Beyond the Grid: How Incentive Policies Can Bridge the Electricity Access Gap in Rural Nigeria

Abstract

Globally, Nigeria has the highest number of people without electricity access, with the majority living in rural areas. Traditional grid extension is not economically feasible for most rural communities, necessitating private investment in mini-grids and stand-alone systems. However, progress is slow due to high perceived investment risk, highlighting the critical need for government incentive policies. This paper investigates the impacts and effectiveness of such policies in Nigeria, revealing that financing productive use equipment proves decisively more effective in lowering costs for mini-grids and stand-alone systems than concessionary loans or capital subsidies. We identified three main incentives: (i) concessionary loans, (ii) capital subsidies, and (iii) financing for productive use equipment. Using a combination of geospatial and regulatory analyses, we evaluated the impact of these incentives on rural electrification across 22,696 rural population clusters.