Winock Solar installs over 2 MW of rooftop solar in Nigeria

From the newsletter
According to FSD Africa's 2024 annual impact report, it has spent over $13 million funding clean energy projects in Africa. One of its main beneficiaries, Winock Solar, a Nigerian solar energy company, has used this funding to install over 2 MW of rooftop solar for over 2,600 customers, displacing 1,200 petrol-fueled generators.

• Displacing the generators has cumulatively enabled the Nigerian government to save about $1 million in fuel costs and 20,000 tonnes of CO2 emissions per year.

• Winock Solar's business model combines solar installations with flexible financing options, such as lease-to-own plans, making solar energy accessible and affordable. In 2024, it secured $1.6 million in equity funding from Acumen Fund Inc. to expand its financing to more micro-businesses.

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• Nigeria is grappling with an energy crisis, leaving over 120 million people without reliable access to electricity. This energy poverty disproportionately affects small businesses – 37 million – which form the backbone of the Nigerian economy. These businesses are forced to contend with unreliable and expensive electricity, hindering their growth and productivity.

• Businesses, as well as households, often rely on generators for power, which pushes the cost of their business operations high. The removal of government fuel subsidies in 2023 increased prices by over 40%, making generators even more expensive to operate. Off-grid solar is an alternative serving to displace the volatile fuel prices.

• The government, as well as the private sector, are all playing a role in electrifying the country. Last year, the government invested over $14,5 million in solar projects across different federal Ministries, Departments, and Agencies (MDAs).

• In the private sector, companies like Winock Solar have also been solving the energy challenge through consumer financing. The market is opening up and attracting international asset financing companies like Kenya-based M-KOPA, which entered Nigeria in 2021.

• In its energy transmission and investment plan, Nigeria intends to invest $10 billion annually to ensure universal electricity access by 2060. There has been a willingness by the private sector to venture into and help build the energy infrastructure, but the high risks of investment, especially in bill collection with Nigeria collecting roughly only 50% of the electricity sold to its customers, remain a challenge. As such, financing will be needed to de-risk this sector to attract private sector activity and would need over $2 billion of guarantees to do so.

Our take

• Nigeria's solar market is undoubtedly poised for rapid growth in 2025 by escalating fuel prices. While its local  Dangote refinery will contribute to domestic fuel production, the high taxes on fossil fuels will likely hinder its ability to compete with solar which is increasingly becoming affordable.

• However, financing remains a big challenge to widespread solar adoption. Consumer financing companies have a crucial role to play in addressing this challenge. They can adopt more inclusive lending practices, to expand access to solar energy for a wider population, particularly the underserved communities who need it most. This could involve lessening the reliance on traditional credit history assessments and leveraging alternative data sources to evaluate creditworthiness.

• Artificial intelligence (AI) can be a valuable tool in this process. By analysing diverse data sets, including mobile phone usage, bill payments, and social media activity, AI algorithms can provide more accurate risk assessments and inform better financing strategies. This can help mitigate default rates and unlock solar energy's potential to transform Nigeria's energy landscape.