Nigeria has allocated $200 million for off-grid solar projects, but there are still 11 million connections to be made.

The regulatory changes have led to a payment from the World Bank, but there remains a significant delay in the implementation of the project.

Funding

The World Bank has released $200 million in previously frozen funds to support Nigeria’s off-grid solar programme. This decision follows the Nigerian Electricity Regulatory Commission’s (NERC) decision to raise the capacity limit for mini-grids to 10 MW and to relax the licensing conditions. This disbursement is part of the $750 million DARES project and comes after Nigeria met four performance-related conditions. The total amount of funds committed now exceeds $430 million; this figure includes the $200 million recently released and a previous commitment of $243 million. This leaves $320 million still available for disbursement, as the December 2028 deadline approaches and 11 million connections still need to be made.

Despite this significant milestone, progress is still lagging behind the planned schedule. By June, the DARES programme had only brought 41.25 MW of renewable capacity online, which is well below the target of 465 MW. Access to electricity has been extended to 5.3 million people, which is still a long way from the target of 16.2 million. Domestic solar systems are growing at the fastest rate, with 1.046 million units installed, but this figure represents less than half of the 2.75 million planned. Political and economic risks, such as currency fluctuations and subsidy cuts, continue to prompt investors to exercise caution.

The World Bank’s caution follows a recent example: in 2024, $717.7 million in funding under the Electricity Sector Recovery Programme was cancelled when key reform milestones were not met. The DARES programme is different, as the funds have been released, having met the necessary conditions. However, its success now depends on the states. As electricity regulation is now managed by 16 state commissions, the Rural Electrification Agency must work with these regional bodies to bridge the gap.

What this means

For developers in the energy sector, regulatory changes in Nigeria are enabling the roll-out of larger-scale mini-grids, but their construction still carries risks. For public regulators, the transfer of responsibilities to the states means that their capacity to manage projects is now crucial. For development finance institutions (DFIs) and banks, the release of funds marks a step forward, but the high political and economic risks mean they must exercise caution before increasing their investments.

Sources: World Bank, Business Day, Nature News