Nigerian cleantech startup Arnergy has raised $15 million in a Series B extension, bringing the total funding for the round to $18 million, as demand for solar energy solutions surges in the power-starved country. The investment will enable the company to expand its operations and meet the growing need for reliable and affordable energy.

The surge in demand for solar systems follows significant policy shifts, including the removal of Nigeria's decades-old fuel subsidy in May 2023. The move has led to a nearly 500% increase in petrol prices, making power generators, once seen as a more affordable alternative to unreliable grid power and solar systems, far costlier to run.

Arnergy's pitch has evolved with the times, shifting from a resilience play to a cost-savings strategy. According to founder and CEO Femi Adeyemo, the company can now clearly show customers how its systems save them money monthly, whether using petrol, diesel, or even the grid. This change in approach has resonated with customers, with the company's lease-to-own product, Z Lite, becoming a core focus.

The lease-to-own model has gained traction, with customers paying fixed monthly fees over 5 to 10 years before owning the system. This approach has become more attractive compared to electricity tariffs, which have climbed significantly following a new government policy last April that tripled electricity consumption costs for customers with the most stable power. As a result, Arnergy has tripled its lease customer base between 2023 and 2024 and expects to grow it 4-5x this year.

The company plans to use its new funding to install more than 12,000 systems by 2029, with a focus on expanding its operations through partnerships with business clients and physical retail outlets outside Lagos. Arnergy has already deployed over 1,800 systems across 35 Nigerian states, totaling 9MWp of solar and 23MWh of battery storage.

However, the company's growth plans may be threatened by a proposed policy to ban solar panel imports to boost local manufacturing. While Arnergy supports the goal of promoting local manufacturing, CEO Femi Adeyemo warns that a premature ban could stall an industry that's only just getting off the ground. Instead, he advocates for creating an environment with the right infrastructure, policy stability, and access to capital to enable local factories to ramp up over the next 3 to 5 years.

The proposed ban has drawn backlash from stakeholders who argue that domestic capacity is far from ready. Adeyemo's concerns are echoed by industry experts, who warn that a ban on imports could have devastating consequences for the industry and the millions of Nigerians who rely on solar as their primary energy source.

Despite the challenges, Arnergy remains committed to its mission of providing reliable and affordable energy solutions to Nigerians. With its new funding and strategic partnerships, the company is well-positioned to drive growth and expansion in the country's power-starved market.