Faced with frequent blackouts, rising electricity costs, and unreliable grid performance, more than 247 companies and academic institutions in Nigeria have turned to self-generated electricity, collectively producing 6,500 megawatts (MW). This figure surpasses the country’s national power generation, which fluctuates between 4,500 and 5,000MW.
These firms, including major players like Dangote Group, NNPC Limited, and Total, have embraced captive power generation, a system where electricity is produced for exclusive consumption. This shift has been accelerated by the Electricity Act of 2023, signed by President Bola Tinubu, which promotes greater autonomy in power generation.
Companies Take Charge
Dangote Industries Limited leads the pack, generating 1,500MW. Aliko Dangote, the company’s chairman, said, “We don’t put pressure on the grid. We produce about 1,500 megawatts of power for self-consumption.” The Dangote Refinery alone generates 435MW, enough to meet the total power requirements of Ibadan Electricity Distribution Company.
Other major contributors include Pure Flour Mills Limited, which generates 546MW, and Nigeria LNG, which produces 360MW. Companies like MTN Nigeria, Guinness Nigeria, Chevron Nigeria, and Nestle Nigeria have also adopted self-reliant power solutions. In the academic sector, institutions such as the University of Lagos, Bayero University, and the University of Benin have joined the trend, securing permits from the Nigerian Electricity Regulatory Commission (NERC).
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High Costs, Low Trust
The migration to captive power generation has been driven by persistent grid failures, high costs, and lack of trust in the national power system. Adebayo Adelabu, Nigeria’s Minister of Power, lamented this trend, stating, “The majority of bulk electricity users, such as industries, are off the grid due to a lack of trust and confidence in the past. They now have their own captive power plants, which is more expensive.”
Adelabu noted that captive power costs between N350 and N1,000 per kilowatt-hour, depending on the fuel source, compared to grid electricity, which could be cheaper if stable. He expressed optimism that efforts to enhance grid reliability would encourage industries to reconnect, saying, “Once consumers see trust, confidence, and stability, they would be encouraged to reconnect to the grid.”
Impact on the Power Sector
The mass exodus of bulk users has significant implications for Nigeria’s power sector. Adetayo Adegbenle, Executive Director of PowerUp Nigeria, described the situation as “sad,” emphasizing the critical role bulk consumers play in grid stability. “Many of the grid collapses can be traced to such consumers leaving the grid, making the demand end less stable,” he said.
Adegbenle called for incentives to bring companies back to the grid, arguing that this would reduce electricity costs for all users. “We still have stranded power not utilized. Bringing these companies back will ensure a cheaper and more stable grid supply,” he added.
Kola Olubiyo, President of the Nigeria Consumer Protection Network, highlighted the grid’s longstanding issues, including voltage fluctuations and frequent system collapses. “Each time there are interruptions, it impacts production negatively and damages industrial machines,” Olubiyo said. He commended industries for adopting off-grid solutions, despite the higher costs, as a means to ensure reliable power supply.
The NERC acknowledged that power fluctuations and grid instability have pushed industries to seek alternatives. The commission stated that extreme voltage fluctuations cause severe damage to industrial equipment, forcing businesses to abandon the grid. It emphasized ongoing efforts to stabilize grid voltage and improve reliability.
Experts Advocate for Reform
Consumer advocates and energy experts have urged reforms to address the challenges in Nigeria’s power sector. Adeola Samuel-Ilori, Coordinator of the All Electricity Consumers Protection Forum, commended manufacturers for their decision to generate their own power, citing the inefficiency and high costs of relying on the grid.
“The service from the DisCos is not meeting their needs, and the monthly bills eat into their profit margins,” he said. Samuel-Ilori called for targeted investments and cost-reflective tariffs to revitalize the sector, stating, “The DisCos can’t keep reaping where they don’t sow.”
The shift to captive power generation reflects a broader trend among Nigerian businesses and institutions seeking reliable electricity amid the nation’s power crisis. While this approach offers short-term relief, experts warn that it highlights deeper systemic issues in the power sector that must be addressed to ensure long-term energy sustainability and economic growth.