This story is being replicated in many other States.

Meanwhile, the Minister of Power has noted that these reforms are already showing early results, as energy sector revenues nearly doubled in 2025, rising from approximately N850 billion in 2023 to over N1.5 trillion in 2024/2025 following the ‘Band A’ tariff adjustments.

As states step boldly into this new mandate, we offer below six key lessons to inform the journey toward a stable, inclusive energy future in Nigeria.

1. Tackling the Diesel-Petrol Self-Generation Crisis - The starkest reality of the sector is the invisible shadow grid. Over the years, Nigeria’s generators have evolved into an expensive, inefficient, and highly polluting primary source of power for many. While installed on-grid capacity currently sits at 13,625 MW, only about 4,901 MW typically reaches consumers due to various constraints. The large bulk of demand is met by diesel and petrol-powered generators. The developmental imperative for states is tackling this crisis by offering a reliable, cheaper grid alternative that begins decommissioning of these generators.

2. One Grid across 36 States, the Necessity of a Super-Grid - As states decentralize, it is critical to ensure Nigeria’s physical infrastructure remains a single, interconnected, and digitally smart ecosystem. Autonomy should not lead to isolation. The Transmission Company of Nigeria (TCN) and the Nigerian Independent System Operator (NISO) provide the national spine. A super grid will not just move power from resource-rich regions to industrial hubs without costly duplication of infrastructure, it will also strengthen the West African Power Pool through robust synchronization.

3. Balancing Transition with Energy Security - Nigeria is taking a pragmatic stance on the energy transition with a bold Decade of Gas initiative as well as Just Energy Transition Plan. Currently, over 80% of the grid energy comes from gas-powered thermal plants and 14% from hydro. The NIRP’s base-load strategy remains anchored in gas, supported by the expansion of local refining capacity. This "dual approach" is pragmatic - utilizing fossil fuels for immediate stability while pivoting toward a target of 75% renewable capacity by 2045 – and the only way to power a nation currently in deep energy poverty.

4. Solving the Financial Puzzle through Cost-Reflectivity - The shift toward cost-reflective tariffs is a "bitter pill," particularly with nearly 60% of consumers still unmetered. However, it is the only key to unlocking the $122 billion in investment required by 2045. States must shepherd this transition carefully, ensuring that policies such as tariff increases are matched by visible service improvements and aggressive metering to end the era of estimated billing.

5. Leveraging State-Specific Resources for a Stable Mix - Every state has a unique competitive advantage. From the solar radiation of the North to the gas and hydro reserves of the South, each State Integrated Resource Plans (SIRPs) will have to leverage such local resources. These plans need to align with the national target of 42 GW by 2030 to ensure that local generation contributes to, rather than strains, the national whole.

Why these Reforms Matter for Nigeria

Finally, the new State Electricity Markets that are emerging will need to be inclusive and focus on powering social infrastructure as well as unlocking productive use. Electricity is the lifeblood of key essential services. Farmers need power for irrigation to ensure year-round food security - as well as reducing post-harvest losses. Nigeria’s Smart Schools require a digital backbone that only reliable energy can provide. Over 30,000 hospitals, currently the most impacted by power deficits, urgently need energy to save lives. Indeed, decentralizing power is starting to play an important catalytic role to power Nigeria’s progress, although these reforms require to be shepherded carefully, so the new electricity markets become engines of the country’s socio-economic transformation.