Nigeria has approximately 85 million people without access to electricity — the largest energy access deficit of any country in the world. Its national grid, operated by the Transmission Company of Nigeria, struggles to deliver more than 4,000 megawatts of power reliably against a demand base that the Nigerian Electricity Regulatory Commission estimates at more than 30,000 megawatts. The shortfall is not primarily a generation deficit: Nigeria has installed generation capacity of over 13,000 megawatts across a mix of gas, hydro, and increasingly renewable sources. The problem is structural — transmission and distribution infrastructure that prevents power from reaching the majority of the population, and a tariff structure that has historically made electrification of low-income communities commercially unattractive for private investors.

The Nigeria Distributed Access through Renewable Energy Scale-up programme — DARES — is the World Bank’s attempt to route around this structural problem at scale. Approved in 2024 with $750 million in International Development Association financing, DARES is the largest single solar mini-grid programme commitment in Africa’s history. Its target: 750,000 new electricity connections delivered through distributed solar systems — solar home systems and mini-grids — within 18 months of full operational deployment.

The pace implied by that target has never been achieved anywhere on the continent in the mini-grid sector.

How DARES Is Structured

DARES is administered through the Rural Electrification Agency — the REA — which has been the primary channel for Nigeria’s off-grid solar programming since its establishment under the Rural Electrification Act 2005. The REA’s track record with the earlier Solar Power Naija programme and the Nigeria Electrification Project (NEP), the predecessor World Bank engagement, provides the institutional foundation for DARES.

The programme operates through a results-based financing model: private solar companies — developers, distributors, and mini-grid operators — deploy systems at their own cost and risk, and then claim subsidy payments from DARES upon verified connection. The subsidy is calibrated to close the gap between the commercially viable tariff (which low-income rural households cannot afford) and the cost-recovery tariff that makes the project financially sustainable for the operator. Connections are verified through a digital registration system that the REA has been building out since the NEP era.

The $750 million envelope is structured across three components: a direct subsidy tranche for solar home system connections, a grant facility for mini-grid capital costs, and a results-based financing window for productive use equipment — refrigerators, water pumps, grain processing machinery — that increase the economic value of electricity to connected households and businesses. The productive use component reflects a lesson from earlier programmes: electrification without appliances that enable productive economic activity does not generate the income growth that makes tariff payment sustainable over time.

The Scale Challenge

Nigeria’s Solar Power Naija programme, the highest-ambition predecessor to DARES, aimed to deliver 5 million solar home systems between 2020 and 2023. It did not reach that target within the original timeline, reflecting the logistical constraints of distributing manufactured equipment through Nigeria’s complex internal market — import financing, customs clearance, last-mile distribution networks, and consumer financing for households that cannot pay the full system cost upfront.

DARES is not targeting 5 million systems. But 750,000 connections in 18 months — roughly 42,000 connections per month at peak — is still a pace that would require simultaneous execution across supply chain management, installer certification, digital verification, and subsidy disbursement at a scale the sector has not previously demonstrated.

The World Bank’s programme appraisal document acknowledges deployment risk explicitly. Key risk factors identified include: contractor capacity constraints — the ecosystem of certified solar installers in Nigeria is significantly smaller than the deployment target would require at peak; supply chain disruption — the majority of solar panel and battery components are imported, making the programme sensitive to global shipping costs, currency depreciation, and customs processing delays; and the digital verification infrastructure, which must be operational and accurate before subsidy disbursements can flow.

Currency risk is not a hypothetical. The naira depreciated approximately 70 per cent against the dollar between January 2023 and January 2025 following the Tinubu administration’s unification of the exchange rate. Solar equipment — imported and priced in dollars — became substantially more expensive in naira terms, compressing the margins of operators who had priced projects at pre-depreciation exchange rates. DARES includes a forex risk management component through which the World Bank provides partial insulation against currency movements for programme participants, but the mechanism’s adequacy against a further depreciation scenario has not been stress-tested at deployment scale.

The Mini-Grid Regulatory Question

Mini-grid deployment in Nigeria operates under a regulatory framework established by NERC’s Mini-Grid Regulation 2016 and subsequently revised through 2021. The framework provides the legal basis for private mini-grid operators to charge customers and operate distribution systems independently of the distribution companies (DisCos) that hold the grid concessions in their service territories.

The regulatory risk embedded in Nigerian mini-grid investment is grid arrival: if NERC’s planned national grid expansion eventually reaches a community served by a private mini-grid, the mini-grid operator is required to sell the asset to the DisCo at a regulated price. The regulatory valuation methodology for those asset transfers has been a source of persistent commercial uncertainty. Operators who have invested in communities on the assumption of a multi-decade operational life are at risk of forced asset sales within the regulatory window at valuations that may not recover their capital.

DARES does not resolve this structural issue. The World Bank’s engagement includes technical assistance to NERC on regulatory clarity — specifically on the asset transfer valuation methodology and on the de minimis threshold below which mini-grids are not subject to grid arrival requirements. But the fundamental tension between national grid expansion planning and private mini-grid investment remains unresolved in the regulatory architecture.

Why This Matters Beyond Nigeria

DARES is significant as a programme, but its significance as a model may be greater. The World Bank is deploying similar results-based financing structures across sub-Saharan Africa — in the Democratic Republic of Congo, in Ethiopia, and in the Sahel — and the Nigerian programme is the largest and most complex test of whether the approach can deliver at scale.

The core hypothesis of the DARES model is that private sector operators, given adequate subsidy support and regulatory clarity, can reach energy access targets faster and at lower total cost than grid extension. That hypothesis has been validated at project scale across dozens of mini-grid and solar home system deployments in Nigeria, Tanzania, Kenya, and elsewhere. DARES tests whether it holds at programme scale — across hundreds of operators, thousands of communities, and hundreds of millions of dollars of disbursement within a compressed timeframe.

If it does, the results-based financing model for distributed energy access becomes the template for the final push to universal access across sub-Saharan Africa’s most population-dense unelectrified regions. If it does not — if supply chains break, installers are unavailable, or verification systems fail — the lesson will be that programme scale requires a different delivery mechanism, and the debate about whether grid extension or distributed systems should anchor the continental access strategy will need to be reset.

Nigeria is running that experiment with $750 million and 750,000 households. The continent is watching.