The Nigerian power sector is evolving rapidly, with the Nigerian Electricity Regulatory Commission (NERC) introducing diverse licensing categories to regulate participants in electricity generation, distribution, transmission, and trading. One emerging area of interest is the Electricity Aggregator License, a concept gaining traction globally as energy markets decentralise and distributed energy resources (DERs) become more prominent.
In Nigeria, while the specific framework for electricity aggregation is still developing, stakeholders interested in becoming electricity aggregators must understand how licensing under NERC works, what requirements apply, and how to navigate the application process.
This guide provides a comprehensive step-by-step explanation of how to obtain an Electricity Aggregator License in Nigeria, highlighting requirements, costs, procedures, and addressing common misconceptions. It is designed to help prospective investors, entrepreneurs, and organisations establish themselves in the Nigerian electricity market.
What is an Electricity Aggregator?
An electricity aggregator is an entity that pools distributed energy resources (such as solar power, embedded generation, or mini-grids) or consumer demand to act as a single unit in electricity markets. In essence, aggregators:
- Coordinate multiple small electricity producers or consumers.
- Negotiate power trading contracts on behalf of groups.
- Help balance supply and demand more efficiently.
- Promote renewable energy integration into the grid.
Globally, aggregators are key players in modern energy markets. In Nigeria, while the explicit term “Electricity Aggregator License” does not yet appear in NERC’s licensing categories, the role aligns closely with Trading Licenses, Embedded Generation Licenses, and Mini-Grid Authorisations.
Regulatory Authority: NERC
The Nigerian Electricity Regulatory Commission (NERC) is the sole body responsible for issuing licenses in Nigeria’s electricity supply industry under the Electric Power Sector Reform Act (EPSR) 2005.
Key NERC licensing categories include:
- Generation License (On-grid, Embedded, Captive)
- Transmission License
- Distribution License
- Trading License
- System Operation License
- Mini-Grid Permit
For entities seeking to act as electricity aggregators, the Trading License or Embedded Generation License often provides the regulatory foundation.
Requirements for Obtaining an Electricity Aggregator License in Nigeria
Applicants must satisfy both general and license-specific requirements. Based on NERC licensing procedures, the following typically apply:
General Requirements
- Completed application form (downloadable from NERC’s website).
- Evidence of incorporation with the Corporate Affairs Commission (CAC).
- Memorandum and Articles of Association (MEMART).
- Detailed business plan and feasibility study.
- Technical and financial capability statements.
- Evidence of tax compliance (FIRS Tax Clearance Certificate).
- Proof of payment of application fees.
Specific Requirements for Aggregators (aligned with Trading/Embedded Generation)
- Power Purchase Agreements (PPAs) or contracts with generation/distribution companies.
- Evidence of technical expertise in power aggregation, distribution, or trading.
- Environmental Impact Assessment (EIA) report (where applicable).
- Grid connection agreements (if tied to the national grid).
Step-by-Step Process for Obtaining an Electricity Aggregator License
| Step | Action | Details |
|---|---|---|
| 1 | Application Preparation | Gather all required documents including CAC incorporation, MEMART, business plan, tax clearance, and agreements. |
| 2 | Payment of Application Fees | Pay the prescribed non-refundable application fee as outlined by NERC. |
| 3 | Submission to NERC | Submit completed forms and documents to NERC Licensing & Legal Division. |
| 4 | Acknowledgement & Screening | NERC reviews application for completeness and issues acknowledgement. |
| 5 | Detailed Review | NERC conducts legal, technical, and financial assessments. |
| 6 | Public Notice | Applicant’s intent is published for stakeholder comments (usually 21 days). |
| 7 | Hearing (if required) | Public hearings may be held if objections are raised. |
| 8 | NERC Decision | Commission grants or denies license, with reasons provided. |
| 9 | License Issuance | If approved, the Electricity Aggregator License is issued, subject to conditions. |
Costs and Fees
While NERC updates its official licensing fee schedules periodically, typical costs include:
| Item | Estimated Cost (₦) |
| Application Form | ₦50,000 – ₦100,000 |
| Non-refundable Application Fee | ₦500,000 – ₦2,000,000 (depending on capacity) |
| Processing/Review Fee | ₦1,000,000+ |
| License Fee (on approval) | Varies by license type & capacity |
Note: The exact cost for an Electricity Aggregator License will depend on how NERC classifies it (e.g., Trading License vs Embedded Generation License). Applicants should confirm from NERC’s official fee schedule.
Duration & Validity of License
- Licenses are generally valid for 10 years.
- Renewable upon compliance with NERC’s regulations.
- NERC may revoke licenses for non-compliance.
Common Misconceptions
- “Anyone can start electricity aggregation without a license.”
❌ False. All electricity-related activities require authorisation from NERC. - “Aggregator License is the same as a Distribution License.”
❌ Incorrect. Distribution covers physical delivery to end-users, while aggregation focuses on pooling supply/demand. - “Small renewable projects don’t need licenses.”
❌ Not always true. While captive/self-use generation below certain MW thresholds may be exempt, commercial aggregation requires licensing. - “Obtaining the license is a one-time process.”
❌ Licenses must be renewed, and compliance reports filed periodically.
Frequently Asked Questions (FAQs)
Q1: Does NERC officially issue an Electricity Aggregator License?
Currently, NERC does not list a distinct aggregator license. However, entities performing aggregation usually operate under Trading or Embedded Generation licenses.
Q2: How long does it take to obtain the license?
It typically takes 3–6 months, depending on completeness of documents and whether public hearings are required.
Q3: Can foreign companies apply?
Yes, but they must register with the Corporate Affairs Commission (CAC) and comply with Nigerian ownership regulations.
Q4: Do aggregators need agreements with both generators and distributors?
Yes. Aggregators usually require Power Purchase Agreements (PPAs) and distribution/retail arrangements.
Q5: What happens if NERC denies the application?
Applicants may reapply after addressing the deficiencies highlighted by NERC.
Conclusion
While the Electricity Aggregator License is still an evolving regulatory category in Nigeria, stakeholders can leverage existing frameworks (particularly Trading and Embedded Generation licenses) to establish aggregator models. By understanding the requirements, costs, and application process, investors can position themselves strategically within Nigeria’s power sector.
As the market grows and NERC updates its licensing framework, the Electricity Aggregator License is expected to become a formalised pathway for market entry. For now, compliance with NERC’s general licensing framework remains the key to legitimacy.
