Nigeria’s Ministry of Finance has signed an agreement with the World Bank for the provision of US$750 million in credit for the implementation of the Distributed Access through Renewable Energy Scale-up (DARES) project.

The DARES project aims to provide some 17.5 million Nigerians and up to 237,000 micro, small and medium enterprises (MSMEs) with new or improved access to electricity through the deployment of solar mini grids and standalone solar systems. About 465MW of renewables generation capacity is planned to be constructed by December 2028 through the project.

According to the World Bank, electricity access in Nigeria is 89% in urban areas and just 26% in rural areas. Those connected to the grid also face frequent outages, with country having about 5GW of available capacity, which is 10% of the capacity of the South African grid for four times the population, making it inadequate to serve Nigeria's growing population and economy.

DARES aims to provide basic electrification for about 13.5 million unserved, rural and remote Nigerians through the deployment of standalone solar systems and electrification via mini grids for more than 2.7 million people in rural and peri-urban settings.

The standalone solar systems will be implemented using targeted and competitively awarded performance-based and catalytic grants, and the mini grids through minimum subsidy tenders and performance-based grants.

The project will also improve the reliability of electricity supply for 1.3 million existing consumers in peri-urban and urban areas by connecting them to interconnected mini grids that will help replace approximately 288,000 diesel/gasoline generator sets.

In addition, DARES will provide an estimated 237,000 MSMEs (including around 124,000 agri-businesses) with reliable and clean electricity that will help improve their income generation potential, create local jobs and improve the financial sustainability of mini grids.

The scheme will also support the deployment of solar rooftop solutions for about 30 diesel generator set-reliant public hospitals in the state of Lagos in southwestern Nigeria under a pilot project.

On top of the US$750 million of credit from the World Bank, the DARES scheme is set to leverage more than US$1 billion of private capital and parallel financing from development partners, including US$100 million from the Global Energy Alliance for People and Planet and US$200 million from Japan International Cooperation Agency (JICA). Other development partners collaborating on the programme include the US Agency for International Development (USAID), the German Development Agency (GIZ), the Sustainable Energy for All (SEforALL) organisation, and the African Development Bank (AfDB).

Nigeria’s Rural Electrification Agency (REA) will be the primary implementing agency for the project. DARES is planned to build on the achievements of the US$550 million Nigeria Electrification Project (NEP), which supported the establishment of 125 mini grids and the installation of more than a million solar home systems, providing access to electricity for some 5.5 million Nigerians. 

The Nigeria DARES project is the first joint World Bank attempt to create a private sector-led electrification ecosystem. The bank announced the launch of the DARES platform at the COP27 climate conference in Egypt in 2022, describing it as a new programme designed to use innovative financial and derisking instruments to triple the pace of electrification in Sub-Saharan Africa.