DRE, DARES: Moving from Slogans to Measurable and Sustainable Clean Electricity

SOStainabilityWeekly

By Oke Epia, E-mail: sostainability01@gmail.com  | WhatsApp: +234 8034000706

Trends and Threads

Beyond the billions of naira announced in launches and mobilised in climate finance, Nigerians yearn for affordable and sustainable electricity, writes Mmachi Okafor

Nigeria’s distributed renewable energy sector received a significant boost in September 2026 with the commercial launch of the $300 million Nigeria Distributed Renewable Energy (DRE) Fund. Announced by the Nigeria Sovereign Investment Authority (NSIA), Africa50 and Sustainable Energy for All (SEforALL) on the sidelines of the United Nations General Assembly in New York, the fund aims to attract investment into distributed renewable energy and expand electricity access. Its long-term significance, however, will depend on how effectively the financing translates into reliable, affordable power and measurable improvements in people’s lives.
For millions of Nigerians, unreliable electricity remains a major obstacle to economic activity, education, healthcare and household welfare. Distributed renewable energy solutions, including solar mini-grids and standalone solar systems, offer an alternative for communities and businesses that are poorly served by the national grid. Yet, despite their potential, these projects face persistent challenges, including high financing costs, foreign exchange volatility, regulatory uncertainty and consumers’ limited purchasing power.
The DRE Promise
The DRE Fund seeks to address some of these barriers by mobilising capital for renewable energy development. Its objectives also align with Mission 300, an initiative targeting electricity access for 300 million people across Africa by 2030. However, the fund’s success will depend not simply on the amount announced, but on whether it attracts additional private investment and supports projects that would otherwise struggle to secure financing.
Institutional economics offers another perspective. Douglass North’s work highlights how institutions, rules and enforcement mechanisms influence economic performance. For renewable energy investors, predictable regulations, credible contracts and macroeconomic stability can be just as important as access to capital. This means the fund’s effectiveness will also depend on the broader policy environment in which projects operate.
Beyond investment returns, energy justice raises an important question: who ultimately benefits from expanded electricity access? Research by Jenkins and colleagues emphasises the importance of fair distribution, meaningful participation and recognition of communities’ different needs. If projects primarily serve commercially attractive locations, low-income and remote communities could remain underserved. Financing strategies must therefore balance commercial viability with affordability and inclusion.
The economic benefits of electricity access also extend beyond connecting households to power. Reliable electricity can help small businesses increase productivity, extend operating hours, preserve goods and create employment opportunities. However, these benefits are not automatic. They depend on whether electricity is affordable, dependable and used for productive activities.
Whither the DARES Impact?
Nigeria’s Distributed Access through Renewable Energy Scale-up (DARES) programme provides an important framework for understanding the government’s broader efforts to address electricity shortages through decentralised renewable energy solutions. Approved by the World Bank in December 2023, the programme is supported by $750 million in International Development Association (IDA) financing and is designed to improve electricity access for more than 17.5 million Nigerians.
Implemented through Nigeria’s Rural Electrification Agency (REA), DARES focuses on expanding private-sector participation in renewable energy development, particularly in rural and underserved communities where conventional electricity infrastructure remains inadequate. Unlike the newly launched $300 million DRE Fund, which is structured to mobilise investment capital, DARES uses public development financing to support electricity access through mechanisms that encourage private-sector participation.
A major component of DARES involves supporting the development of solar-powered mini-grids in rural and underserved communities. These decentralised electricity systems can supply power to households, small businesses, schools, healthcare facilities and agricultural enterprises without requiring immediate connection to the national electricity grid. Through performance-based grants and other financing mechanisms, the programme seeks to encourage private developers to invest in locations where commercial returns might otherwise be insufficient.
This approach is particularly important in communities where extending conventional electricity infrastructure would be expensive or technically difficult. However, mini-grid deployment must be accompanied by effective maintenance systems, transparent tariff structures and consumer protection measures to ensure long-term sustainability.
DARES also supports the expansion of standalone solar systems for households and small enterprises that cannot easily access electricity through the national grid or mini-grid networks. These systems can provide electricity for lighting, phone charging, refrigeration, communication equipment and other essential services. Their importance is particularly evident in remote communities where population density or geographical conditions make larger electricity infrastructure economically challenging.
Nevertheless, the affordability of standalone systems remains a significant concern. Even where financing arrangements reduce initial costs, many low-income households may struggle with repayment obligations or the cost of replacing batteries and other components.

