level HCI annually and update it within sixty (60) days of any material change.

(ii)   The HCI must clearly identify key technical parameters such as feeder name or code, voltage level, supplying substation, indicative available capacity, unserved/underserved classification, energisation windows, and any known technical limitations.

(iii)  Importantly, HCI is indicative only, it does not automatically constitute approval to interconnect, nor does it waive the need to confirm project-specific compliance.

(iv)  The published HCI remains valid for the stated period unless superseded by material changes in loading, protection requirements, fault levels, or other network conditions. In such cases, the DisCo must notify both NERC and affected applicants within five (5) business days.

4.    Monitoring, Evaluation, and Reporting:

Another notable introduction is that the 2026 Mini-Grid Regulations provide that mini-grid operators with capacities above 1MW must submit quarterly operational and commercial reports to NERC[11]. It also requires all mini-grids, whether isolated or interconnected to file milestone reports throughout development and construction, including financing, equipment procurement, site works, construction, commissioning, energisation, and the start of commercial operations.

In addition, NERC may issue standardised reporting formats based on project type and capacity, and may publish aggregated market data to enhance sector transparency and support data-driven planning.[12]

5.     Grid Encroachment and Investment Protection:[13]

Importantly, the 2026 Mini-Grid Regulations also addresses one of the most significant risks to mini-grid developers: grid encroachment. Developers who have invested in isolated or interconnected mini grids are now legally entitled to compensation if the National or State grid later extends into their service area. The 2026 Mini-Grid Regulations establishes a more robust and procedural “Grid Arrival, Transition, and Compensation” framework designed to protect long-term investments as the National or State grid expands. It is important to state that a mini-grid permit holder may operate only within its approved geographical area. When a DisCo plans to extend the main grid to an isolated mini grid, it must notify the operator at least twelve (12) months in advance. Both parties must then negotiate a transition arrangement, which may include converting to an interconnected mini-grid, transferring assets, entering commercial arrangements, decommissioning, or any other NERC -approved option.

In the event of a buyout by a Disco, the 2026 Mini-Grid Regulations moves beyond generic “depreciated value” by introducing a mandatory “Asset Handover and Compensation Confirmation Sheet” (Schedule 13)[14] and requiring NERC to verify accounts to ensure compensation reflects actual capital expenditure rather than just benchmark costs.

Furthermore, the 2026 Mini-Grid Regulations provides explicit procedural safeguards, such as a 60-day mutual negotiation window for disputes and where the DisCo and the isolated mini-grid permit holder fails to reach an agreement in determining the transition arrangement, either party may refer the matter to NERC to decide having regard to service continuity, prudent investment, customer protection, and efficient network development.[15]

6.    Environmental Protection[16]

Another notable introduction of the 2026 Mini-Grid Regulations, is the provision that solar or battery-supported mini-grids up to 10 MW only require  environmental screening and an Environmental and Social Management Plan (ESMP), not a full Environmental and Social Impact Assessment (“ESIA”), unless the environmental authority gives written, site-specific reasons requiring otherwise.

A full ESIA is mandatory for projects involving hydro, biomass, thermal generation, resettlement, significant land-use impacts, or locations under special environmental protection (such as reserves, wetlands, cultural heritage areas, or flood-prone zones).

All permit holders must maintain proper waste management, battery handling, safety measures, spill prevention, and community grievance procedures appropriate to the project’s scale and technology.

No mini-grid may begin commercial operations until it submits proof of compliance with the required environmental process.

CONCLUSION

The 2026 Mini-Grid Regulations represents a deliberate and forward-looking shift in Nigeria’s electricity regulatory framework, aimed at unlocking the full potential of decentralized energy solutions. By expanding capacity limits, simplifying permitting processes, and introducing practical tools such as HCI and portfolio filings, the 2026 Mini-Grid Regulations significantly reduce entry barriers while improving transparency and efficiency for developers.

Please do not treat the foregoing as legal advice, as it only represents the public commentary views of the authors. All enquiries on this should be directed to the key contacts.