The financing is tied to changes in mini-grid rules as stronger private-sector interest in interconnected projects prompts a major restructuring of the DARES programme…..
Nigeria’s push to expand decentralised electricity is facing a major policy test, with the World Bank tying $200 million in performance-based financing to reforms aimed at making the country’s mini-grid regulatory framework more predictable for investors.
The funding represents the entire Performance-Based Conditions allocation under the World Bank’s $750 million Distributed Access through Renewable Energy Scale-up (DARES) project.
The bank’s latest project documents show that the third performance condition, focused on improving Nigeria’s regulatory framework for mini-grids, carries the full $200 million allocation.
Of this amount, $150 million is linked to an intermediate reform target, while the remaining $50 million is tied to a subsequent target.
The arrangement places regulatory reform at the centre of Nigeria’s efforts to attract private capital into decentralised renewable energy.
To meet the World Bank’s condition, the Nigerian Electricity Regulatory Commission (NERC) is required to revise its mini-grid regulations in several areas.
The proposed changes include allowing the batch processing of licence and tariff applications, which could reduce the administrative burden faced by developers seeking to deploy multiple projects.
The rules must also require electricity distribution companies to provide 12 months’ notice before reaching a mini-grid site.
Another requirement is clearer definition of the rights and obligations of communities involved in urban mini-grid projects.
The World Bank framework also calls for a revision of the existing permit limit for mini-grids.
Taken together, the reforms are intended to give developers greater certainty about licensing, tariffs, access to project sites and community arrangements before committing capital.
That certainty is particularly important for DARES because the programme was designed to use concessional public funding to lower project costs and attract additional commercial investment into renewable energy.
The regulatory reforms come as the World Bank reassesses how DARES funding should be deployed following the experience of the programme’s early implementation.
According to the bank, private companies and electricity distribution firms have shown strong interest in interconnected mini-grids, with the pipeline of potential projects significantly larger than what the original programme budget could support.
The World Bank reported relatively limited private-sector interest in Minimum Subsidy Tenders for isolated mini-grids, prompting a proposed $95 million reallocation from isolated to interconnected projects.
The shift means more programme resources will be directed towards the segment where developers and DisCos have demonstrated stronger commercial interest.
However, the stronger appetite has not necessarily translated into lower public funding requirements.
The first interconnected mini-grid tender also revealed a challenge for the programme’s original financial model.
The World Bank said price discovery from the initial tender showed that developers required significantly higher grants than originally anticipated, while their own financial contribution was lower.
In other words, private investors are interested in the market, but the economics of providing electricity to underserved communities remain difficult without substantial public support.
The government needs private capital to expand electricity access, but the cost of serving communities outside conventional grid networks means public financing may have to absorb a larger portion of the initial investment risk.
Despite the challenges, the DARES programme has already delivered substantial progress since becoming effective in November 2024.
As of June 2026, more than 5.2 million people had gained access to electricity through the programme, compared with an overall target of 16.2 million.
More than one million standalone solar systems had also been deployed.
The World Bank said DARES had disbursed $70.26 million as of June 10, 2026, while another $128.6 million had been cleared for award under the first interconnected mini-grid Minimum Subsidy Tender.
In addition, $293.6 million had been committed through signed grant agreements under the Performance-Based Grant window for isolated mini-grids.
The bank noted that access figures are advancing faster than disbursements partly because standalone solar systems are significantly cheaper and faster to deploy than mini-grids.
Mini-grid projects, by comparison, require larger investments and more complex infrastructure.
The $200 million tied to regulatory performance should not be confused with the additional $242.9 million financing package approved as part of the World Bank’s June 2026 restructuring of DARES.
The additional financing comprises a $49.1 million US Department of Justice trust-fund grant and approximately $193.8 million in JICA financing.
The new funding will support several areas of the programme.
The $49.1 million grant will expand renewable-energy access to public institutions, including healthcare and education facilities.
JICA financing will support the expansion of both interconnected and isolated mini-grids while also strengthening institutional capacity.
The restructuring also replaces the original $20 million Lagos solar rooftop pilot with a broader programme targeting renewable-energy supply to public institutions at federal and sub-national levels.
The restructuring has also changed the amount of private capital the World Bank expects DARES to mobilise.
The target has been reduced from $1.028 billion to $733 million.
The bank attributed the reduction partly to the larger public contribution now required for mini-grid projects and the decision to direct more resources towards solar-for-business initiatives and public-institution electrification.
Those areas are expected to generate less private capital mobilisation than standalone solar projects.
Nevertheless, the World Bank expects every $1 of public financing to leverage about $0.79 in private capital, resulting in an estimated $733 million in private investment.
The revised structure effectively moves DARES towards a more deliberate blended-finance model, in which concessional public funds absorb more of the initial risk before commercial investors commit capital.
Despite the reduction in expected private capital, the restructuring has significantly increased the programme’s renewable-energy capacity target.
DARES’ target has been raised from 465MW to 811MW.
Interconnected mini-grids account for the largest portion of the revised target, with 434MW allocated to the segment.
Isolated mini-grids are expected to contribute another 56MW, alongside capacity from solar home systems, public institutions, businesses and productive-use equipment.
The revised programme also introduces a new target focused specifically on public institutions.
Its implementation period has been extended to December 31, 2029, giving the government and its partners an additional year to deliver the expanded programme.
For Nigeria, the message from the World Bank is clear: expanding electricity access will require more than installing solar panels and mini-grids. Regulatory certainty, viable project economics and private-sector confidence will be equally important to turning decentralised power into a sustainable market.
