In the face of persistent power outages, around 250 manufacturers and academic institutions in Nigeria have shifted from relying on the national grid to generating their own electricity. This move, fueled by grid instability, high electricity costs, and rising fuel prices, highlights the growing energy challenges in the country.

Captive Power Generation on the Rise

Data from the Nigerian Electricity Regulatory Commission (NERC) reveals that these organisations collectively generate over 6,500 megawatts (MW) of electricity. This surpasses the national grid’s average output of 4,500–5,000 MW. Captive power generation permits—granted to entities exclusively producing power for self-use—have seen increased demand, particularly since President Bola Tinubu signed the Electricity Act 2023.

Prominent contributors include the Dangote Group, which generates about 1,500 MW, and firms like Nigeria LNG (360 MW) and Lafarge Africa Limited (105 MW). Universities, including the University of Lagos and Obafemi Awolowo University, are also among those adopting self-generation.

Cost Implications

Minister of Power, Adebayo Adelabu, lamented the trend, noting that captive power is more expensive than grid electricity. “Captive power production costs N350–N400 per kilowatt-hour for gas and up to N1,000 for diesel,” Adelabu stated. He urged stakeholders to restore confidence in the grid, which he described as more reliable if stabilised.

Industry Perspectives

Experts warn that this exodus could destabilise the grid further. Adetayo Adegbenle, Executive Director of PowerUp Nigeria, emphasised the need to incentivise large consumers to return to the grid. “Having 200 high-capacity users leave weakens the demand side, impacting grid stability,” he said, adding that stranded power from generation companies could meet these users’ needs if the grid were reformed.

NERC and Voltage Fluctuations

NERC attributes the migration to issues like voltage fluctuations, which damage industrial equipment. Efforts are ongoing to address these challenges and stabilise the grid, including collaboration with the Transmission Company of Nigeria.

Outlook

The Federal Government remains committed to Vision 30-30-30, targeting 30 GW of electricity generation by 2030, with 30% from renewable sources. However, experts contend that achieving this vision requires urgent reforms to attract bulk users back to the grid, ensuring a stable and affordable power supply for all.

This development underscores the need for structural improvements in Nigeria’s power sector to foster industrial growth and economic stability.