Nigeria’s Unreliable Grid Drives Demand for Decentralized Solar

Nigeria’s unreliable electricity grid is helping create a growing market for decentralized solar, mini-grids and other distributed energy systems.

Millions of businesses still depend on diesel and petrol generators because interruptions to grid power disrupt operations and increase costs. The pressure on companies to find more dependable electricity is driving interest in alternatives that can be deployed closer to users.

Solar and mini-grids attract interest

PowerGen is betting that solar installations and mini-grids can deliver more reliable electricity at scale. The company’s approach reflects wider efforts to expand energy access through systems that do not rely entirely on the central grid.

Kenya, Ghana and the Democratic Republic of Congo are also identified as markets seeking greater access to reliable electricity and as potential destinations for distributed energy solutions.

However, the commercial case for solar remains subject to questions, including whether such systems can compete with generators in the markets where businesses already rely on fuel-powered backup electricity.

Currency risk weighs on investment

Currency volatility is another challenge for companies developing clean-energy infrastructure across Africa. When local currencies depreciate, imported equipment becomes more expensive. The decline in local-currency value can also make it harder for companies to repay financing denominated in US dollars.

Those pressures can affect the cost and viability of solar projects even where demand for more dependable electricity is strong. The financing structure associated with PowerGen and Delphos has not been disclosed in the available information. Connor Shine is a director at Delphos.

It also remains uncertain whether similar financing models could be used across other African markets.

Wider regional business developments

Beyond the energy sector, Togo and Russia recently held their first joint intergovernmental commission at the Palais des Congrès in Lomé. The two countries are exploring ways to expand investment and economic ties, although trade between them remains modest. Their diplomatic relations have lasted 65 years.

Africa’s digital connectivity is also continuing to develop. The GSMA says 83 percent of connected Africans go online every day. It also reports that the continent’s mobile coverage gap has declined from 50 percent in 2016 to less than 15 percent today, a change linked to sustained investment in telecommunications.

Together, these developments point to expanding demand for infrastructure across the continent, from electricity systems that can support businesses to communications networks that connect consumers and markets.