The World Bank has approved $200 million in additional financing to support Nigeria’s off-grid electricity sector, as the country moves to expand access to reliable power through mini-grids and other decentralised energy solutions.
The funding comes under the Distributed Access through Renewable Energy Scale-Up (DARES) Project, which is designed to increase electricity access for households, businesses and public institutions that remain underserved by Nigeria’s conventional power grid.
The World Bank’s latest project paper shows that the third PBC, an improved regulatory framework for mini-grids, carries the full $200 million allocation, with $150 million linked to an intermediate target and $50 million to a subsequent target.
Under the condition, the Nigerian Electricity Regulatory Commission (NERC) is required to revise its mini-grid regulations to allow batch processing of licence and tariff applications, require distribution companies to provide 12 months’ notice before reaching a mini-grid site, and clarify the rights and obligations of communities in urban mini-grid projects. The condition also includes a revision of the permit limit for mini-grids.
The World Bank’s framework makes the regulatory reform particularly important because DARES was designed around the premise that concessional public financing would reduce the capital burden on private developers and attract commercial investment into distributed renewable energy.
Nigeria’s ability to unlock the financing is therefore closely connected to whether its regulatory framework can give investors sufficient certainty to commit capital to mini-grid projects.
Investor appetite is reshaping the programme
The financing milestone comes as the World Bank itself is changing the composition of DARES after implementation revealed stronger private-sector interest in some categories of mini-grid projects than others.
The bank stated that DARES has generated strong private-sector and distribution-company interest in interconnected mini-grids, with a pipeline of potential sites “significantly exceeding” the number that could be financed under the original programme envelope.
At the same time, the report identified limited private-sector interest in Minimum Subsidy Tenders for isolated mini-grids.
This has prompted a proposed $95 million reallocation from isolated to interconnected mini-grids, effectively directing more of the programme’s resources towards the part of the market where developers and DisCos have demonstrated stronger appetite.
The World Bank said the early pipeline also showed that the public contribution required for mini-grids was higher than initially modelled.
“Price discovery from the first interconnected mini-grid tender result revealed that the grant requirement for these projects is significantly higher and the private sector contribution lower than originally anticipated,” the report said.
That finding creates a central tension for Nigeria’s off-grid strategy, indicating that the government needs private capital to scale decentralised electricity. However, the economics of serving underserved communities require a larger public subsidy than originally expected.
5.2 million people reached
DARES has nevertheless made significant progress since becoming effective in November 2024.
As of June 2026, the World Bank said more than 5.2 million people had gained access to electricity, against an end target of 16.2 million. More than one million standalone solar systems had also been deployed.
As of June 10, 2026, the project had disbursed $70.26 million. A further $128.6 million had been cleared for award for the first interconnected mini-grid Minimum Subsidy Tender.
Meanwhile, $293.6 million had been committed through signed grant agreements under the Performance-Based Grant window for isolated mini-grids.
The World Bank cautioned, however, that access results are running ahead of disbursements partly because standalone solar systems are considerably cheaper and faster to deploy than mini-grids.
“Some of the other activities under the project, such as the isolated and interconnected mini grids, will provide this at a higher cost,” the report said.
The $200m is not the new $243m financing
The performance-based financing should be distinguished from the $242.9 million additional financing package contained in the World Bank’s June 2026 restructuring.
That package comprises a $49.1 million U.S. Department of Justice trust-fund grant and approximately $193.8 million in JICA financing. The World Bank’s project paper records the additional financing at $242.9 million.
The $49.1 million grant will expand renewable-energy electrification to public institutions, including healthcare and education facilities, while JICA financing will help scale interconnected and isolated mini-grids and strengthen institutional capacity.
The World Bank is also replacing the original $20 million Lagos solar-rooftop pilot with a broader public-institution electrification programme covering federal and sub-national institutions.
More public money, lower private-capital target
The shift towards larger and more complex projects is already affecting DARES’ private-capital expectations. The World Bank has reduced its estimate of private capital mobilisation from $1.028 billion to $733 million following the restructuring.
It attributed the reduction partly to the higher public contribution required for mini-grids and the movement of funds towards solar-for-business initiatives and public-institution electrification, which generate less private capital mobilisation than standalone solar.
Despite the reduction, the bank expects every $1 of public financing to leverage $0.79 in private capital, with total private capital mobilisation estimated at $733 million.
The implication is that Nigeria’s decentralised power market is moving towards a more deliberate blended-finance model, where concessional funding takes on a greater share of project risk before private capital enters.
DARES target raised to 811MW
The restructuring also raises the project’s renewable-energy capacity target from 465MW to 811MW, with interconnected mini-grids accounting for the largest share of the revised capacity target.
The World Bank’s revised framework allocates 434MW to interconnected mini-grids, compared with 56MW for isolated mini-grids, alongside solar home systems, public institutions, businesses and productive-use equipment.
The project is also introducing a new target for public institutions and extending the closing date to December 31, 2029, one year beyond the original deadline, to allow sufficient time to implement the expanded programme.
