How Nigerian Businesses Get 80% Power Supply from Private Generating Sets

Emmanuel Addeh in Abuja

With no end in sight to the perennial power supply issues in the country, Nigerian businesses currently get 80 per cent of their own electricity supply through the deployment of self-funded diesel and petrol generating sets, THISDAY has learnt.

A review of data garnered from various sources released by the Nigerian Bulk Electricity Trading Plc (NBET), at a workshop for power correspondents, showed that with a national peak demand forecast of 19.8GW and highest peak generation of 5.8GW ever, commercial concerns have now resorted to covering the deficit supply by the use of off-grid sources.

Two years ago, a Dalberg report indicated that government and private offices, as well as residences in Lagos alone spent a whopping N750 million daily to generate electricity.

Experts have said that if grid power were available on a 24-hour basis, this will be reduced to about N400 million, thereby markedly reducing the cost of doing business in the country.

The Dalberg report said that there were about 22 million small power generators being used in the country at the time,  with over 60 per cent of that  located in Lagos.

According to the World Bank, this generator usage accounts for over 6.1 million metric tonnes of carbon emissions yearly. Also, the Manufacturers Association of Nigeria (MAN), had said that power generation expenditure represents 40 per cent of the cost of doing business in the country.

In the data released by the NBET, the organisation said that despite all the challenges, Nigeria will begin to reap the years of investment in the near future, stressing that the sector is currently at am incubation stage.

“Self-generation by commercial/industrial customers using petrol/diesel is 8GW – 13GW, according to the National Development Plan 2021-2025. Eighty per cent of operational energy capacity is from off-grid diesel/petrol generators.

“Growing energy deficit will continue as the population continues to grow with an annual growth rate of 3.2 per cent, the country’s population of over 200 million is projected to be about 402 million by 2050,” the data sourced by NBET said.

Stressing that electricity market liquidity and payment challenges are issues that are being sorted out, the report further highlighted infrastructure challenges and misalignment along the electricity value chain (electricity and gas), as areas of challenge.

Quoting data from Nigeria’s Energy Transition Plan 2022, NBET stated that power sector emissions in 2020 was 48MtCO2 while up to 90 million people lacked grid electricity, the highest access deficit in the world , with 12 per cent of the global access deficit.

The NBET data showed that there was need to stimulate effective demand for energy by those who need it, including timely and complete payments to Independent Power Producers (IPPs) and provision of payment security instruments as may be required.

Furthermore, it stressed that transformation of the electricity market to a customer-centred market remains important, where commercial and industrial customers drive network investments for enhanced electricity supply.

“Current regulatory framework already permits this transformation, including the following NERC Regulations:  Regulations for Investments in Electricity Networks in Nigeria 2015; Eligible Customer Regulations 2017; Guidelines on Distribution Franchising in the NESI 2020. Nigeria Net Zero GHG Emissions Target: 2050-2070; Energy Transition Plan sets a target of 2060,” the data indicated.

It highlighted that there is an unconditional plan for 20 per cent reduction on Business as Usual (BAU) emissions by 2030, and a 45 per cent conditional commitment achievable with financial assistance, technology transfer and capacity building.

“By 2050 (we need) a country with a low carbon energy efficient industrial sector; a low-carbon, climate-resilient, high-growth circular economy that reduces its current level of emissions by 50 per cent, moving towards having net-zero emissions across all sectors of its development in a gender-responsive manner,” it stated.

It further noted that plans were underway for the promotion of renewable energy resources including solar, wind, hydro, biomass, and tidal wave by 2050.