The Rural Electrification Agency and Alpha Morgan Bank have signed a N50 billion financing agreement intended to accelerate renewable energy projects in unserved and underserved communities across Nigeria.
The partnership is designed to help developers obtain financing needed to execute projects before receiving performance based grants under REA programmes.
REA Managing Director Abba Aliyu said Nigeria’s electricity demand would continue rising because of population growth and the expanding role of electricity in transport, agriculture, healthcare, education, digital services and artificial intelligence.
He said renewable energy, particularly solar, would remain important as generation costs decline and battery storage improves.
Aliyu estimated that Nigeria required about $23 billion to address electricity access and reliability challenges, compared with less than $2.5 billion currently available.
He said the gap made it necessary to mobilise funding from domestic banks, international partners and other investors.
REA is also expecting about $119 million in financing from the Japan International Cooperation Agency for interconnected and isolated mini grids.
Aliyu said local bank financing was particularly useful because private developers often had to complete projects before becoming eligible for catalytic grants.
The agency said commercial banks were increasingly treating renewable energy as an infrastructure investment rather than an experimental sector.
Alpha Morgan Bank said the agreement was intended to address the shortage of suitable financing structures for power projects.
Managing Director Ade Buraimo said the effect of inadequate electricity should be measured not only in megawatts but also in lost business opportunities, poorly equipped schools and health facilities unable to provide reliable services.
The bank said it was prepared to support commercially viable developers with financing structures suited to individual projects.
It also indicated willingness to explore ways of reducing some financing costs where projects had strong fundamentals and measurable development impact.
REA said mini grids were generating wider economic activity by supporting productive equipment, fintech payment systems, local manufacturing and energy service businesses.
The agency and bank said success would ultimately be judged by improvements in schools, healthcare, local enterprises and household economic opportunity in communities receiving the new power projects.
