Demand for solar power has surged sharply in energy-starved Nigeria amid ongoing reliability issues with the national electrical grid and spiraling fuel costs, attracting investor attention to Arnergy, a local cleantech startup responding to the growing need. Recently, Arnergy secured an $18 million Series B round—comprised of a $15 million extension in addition to a $3 million B1 financing from last year. This significant infusion of capital underscores the heightened investor interest in Nigeria’s emerging renewable energy sector.
The surge in solar demand accelerated significantly following the removal of Nigeria’s decades-old fuel subsidy in May 2023. Previously, the Nigerian government had subsidized petrol prices by covering the cost difference between global and local market rates, an expense that had ballooned in recent years. With subsidies cut, petrol prices surged nearly 500 percent, dramatically raising the costs of diesel- or petrol-powered electricity generators, which had long been a popular stop-gap solution to daily disruptions from the unreliable national grid.
In response, solar systems—once marketed primarily as a guarantee of uninterrupted electricity rather than as an economical alternative—have become increasingly financially attractive. Arnergy CEO Femi Adeyemo noted that consumers are now deeply aware of the direct monthly savings offered by solar systems relative to their current costs.
Adeyemo established Arnergy in 2013 with the aim of providing solar power installations to residential and commercial customers across multiple sectors, including healthcare, education, hospitality, finance, and agriculture. Initially, his customers viewed solar solutions primarily as a means of survival against frequent grid blackouts. Today, the appeal of these systems lies equally in their economic benefit as utility tariff hikes and skyrocketing fuel prices shift the purchasing logic.
A notable accelerator of Arnergy’s growth has been its lease-to-own solar program called Z Lite. Previously, direct purchases dominated the company’s revenue mix, comprising around 60 to 70 percent in 2023. Today, lease-to-own sales considerably surpass outright purchases, surging to prominence as rising electricity and diesel prices render traditional energy sources increasingly unaffordable. Customers, according to Adeyemo, appreciate the transparent cost-saving advantage, with solar leases often cutting monthly power expenses by more than half.
Due to this strategy shift, Arnergy saw its lease customer base triple from 2023 to 2024, and the company expects growth by four to five times in 2025. Naira-denominated revenue has quadrupled, though dollar-denominated income remained flat due to currency devaluation. To offset this, Arnergy is exploring B2B2C partnerships denominated in foreign currency and plans to expand into Francophone African markets to bolster its dollar revenue stream.
To date, Arnergy has installed more than 1,800 solar systems throughout 35 Nigerian states, amounting to 9 megawatts peak of solar capacity and 23 megawatt-hours of battery storage. The fresh capital round—led by Nigerian private equity firm CardinalStone Capital Advisers (CCA) and including existing investors such as Bill Gates-backed Breakthrough Energy Ventures, British International Investment, Norfund, EDFI MC, and All On—will enable the startup to significantly scale its deployment. Arnergy’s goal is to deliver over 12,000 additional solar systems by 2029. To meet this ambitious objective, the firm is transitioning from an in-house sales approach toward a partner-based strategy, leveraging collaborations with business-to-business clients and physical retail outlets outside Lagos.
Additionally, Arnergy aims to secure further local debt funding through domestic banks and international development finance institutions. These resources will support targeted initiatives, including energy-as-a-service (EaaS) offerings tailored for multinational corporations seeking reliable renewable power sources in Nigeria.
Nevertheless, Arnergy’s rapid growth trajectory faces potential complications from proposed government policy intended to boost local manufacturing capabilities. Recently, the Nigerian government introduced a plan to significantly curb imported solar panels, triggering criticism from industry leaders who insist the domestic manufacturing ecosystem remains inadequate to meet national demand.
Adeyemo agrees with the broader intent behind local manufacturing support but cautions strongly against premature restrictions. He emphasizes that a sudden ban on foreign-sourced solar components could stall the developing industry, limiting electricity access for millions of customers and restricting market expansion. Instead, Adeyemo urges policymakers first to cultivate local manufacturing infrastructure, foster stable policy conditions and ensure sufficient capital availability over the next three to five years. Only when such frameworks are established should policymakers consider gradually phasing out imports.
“Supporting local production is essential, but we must carefully build our capabilities first. Shutting off imports too soon risks hurting an industry just beginning to flourish, with grave short-term impacts for millions who now depend on solar power,” Adeyemo stated.
