Making Solar Rentals Work in Africa – Nigeria

This activity is leveraging financing to increase the usage of solar photovoltaic in Nigeria. In taking an approach that is culturally responsive, the project is piloting a solar rental system to deliver alternative energy services. Such off-grid solar photovoltaic systems would replace diesel-burning generators, reducing greenhouse gas emissions while increasing access to energy.

Fast facts:

6,000 pico-solar systems installed;
Every megawatt of solar photovoltaic results in reduction of more than 32,000 tonnes of carbon dioxide emissions in its 25-year lifetime;
More than USD 4 million worth of clean energy products sold through carbon credit network program;
Won an award for most financeable energy investment in West Africa.

The problem

Despite Nigeria being a leading global oil and gas exporter, more than 100 million Nigerians live in the dark. Even those with access to the national grid suffer some of the continent’s poorest supply reliability, with persistent brownouts and blackouts. All over Africa, and especially in Nigeria, off-grid generators are one of the most common and carbon-intensive forms of electricity generation. In Nigeria, the cumulative capacity of off-grid generators is greater than connections to the grid.

The decreasing cost of solar power has leveled the cost of solar electricity to below that of current off-grid generators. On-grid solar rentals are common in industrialized countries, but off-grid solar rentals have yet to be successfully rolled out at any significant scale. Large-scale adoption of solar energy is constrained by high prices, weak policies, lack of information on system performance, poor public perception, and lack of mechanisms to promote product quality assurance and standards.

The solution

By enabling users to offer collateral, and securitizing and professionalizing the leasing process, this program will open up the market for millions of homes across Nigeria and the rest of Africa to be solar-powered. Monthly solar photovoltaic systems can be provided at less than the cost of off-grid generators, while still offering investors a return of more than 20%. This new program would allow people and small businesses to rent out systems that generate 1 to 3 kilowatts at monthly costs that are cheaper than what they currently pay for off-grid generators. The program also utilizes insurance and loan guarantees to accelerate deployment. Use of public funds reduces financial risk and proves the concept at early stages to encourage private investment.

Helping the planet

Reducing the use of diesel-powered generators decreases emissions of greenhouse gases and other air pollutants.

Helping people

Setting up a financing structure that allows millions of Africans to utilize solar photovoltaic as a cleaner and more economic form of electricity will accelerate sustainable development through stable access to electricity.

Scaling up

Merit-based incentives permitting anyone to start their own business allows for explosive growth, harnessing the energy and ingenuity of the under- and unemployed in Nigeria. This project is also financeable on a national and ultimately continent-wide scale, as actors will also be working with partners to systematize these off-grid solar rentals in a way that makes sense to the global capital markets. There is also the possibility to scale through property-assessed clean energy financing.