This is a best prospect industry sector for this country. Includes a market overview and trade data.
Unit: USD millions
Total Local Production
Imports from the U.S.
Total Market Size
Exchange Rate: 1 USD
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Total Local Production: Independent Power Producers and other local sources such as Manufacturers Association of Nigeria, National Bureau of Statistics.
Total Exports: Independent Power Producers and other local sources such as Manufacturers Association of Nigeria.
Total Imports: Independent Power Producers and other local sources such as Manufacturers Association of Nigeria.
Imports from U.S.: U.S. Census Bureau, ITC Trade Map
*Estimates for 2021 based on estimated GDP trends across the sector
In 2013, the government of Nigeria (GON) privatized 11 electricity distribution companies (DISCOs) and six generating companies (GENCOs) while retaining 100% ownership of the Transmission Company of Nigeria (TCN) as part of a wider strategy to reform the sector and stimulate growth. The country’s ongoing comprehensive power sector reforms are aimed at expanding capacity, increasing electricity access, and upgrading transmission.
Nigeria’s power generation is mostly thermal and hydro with installed capacity of about 12,522 MW. The country is part of the Economic Community of West African States and part of the West African Power Pool (WAPP), a specialized agency of ECOWAS that includes 14 of the 15 countries in the regional economic community. WAPP was initiated to promote and develop power generation and transmission infrastructures as well as to coordinate power exchange among the ECOWAS member states. Nigeria currently supplies electricity to the Republic of Benin, Togo, and Niger.
The Nigerian power sector will require significantly more investment to achieve reliable power supply. Industry operators estimate that the country will require as much as $100 billion in investment over the next 20 years to main current service. The World Bank is financing a $486 million International Development Association credit for the Nigerian Electricity Transmission Access Project (NETAP), part of the Transmission Rehabilitation and Expansion Program (TREP). The goal of TREP is to support the rehabilitation and upgrade of Nigeria’s electricity transmission substations and lines. This will expand the power transmission network and capacity, allowing distribution companies to improve reliability and supply to consumers. Following the roll out of TREP I, which is fully donor-funded, GON is currently sourcing funding for TREP II, to further increase transmission capacity. TCN has raised over $1.6 billion through TREP.
Other ongoing programs include the Meter Assets Provider regulation which was implemented in 2018. The regulation aims to bring new money into the market to finance meter deployment, closing metering gaps (currently less than 50% of customers are metered), removing estimated billing and related issues, and beginning to alleviate collection-related challenges faced by the DISCOs. Under the differential power distribution policy, GON introduced “the willing seller, willing buyer” electricity distribution policy aimed at allowing electricity to be wheeled directly from the generating companies to willing consumers, including communities, commercial clusters, industrial areas, and hospitality sectors with capacity for full payment. Also, GON recently announced that it plans to sell about 2,000 MW of ‘unutilized’ stranded electricity from Nigeria to four West African countries of Niger, Togo, Benin, and Burkina Faso through the proposed $570 million, 875 km, and 330 kv Northcore Power Transmission Line project. The Northcore project is funded by the World Bank, African Development Bank, and the French Development Council.
The Renewable Energy Master Plan was launched in 2011 and was aimed at increasing the share of renewable energy in the country’s energy mix by at least 13% by 2015, 23% by 2025, and 36% by 2030. It is expected that with current GON focus on renewable energy, the country will see significant growth to meet some of these targets. These energy mix targets will be comprised of:
- 30% capacity from coal (2,200 MW)
- NIPP projects (1,896 MW)
- IPPs (296 MW)
- GON legacy assets (thermal (5.6 GW), hydro: (1.3 GW) and wind (10MW))
In addition, GON is also investing heavily to boost generation through large, medium, and small hydrostatic power plants with total capacity of over 6,024 MW, including:
- Mambilla (3,050 MW)
- Zungeru (700 MW)
- Gurara (11,360 MW)
- Lokoja (750 MW)
- Makurdi (1,000 MW)
- Small hydropower (84 MW)
- Itisi (40 MW)
- Kashimbila (40 MW)
Industry sources indicate that due to rapid population, Nigeria will need substantial additional generation capacity to meet demands through 2030. They foresee opportunities in distributed power generation, smart grids, and energy storage in the medium to long-term.
