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Nikolite is an ore added by the RedPower2 mod, found in the Technic Pack, which strongly resembles diamond at first glance in the dark mines (giving it the nickname "False Diamond"). When mined it gives you Nikolite powder, which resembles redstone and glowstone dusts, but textured blue. Nikolite is used to make Blue Alloy, as well as Battery Packs and various other things from the Red Power mod.
Nikolite is used in a variety of blocks and items from batteries, wires, and solar panels to sorting machines, and furnaces. It is also worth a decent amount of EE points considering the quantity you get, so it is valuable as an exchange item.
Nikolite is normally found around the same layer as diamonds is commonly found between layers 8 and 15.
You can tell the difference between Diamond and Nikolite by looking closely at the ore. Nikolite ore does not glimmer like diamond ore and is darker than diamond ore as you can see in the photo. Also, unlike diamond, Nikolite can be found at most depths underground.