From Consumer To Prosumer: What Nigeria’s 2026 Net Billing Regulations Mean For Businesses Investing In Solar

Nigeria’s renewable energy market has just gained an important new piece of infrastructure not a new solar technology, but a new set of rules governing what happens when a customer generates more electricity than it needs. The Nigerian Electricity Regulatory Commission (“NERC” or the “Commission”) has issued the Net Billing Regulations 2026 (Regulation No. NERC-R-002-2026) (“Regulations”) to establish a framework under which eligible electricity customers can connect renewable energy systems to a distribution network, use the electricity they generate, and receive credits for eligible surplus electricity exported to the grid.¹

For businesses already investing in solar or considering doing so, this changes an important part of the investment equation. The question is no longer simply: “How much electricity can my solar system generate?”. It is also: “What happens to the electricity I do not use?” That is where net billing comes in.

This article provides a practical overview of the new framework for businesses, renewable energy developers, EPC providers, DisCos, lenders and investors, focusing on the key regulatory and commercial considerations that may affect the development, connection, financing and operation of a net billing project. 

1. The basic idea: use your power first, credit the surplus

The easiest way to understand the new framework is to think of a business that has installed a solar system on its premises. During the day, the system generates electricity. The business consumes what it needs. If the system produces more electricity than the business is consuming at that point, the eligible surplus can be exported through the distribution network. Instead of the DisCo simply paying the business cash for that electricity, the exported electricity is converted into a credit which can be applied against the business’s future electricity imports.²This is an important distinction.

Net billing is not a licence for a customer to become a conventional power producer selling electricity into the grid. It is principally a mechanism for offsetting the customer’s electricity bill through credits generated from eligible surplus renewable energy. The Regulations therefore create a bridge between two roles: the customer remains an electricity consumer, but can also become a “Prosumer” (a producer and consumer of electricity).³

 2. Who can actually participate?

Not every rooftop solar installation automatically qualifies. The Regulations apply to Renewable Energy Systems (“RES”) connected to a distribution network with an installed capacity of at least 50 kWp and not more than 1.5 MWp per User.⁴ Solar energy is the principal renewable energy source recognised under the Regulations, although small wind and hydro installations may be

incorporated into the framework when the relevant technical standards are available. There is also an important distinction between installed capacity and export capacity. A business may have a system capable of generating substantial electricity, but the amount it is permitted to export is not simply whatever the system can produce. The Regulations provide that approved export capacity should generally not exceed 120% of the customer’s Eligible Load Demand, while also applying feeder-level aggregate limits and other technical feasibility requirements. This is commercially significant because it means that bigger is not automatically better. A business considering a 1.5 MWp installation should first ask how much electricity it actually consumes, when it consumes it, and how much of the proposed generation can realistically be exported, making load analysis an important part of project design.

3. The real commercial opportunity: design the system around the business

For a business considering solar investment, the most important commercial question may not be the export tariff. It may be self-consumption. The Regulations’ structure encourages a business to design its renewable energy system around its own electricity requirements. The more electricity the business can consume directly, the less it depends on the economics of exporting surplus power. The export credit is therefore best viewed as an additional economic benefit rather than the sole reason for installing the system.

This has implications for businesses in sectors such as manufacturing, hospitality, commercial real estate, healthcare, telecommunications, education and large retail facilities, where electricity consumption can be significant and predictable. For these businesses, the investment analysis should consider at least three components:

1. the value of electricity generated and consumed on-site;
2. the value of electricity exported to the grid; and
3. the cost of installing, connecting, maintaining and financing the system.

4. Exported electricity does not necessarily earn the same value as imported electricity

This is one of the most important points for anyone modelling a net billing project. Electricity imported from the DisCo is billed at the applicable retail tariff.⁵Electricity exported by the Prosumer is credited at an Export Tariff determined under the Regulations. The Export Tariff is linked to the DisCo’s Avoided Cost Delivered and an Export Tariff Factor (“ETF”).⁶ The Regulations set the ETF at 0.55 for off-peak exports and 0.75 for peak exports, with the peak period defined as 6:00 p.m. to 9:00 p.m.⁷ This means a business should not build its financial model on the assumption that every unit of electricity exported will receive the same value as a unit purchased from the grid. That distinction can materially affect project returns.

