Small and Medium Enterprises (SMEs) are vital to Nigeria’s economic growth, contributing nearly 50% of GDP and over 60% of employment. However, their productivity is constrained by unreliable electricity supply and high fossil fuel costs. This study evaluates the impact of renewable energy policies on SME development in Nigeria, with a focus on electrification coverage, electricity reliability, and renewable energy investment. The research adopts an ex-post facto design using secondary time-series data (1981–2023) from national and international statistical sources. Econometric analysis, including   Augmented Dickey-Fuller (ADF) unit root tests, Johansen co-integration tests, and a Vector Error Correction Model (VECM), is employed to examine the long-run and short-run dynamics among the variables. The results reveal that the Electrification Coverage Index (ECI) and Renewable Energy Investment (REI) have positive and statistically significant effects on SME development, where a 1% increase in ECI and REI corresponds to 9% and 8% improvements, respectively. Conversely, the Electricity Reliability Index (ERI) shows a negative but statistically insignificant relationship, likely reflecting persistent grid unreliability and data quality issues. The Error Correction Model suggests a 5% annual adjustment speed toward the long-run equilibrium. The findings highlight the importance of scaling up renewable energy deployment, strengthening regulatory frameworks, and tailoring energy policies to meet SME-specific needs. This study contributes to the discourse on energy policy and SME growth by providing empirical evidence on the role of renewable energy in fostering sustainable economic development in Nigeria.

Key Words: Renewable Energy Policy, SME Development, Electrification Coverage, Electricity Reliability.