Over 250 Nigerian manufacturers and institutions now generate 6,500MW of captive power, surpassing the national grid’s 4,500–5,000MW output.
Over 250 manufacturers and academic institutions in Nigeria have abandoned reliance on their power distribution companies to generate their own electricity, citing the national grid’s persistent unreliability, high electricity costs, and frequent outages.
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Findings from the Nigerian Electricity Regulatory Commission (NERC) reveal that these bulk electricity users now generate a combined 6,500 megawatts (MW) of captive power, surpassing the country’s current grid output of 4,500–5,000MW.
The transition to captive power generation has been steadily increasing, with permits issued by NERC as far back as 2010.
The trend gained momentum in 2023 following President Bola Tinubu’s signing of the Electricity Act 2023, which decentralised electricity generation.
Captive power generation allows entities to produce electricity exclusively for their consumption, prohibiting third-party sales.
While some companies utilise gas-powered plants, others embrace renewable energy sources like solar.
Prominent adopters of captive power include:
- Dangote Group: Generates 1,500MW, including a 435MW power plant at the Dangote refinery.
- Pure Flour Mills Limited (546MW) and Nigeria LNG (360MW).
- Other contributors: MTN Nigeria, Nigerian Breweries, Lafarge Cement, Flour Mills of Nigeria, and Shell.
Educational institutions such as the University of Lagos, Obafemi Awolowo University, and the Nigerian Defence Academy also utilise captive power systems to ensure uninterrupted energy supply.
While captive power provides greater reliability for industrial operations, the costs remain a significant drawback.
The Minister of Power, Chief Adebayo Adelabu, recently highlighted the high expense of captive power generation, estimating costs at:
- N350–N400 per kilowatt-hour (kWh) for gas-powered systems.
- N950–N1,000 per kWh for diesel-powered systems.
Despite the cost, many bulk electricity users prefer captive power due to voltage fluctuations, spikes, and dips on the grid that can damage industrial equipment.
The Federal Government aims to restore confidence in the national grid.
“Once consumers see the trust, stability, and efficiency we are providing, they will reconnect to the grid for a cheaper source of power,” said the Minister of Power.
To achieve this, the government is focused on its Vision 30-30-30, which aims to generate 30GW of electricity by 2030, with 30% from renewable sources.
NERC acknowledged that grid voltage fluctuations and inefficiencies have driven industries away from the national grid. Efforts are underway to stabilise the grid and minimise commercial losses to prevent further migration.
Meanwhile, experts warn that the continued abandonment of the grid by major users could have ripple effects on the electricity distribution and paper sectors, further complicating Nigeria’s energy landscape.
The shift to captive power highlights the urgent need for reforms in the energy sector, balancing the demand for reliability and cost-effectiveness with the overarching goal of achieving universal energy access by 2030.
