“Diesel was eating us alive. The grid gives us maybe five hours a day if we’re lucky,” said Okafor, whose factory now runs almost entirely on a rooftop solar array paired with battery storage. “We haven’t looked back.”
His story is being replicated across Nigeria at a scale that is fundamentally redrawing the country’s energy map. Nigeria installed 803 megawatts of new solar capacity in 2025, a year-on-year surge of 141 percent, making it Africa’s second-largest solar market.
The driving force is not government ambition or climate policy; it is the chronic, grinding failure of the national grid.
Over the past decade, Nigeria’s power grid has suffered nearly 140 recorded malfunctions, with some areas receiving reliable electricity for only five to six hours per day. In the first two months of 2026 alone, the national grid collapsed twice. For households and businesses running Africa’s largest economy, patience has finally run out.
Off-grid installations, private mini-grids, solar home systems, and commercial rooftop arrays, account for roughly 1.15 gigawatts, or about 96 percent of Nigeria’s total installed solar capacity.
The Nigeria renewable energy and solar off-grid market is now valued at approximately $2.5 billion, driven by persistent grid unreliability, declining costs of solar and storage technologies, and surging private sector investment.
Key urban centers are leading the charge. Lagos, as the country’s commercial hub, has seen a surge in distributed solar installations, while Abuja’s policy environment and government-backed programs have fostered investment in renewable energy.
Battery storage is scaling even faster than the panels themselves. Installed battery capacity increased from around 10 megawatt-hours to 40.6 megawatt-hours in a single year, a rise of about 305 percent. Analysts note that those figures are likely understated because most projects are behind the meter and go untracked in official data.
Economics Tipping Against Diesel
The financial calculus has shifted decisively. Commercial and industrial users who adopt on-site renewables are achieving savings of 20 to 30 percent compared to diesel self-generation. With diesel costs running above $0.30 per kilowatt-hour, manufacturers in Lagos, Kano, and Port Harcourt are locking in 20-year power purchase agreements at fixed tariffs well below that threshold.
Nigeria’s extensive solar resource, delivering 4.5 to 6.5 kilowatt-hours per square meter per day, produces capacity factors 40 to 60 percent higher than those of many European sites, amplifying the economic case. Global module price declines have further compressed costs, bringing grid-parity economics to Nigeria’s sun-rich northern states.
Pay-as-you-go financing models are extending solar access to smaller firms and households, with payback periods now as short as three to five years.
Legislation is beginning to align with market realities. The 2023 Electricity Act decentralises market oversight and allows states to define their own feed-in tariffs tailored to local conditions, while seven-year tax holidays tilt project economics further in favor of renewables.
Nigeria’s renewable energy market is projected to grow from 3.13 gigawatts in 2024 to 5.01 gigawatts by 2029, at a compound annual growth rate of nearly 10 percent. More bullish forecasts place total installed capacity at 14.07 gigawatts by 2031, implying a compounded annual growth rate of more than 25 percent.
Nigeria already accounts for nearly 80 percent of West Africa’s solar additions. Under base-case projections, the wider region could add a cumulative 4.9 gigawatts between 2026 and 2029, cementing West Africa’s emergence as a major frontier solar market.
The rush off-grid carries a paradox. As wealthier households and businesses defect, the utility base that might fund grid repairs shrinks further, accelerating the very cycle of decline that drove them away in the first place.
The Nigerian government has announced an annual investment of $600 million in electricity subsidies between 2025 and 2027, aimed at bridging the gap between cost-reflective prices and regulated tariffs. Whether that is enough to reverse decades of underinvestment remains deeply uncertain.
By Oladehinde Oladipo, Business Day
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