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Virtuitis Solaris to build 500 solar mini-grids in Nigeria
From the newsletter
Nigerian-based energy company Virtuitis Solaris plans to build 500 solar mini-grids in the country over the next three years, with 100 mini-grids to be constructed in the first year. The project will be funded by the International Finance Corporation and will provide electricity to at least 200,000 Nigerians across 10 to 15 states.
Both the government and private sector are investing in solar mini-grids. In its 2025 budget, the Nigerian government has proposed a $66.7 million allocation for solar mini-grids in selected universities, teaching hospitals, and government institutions.
Nigeria currently leads Africa in the mini-grid sector, with about 82 MW of solar mini-grids and 74 MW of solar home systems installed.
More details
Over 85 million Nigerians lack access to electricity. Even those connected to the grid experience an unreliable supply, with frequent outages disrupting businesses and daily life. Relying on petrol-powered generators is expensive especially after the government removed fuel subsidies.
The Nigerian market opportunity is thus very big. It is estimated that by developing off-grid alternatives, a market opportunity of $9.2 billion per year can be created for mini-grids and solar home systems. This could potentially save Nigerian homes and businesses $4.4 billion annually.
However, current investment in the sector falls far short of what is needed to connect millions of Nigerians without electricity access. To catalyse investment, the Nigerian government has revised its electricity regulations to attract the private sector. The Electricity Act 2023, for example, allows states and private entities to participate in electricity generation and distribution, promoting decentralised renewable energy projects like mini-grids. This enables local governments to focus on developing renewable energy projects tailored to their specific needs.
Nigeria's mini-grid regulations are more mature and inclusive, providing clear guidelines on grid integration and allowing for connections to the main grid. These regulations also permit the construction of larger mini-grids and even their interconnection. One notable example of a large-scale mini-grid project is the 1 MW Zawaciki interconnected solar mini-grid in Northern Nigeria.
In December 2023, the World Bank approved a $750 million credit for the Nigeria Distributed Access project, which aims to provide over 17.5 million Nigerians with new or improved access to electricity through distributed renewable energy solutions.
The African Development Bank also supports the Solar Hybrid Mini Grid Fund, a component of the National Electrification Plan (NEP). It has committed $150 million to electrify 300,000 households and 30,000 local enterprises through mini-grids.
Nigeria also recently received a $1.1 billion loan from the African Development Bank. The fund aims to provide electricity to 5 million people by the end of 2026, with part of the investment supporting solar and wind energy projects in rural areas.
Our take
The Nigerian solar market is gaining prominence, with both the government and the private sector investing heavily in the sector. The recent "Mission 300" initiative by the World Bank and AfDB has identified Nigeria as one of 12 countries to receive special funding for improving electricity access. Energy companies should move quickly to ensure they meet the application requirements.
Nigerian mini-grid regulations, especially for interconnected mini-grids, offer a win-win situation for utilities, developers, and customers. These mini-grids allow utilities to improve their supply reliability and revenue streams, while developers gain access to a larger market. Customers benefit from a more stable and affordable electricity supply. This can act as an incentive for energy companies who want to venture into mini-grids.
The Nigerian market for solar mini-grids is projected to grow to over $9 billion by 2030, driven by population growth and urbanisation. However, a significant challenge for Nigeria has been the devaluation of its currency. The Naira has lost value by over 200% in the last two years. This poses a risk to investors, as their returns in Naira could be significantly eroded when converted back into their home currency. To protect investors and encourage investment in the sector, providing currency-hedging facilities is crucial.