Rural electrification project supported by the Nigerian Electrification Project (NEP) 1

Rural electrification project supported by the Nigerian Electrification Project (NEP) 1

Project Overall Goal

NEP aims to address an energy access gap by providing electricity to households, MSMEs, health and education facilities in rural communities, by deploying off-grid solutions such as mini-grid, Solar Home Systems (SHS), captive power plants, and productive use appliances. Specific goals include connecting more than 3.5 million people, providing more than 700,000 households with electricity, energizing more than 100,000 MSMEs, and supplying 400 primary health centers with reliable power

Executive Summary

The Nigerian Electrification Project (NEP) is a private sector-driven Federal Government program, funded by the World Bank and African Development Bank, with the goal of powering Nigeria and catalyzing sustainable off-grid development through mini-grids, solar home systems, captive power plants, and productive use appliances. It comprises several components, including:

  • Solar Hybrid Mini Grid for Economic Development
  • Standalone Solar Home Systems for Households and MSMEs
  • Results Based Financing for Productive Appliances and Equipment
  • Energizing Education Program
  • Technical Assistance
  • Solar Power Naija

Under the solar hybrid mini-grid component, a Performance-Based Grant Programme, funded at US$48 million, provides grants of US$600 per connection to qualified mini-grid developers on a milestone basis: 1) delivery of goods to sites, 2) commissioning of mini-grid and initial customer connections, and 3) three months of successful, verified connection.
Under the solar home system component, a US$60 million Output Based Fund provides grants of up to 60% of the costs of the solar home system – of which 20% must be passed on to the end user to reduce the price of the product. Over the life of the program, the size of the grants will be reduced. This grant support helps unlock other sources of funding such as commercial debt by reducing the risk to lending entities.
NEP’s results-based financing grants can support commercial investors to meet their risk-return threshold for investment and support large-scale investment into the off-grid sector in Nigeria. For example, the NEP RBF scheme helped to mobilize an additional >$5M of private capital from a commercial investor who sought to acquire a majority equity stake in a mini-grid project. The mini-grid project is expected to provide clean and affordable energy to more than 10,000 residential customers, 1,500 MSMEs, and around 100 productive use customers in rural communities in Nigeria.


Project Details

Sector:  Energy
Tags:  Africa, Low Middle Income Countries, Mitigation and Adaptation, blended
Source of Capital:  Public Balance Sheet (via REA and NEP), Bilateral, Multilateral & Development Finance Institutions, Undisclosed ‘commercial investors’
Project URL:  Download PDF

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