Background

Nigeria’s ongoing electricity challenges have pushed many businesses to install their own renewable power systems, especially solar energy systems to reduce their reliance on the national grid and/or diesel generators. The Net Billing Regulations 2026 (the “Regulations”) which were released on 3^rd  day of June 2026 by the Nigerian Electricity Regulatory Commission (“NERC”) pursuant to section 226 of the Electricity Act 2023[1] provide a dedicated framework for eligible customers to export approved surplus electricity from such systems to a distribution network and receive bill credits in return.

The objectives of the Regulations include establishing a standard interconnection framework, facilitating the export of surplus renewable electricity under a credit-based billing system, providing a compensation mechanism for exported energy, and preserving network safety and reliability.[2]

At the centre of the framework is a distinction between net billing and net metering. Electricity imported from a distribution company (“DisCo”) is billed at the applicable retail tariff, while electricity exported by the customer is measured separately and credited at a different NERC-approved export tariff. The Regulations therefore do not create a one-for-one exchange of imported and exported electricity.

This article examines the principal features of the Regulations and their commercial implications for prospective prosumers, renewable energy developers, financiers and DisCos.

Key Features of the Regulations

1. A Regulated Role for the Prosumer

The Regulations formally recognize the “prosumer” within the distribution market. A prosumer is a customer within a Distribution Licensee’s supply area that has a commissioned Net Billing Arrangement with that licensee.[3] In practical terms, the same customer may consume electricity supplied by the DisCo, use electricity generated from its own renewable energy system, and export approved surplus electricity to the DisCo’s network, i.e. the customer produces and consumes electricity and has completed the required interconnection, metering and registration steps for net billing. A prosumer is considered “prospective” before formal commissioning.

2. Eligible Renewable Energy Systems and Users

The framework currently applies to solar energy systems, however small wind and hydro installations may be incorporated later if NERC issues the relevant technical standards and updates the applicable schedule. Eligible systems must be connected to a distribution network, have a minimum installed capacity of 50 kWp, and must not exceed 1.5 MWp per user.[4]

The Regulations do not expressly exclude residential customers. However, the 50 kWp minimum means that ordinary residential rooftop systems will generally fall outside the framework. The immediate market is therefore likely to consist mainly of factories, commercial buildings, hospitals, universities, hotels, agricultural facilities and large residential estates with substantial electricity demand.

3. Controlled Access and Network Capacity Limits

A Distribution Licensee is required to consider eligible applications on a first-come, first-served and non-discriminatory basis, but participation remains subject to technical feasibility. The aggregate excess capacity injected by prosumers into a relevant 0.4 kV, 11 kV or 33 kV network asset must not exceed 30% of the asset’s average load. In addition, the approved export capacity must generally not exceed 120% of the customer’s Eligible Load Demand.[5]

The framework allows some flexibility where a customer can demonstrate verifiable and imminent load expansion. In such circumstances, a DisCo may approve export capacity above the 120% threshold, provided the approved capacity does not exceed the customer’s projected load demand within twenty-four months and remains within the applicable feeder limit. The installed direct-current capacity may also exceed the approved alternating-current export capacity where certified inverter settings or export controls limit actual injection into the network.[6]

These limits make feeder availability and the customer’s historical or contracted load central to project development. A technically sound solar installation will not automatically qualify if the relevant network asset lacks sufficient capacity. Developers and prospective prosumers should therefore assess network constraints and submit applications early in the project-development process.

4. A Time-Bound Approval and Interconnection Pathway

A prospective prosumer must apply to the relevant DisCo with the prescribed form, evidence of ownership or occupation of the premises, a certified single-line diagram and technical specifications for the proposed renewable energy system. Existing systems are subject to additional information requirements, including available generation history, prior approvals, technical data and a certified inspection report.[7]

Upon receipt of a complete application, the DisCo must undertake a technical feasibility assessment and issue its report within fifteen business days. If the application is approved, the parties must execute the prescribed Net Billing Agreement within five business days, after which the customer applies to NERC for registration. NERC is required to issue an electronic registration certificate within ten business days of receiving a complete application.[8] Following registration, the customer pays the applicable connection charge.

The DisCo must ordinarily complete the interconnection works within thirty business days after payment, or within one hundred and twenty business days, where major reinforcement at 11 kV or 33 kV is required. The installation is thereafter subject to inspection and certification by the Nigerian Electricity Management Services Agency (“NEMSA”), followed by commissioning by the DisCo. No renewable energy system may export electricity before commissioning approval.[9]

The prescribed timelines improve visibility for project planning. Their practical value will, however, depend on the operational readiness of DisCos, NERC and NEMSA, as well as transparency regarding connection charges and any required network reinforcement.

5. Technical Standards and Metering as Commercial Infrastructure

The Regulations impose detailed safety and interconnection requirements, with installation, maintenance and operation being carried out by certified technicians in accordance with the Distribution Code, the Nigerian Electricity Supply and Installation Standards Regulations and other applicable technical standards. The system must include appropriate switching, synchronisation, anti-islanding, protection, power-quality and grounding arrangements.[10]

After payment of the connection charge, the DisCo is responsible for providing a revenue-grade import/export meter or a dual-register smart meter that complies with the Metering Code and has time-of-use capability. The meter must record imported and exported electricity separately, while the DisCo is responsible for remote reading, validation and reconciliation of the data used for settlement.[11]

Where a time-of-use meter is unavailable, the system may be provisionally commissioned with NERC’s prior consent using a standard NEMSA-certified bidirectional meter. Until a time-of-use meter is installed, all electricity exported to the grid will be credited at the lower off-peak tariff. The DisCo must install the time-of-use meter within twelve months.[12] Meter availability is therefore not merely an operational issue; it can directly affect the value of exported electricity.

