- Nigeria’s captive power generation has surpassed the national grid’s 4,500MW capacity, with companies and institutions now producing 6,500MW of electricity.
- The number of captive power generation licenses has surged since President Bola Tinubu signed the Electricity Act into law in 2023.
Former Nigerian President Olusegun Obasanjo once described the N2 billion investment in captive power generation as a cost-effective initiative.
Captive power generation, a system in which organisations produce electricity exclusively for their use, has gained prominence across Nigeria, particularly in light of the country’s ongoing electricity supply challenges.
According to data from the Nigerian Electricity Regulatory Commission (NERC), the combined electricity generation capacity of various companies and academic institutions in Nigeria now exceeds the national grid’s average power supply.
As of the latest figures, these entities are generating 6,500MW of electricity, substantially higher than Nigeria’s total national electricity consumption of approximately 4,500MW. This discrepancy highlights the growing reliance on independent power generation as the nation struggles with an unstable power grid and frequent outages.
Over the past decade, many companies and institutions have been granted licenses by NERC to establish captive power plants. These licenses allow them to produce electricity for their consumption, with no authorisation to sell surplus power to external parties.
Captive power plants are typically seen as a solution to the erratic power supply from the national grid, providing organisations with more reliable access to electricity. This is especially crucial for industries, businesses, and educational institutions that require constant power for operations.
The trend of requesting captive power generation licenses has been steadily rising, especially since President Bola Tinubu passed the Electricity Act in 2023. The new law has allowed more entities to explore this option to enhance their operational efficiency and reduce dependence on the national grid.
These developments indicate a shift in Nigeria’s energy landscape, with more businesses and institutions taking matters into their own hands in the face of unreliable public electricity supply. The success of these captive power systems highlights the potential of private sector-led initiatives in solving the country’s power crisis.
However, challenges remain, particularly in regulatory oversight and ensuring a balanced energy market that benefits private entities and the general public.
While captive power generation offers a practical solution to Nigeria’s electricity woes, it also raises questions about an energy system’s long-term sustainability and fairness that increasingly favours private investments over public infrastructure improvements.