2025 and the emergence of a cohesive renewable energy industry in Nigeria

Nigeria’s renewable energy sector entered 2025 with the usual familiar structural constraints but ended it with clearer signs of consolidation, maturity and industrial intent. The year was shaped by sharper supply chains, more deliberate policy choices, macroeconomic stability and a visible shift toward local value creation across the ecosystem. For many operators, investors and policymakers, 2025 marked the point at which the sector began to function less like a donor-driven programme and more like an investable industry.

A shift toward local manufacturing and supply chain stability

One of the most consequential developments was the growing adoption of locally assembled solar panels and other critical inputs in commercial, industrial and minigrid projects. Several developers and industry watchers reported that locally assembled modules accounted for a higher share of installed capacity than imported ones.

This shift rested on three foundations. First, Nigerian manufacturers improved quality and compliance with international standards, with firms such as Auxano Solar securing IEC 61215 and 61730 certifications for their modules, reinforcing investor and lender confidence in local products.

Second, the Rural Electrification Agency (REA) continued to embed local-content incentives into the $750 million World Bank-funded DARES programme which it manages, rewarding developers that integrate Nigerian-assembled modules and local balance-of-system components into the systems they build.

Third, the combination of the Federal Government’s FX reforms and a more predictable trading framework has reduced the volatility that had characterised 2023 and early 2024. IMF and World Bank assessments in 2025 have highlighted greater stability in the foreign exchange market and an improvement in Nigeria’s external position, which allowed project sponsors to easily import, pay for, and model their costs and revenues with more confidence.

Regulation and policy: From pilot orientation to industrial strategy

Policy and regulation continued to shape market outcomes. The Electricity Act 2023 advanced into operational reality, as an increasing number of states established or strengthened electricity regulatory commissions. This widened the space for renewable energy deployment through more flexible tariff structures, localised licensing and bespoke oversight of distributed generation. More forward-looking states have put in place attractive regulations aimed at attracting more solar projects to benefit their citizens.

At the federal level, the NERC has retained a coordinating role, as it works to prevent regulatory fragmentation as state-level frameworks emerge. Import policies, environmental norms and energy-transition strategies all helped align public objectives with the commercial logic of renewable energy roll-out, even if implementation across agencies has remained uneven.

The DARES programme was particularly influential. By sharpening scoring criteria around local value chain participation, technical robustness and business model viability, it encouraged developers and financiers to move from purely grant-led thinking toward more sustainable and long-term-focused commercial structures.

Market dynamics: Mini grids, C&I solar and storage

Mini grid developers continued to refine their focus on productive-use demand and creditworthy anchor customers, improving the economics of rural and peri-urban projects. In parallel, the commercial and industrial (C&I) solar market moved into larger system sizes, with more 5 MW to 10 MW projects reaching construction or late-stage financing as the year progressed.

Battery storage adoption accelerated, particularly for telecom towers, data centres and industrial estates. Falling global storage costs and early local-assembly initiatives helped scale hybrid systems that combine PV, inverters and batteries with or without diesel backup.

Higher grid tariffs, introduced as part of a broader move toward cost-reflective pricing, significantly strengthened the competitiveness of solar and hybrid solutions for large users. As grid costs rose, long-term PPAs and lease structures became more attractive alternatives, particularly for facilities facing chronic reliability issues.

This environment supported the growth of lease-to-own and energy-as-a-service models. Companies such as Earthbond, Rivy and similar platforms demonstrated that, with robust customer selection systems, appropriate security structures and credible technical partners, pay-as-you-use solar structures could scale in Nigeria’s current macroeconomic context.

Financing: From isolated transactions to programmatic capital

Financing remained central to sector progress in 2025, and the year saw several notable developments across impact investors, infrastructure guarantees and commercial banks.

All On continued to play a catalytic role. Its ₦2 billion investment in Salpha Energy targeted the scale-up of local solar assembly and distribution, linking manufacturing to last-mile access. All On also joined co-investors to close a $3 million bridge investment round in Arnergy to support the expansion of distributed renewable energy solutions, while financing key projects such as the Oweikorogha solar mini-grid in Bayelsa State through the Niger Delta Electrification Programme, reinforcing its blended model of capital and technical support.

