In 2024, Nigeria witnessed a significant increase in the number of entities seeking self-sufficiency in electricity generation. Forty-six licenses were granted by the Nigerian Electricity Regulatory Commission (NERC) for captive power generation, totaling 289 megawatts. This encompassed 24 licenses for bulk electricity consumers disconnecting from the national grid and an additional 22 licenses for off-grid generation projects. This trend underscores the growing dissatisfaction with the reliability and stability of the national grid, pushing businesses and institutions towards alternative power solutions.
The 24 bulk consumers who received licenses to disconnect from the grid represent a diverse range of industries and institutions, including manufacturing, telecommunications, and academia. These entities, seeking a more reliable power supply for their operations, will generate a combined 138 megawatts of electricity. Notable recipients include companies like SweetCo Foods, African Steel Mills, and MTN Nigeria Communication Limited, as well as educational institutions such as the University of Abuja, University of Calabar, and several other universities and teaching hospitals. The decision to generate their own power reflects a loss of confidence in the national grid’s ability to consistently meet their energy needs.
The remaining 22 licenses were granted for off-grid power generation projects, primarily utilizing gas and solar resources. These projects, with a combined capacity of 151.214 megawatts, were distributed across several states in Nigeria, including Lagos, Oyo, Ogun, Cross River, Kaduna, Niger, and Abia. Golden Penny Power Limited secured licenses for a significant portion of the off-grid capacity, with 113.20MW generated from gas. Daybreak Power Solutions received nine solar grid licenses totaling 24.51MW, highlighting the growing role of renewable energy in Nigeria’s off-grid power sector. While gas remained the dominant source for off-grid generation at 126.7MW, the increasing adoption of solar power signals a shift towards more sustainable energy solutions.
The NERC attributes the exodus from the national grid to persistent power fluctuations and inadequate supply, which disrupt industrial operations and lead to significant commercial losses. Grid frequency fluctuations, in particular, pose a serious challenge for industrial customers whose heavy-duty machinery requires stable power within specific frequency tolerance limits. The Grid Code stipulates a standard frequency of 50Hz with permissible deviations, but the grid’s performance in 2024 frequently fell outside these acceptable parameters. These inconsistencies have eroded trust in the national grid and motivated businesses to seek alternative power sources.
Voltage fluctuations, another critical power quality parameter, also contributed to the exodus from the grid. The NERC reported that voltage fluctuations, including spikes, dips, flickers, and brownouts, are common occurrences, causing significant harm to consumers and resulting in substantial commercial losses. In 2024, both the average upper and lower operating voltage bounds for the transmission network were outside the allowable limits defined in the Grid Code. This persistent instability further discouraged reliance on the national grid, prompting companies to invest in captive power generation.
The trend of abandoning the national grid is not new. Several high-profile entities, including former President Olusegun Obasanjo, had already made the switch to self-generated power in previous years. The 250 firms identified in a January report by The PUNCH, encompassing manufacturers and academic institutions, are estimated to generate a combined 6,500 megawatts of electricity – significantly exceeding the national grid’s output of 4,500MW to 5,000MW. The number of requests for captive power generation permits has surged since President Bola Tinubu signed the Electricity Act 2023. This Act is intended to liberalize the electricity sector and promote private investment in generation, but it has also facilitated the trend of self-generation, especially among larger consumers. The Dangote Group, for instance, has a captive power capacity of 1,500MW, highlighting the scale of private investment in self-generation. While the Minister of Power, Adebayo Adelabu, advocates for the reliability and cost-effectiveness of grid connection, the continued exodus of bulk consumers indicates a deeply rooted lack of confidence in the national grid’s stability. This underscores the urgent need for significant improvements in grid infrastructure and management to restore consumer trust and ensure a reliable power supply for the nation.
