A key issue is that the government of the country has changed the previously established tariffs and reduced the subsidies for grid electricity prices, citing a decrease in the cost of photovoltaic modules. Out of the 14 independent photovoltaic power producers in the country, only two companies have accepted a reduction in their feed-in tariff subsidies, while the remaining companies have stated that the feed-in tariff subsidies are too low to accept.

Nigeria Bulk Electricity Trading Company (NBET) also requires partial risk guarantee, which is an agreement reached between the company as the purchaser and financial institutions. Essentially, this is a guarantee to provide more liquidity to Nigeria's bulk electricity trading company (NBET) when it needs cash, and the government must provide this guarantee to financial entities. Without this guarantee, photovoltaic independent power producers will not be able to achieve financial settlement. But so far, the government has not provided guarantees, partly due to a lack of trust in the electricity market, and some financial institutions have now cancelled proposals to provide guarantees.



Ultimately, the lack of trust among lenders in the Nigerian electricity market also stems from fundamental issues with the power grid, especially in terms of reliability and flexibility. This is why most lenders and developers need guarantees to protect their investments, while the operation of most of Nigeria's power grid infrastructure is not reliable.



The Nigerian government's preferential policies for photovoltaic systems and other renewable energy sources are the foundation for the successful development of clean energy. One strategy that can be considered is to split the acquisition market by allowing companies to purchase electricity directly from power suppliers. This largely eliminates the necessity of price regulation, enabling those who do not mind paying a premium for stability and flexibility to do so. This in turn eliminates most of the complex guarantees required by loan institutions for project financing and improves liquidity.



In addition, upgrading the grid infrastructure and increasing transmission capacity are crucial, as more photovoltaic systems can be connected to the grid, thereby improving energy security. In this regard, multilateral development banks can also play an important role. The reason why fossil fuel power plants can be successfully developed and continue to be used is because multilateral development banks have provided risk guarantees for them. If these can be expanded to the emerging photovoltaic market in Nigeria, it will increase the development and adoption of photovoltaic systems.