Nigeria’s power sector is facing a dramatic shake-up as millions of homes and businesses turn to alternative energy, leaving electricity distribution companies (DisCos) struggling to stay afloat.
What began as a response to years of unreliable grid power is fast becoming a permanent shift, with solar panels, inverter-battery systems, and mini-grids now powering homes in Lagos, Kaduna, Port Harcourt, and beyond.
“In the past year, I’ve spent less than N3,000 monthly on grid power,” said Olatunji Adeyemi, a civil servant in Ibadan. “My 1.5kVA solar system powers my fan, lights, TV, and fridge. NEPA (DisCo) is now just a backup.”
Set up during the 2013 power sector privatisation, DisCos were meant to modernise electricity distribution. But after more than a decade of poor investment, electricity theft, and tariff restrictions, they are losing their most dependable customers—those who pay.
As reliable solar options become cheaper, many urban and peri-urban residents are cutting back or exiting the grid completely. A solar kit powering basic household needs can now be acquired with a deposit as low as N10,000 and monthly payments of N5,000–N8,000.
“Since getting solar, I sleep better,” said Joshua Akingbade, a Lagos trader. “No fuel queues, no noise, no fire risk. I have told all my neighbours.”
According to the Rural Electrification Agency (REA), over 1.5 million households adopted standalone solar or hybrid setups in 2023 alone—a number projected to double by the end of 2025.
Small and medium enterprises (SMEs), which form the backbone of Nigeria’s economy, are also turning their backs on DisCos. For many, unreliable power supply is no longer sustainable.
“My cold room business was dying,” said Chinedu Eze, a small business owner. “I spent N40,000 weekly on diesel. I installed solar and inverter last year, and now I save more than half.”
Justrite Superstores Chairman, Dr. Ayodele Aderinwale, highlighted the business case for solar: “The switch to solar power is not just a cost-saving measure but a strategic decision to improve the stability and reliability of Justrite’s power supply.”
With high-paying customers defecting to solar, DisCos are losing vital revenue but still face the same infrastructure costs. The Nigeria Electricity Regulatory Commission (NERC) estimates that less than 45% of generated electricity is actually paid for.
A 2023 audit revealed that seven of the eleven DisCos were technically insolvent. Some, including Kaduna and Yola DisCos, are now under government or AMCON control.
Meanwhile, the alternative energy sector is thriving. Companies like Sun King, Lumos, and Arnergy are rapidly scaling operations. MTN’s partnership with Lumos has already provided over 100,000 solar home systems, while Husk Power plans to build 500 solar mini-grids by 2026.
In 2023, investments in Nigeria’s decentralised energy sector surged past $250 million, triple the 2020 total, according to the Africa Solar Industry Association.
Some DisCos are trying to adapt, exploring partnerships with solar firms or co-investing in hybrid generation, but progress is slow. Without quick reform, analysts warn of a deepening divide.
“Nigeria is becoming a two-tier electricity society,” said an analyst from the Nigerian Economic Summit Group. “One tier is reliable, clean, private—and the other is broken, underfunded, and collapsing.”
