The government of Nigeria currently targets 100 percent electrification rate by 2040, and off-grid energy will play a vital role. The electrification rate currently stands at 45 percent, with higher access in urban areas (55 percent) compared to rural areas (36 percent). While the country has an energy generating capacity of 12,522 MW, 20 million households remain without energy access. Extending on-grid connections will continue, but it will be timely and costly, particularly for rural and sparse populations. Off-grid energy, however, presents a viable alternative, and standalone systems are particularly well suited to reach the hardest-to-reach customers.
The SAS sector is nascent and fast-growing, and stakeholders have committed to its rapid expansion. The Nigerian government looks to add 5 million new solar connections through solar home system and mini-grids by 2023 under the 2020 Economic Sustainability Plan, reaching 25 million people. This builds on a young and growing sector, comprised of international companies that have established traction in other markets for example BBOXX, Lumos, Zola Electric, d.light, Azuri, and Oolu—and often smaller but established local companies such as Sosai Renewables, Arnergy, Blue Camel, Consistent Energy, and ColdHubs, among others. Combined, these companies have an annual revenue potential of USD 1.2 billion, presenting opportunities for both private and public investments.
To achieve the government’s goals, stakeholders must execute a rapid roll-out and provide strategic support to existing SAS companies. Many companies in the sector are yet to achieve substantial scale-up of their businesses, and many—in particular local companies—cite limited access to the right financing as the primary setback to growth. Given the capital intensive nature of this sector, companies will require substantial investment to prove commercial viability, scale operations, and support the country’s electrification efforts.
The need for more investment and the current lack of investment data created the impetus for this report. Throughout this work, the research team conducted a comprehensive literature review to gain a detailed understanding of the investment landscape, the key stakeholders, and the regulatory environment for stand-alone solar in Nigeria. The team then conducted interviews with over 20 senior industry stakeholders to validate the findings, gather additional data, and align on recommendations needed to accelerate investment. Throughout the process, the research team aimed to answer the following questions:
- What has been the nature of investment in SAS to date?
- What are the main barriers to investment into SAS to date?
- What are the highest potential interventions to accelerate SAS growth in Nigeria?
This report outlines the current investor landscape, barriers to investment, and interventions required to catalyze both public and private investment into the sector to accelerate market growth. While the off-grid sector is comprised of both mini-grids and standalone solar (SAS) companies, this report will only focus on the SAS sector, including pico solar products, solar home systems (SHS), small standalone productive use systems, and larger standalone systems that are not considered for commercial and industrial purposes. The report aims to inform investors of the investment opportunity for SAS in Nigeria; companies of potential investors in the market; and policymakers, development partners, and supporting organizations of interventions required to catalyze investment and market growth in the sector.
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