In June 2020, the GON rolled out a 2.3 trillion naira ($5.9 billion) stimulus plan to help support the economy. International organizations are also providing support for Nigeria’s power sector. The African Development Bank (already working with Nigeria on a $410 million transmission project) pledges to invest an additional $200 million through the Rural Electrification Agency (REA), to expand Nigeria’s power sector and improve access to electricity. In 2020, the World Bank approved an additional $750 million Power Sector Recovery Operation (PSRO) loan for Nigeria to achieve financial sustainability, enhance accountability, and ensure the supply of 4,500 MW/h of electricity to the grid by 2022. In 2019, the World Bank approved a $550 million loan for Nigeria to develop mini grids and solar home systems based on its projections that the country’s mini grid subsector was set to expand rapidly. The Power Sector Recovery Program (PSRP) was initiated in 2017 by GON, in collaboration with the World Bank, as an operational and financial intervention to review and address the power sector financial deficit.
In June 2020, the Government approved $120 million for the continued construction and completion of the Kashimbila multipurpose dam in Taraba State, expected to generate 40 MW and water for the community. The government recently signed a six-year, 1.15 trillion naira (about $3.8 billion) contract with Germany’s Siemen AG for a three-phased electrification project aimed at increasing Nigeria’s power to 25,000 MW. According to the Technical and Commercial Proposal released in May 2019, the first phase of the project will add an additional 2,000 MW to Nigeria’s existing on-grid capacity, significantly reduce aggregate technical, commercial, and collection while achieving improved grid stability and reliability. The scope of work for the first phase would entail transmission and distribution assets upgrades, grid automation, national metering infrastructure, power system simulation, and general technical training.
The Nigerian National Petroleum Corporation’s (NNPC) Abuja 1350-megawatt power plant, which received a $1.16 million funding commitment from USTDA, is set to benefit from the Ajaokuta–Kaduna–Kano (AKK) gas pipeline being built. The power plant is being built by U.S. companies GE and Continuum Associates, in partnership with the NNPC. In addition to ongoing power projects in Nigeria, GON has signed a $2 billion power production agreement with Siemens under the Presidential Power Initiative. The project is expected to boost Nigeria’s electricity production to 25,000 megawatts by 2023. The NNPC plans to build two more power plants in Kano and Kaduna, bringing the total capacity of the three projects to 4600 MW of electricity production capacity.
Power Africa:Power Africa is a market-driven, U.S. Government-led public-private partnership aiming to double access to electricity in sub-Saharan Africa. It offers tools and resources to private sector entities to facilitate doing business in sub-Saharan Africa’s power sector. The Electrify Africa Act of 2015 institutionalized Power Africa. Learn more about the full Power Africa toolbox or other opportunities offered by Power Africa
Power Africa Support: Power Africa has provided significant transaction assistance to the Government of Nigeria and private sector entities in accelerating landmark power projects, including Nigeria’s first IPP which reached financial close in 2015 and added 450 MW to the grid. Since April 2018, Power Africa has facilitated the financial close of 1005 megawatts of generation capacity, achieved 1,845,681 new on grid and off-grid connections and unlocked $1.48 billion in investments for on-grid generation, and off-grid projects in Nigeria. Power Africa also played a key role in assisting the Nigerian government in unbundling the electricity sector into six generation companies, eleven distribution companies, and the Transmission Company of Nigeria. Critical to this support has been the role of the Overseas Private Investment Corporation (OPIC) (now the U.S. International Development Finance Corporation (DFC)) in providing much needed investment funding for IPPs and U.S. Trade and Development Agency in modernizing distribution networks, while reducing technical and commercial losses. Without more generating capacity, it will be difficult to connect additional customers to the grid, thus Power Africa is supporting the growth of off-grid options including mini-grids and rooftop solar through technical assistance to electrify communities. Power Africa has developed various tools, business models, and guidance documents for the Nigeria Rural Electrification Agency (REA), investors, and private sector companies seeking to access the market.
