The Niger Delta region of Nigeria, historically dependent on oil and gas revenues, is facing a critical juncture in its energy and economic trajectory. The global push for decarbonization, alongside local demands for environmental justice, necessitates a transition from the existing petro-economy toward a more equitable, decentralized, and sustainable energy system. This paper explores the implications, opportunities, and challenges of transitioning to decentralized energy systems within the urban Niger Delta, emphasizing regulatory reforms and community equity. Drawing on a multi-disciplinary literature base, including policy reviews, case studies of solar microgrids, and socioeconomic analyses of mini-grid impacts, the study critically evaluates how distributed renewable technologies—such as solar PV and hybrid systems—can address energy poverty, reduce carbon footprints, and drive local content development. It highlights the role of the Nigerian Electricity Regulatory Commission (NERC), evolving federal energy laws, and state-level energy autonomy in enabling or hindering reform. Special attention is paid to the environmental degradation caused by oil extraction, the socioeconomic disparities embedded in the region, and the potential for green growth through job creation and inclusive planning. The paper also incorporates voices from local communities to center justice, ownership, and empowerment in the transition. This research underscores the need for coherent policy alignment, robust regulatory frameworks, and community-centered approaches to facilitate a just transition from extractive to regenerative energy systems in the Niger Delta.