InfraCredit deepened its role in 2025 as a cornerstone of Nigeria’s green infrastructure finance. Building on the 2024 NGN 1.95 billion Prado Power Green Sukuk, a seven-year guaranteed green infrastructure instrument for solar mini grids, InfraCredit’s Clean Energy Funding Programme advanced again in 2025 with a guarantee for CEESOLAR’s off-grid energy project. Announced in November 2025, this transaction used the UK-funded Climate Finance Blending Facility to mobilise local-currency debt for mini grids and standalone systems in multiple states, underlining InfraCredit’s importance as a provider of credit enhancement for distributed renewables.

United Capital, through its United Capital Infrastructure Fund (UCIF), entered the mini-grid debt space at scale. In September 2025, it announced a ₦5 billion (c. $3.4 million) revolving local-currency facility for Husk Power Systems to expand solar mini grids in Nigeria, widely described as the largest naira-denominated debt financing in the country’s mini grid sector to date.

Sterling Bank consolidated its positioning in renewable energy. Its dedicated Renewable Energy Project Finance platform offers tailored funding for mini grids, solar home systems and C&I projects with tenors of up to four years, moratoria, and asset-backed security structures. In January 2025, Sterling also announced a partnership with Sun King to provide loans with up to 48-month repayment periods for households and SMEs acquiring solar systems, directly supporting demand-side uptake.

FCMB reinforced its presence through both product design and partnerships. The bank’s energy finance loans, which provide up to ₦30 million for households and SMEs to acquire solar panels, batteries and inverters, continued to underpin small-scale deployments. More strategically, FCMB and the REA launched a ₦100 billion credit programme aiming to deliver clean and reliable power to about two million households across Nigeria, aligning commercial lending with the objectives of the DARES programme and other distributed renewable energy initiatives.

Together, these deals signalled an important trend. Capital is beginning to move from isolated, one-off transactions towards more programmatic, portfolio-based financing structures, although volumes are still far from the levels required for universal access.

Macroeconomic conditions helped. FX reforms and improved external balances increased predictability for investors, while the naira trading in a narrower band around the mid-₦1,400s to the dollar in late 2025, after a period of sharper volatility, provided a more stable basis for modelling long-term PPAs and service contracts. This relative stability, combined with higher power tariffs, materially improved the economics of solar adoption across key customer segments.

Remaining gaps and the path ahead

Despite clear momentum, significant gaps remain. Regulatory clarity still varies across states, and coordination between federal and state regulators will be critical to prevent overlapping mandates and inconsistent rules. Grid infrastructure constraints continue to limit the integration of larger renewable projects in some regions.

Most importantly, financing is still insufficient, both in volume and structure. Companies across the value chain require a mix of equity, quasi-equity, long-term local-currency debt and working-capital lines. All of these remain constrained in size and, in many cases, are available only at relatively high costs. The sector needs deeper pools of institutional capital, more specialised funds and more scalable securitisation and aggregation structures if today’s pioneers are to evolve into future pure-play infrastructure platforms once the market reaches greater scale.

Nevertheless, the direction of travel is positive. The combination of improved macroeconomic stability, gradual regulatory alignment, local manufacturing growth and more sophisticated financing structures indicates that 2025 was more than a year of isolated success stories. It was a year in which Nigeria’s renewable energy sector began to look and behave like a durable industry.

If these trends hold, 2026 could mark the start of a period in which distributed renewables, hybrid systems and local manufacturing form a more central part of Nigeria’s power and industrialisation strategy, with private capital playing an increasingly decisive role in both deployment and ownership.

About the writer

Afolabi Akinrogunde is a senior energy professional with over 20 years of experience spanning upstream oil and gas, gas commercialisation, energy economics and renewable energy investment and development. He previously helped build Nigeria’s off-grid sector as a key leader at All On, where he drove tens of millions of USD in financing, manufacturing and market scale-up initiatives across the country. He currently serves as a Senior Deal Lead at Shell Energy Nigeria, driving gas infrastructure, power and commercial strategy across multiple value chains.