Nigerian Breweries and Universities Turn to Captive Power Amid National Grid Woes
In response to surging electricity costs and chronic power instability, Nigerian Breweries Plc has secured approval to generate captive power at its facilities in Abia, Oyo, and Enugu states. Cumulatively, the company will produce up to 41 megawatts across four stations, according to a report by the Nigerian Electricity Regulatory Commission (NERC).
The permits, granted during the third quarter of 2024, reflect a broader trend of businesses and institutions opting for self-reliance in energy generation following the enactment of the Electricity Act 2023.
A Shift Towards Energy Independence
The Electricity Act has empowered private entities to generate power exclusively for their consumption through captive power generation permits. Under this framework, entities are prohibited from selling electricity to third parties.
In its report, NERC revealed it had issued permits to 11 applicants in the third quarter, granting a total capacity of 63.36MW. This includes approvals for six universities and the Nigerian Defence Academy (NDA) to generate power independently.
Prominent educational institutions receiving permits include the University of Abuja (3MW), University of Calabar and Teaching Hospital (7MW), and the University of Maiduguri and Teaching Hospital (12MW). The NDA, a military academy in Kaduna, was also cleared to generate 2.5MW.
Soaring Costs Drive Captive Power Adoption
The push towards captive power generation comes as universities and public hospitals struggle with skyrocketing electricity bills. Following the removal of subsidies in 2023 for customers on Band A feeders—who are promised a minimum of 20 hours of electricity daily—many institutions reported unsustainable cost increases.
The University of Lagos and Lagos University Teaching Hospital, for example, saw their monthly electricity bill leap from under ₦100m to ₦280m in May. Similarly, the University of Benin’s monthly tariff rose from ₦80m to ₦250m, while the Federal University of Technology, Akure faced a threefold increase from ₦20m to ₦60m.
Prof. Ademola Tayo, Vice-Chancellor of Babcock University in Ogun State, lamented in July that the institution had paid a staggering ₦300m for electricity in a single month. He warned that such costs threatened the quality of education nationwide.
Stability Through Captive Power
Captive power generation offers a lifeline to institutions and companies grappling with erratic power supply and frequent grid collapses. By generating their own electricity, Nigerian Breweries and other permit holders aim to achieve stable and reliable power to support daily operations.
Expanding Capacity and Market Regulation
During the same review period, NERC took additional steps to strengthen the power sector, certifying seven Meter Service Providers, five meter installer companies, and two-meter manufacturers. The commission also issued 22 permits for Meter Asset Providers and released 50 regulatory orders to guide licensees.
The transition to self-generation by Nigerian Breweries and major institutions underscores the persistent challenges facing Nigeria’s national grid. As businesses and educational institutions increasingly turn to captive power, questions loom over the future of grid dependency and the sustainability of energy reforms in the country.
