NISO Seeks Coordination of State Power Markets to Avert Grid Fragmentation

***• Proposes technical working group to harmonise operations ***

***•***Plans integrated network mapping, real-time monitoring

Emmanuel Addeh in Abuja

The Nigerian Independent System Operator (NISO) is seeking to establish a formal coordination mechanism with state electricity markets to prevent fragmentation of the country’s power industry following the decentralisation introduced by the Electricity Act 2023.

The system operator said it was advancing plans for a NISO–States Electricity Market Technical Working Group to address operational, technical and institutional challenges arising from the emergence of multiple state electricity markets alongside the national electricity market.

Speaking at the ongoing Africa Energy Leadership Summit 2026 in Lagos, the Managing Director and Chief Executive Officer of NISO, Mohammed Bello, said the initiative was necessary to ensure that the growing number of electricity markets and independently developed power infrastructure operated within a coordinated national framework.

“Our position is clear: decentralisation should create more opportunities and more investment, not more fragmentation,” he said.

The NISO chief executive explained that the Electricity Act 2023 had fundamentally changed Nigeria’s electricity industry by empowering state governments to establish electricity markets and regulate generation, transmission and distribution within their respective territories.

“These developments present enormous opportunities for accelerating electricity access, improving service delivery, stimulating competition and attracting much-needed private capital into the sector. However, they also introduce new complexities,” he said.

The proposed technical working group is expected to facilitate coordination on grid connections, network access, cross-boundary electricity transactions, metering, energy accounting, settlement arrangements, planned outages, maintenance and emergency responses.

The NISO chief executive stressed, however, that the organisation’s expanding responsibilities would not extend to regulating state electricity markets or undermine the statutory functions of the Nigerian Electricity Regulatory Commission (NERC) and state electricity regulatory authorities.

“Let me emphasise that this does not make NISO a regulator of state electricity markets, nor does it diminish the statutory responsibilities of NERC or State Electricity Regulatory Authorities.

“Rather, NISO’s responsibility is to provide the necessary technical, operational, planning and market coordination interfaces that enable the different institutions and market participants to function efficiently within the wider Nigerian electricity ecosystem,” he said.

Beyond coordinating the different markets, the system operator warned that decentralised electricity development could lead to wasteful investment if infrastructure projects were planned without adequate consideration of the wider network.

It cited the possibility of states developing generation projects without sufficient transmission capacity to evacuate the electricity, as well as industrial clusters building dedicated transmission or distribution networks without coordinating with surrounding infrastructure.

“Without effective coordination, such developments can result in unnecessary investment costs, underutilised assets, network constraints and stranded infrastructure,” the NISO chief executive said.

To address these risks, the organisation, he said, is strengthening its system planning capabilities through Integrated Resource Planning, which considers generation, transmission and distribution requirements within a common framework.

The approach would incorporate electricity demand forecasts, generation expansion options, renewable energy resources, transmission development, storage solutions and emerging demand centres to guide investment decisions.

NISO is also promoting Geographic Information Systems (GIS) to map existing and proposed transmission infrastructure, substations, generation facilities, distribution networks, load centres and major industrial developments.

According to the chief executive, the initiative would improve demand forecasting, identify infrastructure gaps and provide a common planning reference for state governments, investors and project developers.

He added that NISO was strengthening collaboration with the Transmission Company of Nigeria (TCN), state electricity institutions and independent network developers to ensure that proposed projects aligned with system-wide requirements and long-term network development plans.

The system operator also identified digitalisation and real-time monitoring as critical to managing the increasingly complex electricity industry, announcing plans involving Supervisory Control and Data Acquisition and Energy Management Systems, Internet of Things-enabled telemetry, Phasor Measurement Units and Wide Area Monitoring Systems.

The technologies are expected to improve network monitoring, generation dispatch, contingency assessment and the early detection of potential instability across the electricity system.

“We cannot effectively coordinate a decentralised electricity industry using fragmented data, manual reporting and limited visibility of network conditions,” he said.

On market administration, the NISO chief executive said the organisation was strengthening market registration, metering, energy accounting, settlement administration, data validation and performance reporting to improve investor confidence.

He added that investors considering generation facilities, industrial electricity supply arrangements or independent transmission projects required credible information on available network capacity, connection requirements, demand projections and operational constraints.

“NISO is positioning itself to provide relevant system and market information within its statutory mandate, thereby helping to reduce information asymmetry and improve the quality of investment decisions.

“Our objective is to make the Nigerian electricity industry more predictable, transparent and attractive to long-term private capital,” he said.