Understanding Nigeria’s Electricity Challenges
*Victor I. Fagorite, PhD and Victor Omefe
Electricity is an indispensable component of modern life, serving as the most prevalent form of energy. Its introduction marked a paradigm shift in human history, reshaping societal norms, occupational practices, and interactions with the environment.
Although ancient philosophers recognized certain natural phenomena, such as lightning, that were indicative of electricity, they lacked a comprehensive understanding of its underlying principles. These early observations, while insightful, did not encompass the broader concept of electricity as a unified force.
In the past, houses were lit with kerosene lamps, food was cooked with firewood, and rooms were warmed by wood-burning or coal-burning stoves. Electricity now provides essential services such as lighting and heating for homes, supports transportation systems, powers communication networks, and ensures access to clean water. As these services are fundamental indicators of development, a country’s electricity consumption reflects its level of economic as well as social development over time.
Electricity generation drives economic prosperity so much that meeting energy demands is becoming a top priority for countries worldwide. As reliance on energy sources surges, there is a rising preference for more flexible and user-friendly forms of energy. Electricity, as a prime example of such energy forms, is experiencing increased demand across all sectors of the economy due to rising prosperity and population growth. This includes not only households, which are increasingly relying on electricity for their basic needs, but also the industrial sector, where electric machinery is replacing outdated thermal equipment.
Moreover, in the transportation sector, there is a notable shift towards electric public and private vehicles to reduce urban pollution and traffic congestion. Electric trains are also gaining traction for long-distance national and international travel.
fig 1. World share of population with access to electricity
Between 2015 and 2022, the proportion of the global population with access to electricity (more sources) increased from 87 % to 91 % . This upward trend underscores the importance of examining Nigeria’s energy generation, as established that energy remains a driving force for development and a key factor in social and economic transformation. Goal 7 of the United Nations Sustainable Development Goals (SDGs), focusing on Affordable and Clean Energy, emphasizes the centrality of energy in promoting development and well-being. It also highlights the need for policy measures aimed at ensuring universal access to affordable electricity by 2030.
Nigeria, Africa’s most populous nation with a projected surge to 400 million by 2050, faces a perplexing energy challenge. Despite ranking as the world’s 11th largest oil producer, the country grapples with widespread energy deficits. Moreover, according to secondary sources, the total crude oil production of the OPEC-12 averaged 26.57 million barrels per day (mb/d) in February 2024, representing an increase of 203 thousand barrels-per-day (tb/d) month-on-month (m-o-m). This increase was primarily driven by higher production levels in Libya and Nigeria. However, the paradox reveals the disconnect between resource wealth and its translation into accessible energy for all Nigerians.
Electricity generation in Nigeria dates back to 1896 with the establishment of the Nigerian Electricity Supply Company (NESCO). The sector has achieved a 93% increase in generation over the past seven years. However, as Africa’s second largest economy, the country struggles with significant electricity supply. This makes it one of the most underpowered nations globally. The prevalence of self-generation is striking in Nigeria, with an estimated capacity of nearly 14 gigawatts (GW) in small-scale diesel and petrol generators. Approximately half of the total electricity consumed in the country is self-generated, highlighting a substantial unmet demand for electricity.
The Association of Power Generation Companies (APGC) reported that infrastructure deficits have been a significant factor in Nigeria’s power sector. Average generation, transmission, and distribution capacities fall short of the country’s growing population’s needs. This shortfall is due to the inability to evacuate available capacity, resulting in the rejection or reduction of generated power. The idle capacity impacts the ability of Generation Companies (Gencos) to service customers, further undermining their ability to meet customer needs.
While Nigeria possesses a diverse energy portfolio, including fossil fuels, renewable resources like wind, hydro, and tidal, widespread access remains elusive. The nation relies heavily on fossil fuels for power generation, supplemented by limited hydropower. Although, there has been a slight increase in capacity (11.7 Gigawatt in 2021 compared to 9.1 GW in 2012), substantial gaps persist. Nigeria generated about 31.5 gigawatt hours (GWh) in 2021, and about 74% of that total was derived from fossil fuel sources and the remainder from hydropower (see figure 2 and 3 below).