6. Export Tariff and the Battery-Linked Peak Premium

The Regulations adopt a net billing model rather than the conventional net metering. In simple terms, both models reflect how solar owners interact with the grid, but the difference lies in how exported electricity is valued and billing is calculated. The core distinction is that net metering uses retail rates while net billing uses export rates. Electricity taken from the grid is billed at the applicable retail tariff, while electricity exported to the grid earns a separate credit calculated under the Regulations. Exported electricity therefore does not offset imported electricity on a one-for-one basis. The Export Tariff Factors are currently set at 0.55 for off-peak exports and 0.75 for peak exports, subject to review by NERC.[13]

Access to the peak factor is not automatic as the Regulations currently define the peak period as 6 p.m. to 9 p.m. and require a prosumer seeking the peak tariff to install a NEMSA-verified battery energy storage system. The battery must, among other requirements, have usable capacity of at least two hours of rated output at 50% of the installed renewable energy capacity and be capable of charging from the renewable energy system and discharging independently to the grid. Systems without qualifying storage are settled at the off-peak tariff for all exports.[14]

This design makes storage central to accessing the higher tariff and reinforces the policy preference for reliable exports during periods of greater system value. It also means that project economics will depend on the customer’s load profile, expected export profile, battery configuration and the applicable tariff assumptions, not merely on the size of the solar installation.

NERC is required to review the settlement parameters at least once every twelve months. NERC may review the settlement terms earlier if the benchmark cost used to calculate the export tariff changes by more than 20%, or if a DisCo or prosumer association formally requests a review. However, the parameters in force when the Net Billing Agreement is executed remain applicable for at least twelve months from the connection date.[15] This provides a limited degree of tariff stability for financial modelling.

7. Billing, Carried-Forward Credits and Transfer

DisCos must issue monthly bills showing imported and exported energy, the applicable tariffs, the import charge, the export credit, carried-forward balances and the net amount payable. Export credits and any opening credit balance are applied only against the prosumer’s import bill. Where the credits exceed the bill, no payment is due for that billing period and the excess is carried forward. The net bill cannot be negative, and no cash payment is made to the prosumer except where expressly provided by the Regulations or an applicable NERC Order.[16]

Carried-forward credits may be used only to offset future import charges and are subject to net-off at the anniversary of the system’s connection. The DisCo must notify the prosumer at least thirty days before any credit balance is due to expire. Credits may transfer with the premises where the Net Billing Agreement is formally transferred to a new owner or occupier, but are extinguished if the system is relocated or the agreement is terminated.[17]

8. Monitoring and Dispute Resolution

Each DisCo must maintain an up-to-date register of approved Net Billing Facilities. It must also publish quarterly aggregated and non-confidential information on the number and capacity of approved facilities, feeder-level penetration and energy imported and exported under the framework, and submit quarterly reports to NERC on applications, processing timelines, rejections and network upgrades.[18]

Disputes between a prosumer and a DisCo must first be addressed through mutual negotiations within thirty days. An unresolved dispute may then be referred to NERC, which is required to determine it within thirty  days after receiving the relevant documentation, unless exceptional circumstances justify a longer period. NERC may issue interim directions, and the filing of a dispute does not suspend the parties’ obligations unless NERC directs otherwise.[19]

Implications for stakeholders

For prospective prosumers, the Regulations create a route to obtain value from surplus renewable generation, but participation requires more than installing solar panels. A viable project must be supported by sufficient load history, available network capacity, the required approvals, an appropriate meter, NEMSA certification and a realistic understanding of connection costs, credit expiry and tariff treatment.

For renewable energy developers and financiers, the framework improves regulatory visibility but introduces additional conditions that should be reflected in project documents and financial models. DisCo approval, NERC registration, metering availability, network reinforcement and commissioning should be treated as material development risks. Export revenue assumptions should also be conservative, particularly where a project does not include qualifying battery storage.

For DisCos, the Regulations impose new operational responsibilities relating to application processing, technical assessments, interconnection works, metering, credit ledgers, billing, publication and regulatory reporting. Effective implementation will require coordinated engineering, commercial and customer-service systems.

More broadly, the Regulations represent a measured first step towards integrating customer-owned renewable generation into the distribution market. The 50 kWp minimum and 1.5 MWp maximum indicate that the initial framework is directed principally at commercial and institutional customers rather than mass residential participation.

Conclusion

The Net Billing Regulations 2026 establish a structured route for eligible customers to export surplus renewable electricity and receive bill credits while preserving technical oversight of the distribution network. Their significance lies not only in recognising the prosumer, but also in creating a defined approval, metering, tariff, billing and dispute-resolution framework for customer-side generation.

The framework is commercially promising but its success will depend on timely and transparent implementation by DisCos, NERC and NEMSA as well as the availability of time-of-use meters, the treatment of connection and reinforcement costs and the consistency of tariff reviews.

If implemented effectively, the Regulations could improve the economics of commercial and industrial solar projects and support the gradual integration of distributed renewable energy into Nigeria’s electricity market.