- Nigeria has unlocked over $1.3 billion in renewable energy investment commitments through NEP and DARES.
- DARES will expand solar and mini-grids to improve electricity access and reduce generator dependence.
More than $1.3 billion in investment commitments have been unlocked for Nigeria’s distributed renewable energy sector through the Nigeria Electrification Project (NEP) and its successor, the Distributed Access through Renewable Energy Scale-up (DARES) program.
The Federal Government disclosed the figure this week. It represents investment commitments, not funds already deployed. However, it highlights the growing role of private capital in expanding electricity access through solar systems and mini-grids.
DARES has $750 million in World Bank financing. The program aims to provide new or improved electricity access to more than 17.5 million Nigerians. It targets 465MW of distributed generation, 1,350 mini-grids and more than one million standalone solar systems. The projects are expected to serve about 3.24 million households and 237,000 micro, small and medium-sized enterprises.
DARES marks a major expansion from NEP, which preceded it. According to the Rural Electrification Agency, NEP deployed about 94MW of solar capacity and reached more than 1.1 million households and 7.8 million people. The program also provided electricity services to about 11,400 MSMEs.
DARES is targeting almost five times NEP’s reported solar capacity. The expansion reflects Nigeria’s continuing need for alternatives to an unreliable national grid.
Many businesses still rely on petrol and diesel generators when public electricity is unavailable. DARES could help reduce that dependence. The program also has an industrial focus. The REA aims to replace more than 280,000 petrol and diesel generators. It also wants to provide more reliable electricity to MSMEs and agribusinesses. This makes distributed renewable energy more than an electricity access program. It is also becoming a tool for reducing business energy costs and improving productivity.
The investment push comes as Nigeria decentralizes its electricity market. The Electricity Act 2023 allows states to establish their own electricity regulators and manage intrastate electricity markets.
As of July, 16 states had completed the transition to state-level electricity regulation, according to the Nigerian Electricity Regulatory Commission. The shift is creating new opportunities for developers of mini-grids, embedded generation and standalone solar systems. Investors must now consider state-level regulations alongside the federal electricity framework.
The Ministry of Power established a nine-member inter-agency committee in July to improve coordination between federal and state institutions. The $1.3 billion commitment is significant. However, the amount of capital that investors ultimately deploy will matter more.
Distributed energy projects still face challenges. These include financing constraints, currency risk, customer creditworthiness and regulatory uncertainty. DARES also does not eliminate the need for investment in large-scale generation, transmission and distribution. Its planned 465MW will not close Nigeria’s electricity deficit. Its significance lies elsewhere.
By bringing smaller power systems closer to homes and businesses, the program offers an alternative to waiting for the national grid to reach every customer. The next test is whether Nigeria can turn development-backed projects into a commercially sustainable distributed energy market. That will determine whether the country can attract private investment at scale.