Fig 2: Nigeria’s electricity capacity by fuel type, 2012–2021
Fig. 3: Nigeria’s net electricity generation by fuel type, 2012–2021
The disparity in access is even more concerning. Urban areas boast a significantly higher electrification rate (84%) compared to rural regions. Unfortunately, access to electricity for Nigeria’s over 100 million rural inhabitants is estimated at 36%. This uneven distribution is further exacerbated by poor infrastructure and high transmission losses, resulting in frequent blackouts. Even those with access face the burden of unreliable electricity, forcing them to rely on expensive oil-fired generators or traditional biomass for their energy needs.
Presently, the country faces the challenge of connecting between 500,000 to 800,000 new households annually to electricity sources. This effort is part of the country’s goal to achieve universal access to electricity by 2030, as outlined in the World Bank Nigeria Electrification Project.
The absence of electricity presents a significant hardship, akin to living in perpetual darkness, and denies marginalized communities access to fundamental comforts. This lack of a crucial resource fuels migration patterns. Conversely, ensuring widespread electricity access demonstrably enhances quality of life and expedites rural development. Electricity access facilitates the creation of job opportunities, promotes security, improves healthcare, and fosters food security, all of which are the cornerstone of civilisation and development. Therefore, ensuring electricity access is not merely a means to improve living standards, but an essential tool in the fight against poverty.
The energy future of Nigeria hinges on successfully bridging the gap between its abundant resources and the energy needs of its growing population. A well-established energy system supports all sectors: from businesses, medicine and education to agriculture, infrastructure, communications and high technology.
Abubakar Suleiman, the Chief Executive Officer (CEO) of Sterling Bank, asserts that Nigeria’s electricity challenges significantly impact businesses and communities, necessitating urgent resolution to ensure a high quality of life for all citizens and to foster accelerated economic development. He advocates for addressing this issue through decentralized renewable energy solutions, foreseeing their potential to drive rapid industrialization, job creation, and advancements in education and healthcare delivery, among other benefits.
Recognizing these challenges, the Nigerian government unveiled its ambitious Energy Transition Plan in 2022. This plan aims to achieve carbon neutrality by 2060 and requires significant investment ($1.9 trillion) across various sectors like power, transportation, and cooking. The Energy Transition Plan and a shift towards renewable sources like hydropower and solar power offer a roadmap for a more sustainable and equitable energy future.
Transitioning to renewable energy as a means of reducing carbon emissions has the potential to generate significantly more employment opportunities than the fossil fuel sector. Research indicates that the renewable energy industry could create up to three times as many jobs as the fossil fuel industry. Although it is reasonable to anticipate an initial surge in job creation to develop the renewable energy sector, it is clear that this growth in employment would be sustained beyond the initial phase. This contrasts with fossil fuel-based power sources such as coal, which inherently require less labor.
As of 2020, the wind energy capacity in Nigeria kept stable at three megawatts, same amount registered since 2014. South Africa had the highest wind energy capacity in Africa in 2020. Nigeria possesses considerable wind energy potential, particularly in its Northern states. Currently, a 10 MW wind farm operates in Katsina, yet it faces challenges that hinder it from functioning at maximum capacity, spanning from security concerns to financial constraints. Direct investment in renewable energy projects, such as solar and wind farms, can help Nigeria diversify its energy mix and reduce its reliance on fossil fuels. Foreign investment, on the other hand, can bring in much-needed capital and expertise to develop these projects efficiently and sustainably.
Nigeria’s vast availability of hydropower offers a promising avenue for increasing capacity. The government is actively seeking private investment, with the 700-megawatt Zungeru hydropower plant under construction. This focus on renewables extends to solar power, with government support for projects like the Africa Minigrids Program launched in 2022. This program promotes solar mini-grid development in remote areas, providing cleaner and more affordable alternatives to diesel generators.
Furthermore, the implementation of a national renewable electricity standard would not only create jobs directly related to the renewable energy sector but also spur job creation in other sectors such as transportation and financial services. Additionally, industries unrelated to energy would experience a boost, as workers in the renewable energy sector would have more disposable income to spend on goods and services like restaurants and movie theaters. Consumers would also benefit financially, saving an estimated $95.5 billion on their electric bills by 2030, further stimulating economic activity.
Looking ahead, the future of electricity generation holds great promise, with ongoing research and development efforts focused on enhancing efficiency, reducing costs, and further increasing the share of renewable energy in the global energy mix. As we continue to harness the power of electricity generation, we have the opportunity to create a more sustainable and equitable future for generations to come.
Victor I. Fagorite, Phd is Senior Manager Research, Clean Technology Hub.
Victor Omefe is Junior Research Analyst, Clean Technology Hub.
