Energy as a Service in Nigeria: Solar With No Upfront Cost

Almost every Lagos business that looks seriously at solar reaches the same wall. The diesel comes out of this month’s revenue. The system wants fifteen million naira in one payment. The arithmetic is obvious, the capital is not, and so the generator keeps running for another year. Energy as a Service exists for exactly that gap, and for daytime commercial loads it is the structure that fits best.

What energy as a service means

Under an Energy as a Service agreement you never buy the system. The provider funds it, installs it, owns it, monitors it and maintains it. You pay a monthly bill for the power, exactly as you pay for diesel today, except the bill is 50–60% of what you currently spend and it is lower from the very first month.

There is no deposit, no procurement cycle, no maintenance contract to negotiate separately, and no capital sitting on your balance sheet depreciating. If an inverter fails in year five, it is our problem and our cost.

Why this fits commercial and daytime loads

This is the part most coverage of EaaS skips, and it decides whether the model works for you at all. Solar produces during daylight hours. A business that runs from eight in the morning until six in the evening consumes at almost exactly the hours the array is generating, so most of what the panels make is used the moment it is made, rather than cycled through a battery and returned at a loss.

That single fact drives everything. A daytime commercial load needs proportionally less battery per kilowatt-hour served, wastes less energy to round-trip losses, and extracts more value from every panel on the roof. A household with the same annual consumption draws most of it after sunset, which means a bigger battery, more losses and worse economics.

• Offices, clinics, schools, retail, light industry: load concentrated in working hours, which is when generation peaks.
• Sites already running a generator through the working day: the most expensive electricity anyone buys, replaced by the cheapest.
• Businesses where downtime has a cost that is measured in lost trading rather than inconvenience.

What you are actually buying: uptime

The name matters. The contract is not for a solar system, it is for power during your working day. Meeting that promise is an operational commitment, not a hardware one, and it is why the system stays ours to run:

• Remote monitoring on every installation. We see generation, battery state and consumption continuously, so a degrading string or a failing cell surfaces as a maintenance visit rather than as your lights going out.
• Grid forecasting. Lagos grid availability is predictable enough to plan around. Knowing when supply is likely to drop means the battery can be held at the right state of charge going into it, instead of being caught low.
• Maintenance included for the life of the contract. Cleaning, servicing, replacement, all of it.
• We carry the failure risk. Equipment that fails is equipment we replace, and our revenue depends on it working.

What Lagos power actually costs right now

The bill is calculated off your current blended cost, so that number has to be honest. Two things set it: the price of diesel, and how much of the time the grid is actually there.

With diesel at ₦1,900–₦2,000 a litre, a well-maintained generator produces electricity at roughly ₦607–₦702 per kilowatt-hour in fuel alone. Servicing, overhaul, managed-power premiums and diesel theft add another ₦60–₦120, so generator power costs ₦700–₦790 per kilowatt-hour all-in. Band A grid power costs ₦210. Most commercial sites in Lagos see the grid somewhere between 40% and 60% of the time, and burn diesel for the rest.

The worse your grid, the more of your energy comes from the most expensive source you have, and the more a service agreement is worth to you. Sites with the least reliable supply benefit most.

A worked example

Take a commercial site consuming 65 kWh a day: a mid-sized office, a clinic, a busy retail unit. Grid roughly half the time, generator the rest, at the central blended rate of ₦471 per kWh.

Across the seven-year term

Both your diesel bill and the service fee rise with inflation, which is the point of indexing: the gap holds in real terms instead of quietly closing. Below, the same site over the full contract, at three inflation assumptions.

Because both sides are indexed, the proportion holds while the absolute gap widens every year diesel moves. The saving rises as inflation rises, because a fixed share of a bigger number is a bigger number. A business that keeps its generator is not holding costs steady. It is holding a position that gets worse every year diesel moves.

Who should take which

Take the service agreement if

• You cannot or will not commit eight figures of capital to a roof.
• Your capital earns more inside the business than the roughly 25% a year that owning a system returns.
• You rent, and cannot justify fixing an asset to a building you may leave.
• You want the equipment risk and the maintenance burden to sit with someone whose revenue depends on the system running.

Buy outright or lease-to-own if

• You have capital that is not working harder elsewhere. Payback on purchase runs one to two years on most commercial sites.
• You own the building and intend to stay in it.
• You want the asset on your balance sheet rather than a recurring obligation against it.

The comparison most businesses are actually making

The argument between funding structures obscures the column that dwarfs all of them. Seven years of the status quo costs this site between ₦106M and ₦144M, depending on where diesel goes. Every route out of that (service agreement, lease, outright purchase) is better than the road you are already on.

The expensive decision is not picking the wrong structure. It is spending another year running the generator while deciding. If you want the arithmetic behind that ₦106M, we set out what a generator truly costs per kilowatt-hour in solar versus generator in Lagos, and how to size a system against a real load in what size solar system you need.