By William Emmanuel Ukpoju
The start-up space in the energy sector in Nigeria is emerging as a force to be reckoned with, as visionary entrepreneurial efforts to address the nation’s pressing power challenges continue to grow stronger. From a meagre 1.9% of the market share of the start-up sector, according to a 2022 Nigerian Start-up Ecosystem Report by Disrupt Africa, the Energy sector start-up space is on the rise, reflecting a growing awareness of the energy crisis and the need for innovative solutions to tackle the crisis. Nigeria, Africa’s largest economy, has long struggled with energy access and reliability. While the country boasts vast oil, gas, and renewable energy potential, millions of Nigerians still face erratic electricity supply. As of 2024, approximately 86 million Nigerians lack access to electricity, this is according to the President of the African Development Bank (AfDB), Akinwunmi Adesina. This represents about 37% of the country’s estimated population of 230 million. This figure, according to him, positions Nigeria as the nation with the highest number of people without electricity globally. The disparity is more pronounced in rural areas, where less than one-third of residents have electricity access, compared to urban areas with an 89% access rate. Nigeria’s persistent energy deficits have been a major impediment to economic growth and social development. Frequent power outages and an inadequate grid have spurred entrepreneurs to seek alternative solutions, leading to the birth of a vibrant start-up ecosystem focused on revolutionizing the energy sector.
From solar solutions to smart grids, energy storage, and blockchain-powered transactions, Nigerian start-ups are developing sustainable, tech-driven models to solve long-standing power challenges. This shift is not just about providing electricity—it’s about redefining how energy is generated, distributed, and consumed. Nigeria’s energy sector is undergoing a remarkable transformation, driven by today’s technology start-ups. The driving forces of several factors have contributed to the rise of energy tech start-ups in Nigeria. One of the major driving forces is the persistent power deficit facing the country. Nigeria’s national grid remains unreliable, with frequent power outages affecting homes and businesses. For instance, the national power grid collapsed a total of 12 times in 2024, fuelling the demand for off-grid alternatives including solar. Nigeria led the West African solar market last year, accounting for 88% of all off-grid solar energy kit sales in the region. This is an indication that the lack of power is driving more businesses to seek alternative sources. Aside the persistent energy crisis facing the country, the shift toward clean energy has been largely driven by government policies and initiatives, climate change concerns, as well as consumer demand for affordable power. In terms of government initiatives, the Federal Government has introduced several schemes aimed at promoting off-grid energy solutions, particularly through renewable sources such as solar power, mini-grids, and distributed energy systems to attract investments, incentivize innovation, and accelerate energy access in underserved communities. For instance, the Nigeria Electrification Project (NEP) is a flagship initiative designed to increase electricity access for unserved and underserved communities through renewable energy solutions. The program is backed by the World Bank ($350 million) and the African Development Bank (AfDB $200 million), making it one of the largest off-grid energy funding projects in Africa. Through NEP, projects like the Energizing Economies Initiative (EEI) have powered markets such as Ariaria Market (Abia State), Sura Market (Lagos), and Sabon Gari Market (Kano) using solar hybrid systems. Another initiative is the Rural Electrification Fund (REF) managed by the Rural Electrification Agency (REA). The REF provides grants and subsidies to private developers building off-grid projects. The Fund has supported numerous mini-grid and standalone solar installations in rural Nigeria, enhancing energy access for farmers, schools, and small businesses. Aside the government effort, many start-ups are stepping in to fill the huge energy gap, offering alternative energy solutions such as solar mini-grids, battery storage systems, and energy-efficient appliances. Companies like Arnergy, Lumos, and Rensource Energy are at the forefront, providing solar-powered solutions to businesses and households at affordable costs to customers.
Founded in 2014, Arnergy provides solar power systems to homes and businesses. The company builds, owns, maintains and supplies 24-hour electricity to residential estates, universities/campuses, telecom operators’ infrastructures, and commercial and manufacturing firms using predominantly solar energy. Lumos, is another Nigerian start-up that is helping to solve Nigeria’s power sector problems, in terms of financing. Launched in 2013, the company enables modern solar electricity that can power lights, cell phones, fans, computers, TVs and other compatible small electronic devices. Lumos offers homes and small businesses a simple and affordable way to pay for electricity in small instalments using their mobile phones. The company targets off-grid residential and small businesses. Next is Rensource, founded in 2015 with over 2000 customers, the company is rapidly disrupting Nigeria’s energy generation and distribution. Resource partners with project sponsors to develop, fund and manage decentralized energy projects to address the energy drop in Nigeria — by providing reliable energy to consumers, growing businesses and industrial clients. Advancements in smart technologies have also boosted the emergence of energy start-ups in the country. With the rise of IoT (Internet of Things), artificial intelligence (AI), and blockchain, start-ups are developing innovative products that optimize energy consumption, reduce waste, and improve efficiency. Companies like Beacon Power Services and Coldbox Store are using smart grids and predictive analytics to reshape Nigeria’s energy landscape. Access to funding is also a factor that has enabled energy tech start-ups in recent times. Investors are increasingly backing energy-tech start-ups in the country. In recent years, firms such as All On, the Nigeria Electrification Project (NEP), and international venture capital firms have injected millions of dollars into promising start-ups. Programs like the Rural Electrification Agency’s (REA) Solar Power Naija initiative have also provided funding and support for off-grid energy solutions. For instance, Arnergy recently raised $3 million in a bridge round led by All On, an off-grid energy impact investment company supported by Shell. This fresh injection of capital comes on the heels of Arnergy’s $9 million Series A round in 2019.
Challenges & future of energy-tech
Despite the rapid growth, energy-tech start-ups in Nigeria face several hurdles. Firstly, the cost of acquiring and deploying renewable energy solutions remains a challenge for many start-ups and their customers. This challenge is compounded by complex licensing procedures and inconsistent government policies. Again, many remote areas still lack the infrastructure needed for the deployment of energy solutions. Notwithstanding these challenges, the outlook for energy-tech start-ups in Nigeria is promising. With increasing investments, technological advancements, and a growing commitment to sustainability, the sector is set for explosive growth. The Federal Government’s push for off-grid solutions, partnerships with international investors, and the rise of local talent in energy innovation are key drivers shaping the future. As these start-ups continue to innovate, Nigeria is moving closer to solving its energy crisis, creating a more sustainable and resilient energy ecosystem. The next few years will be crucial in determining how these companies scale their impact, but one thing is certain — energy-tech start-ups are lighting up Nigeria’s future.
