Nigeria faces $23 billion funding gap to revamp electricity sector

Nigeria faces a $23 billion funding gap required to revamp its electricity sector and meet rising demand, according to the Rural Electrification Agency (REA). REA Managing Director Abba Aliyu noted that current access to funding is less than $2.5 billion, a deficit driven by population growth, digitalization, and the expansion of artificial intelligence and data centers.

To address immediate needs, the REA has signed a financing partnership with Alpha Morgan Bank. The bank has committed N50 billion to support renewable energy developers, with individual projects potentially accessing up to N10 billion in financing. While this provides a boost, Aliyu emphasized that the commitment remains far below the total investment needed for a systemic transformation.

On a broader scale, Nigeria’s Energy Transition and Investment Plans (ETIP) project that a shift toward domestic renewables could generate $686.8 billion in fuel cost savings by 2060. The ETIP aims for 277 GW of total installed capacity and over 104,000 mini-grids by 2030. Organizations like Sustainable Energy for all (SEforALL) have highlighted that increasing in-country energy generation through solar and wind can protect developing nations from the price volatility and supply disruptions associated with imported fossil fuels.