Over 250 Nigerian Companies and Universities Are Ditching the National Grid for Captive Power

 As Nigeria continues to face ongoing power outages, about 250 businesses and educational institutions have decided to take matters into their own hands and stop relying on the national power grid. These organizations, which use a lot of electricity, have turned to generating their own power to ensure they have a steady and reliable supply.

The move comes in response to the high cost of electricity, rising fuel prices, frequent grid failures, and power line issues. For example, in 2021, former President Olusegun Obasanjo set up a two-megawatt solar power project at the Olusegun Obasanjo Presidential Library in Abeokuta, Ogun State, saying it was a smart and cost-effective investment.

According to data from the Nigerian Electricity Regulatory Commission (NERC), these companies and institutions have together generated more than 6,500 megawatts of electricity, which is even higher than the country’s current power generation of 4,500 to 5,000 megawatts.

Some of these organizations were granted permission to generate their own electricity, known as "captive power," starting as far back as 2010. This increase in captive power generation has surged since 2023, especially after the signing of the Electricity Act by President Bola Tinubu.

Captive power generation is when a company or institution generates electricity solely for its own use and is not allowed to sell any excess power to others. Many of these businesses use gas, but others, like solar, are turning to renewable energy sources.

One of the largest captive power producers is the Dangote Group, which generates about 1,500 megawatts of electricity. Their refinery alone has a 435-megawatt power plant, enough to meet the electricity needs of the entire Ibadan Electricity Distribution Company.

Other companies and institutions that have also turned to captive power include MTN Nigeria, Shell, Lafarge Cement, Nigeria LNG, Flour Mills of Nigeria, and the Nigerian National Petroleum Company (NNPC). Many universities across the country, including the University of Lagos, Obafemi Awolowo University, and the University of Calabar, are also generating their own power.

However, the Minister of Power, Adebayo Adelabu, has expressed concern over the increasing number of companies moving away from the national grid. He noted that while captive power is an option, it’s more expensive than grid electricity, with the average cost of producing power from gas costing N350 to N400 per kilowatt-hour, and N950 to N1,000 for diesel.

The Nigerian Electricity Regulatory Commission (NERC) attributes the migration of bulk power users to frequent voltage fluctuations in the grid, which damage equipment and lead to financial losses for industries. To address this, NERC is working with the Transmission Company of Nigeria to stabilize the grid.

Energy experts say that the exodus of big power users from the national grid could cause issues, especially for the country’s power supply. Adetayo Adegbenle, Executive Director of PowerUp Nigeria, stated that companies leaving the grid can create instability, as the demand for power becomes unbalanced, putting more pressure on residential users.

Despite this, some experts argue that the current system is failing, and businesses are turning to alternative energy sources to stay competitive and ensure continuous operation. They also point out that businesses like Cadbury and Coca-Cola have been generating their own power for years.

The Nigerian government and power sector stakeholders are being urged to make renewable energy more affordable, possibly through tax reductions or import waivers for necessary equipment. This could help reduce the load on the national grid and avoid frequent collapses while providing a more stable power supply for both businesses and individuals.

In conclusion, while Nigeria’s power grid struggles to meet the needs of businesses and institutions, many choose to go off-grid and invest in captive power solutions. The shift highlights the need for reforms in the country’s energy sector, especially to encourage more sustainable and reliable power generation.