Is Solar a Good Investment for Your Business in Nigeria?
Commercial solar in Nigeria typically returns 35–55% IRR over its lifetime for businesses replacing heavy diesel use, with an annual cash yield of 18–28% once the system reaches breakeven. That compares to single-digit returns on a fixed deposit and far less certainty than most other capital projects a Nigerian business can put money into this year, because the "return" is a guaranteed cost avoided every month, not a market bet.
Prices last verified: 2026-08-08. See sources below.
Solar IRR and Yield by System Size
Based on Nigerian commercial properties replacing 10–12 hours a day of diesel generator run-time, over a 20-year system lifespan. IRR and yield assume typical installed cost per kw and pump price as of the verification date above; your actual figure depends on your current diesel and grid spend.
| System Size | Typical Installed Cost | 20-Year IRR | Annual Cash Yield* |
|---|---|---|---|
| 10–20kw | ₦6,500,000–₦12,000,000 | 45–58% | 22–28% |
| 30–50kw | ₦18,000,000–₦28,000,000 | 40–50% | 20–25% |
| 75–100kw | ₦32,000,000–₦48,000,000 | 35–45% | 18–23% |
| 150kw+ | ₦55,000,000+ | 28–36% | 15–19% |
*Annual cash yield calculated post-breakeven, as annual diesel and grid saving divided by original installed cost. Diesel pump price benchmark: NNPC Ltd. retail price data. Grid tariff benchmark: NERC tariff schedule. Installed system cost and saving figures based on Olasupo Energy installed-project data, 2026-08-08.
How Solar Compares to Other Capital Projects
Typical 100kw commercial system
~42% IRR
Based on ₦2.5M/month diesel + electricity spend, ~₦42M installed system cost, 20-year system life. Your figure depends on your load — use the calculator below for an exact number.
Why Solar's Return Is Different From a Market Investment
Solar's return doesn't come from selling an asset for more than you paid — it comes from a monthly cost that stops happening. Every naira not spent on diesel is a naira kept, at a rate that's fixed the day the system is installed and only gets more valuable if diesel or grid tariffs rise. That's why the return is closer to a guaranteed cost avoidance than a speculative asset play.
The two numbers that matter to an owner are IRR and cash yield. IRR captures the full 20-year picture, including the upfront outlay and the compounding value of avoided diesel spend over the system's life. Cash yield is the simpler, more intuitive number: once the system has paid for itself, what percentage of the original cost does it return every year, in cash, for the rest of its working life.
As with payback, the size of the return tracks how much diesel a property was burning before switching. Heavy diesel users see the highest IRR because the monthly saving is largest relative to installed cost. Properties with lighter generator use or more grid access see a lower — but still strong — return, since the monthly saving is smaller.
Calculate Your Own Return
Enter your current diesel and electricity spend to see your business's exact IRR, annual yield, and 10-year saving.
Commercial Solar ROI Calculator
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What Business Owners Say About Their Return
"We evaluated solar the same way we evaluate any capital project — against our hurdle rate. Olasupo Energy walked us through the IRR calculation using our actual diesel numbers, and it cleared our threshold comfortably. That's what got it approved."
Chinedu Okorie
CFO, Manufacturing, Lagos
"Our board wanted a return number they could compare against other projects, not just a saving estimate. The yield figure Olasupo gave us made the case on its own — it beat every other option we had for that capital."
Amaka Nwosu
Operations Director, Retail Group, Abuja
"What convinced me wasn't the payback period, it was the annual yield after that. Knowing what the system pays back every year for the next 15+ years made it an easy decision next to a fixed deposit."
Tunde Fashola
Managing Director, Hospitality, Port Harcourt
Reviews collected directly from Olasupo Energy clients. Names and businesses shown with permission.
Solar Return on Investment — Common Questions
What IRR should I expect from commercial solar in Nigeria?
For systems replacing heavy diesel use (10–12 hours a day), 35–55% IRR over a 20-year system life is typical. Smaller systems installed at properties with very high diesel spend relative to their load tend to sit at the higher end of that range.
How is solar ROI different from payback period?
Payback period tells you when you break even. ROI — expressed as IRR or annual cash yield — tells you how much the investment returns over its full life, including everything that happens after breakeven. A system can have a longer payback and still have a strong IRR if it keeps producing for many years afterward.
Is solar a better investment than a fixed deposit or treasury bills?
On yield alone, a well-sized commercial solar system replacing heavy diesel use typically outperforms a Nigerian fixed deposit or treasury bill, because the return comes from a cost that stops happening rather than a market rate. It isn't a liquid investment, though — the money is tied up in equipment rather than sitting in an account you can withdraw from.
Does the ROI number include the cost of financing?
The IRR and yield figures above assume the system is paid for upfront. If you finance the system, your effective return depends on the financing rate — but most businesses see positive monthly cash flow immediately either way, since the financed payment is usually lower than the diesel spend it replaces.
Want Your Exact IRR and Yield?
Send us your generator size and monthly diesel spend on WhatsApp. We'll send back a real, itemized return breakdown for your property — free, no obligation.
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