- Power Generation Companies (GenCos) in Nigeria report massive financial losses, with Kainji and Jebba plants alone losing N21.87 billion due to frequent grid collapses in 2024.
- GenCos urge urgent reforms, including better grid management and the approval of Ancillary Services, to prevent further damage and reduce operational costs.
Power Generation Companies (GenCos) in Nigeria have expressed serious concerns about the financial and operational effects of the country’s frequent grid collapses, resulting in substantial losses. The national grid suffered 12 full or partial collapses in 2024, causing severe commercial and technical disruptions for the sector.
At a recent workshop organised by the Association of Power Generation Companies (APGC), Dr Joy Ogaji, the association’s CEO, highlighted the significant damage caused by these grid failures. While the total industry impact has yet to be fully quantified, Dr Ogaji noted that the Kainji and Jebba hydroelectric plants alone had lost N21.87 billion due to system instability this year.
Dr. Ogaji explained that grid collapses pose both mechanical and commercial challenges. On the mechanical side, frequent disruptions damage critical infrastructure like generators and transformers, leading to prolonged downtimes and costly repairs.
Commercially, GenCos faces reduced revenue from lower power sales, penalties for missed deliveries, and increased operational costs. The strain on resources makes it difficult for companies to maintain and repair equipment, further undermining the stability and reliability of power supply.
Prof. Stephen Ogaji, an electricity industry expert, added that grid instability causes significant revenue losses, especially when plants cannot generate power. He pointed out that the economic impact extends beyond GenCos, affecting the entire economy that relies on stable power.
A recent study revealed massive energy losses at the Odukpani NIPP plant due to frequent shutdowns and startups, which resulted in wasted gas and reduced efficiency. The financial strain from underutilised gas resources and high operational costs could ultimately lead to the closure of some GenCos, especially those without backup contracts.
Furthermore, the thermal fatigue caused by repeated shutdowns leads to costly damage to critical components such as combustion liners, fuel nozzles, and gas turbine parts. The repair costs for these components run into millions of dollars.
Given these challenges, Dr. Ogaji called for urgent reforms, including approving Ancillary Services to provide secondary controls like Spinning Reserve. She also urged the System Operator to complete and commission the SCADA project, implement the proposed Generation Dispatch Tool (GDT), and enforce the Grid Code to improve grid stability and prevent further disruptions.
Engr. Jacob Barasuno, Operations Supervisor at Mainstream Energy, added that frequent grid collapses had caused extensive damage to equipment at the Kainji and Jebba plants, affecting GenCos’ ability to meet generation targets and fulfil contractual obligations.
The calls for urgent action highlight the need for immediate interventions to prevent further damage to Nigeria’s power generation infrastructure and mitigate the escalating financial losses caused by grid instability.