Arnergy, a Nigerian cleantech startup focused on distributed solar energy solutions, has raised an additional $15 million as an extension of its Series B round, adding to the $3 million it secured in an earlier tranche in 2023. This brings the total Series B funding to $18 million.
The latest investment round was led by CardinalStone Capital Advisers (CCA), a Nigerian private equity firm. Other participants include Breakthrough Energy Ventures — which led Arnergy’s $9 million Series A round in 2019 — alongside British International Investment (BII), Norfund, EDFI Management Company (EDFI MC), and All On, an off-grid energy impact investor backed by Shell.
The capital injection will be deployed to support Arnergy’s ambitions to install more than 12,000 additional solar energy systems by 2029, up from the 1,800 it has already deployed across 35 Nigerian states. These systems currently account for a combined 9 megawatts peak (MWp) of solar capacity and 23 megawatt-hours (MWh) of battery storage.
A significant portion of the new capital will also fund the scaling of Arnergy’s lease-to-own product, Z Lite, which has become central to its commercial model. The startup is shifting from a fully in-house sales strategy to a partnership-driven model — including collaborations with retail outlets and B2B2C channels — to increase accessibility outside Lagos. Additionally, the company is in discussions with local banks and Development Finance Institutions (DFIs) to raise debt that will finance energy-as-a-service (EaaS) solutions for large enterprises and multinational customers.
However, Arnergy’s scaling plans face a looming policy threat: the Nigerian government’s proposal to ban imported solar panels. While intended to promote local manufacturing, critics argue — and CEO Femi Adeyemo agrees — that the policy is premature given Nigeria’s inadequate local capacity. A rushed implementation could destabilize the sector and hinder progress on electrification.
Why the Investors Backed Arnergy
Investor confidence in Arnergy is grounded in a set of strong, data-driven fundamentals rather than sentiment or hype. The decision to commit $18 million to the cleantech firm can be explained by three interconnected dynamics:
1. Macroeconomic Tailwinds:
The abolition of Nigeria’s fuel subsidy in May 2023 radically altered the country’s energy economics. Petrol prices have surged by nearly 500%, and diesel costs have also escalated. With fuel now prohibitively expensive, solar energy has become a more attractive alternative for homes and businesses. Power generators, previously considered a “cheaper evil,” are no longer financially viable.
This shift has caused a spike in solar demand, which investors interpret as a structural, not cyclical, change. For long-term investors, especially impact and climate-focused funds like Breakthrough Energy Ventures and Norfund, this presents a rare opportunity to ride a sustainable growth curve in a large underserved market.
2. Business Model Evolution and Evidence of Product-Market Fit:
Arnergy has pivoted smartly to match market needs. Once positioned as a premium product for power resilience, its solar offerings are now marketed as cost-saving alternatives. The startup’s lease-to-own model, Z Lite, has surged in adoption, comprising 75% of sales in the latest financial year, compared to 30–40% in prior years.
The financial logic is simple: Arnergy customers have seen energy costs drop from ₦200,000 ($125) monthly to ₦96,000 ($60). With these savings, many customers are not just sticking around — they are doubling their solar capacity or cutting the grid entirely. Arnergy tripled its lease customer base between 2023 and 2024 and expects 4–5x growth in the current year, offering clear growth metrics for investors to track.
3. Strategic Positioning and Execution Capability:
Investors were likely further reassured by Arnergy’s measured and adaptable scaling strategy. Rather than overextend, the company has opted for incremental expansion, initially testing a distributed partnership approach before rolling it out nationally. Its success in deploying 1,800 solar systems across all but one Nigerian state demonstrates operational viability and execution competence.
Furthermore, the company’s focus on dollar-denominated B2B2C partnerships and potential expansion into Francophone Africa shows a proactive response to currency risks. This is particularly important in Nigeria, where naira depreciation has undermined local-currency earnings. Arnergy’s efforts to buffer this exposure indicates strong financial stewardship — something impact-focused funds increasingly look for in growth-stage African ventures.
A Look at Arnergy
Founded in 2013 by Femi Adeyemo, a former telecommunications engineer turned clean energy entrepreneur, Arnergy is one of Nigeria’s most prominent homegrown cleantech startups. Co-founder and current CTO Kunle Odebunmi brings decades of engineering experience to the firm’s technical backbone.
The startup is headquartered in Lagos, but its operational footprint spans nearly all Nigerian states, targeting regions with poor grid reliability. Arnergy’s core offering includes solar photovoltaic (PV) systems paired with lithium-ion battery storage, delivered to customers through both direct sales and a growing lease-to-own model.
The company’s primary markets are homes and businesses across sectors like education, healthcare, hospitality, agriculture, and financial services — all of which suffer from frequent blackouts and high energy costs. Its emphasis on productivity and cost-effectiveness has made solar viable for a larger customer base, moving the conversation from environmental idealism to economic necessity.
Beyond products, Arnergy has also innovated on financing and service delivery, offering digital monitoring tools, customer support, and flexible payment schemes. This full-stack approach is crucial in an environment where technical literacy and trust in off-grid solutions remain low.
Notably, Arnergy has remained relatively capital-efficient. Until the latest Series B, it had raised only $9 million in Series A (2019) and $3 million in Series B1 (2023) — a modest sum compared to its deployment scale. The startup has used those funds to demonstrate market fit, build a replicable model, and grow organically without falling into the common trap of overcapitalization in emerging markets.
As it prepares for its next growth phase, the company’s challenge will be balancing scaling with policy navigation, especially in light of Nigeria’s shifting stance on renewable energy imports. For now, however, Arnergy remains one of the most compelling bets on Africa’s off-grid energy future.