Nigeria’s growing adoption of solar energy is putting pressure on electricity distribution companies (DisCos), as households and businesses increasingly turn to alternative power sources amid persistent grid failures.
The shift is changing electricity consumption patterns and raising concerns about the long-term sustainability of the revenue model of the country’s 11 electricity distribution companies.
According to a report by The Guardian, solar installations, mini-grids and other decentralised energy solutions are gaining popularity among Nigerians frustrated by unreliable electricity supply.
Although solar accounts for just 1.6 per cent of Nigeria’s total energy mix, its adoption is accelerating as consumers seek alternatives to expensive generators and inconsistent grid electricity.
Data from Outbrand Consulting showed that Nigeria’s cumulative installed solar capacity reached 385.7 megawatts (MW), following the addition of 63.5MW in 2025.
The country could add more than 550MW of new solar capacity before 2029 under moderate growth projections.
Electricity billing drops by 9.9%
Recent figures from the Nigerian Electricity Regulatory Commission (NERC) highlight the growing pressure on electricity distribution companies.
The 11 DisCos billed customers for 5,812.31 gigawatt-hours (GWh) of electricity in the second quarter of 2026, representing a 9.9 per cent decline from the 6,449.82GWh recorded in the corresponding period of 2025.
NERC disclosed that the distribution companies received electricity valued at ₦946.57 billion during the quarter but billed customers ₦744.67 billion.
Their billing efficiency stood at 78.67 per cent, while collections amounted to ₦603.64 billion, representing approximately 81 per cent collection efficiency.
The commission also reported aggregate technical, commercial and collection losses of 36 per cent, significantly above its benchmark of 16.92 per cent.
Despite these challenges, revenue collections increased by 6.9 per cent, from ₦564.71 billion in the second quarter of 2025 to ₦603.64 billion in the same period of 2026.
However, there is no national data establishing a direct causal relationship between increased solar adoption and the decline in electricity billed by DisCos.
Industry operators and consumers attribute the changing consumption patterns to persistent power outages, rising generator costs and growing access to alternative energy sources.
Nigerians turn to solar amid unreliable supply
For many households, prepaid electricity credit now lasts longer because power supply is increasingly intermittent, rather than because electricity consumption has reduced.
Olaosebikan Solomon, a resident of Ejigbo, Lagos State, said the ₦5,000 he loads on his prepaid meter can last more than a month because electricity is rarely available.
“Imagine using N5000 for over a month when the light isn’t stable and whenever it comes, I use all my electricity fittings and even AC, but because it’s either once in three days or once in a week. Is that supply?” he queried.
Similarly, Hameed Bamkefa, a resident of Ifo, Ogun State, said he was purchasing solar equipment through an instalment arrangement.
“I have paid part payment and they would install it tomorrow. I have six months to balance up; at least I won’t bother about electricity from the grid and I won’t even buy much on the prepaid anymore because we need the light more at night, but we don’t get it”, he said.
In Osogbo, Osun State, Olanrewaju Hafsat said she had acquired a battery to power basic household appliances.
Other consumers, including Chinedu Molokwu in Egan-Igando, Lagos, are also seeking alternatives, while Abimbola Adekanmi said repeated power outages had caused food stored in her freezer to spoil.
However, the high initial cost of solar panels, inverters and batteries remains a major obstacle for many households.
Consumers have consequently called for government-backed financing, bulk procurement arrangements and affordable instalment payment schemes to make solar equipment more accessible.
Nigeria’s solar market attracts growing investment
The growing demand for alternative electricity is also creating opportunities for investors and renewable energy businesses.
Industry data from the private sector and the Manufacturers Association of Nigeria (MAN) estimate that Nigerians spend approximately $14 billion annually on generator fuel.
The country is projected to add 1.7 gigawatts (GW) of solar capacity by the end of 2026, equivalent to nearly 40 per cent of its current grid supply.
