UK energy developer gets funding for Nigeria expansion

From the newsletter

Konexa, a UK-based energy developer and investor, together with Climate Fund Managers and Norfund, will put $3.6 million into growing Konexa's operations in Nigeria. This initial investment is expected to unlock $80 million for the construction of a 50 MW solar plant and grid infrastructure. The plant will supply clean power to Nigerian Breweries Plc in Lagos and Enugu State.

• Nigeria has faced decades of under-investment in renewable energy generation and grid infrastructure. Access to reliable electricity remains limited, and many businesses rely on expensive, polluting diesel and gas generators. 

• This systemic failure has driven a significant portion of the country's Commercial and Industrial (C&I) sector towards captive power generation to ensure operational continuity. Solar, in particular, has received the most investments.

More details

• Climate Fund Managers' EU-supported blended finance facility, Climate Investor One (“CIO”), will contribute 50%, and Norfund and Konexa will each contribute 25%. This will be the second investment, following the $18 million invested in March last year, which delivered two renewable energy projects to two Nigerian Breweries Plc sites in Kaduna State. Pictured Konexa, Heineken and Nigerian Breweries team during the signing of the first deal last year.

• The 50 MW solar project is expected to reach financial close and start construction in the second half of 2025. The investments will also support the continued rollout of Konexa’s private renewable energy trading platform to a broader base of commercial and industrial (“C&I”) clients. Once operational, the project is expected to offset approximately 30,000 tonnes of CO₂ emissions annually, support 100 construction jobs, and create 35 permanent roles.

• Nigeria's grid challenges have forced the government to design friendly policies to attract private sector investments. The VAT (Modification) Order 2021 introduced numerous incentives, including VAT exemption (7.5%) on renewable energy equipment transactions, exemptions from customs and import duties on machinery and equipment for renewable energy generation, and an Investment Tax Credit (10-15%) under the Companies Income Tax Act for businesses replacing old equipment with energy-efficient or renewable energy systems. The 2023 Electricity Act further seeks to liberalise the electricity market and promote the use of renewables.

• The private sector's investment in solar power in Nigeria has significantly increased, with industries, businesses, schools, universities, and hospitals increasingly adopting solar energy, supported by both government and private investors. In 2024, C&I customers installed at least 62 MW of solar capacity. The Nigerian government is also funding projects under the Nigeria Electrification Project program, supported by the World Bank and the AfDB. To date, at least 15 universities and teaching hospitals have had solar installed.

• At the same time, the global push for sustainable production is prompting companies to evaluate their strategies to appeal to funders and consumers. Firms like Nigerian Breweries, with its "Brew A Better World" agenda, plan to achieve 70% renewable energy usage across all its breweries by 2030. Several other companies, like Dangote Group, plan to integrate solar and biomass where suitable.

• The appeal of renewables in profit-making is no longer a doubt. Recent financial reports from Scatec show it got $96 million in revenue in the first quarter of 2025, with assets from South Africa and Egypt generating the most electricity.

Our take

• The appeal of solar for independent power generation is growing, even after Nigeria started refining its oil locally. Oil prices keep rising, and those who hoped this would solve price issues have no option but to explore solar, which is increasingly becoming cheaper.

• Nigeria is the largest untapped market for energy. The current generation capacity cannot meet demand, which continues to grow with the population and industrialisation. Investors should explore this market as it offers significant potential for scaling up their investments and increasing revenue.

• Konexa's entry is expected to increase competition and bring down the cost of power purchase agreements. Targeting the C&I sector, which has better revenue streams, guarantees them repayment.