Learn more about how Power Africa is partnering to address key challenges in Nigeria’s electricity sector and supporting private sector investment in electrical power equipment at:
https://www.usaid.gov/powerafrica/nigeria. For more information, please contact us at:
Two major subsectors currently exist within the electrical power sector in Nigeria:
- Electrical equipment, and
- Renewable energy
Electrical Equipment Subsector
The electrical equipment segment is large and has a high potential for growth in the future. Electrical equipment such as electrical wires, power generating machines, inverters, transformers, conductors, meters, switch gears, capacitors, distribution boards, and voltage regulators are all used in Nigeria on a large scale. Most of the demand for electrical equipment in Nigeria is met by foreign countries, due to low production capacity and expertise in the country.
In 2006, GON initiated the Renewable Energy Master Plan (REMP) aimed at increasing the supply of renewable electricity (wind, solar, biomass and small hydro) from 13% of total installed electricity generation capacity in 2015 to 23% in 2025 and 36% by 2030. The country also expects to add 30% capacity from coal with the objective of increasing the country’s power generation capacity to 10,000 MW.
With over $12 billion spent per annum on electricity at a cost of 140 naira per kWh or $0.35/kWh, there is a market for less expensive, off-grid power solutions for companies and households in Nigeria. With local companies working to fill this gap, there is high demand for equipment such as solar panels, installation equipment, distribution equipment, and batteries. as part of their solutions. Due to the lack of production capacity for such equipment in the country, U.S. manufacturers have an opportunity to export such equipment to the companies operating in this segment of the market.
Currently, the energy mix in Nigeria is dominated by thermal (80%) and hydro (20%) power generating sources. GON has embraced the use of renewable sources such as biomass and solar to produce electricity mostly for rural and semi-urban areas that are out of the reach of distribution companies. GON, through the Rural Electrification Agency, has actively been commissioning electrification projects since 2014, using solar energy as the main source of electricity. According to the agency’s impact report released in January 2019, the REA recorded over 99,450 connections in a 20-month period and sourced over $550 million in funding for investment in rural areas and market areas in the country.
Solar: Nigeria is estimated to have about 427 GW of solar power potential, although current generation capacity is estimated at 5GW. In 2016, the country signed a Power Purchase Agreement (PPA) worth $2.5 billion with 14 independent power producers for solar power plants across the country, expected to add about 1.1 GW of power to the grid. However, these projects are stalled due to several issues, including tariff structures and concerns about the capacity of the current transmission infrastructure to accommodate the additional power generation. Industry experts believe that the best potential lies in the smaller micro-grid projects which are best suited for the northern parts of Nigeria. There is a growing uptake of off-grid solar power installations to replace more expensive diesel generators across the country, both for commercial and industrial applications. Over 50 MW of solar capacity has been installed over the last five years. The Rural Electrification Agency, with $550 million funding support from the World Bank and the African Development Bank, is helping to expand energy access through the Solar Power Naija initiative. This initiatives aims to provide 5 million new connections to 25 million individuals in off grid communities. Power Africa has been instrumental in helping suppliers of solar home systems better understand and enter the Nigerian market.
Hydro: Nigeria is estimated to have a total exploitable large-scale hydro power potential of over 14,120 MW, capable of producing 50,832 GW of electricity annually. The potential for small hydro power is estimated at 3,500 MW, of which only 60.58 MW (about 1.7%) has been developed. The country’s hydroelectric energy is about 20% of installed capacity. Studies estimate that there is potential for 11,500 MW in large hydro power plants and up to 730 MW in small hydro-power projects.
Wind: Nigeria has great potential for onshore wind power generation. A100 MW wind power project is already under development, while offshore wind resources are being evaluated and mapped out.
Biomass: GON, through the national oil company the Nigerian National Petroleum Corporation (NNPC), has a renewable energy division that has mapped out biomass opportunities in the sector and has a mandate to expand the automotive biofuels industry. NNPC intends for projects to be executed as a Public-Private-Partnership (PPP), with NNPC as a minority shareholder. Plans include using sugarcane and cassava as key biomass raw materials. However, this has been stalled due to a lack of appropriate legislative framework and appropriate equity financing.