5. Batteries are no longer just a technical choice

The Regulations create an interesting commercial incentive for Battery Energy Storage Systems (“BESS”). A Prosumer seeking access to the Peak Export Tariff must have a BESS that satisfies the applicable requirements and is verified by NEMSA.⁸ The Regulations require the BESS to have sufficient storage capacity and the ability to charge independently from the renewable energy system and discharge to the grid.⁹Systems without a qualifying BESS are settled at the Off-Peak Export Tariff for all exports.¹⁰ This changes the conversation around battery storage. Historically, the question for many businesses has been: “Is a battery worth the additional capital cost?”, Under the new framework, another question can be added: “Can the battery improve the commercial value of the electricity we export?” That does not mean every project should install a battery. The additional capital expenditure, replacement cycle, operating profile and financing implications still need to be tested but BESS should now form part of the commercial analysis of a net billing project rather than being treated purely as a technical accessory.

6. The grid connection process is structured but it is not automatic

The Regulations provide a defined process for connecting a Net Billing System. The User applies to the relevant DisCo with the required information, including evidence of ownership or occupation of the premises, a certified single-line diagram and the technical specifications of the renewable energy system.¹¹ The DisCo then has 15 days from receipt of a complete application to undertake the technical feasibility assessment and issue its report.¹⁴ If the application is approved, the User and DisCo execute the Net Billing Agreement within five days of the feasibility report.¹² The User then applies to NERC for registration, with the Commission required to issue a registration certificate within 10 days of a complete application¹³.

Following registration and payment of the applicable connection charge, the DisCo undertakes the necessary interconnection works. The Regulations provide for completion within 30 days, subject to a longer period of up to 120 days where specified network reinforcement is required. The system must then undergo NEMSA inspection before the DisCo commissions the interconnection.¹⁸ Importantly, the system cannot export electricity before commissioning approval.¹⁴For developers and businesses, this means that the regulatory process needs to be built into the project programme from the beginning.

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Footnotes

^{1. Nigerian Electricity Regulatory Commission, Net Billing Regulations 2026, Regulation No. NERC-R-002-2026, Regulations 1–3. The Regulations state that their objectives include establishing a framework for interconnection of renewable energy installations, facilitating export of surplus power and providing compensation through a credit-based billing system.}

^{2. Net Billing Regulations 2026, Regulation 4 (definition of “Net Billing Arrangement” and “Credits”) and Regulations 19–21 3 Ibid., Regulation 4 (definition of “Prosumer” and “Net Billing Arrangement”). 4 Ibid., Regulation 5(1).}

^{3. Ibid., Regulation 4 (definition of “Renewable Energy Sources”).}

^{4. Ibid., Regulation 6(3)–(4), including the 120% Eligible Load Demand limit and feeder-level aggregate limits.}

^{5. Ibid., Regulation 19(1).}

^{6. Ibid., Regulation 19(2)–(4). The Regulations provide the formula for Export Tariff by reference to Avoided Cost Delivered and the Export Tariff Factor.}

^{7. Ibid., Regulation 19(5) and Regulation 4 (definitions of “Peak Period” and “Off-Peak Period”).}

^{8. Ibid., Regulation 17(6) and Schedule 6.}

^{9. Ibid., Regulation 17(6)(a)–(b).}

^{10. Ibid., Regulation 17(6)(c)–(d) and Regulation 18(5).}

^{11. Ibid., Regulation 7(2). The required application documents include proof of occupation or ownership, a certified single-line diagram and technical specifications of the proposed RES 14 Ibid., Regulation 8(1).}

^{12. Ibid., Regulation 9(1).}

^{13. Ibid., Regulation 10(1)–(2). 17 Ibid., Regulations 11–12 18 Ibid., Regulation 14.}

^{14. Ibid., Regulation 15(3).}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.