Solar energy consumption in power-starved locations of Nigeria has grown dramatically over the last decade as grid reliability has deteriorated and fuel costs have increased.That has sparked investor interest in Arnergy, a cleantech business that addresses that demand. The company recently earned a $15 million Series B, an extra period increasing the total to $18 million.

Significant legislative changes, which include the elimination of Nigeria’s long-standing gasoline subsidy in May 2023 (the government’s decision—long debated—ended its method of subsidizing the gap between worldwide and regional fuel prices), have resulted in a boom in popularity for solar systems.

Since then, gas prices have increased by almost 500%, making power generators—once thought to be a more cost-effective option than unstable grid electricity and solar systems, despite their potential for environmental risks—much more expensive to operate.

With the times, Arnergy’s pitch has evolved.

“When we started the business, we used to position solar as a way to get uninterrupted power, not necessarily to save money. It wasn’t part of a commercial conversation, “

Femi Adeyemo, the founder and CEO, told TechCrunch.

“It is now, as we can clearly demonstrate to our clients, exactly that our technology can save them money each month, whether they use the grid, gasoline, or diesel.”

For the environmentally friendly company supported by Bill Gates’s Advanced Energy Ventures (which led Arnergy’s $9 million Series A in 2019), what started out as an adaptability play is now a cost-savings approach that is altering the economics of adoption.

Lease-to-Own Model Gains Traction

The company’s lease-to-own offering, Z Lite, which emerged as a primary emphasis after Arnergy’s initial Series B tranche last year, is the best example of this uptake.

Outright acquisitions made up only 25% of revenues last year, but they accounted for 60% to 70% of revenue in 2023. However, lease-to-own has become more popular, when clients pay set monthly costs for five to ten years before they purchase the system.

According to Bloomberg, affordability in relation to electricity rates is one factor driving this shift. Long-term leases were thought to be more expensive than operating diesel or gasoline generators until recently.