$20m Guarantee to Power Nigeria's Rural Mini-grid Expansion

Nigeria's efforts to expand electricity access in underserved communities have received a major boost after the Green Guarantee Company (GGC) secured a $20 million guarantee to support mini-grid projects under the Rural Electrification Agency's Distributed Access through Renewable Energy Scale-up (DARES) programme.

The country continues to face a large electricity access gap, especially in rural areas where many people depend on costly and unreliable energy sources. To address this challenge, the Federal Government, with support from the World Bank Group, launched the DARES programme to expand renewable energy solutions through mini-grids and standalone solar systems. The Rural Electrification Agency manages the programme, with support from private sector developers.

Mini-grids have become an important option for communities that are not connected to the national grid. They provide electricity for homes, schools, health centres and small businesses using renewable energy. The programme also aims to reduce pollution by replacing diesel generators and other fossil fuel sources with cleaner alternatives.

GGC's impact

The Green Guarantee Company was established to help attract private capital into climate-related projects in Africa. Its financial guarantees reduce investment risks, making it easier for banks and investors to support renewable energy projects that might otherwise struggle to secure funding.

The company announced in London that the guarantee forms part of its first climate finance transactions, which together mobilised USD 70 million for sustainable energy projects in Africa.

The Nigerian project involves a $20 million framework guarantee provided to Bank of Africa UK. The facility will support mini-grid projects under the DARES programme. ImpactA Global is participating as a co-lender alongside the guaranteed facility.

The investment is expected to provide new or improved electricity access to about 340,000 people living in underserved communities. It will also install about 13 megawatts of renewable energy capacity.

Project partners said the investment will strengthen renewable energy infrastructure while helping local developers expand electricity services in rural communities.

The initiative is also expected to avoid about 250,000 tonnes of carbon dioxide equivalent emissions each year by replacing more polluting energy sources with renewable power.

Wider climate finance effort

The Nigerian transaction is part of a wider climate finance package completed by the Green Guarantee Company.

Its second transaction is a $50 million guarantee supporting a green bond listed on the International Securities Market of the London Stock Exchange. Standard Chartered arranged the bond, which attracted investments from institutional investors in the United Kingdom and the United States, including Legal & General, Calvert Impact Capital and Ceniarth.

The money from that bond will finance lending platforms backed by distributed solar energy assets in Sub-Saharan Africa. The first funding will support d.light's pay-as-you-go solar business, with the project expected to expand clean energy access to nearly 4.3 million people.

Lasitha Perera, Chief Executive Officer of the Development Guarantee Group, which manages the Green Guarantee Company, said the first transactions provide a foundation for larger climate finance investments.

Christopher Marks, Chairman of the Green Guarantee Company Board, said the organisation has developed a pipeline of projects aimed at supporting affordable long-term financing for renewable energy.

Officials from Standard Chartered, African Frontier Capital and Bank of Africa UK also said financial guarantees, combined with capital market expertise, can help connect international investors with renewable energy projects in Africa.

The GGC is backed by shareholders that include the Green Climate Fund, KfW, the United Kingdom's MOBILIST programme, Norfund and the Nigerian Sovereign Investment Authority. Through projects such as the DARES programme, the company aims to attract more private investment into renewable energy while helping underserved communities gain reliable electricity.