KEY POINTS
- Firms abandon the national grid due to unstable voltage and blackouts.
- Six firms and a university gained NERC approval for private generation.
- Captive power offers reliability but comes with high production costs.
Battered by frequent power outages and voltage fluctuations, six companies and one university have formally secured the Nigerian Electricity Regulatory Commission’s approval to generate and distribute their electricity.
This effort, driven by the unreliability of the national grid, allows the approved entities to produce up to 30 megawatts of electricity through various arrangements.
Among the beneficiaries is the Nile University of Nigeria in Abuja, which received a captive power permit for 10 megawatts. Captive power permits are designated for self-consumption, meaning the electricity generated is not for resale but strictly for in-house use.
Other recipients include Ro-Marong Nigeria Limited in Lagos (4.40 MW), Quantum Paper Limited in Ogun State (7 MW), and Psaltry International in Oyo State (1.10 MW). Additionally, Daybreak Power Solutions Limited was granted an off-grid license to produce 2.63 megawatts.
This surge in self-generation comes under Section 165(1)(m) of the Electricity Act 2023, which empowers NERC to issue mini-grid licenses to renewable energy companies for specific locations.
These licenses permit operators to build, run, and maintain mini-grids that can distribute up to 1 megawatt and above 100 kilowatts, while smaller systems under 100 kilowatts receive registration certificates instead.
NERC promotes mini-grids to fill national power gaps
To further decentralize energy production and bridge electricity access, NERC revealed it issued 24 permits for mini-grids with a combined capacity of 5.5 megawatts in the last quarter of 2024.
In addition, five registration certificates were awarded for systems with a combined capacity of 450 kilowatts. These were distributed across regions, including 24 sites under Prado Limited in Benue, Nasarawa, Niger, Ondo, and Kano states, and five systems under Cross Boundary Energy in Kogi State.
This trend is not entirely new. As of September last year, around 250 organizations, primarily bulk power users like manufacturing firms and academic institutions, had already ditched their respective distribution companies. These entities now generate an estimated 6,500 megawatts collectively, a figure that outpaces the national grid’s current supply of about 5,500 megawatts.
Experts warn that the continued exit from the national grid could spell trouble for the broader power sector, undermining public infrastructure investment and increasing the cost burden on smaller consumers who remain dependent on the grid.
Firms abandon national grid over harmful voltage fluctuations
According to Punch, the mass departure from the grid stems from consistent voltage fluctuations, which NERC described as a major cause of commercial loss and equipment damage.
These fluctuations, ranging from spikes and dips to brownouts and flickers, can severely damage sensitive industrial machines, making grid-supplied electricity an unreliable option for large-scale operations.
The Grid Code mandates a nominal system voltage of 330 kilovolts, with a permissible variation of plus or minus five percent. However, frequent deviations from this standard have rendered the grid unsuitable for many businesses. In response, firms are opting for captive power generation despite the higher costs.
Minister of Power Adebayo Adelabu acknowledged this shift, noting that bulk power users have lost faith in the national system. He highlighted that producing electricity independently via gas lines costs between ₦350 to ₦400 per kilowatt-hour, while diesel-powered generation can cost up to ₦1,000.
To address the challenges, NERC continues engaging with the Transmission Company of Nigeria and other stakeholders to stabilize voltage levels and restore confidence in the public power supply system.
