Demand for photo voltaic power in power-starved Nigeria has soared within the final decade because of worsening grid reliability and rising gasoline prices. That’s drawn investor curiosity to Arnergy, a clear tech startup assembly that want. The corporate simply raised a $15 million Sequence B extension (on high of a $3 million B1 spherical final 12 months), bringing its whole for the spherical to $18 million.
That surge in demand for photo voltaic methods follows important coverage shifts, most notably the removing of Nigeria’s decades-old gasoline subsidy in Might 2023 (the federal government’s choice — lengthy debated — ended its observe of overlaying the hole between world and native gasoline costs).
Since then, petrol costs have jumped almost 500%, making energy turbines, as soon as seen because the extra reasonably priced various to unreliable grid energy and photo voltaic methods regardless of environmental hazards, far costlier to run.
Arnergy’s pitch has modified with the occasions. “After we began the enterprise, we used to place photo voltaic as a option to get uninterrupted energy, not essentially to economize. It wasn’t a part of a business dialog,” founder and CEO Femi Adeyemo informed TechCrunch. “Now it’s, as a result of we are able to clearly present clients how our methods save them month-to-month whether or not utilizing petrol, diesel, and even the grid.”
Adeyemo launched Arnergy in 2013 to supply photo voltaic methods to houses and companies throughout sectors like hospitality, training, finance, agriculture, and healthcare.
What started as a resilience play is now a cost-savings technique altering the economics of adoption for the cleantech backed by Invoice Gates’s Breakthrough Vitality Ventures (the agency led Arnergy’s $9 million Sequence A in 2019.)
Lease-to-own growing adoption
That adoption is clearest within the firm’s lease-to-own product, Z Lite, which turned a core focus following Arnergy’s first Sequence B tranche final 12 months.
Whereas outright purchases comprised 60% to 70% of income in 2023, they accounted for simply 25% of gross sales final 12 months. However, lease-to-own, the place clients pay mounted month-to-month charges over 5 to 10 years earlier than proudly owning the system, has gained extra traction.
One cause for this modification is affordability when in comparison with electrical energy tariffs. Till just lately, many individuals considered long-term leases as costlier than working diesel or petrol turbines. However with diesel costs hovering post-subsidy removing and grid tariffs climbing—particularly after a brand new authorities coverage final April that tripled electrical energy consumption prices for patrons with probably the most steady energy—lease-to-own photo voltaic is turning into standard amongst clients, says Adeyemo.
“Think about paying ₦200,000 (~$125) each month for energy. With our product, that drops to ₦96,000 (~$60). Over 5 years, it’s a no brainer what you’ll save,” stated the CEO. He added that many current clients are returning to double their photo voltaic capability or change utterly off-grid in consequence.
Arnergy tripled its lease buyer base between 2023 and 2024 and expects to develop it 4–5x this 12 months. Naira revenues have climbed accordingly and are on monitor to quadruple by the top of the 12 months.
Greenback revenues, alternatively, have remained flat attributable to forex devaluation, however Adeyemo stated the corporate is constructing FX income by means of dollar-denominated B2B2C partnerships and potential growth into Francophone Africa.
Scaling amidst yet one more authorities coverage
Thus far, Arnergy has deployed over 1,800 methods throughout 35 Nigerian states, totaling 9MWp of photo voltaic and 23MWh of battery storage.
Arnergy plans to make use of its new funding led Nigerian non-public fairness agency CardinalStone Capital Advisers (CCA) to put in greater than 12,000 methods by 2029. Breakthrough Vitality Ventures in addition to British Worldwide Funding, Norfund, EDFI MC, and All On participated within the spherical.
However hitting that focus on requires a strategic shift. For almost a decade, Arnergy dealt with gross sales in-house. Now, it’s adopting a partnership-driven mannequin with enterprise shoppers and bodily stores exterior Lagos to succeed in extra clients in Nigeria’s power-starved market.
The Lagos-based cleantech is in talks to boost extra native debt from banks and DFIs to assist these initiatives together with energy-as-a-service (EaaS) options for multinationals, says Adeyemo.
But as Arnergy prepares to scale, a proposed coverage may threaten its momentum.
Final month, Nigeria’s authorities introduced plans to ban photo voltaic panel imports to spice up native manufacturing. The transfer has drawn backlash from stakeholders who argue that home capability is much from prepared.
Adeyemo agrees with the objective, however not the method. He warned {that a} untimely ban may stall an business that’s solely simply getting off the bottom.
In response to the CEO, Nigeria must create an surroundings with the proper infrastructure, coverage stability, and entry to capital in order that native factories can ramp up over the following 3 to five years. Solely after that ought to the nation begin fascinated about phasing out imports.
“We’re advocates for native manufacturing. However let’s construct capability earlier than shutting the door on imports. In any other case, we threat doing extra hurt than good, each to the business and to the thousands and thousands of Nigerians who now depend on photo voltaic as their major power supply,” he remarked.