Another important aspect of DARES is its emphasis on attracting private investment into Nigeria’s renewable energy market. Rather than relying exclusively on government-owned electricity infrastructure, the programme seeks to create opportunities for renewable energy developers, equipment suppliers, financial institutions and local entrepreneurs. This strategy recognises that public financing alone is unlikely to meet Nigeria’s enormous electricity infrastructure requirements.
By reducing some of the financial risks associated with renewable energy projects, DARES could encourage private companies to expand their operations into underserved communities. However, its success will depend on transparent project selection, credible financing arrangements, effective regulatory oversight and the ability of participating businesses to remain financially sustainable.
Beyond household electrification, DARES recognises the importance of using electricity to stimulate economic activity. Reliable power can support agricultural processing, irrigation, cold storage, manufacturing, retail operations and other income-generating activities. For instance, rural farmers could benefit from solar-powered irrigation and refrigeration systems that reduce post-harvest losses, while small businesses could lower their dependence on expensive petrol and diesel generators.
Similarly, access to electricity could enable healthcare centres to preserve vaccines, schools to operate digital learning facilities and entrepreneurs to extend their business hours. However, these economic benefits require complementary investments in equipment, business development, technical training and access to markets. Electricity access alone does not guarantee higher productivity or employment creation.
DARES also operates within Nigeria’s broader electricity reform framework, requiring coordination among the Rural Electrification Agency, electricity regulators, state governments, private developers and participating communities. Effective implementation depends on clear regulations, reliable project monitoring and the capacity of relevant institutions to manage financing and enforce contractual obligations.
The programme must also address the relationship between mini-grid infrastructure and future national grid expansion. Without adequate coordination, developers could face uncertainty over their investments when the national grid eventually reaches communities already served by decentralised electricity systems. This makes regulatory predictability and long-term electricity planning essential.
DARES represents a potentially significant intervention in Nigeria’s electricity sector because it combines international development financing with private-sector participation and decentralised renewable energy technologies. Its projected reach of more than 17.5 million Nigerians suggests that successful implementation could contribute substantially to reducing electricity poverty. However, the programme’s effectiveness should be assessed against measurable outcomes rather than financing commitments or projected beneficiary figures alone.
One of DARES’ strongest features is its focus on communities that have historically received inadequate electricity services. By supporting mini-grids and standalone systems, the programme could reach households and businesses excluded from conventional electricity infrastructure. Nevertheless, questions remain about whether the poorest communities will benefit equally.
Private developers may naturally prefer locations with higher electricity demand and stronger consumer purchasing power. Consequently, without carefully designed subsidies and social inclusion measures, communities experiencing the most severe electricity poverty could remain underserved. A credible assessment should therefore examine the geographical distribution of projects, household affordability, gender inclusion and the participation of vulnerable communities.
The programme also has the potential to strengthen local economies by reducing dependence on costly fossil-fuel generators. For small businesses, reliable electricity can reduce operating expenses, improve productivity and create opportunities for expansion. Renewable energy deployment could also generate employment in installation, equipment distribution, maintenance, technical services and local enterprise development.
The Search for Impact
However, these outcomes should not be assumed. Independent evaluations would need to establish how many sustainable jobs are created, whether participating businesses experience measurable income growth and whether electricity costs become more affordable. For example, comparing business performance before and after electrification would provide stronger evidence of the programme’s economic impact.
Although DARES benefits from substantial development financing, Nigeria’s difficult macroeconomic environment presents important challenges. Exchange-rate instability can increase the cost of imported solar panels, batteries, inverters and other renewable energy equipment. Inflation and high borrowing costs may also undermine project profitability and household affordability.
Furthermore, developers operating in low-income communities may struggle to recover investments through electricity tariffs. This creates a delicate balance between ensuring affordable electricity for consumers and maintaining commercially sustainable energy businesses. The programme’s long-term success will therefore depend on its ability to reduce financial risks without creating permanent dependence on public subsidies.
Nigeria’s electricity sector continues to experience regulatory and institutional challenges that could affect renewable energy development. Project approval procedures, tariff regulations, licensing requirements and coordination between federal and state authorities may influence implementation.
The Electricity Act 2023, which provides a framework for greater state participation in electricity regulation, creates opportunities for decentralised energy development but also increases the importance of coordination across jurisdictions. Strong oversight will be necessary to prevent project delays, inefficient spending and uneven implementation.
Transparent reporting on funding disbursement, project completion, electricity connections and service quality would help strengthen public confidence. More on this as SOStainability unravels the RENEW SDG7 project in the coming weeks.