GOGLA also reported that Nigeria’s solar energy kit sales in the first half of 2025 increased by 33 per cent compared with the corresponding period in 2024.
Its 2025 investment dataset recorded approximately $114 million in off-grid solar investment in Nigeria, making the country the largest recipient in the dataset.
The Rural Electrification Agency (REA) is also expanding decentralised electricity projects to communities and businesses underserved by the national grid.
In Kano State, the agency commissioned two solar mini-grids in Ballagaza, Gabasawa Local Government Area, and Marayar Rogo, Warawa Local Government Area.
The projects have capacities of 195.2 kilowatts-peak (kWp) and 73.2kWp, respectively, and provide a combined 2,214 electricity connections.
REA Managing Director, Abba Aliyu, said reliable electricity would support economic activities such as milling, welding, tailoring and cold storage, while improving access to power for healthcare facilities.
“The cost of unreliable electricity is felt every day by businesses that depend on generators to keep working. For me, expanding energy access means placing generation capacity where it can support livelihoods and make the greatest economic difference,” Aliyu said.
The projects involve investment by Alfuttaim Nigeria Limited, which will own and operate the systems, with partial subsidies from the REA through the World Bank-backed Distributed Access through Renewable Energy Scale-up (DARES) programme.
Aliyu said the agency had signed approximately 380 grant agreements under the Nigeria Electrification Project, commissioned more than 150 hybrid solar mini-grids and deployed about 1.45 million solar home systems.
He added that the $750 million DARES programme would support 1,350 mini-grids, including 250 interconnected mini-grids, and provide new electricity access to approximately 17.5 million Nigerians.
By April 2026, more than 830,000 solar home systems had been deployed under the programme across Nigeria’s six geopolitical zones, providing electricity access to about 3.9 million people.
Solar customers raise concerns over DisCos’ charges
The increasing adoption of solar power is also creating tensions between customers and electricity distribution companies, particularly where consumers retain their grid connections as backup.
A Lekki Phase 1 resident, Raphael Awoseyin, recently raised concerns after installing an 18kW solar system while retaining Ikeja Electric as an alternative power source.
In posts on X published on October 19 and updated on October 21, Awoseyin alleged that Ikeja Electric officials inspected his prepaid meter after noticing unusually low or zero electricity consumption.
He said the company suspected a meter fault or bypass, subsequently issued a disconnection notice and demanded ₦112,606 for alleged revenue loss.
Awoseyin maintained that he demonstrated that the meter recorded electricity consumption whenever his inverter was bypassed and his property relied on grid supply.
He further claimed that following public attention and a reported referral of the complaint by NERC, three Ikeja Electric managers contacted him, apologised and promised to replace his meter with a smart meter.
The incident has raised questions about how DisCos assess low electricity consumption among customers who have installed solar systems but remain connected to the national grid.
However, the complaint remains an individual allegation and does not establish a wider practice by Ikeja Electric or other distribution companies.
Poor grid supply threatens businesses and jobs
Beyond households, unreliable electricity continues to increase operating costs for Nigerian businesses, many of which depend on petrol and diesel generators to maintain operations.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, warned that prolonged grid disruptions could weaken business profitability, increase operating expenses and undermine job creation.
“The implication is obvious. The implication is that you will spend more energy because when you don’t have the public power supply, you have to fall back on the use of diesel, on the use of petrol or the use of gas and this is a damn very expensive business,” he said.
Yusuf explained that the duration of electricity disruptions would determine the extent of the economic consequences.
He added that higher energy costs could affect profit margins, business sustainability and companies’ ability to create jobs.
For electricity distribution companies, the challenge is increasingly shifting beyond supplying power to retaining customers who can generate some or all of their electricity independently.
As solar adoption expands, the ability of DisCos to improve service delivery and adapt their commercial models could determine whether decentralised energy becomes a complement to the national grid or a growing alternative to it.