Coal: Nigeria is estimated to have coal reserves of up to two billion metric tons and coal-fired electrical power is being explored by the GON as an additional source of power. GON plans to expand generation by about 11,000 MW through the addition of six coal-fired power and nine gas plants by 2037. The coal plants expected in 2034:
- Ramos (1000MW)
- Ashaka/TPGL (500 MW)
- Nasarawa (500 MW)
- Ashaka (64 MW)
The coal plants expected by 2037:
- Benue (1200 MW)
- Enugu (2000 MW)
HTG-Pacific Energy (a Chinese consortium) signed an MoU with the GON for the exploration and mining of coal bricks. The MoU is expected to be followed by a Power Purchase Agreement (PPA) which will boost investors’ confidence in the 1,000 MW, coal-fired plant project. However, the absence of infrastructure in both the power and mining sectors, coupled with lack of skilled coal mining labor, may hinder the development of large-scale, coal-fired power in Nigeria
Self-generation for power remains widespread, which significantly increases costs of doing business. Nigeria presents a significant opportunity for U.S. manufacturers and suppliers of diesel-operated generating sets (20-500 KVA). Until service is improved, corporate offices, service providers, and individuals must generate their power (ranging from 20 KVA to 500 KVA) and U.S. diesel-operated power equipment is preferred. However, various opportunities exist in utility grids, including transmission and distribution (T&D) network upgrades, expansion of infrastructure, metering, billing, collection, and prevention of theft and loss.
There are tremendous opportunities for U.S. companies in Nigeria’s power sector. However, U.S. companies still face competition from Chinese, U.K., French, German, Indian, and Korean companies for projects and sale of electrical equipment in the Nigerian market. The country’s growing population and its ambition to become an industrialized nation continues to increase its power infrastructure needs. There are opportunities for U.S. companies in equipment export as well as training and technical services.
According to the National Integrated Infrastructure Master Plan (NIMP), the power sector accounts for the largest proportion of proposed investments over the next thirty years in Nigeria. The $3.8 billion Siemens agreement is an indication that the government will increase spending in the electricity segment. The government is also developing IPPs to increase the country’s production capacity.
U.S. firms interested in the power sector are encouraged to explore opportunities in the following areas:
- Building of transmission and distribution infrastructure, including construction of a transmission infrastructure to wheel increased power generated by GENCOs and sold to DISCOs. This is expected to enhance Nigeria’s national grid and enable independent power plants to interconnect and sell their power.
- Joint venture partnerships to build off-grid captive power plants (5–19 MW) for resale to manufacturing industries in strategic cities (GON power reforms allow off-grid sales of generated power)
- Partnerships offering technical services to newly privatized GENCOs and upgrading of existing equipment (turbines, generators, and ancillary systems)
- Renewable energy (RE) systems: solar, wind, biomass technologies
- Technical services to DISCOs for proper metering and billing systems
- Supply of prepaid meters to DISCOs
- Training of GENCO and DISCO technical personnel for maintenance of equipment
- Sale of heavy-duty generators (100 KW to 1 MW): Most companies operating in Nigeria provide their own reliable source of power such as diesel-operated heavy-duty generating sets. U.S. and European-origin equipment are preferred in view of its reliability and serviceability. U.S. manufacturers of power equipment may utilize the guarantees provided by Ex-Im Bank and U.S. Development Finance Corporation as incentives to purchase generators from the United States. Ex-Im Bank has put forth a plan to provide up to $1.5 billion in financing and guarantees in the Nigerian power sector.
- Provision of specialized training for electricity industry technicians and managers.
- Assembly Plants for intermediary power equipment and accessories, including meters
- Consultancies in regulatory and consumer education initiatives
- Provision of power sector specific equipment testing, calibration, and logistics services
- Smart metering devices, both manufacturing and servicing
- Manufacturing of electricity generation, transmission, and distribution equipment/spare parts
Local Trade Events
- The Nigeria Energy Forum - Advancing Clean Energy Sustainability (thenef.org)
- Nigeria Energy, https://www.nigeria-energy.com/en/home.html,
- International Power Engineering Exhibition and Conference (IPECON https://10times.com/ipecon-abuja)(Hybrid)
- Future Energy Nigeria (https://www.future-energy-nigeria.com/), (virtual)
- Nigeria Alternative Energy Expo
Key Agencies in the Nigeria Power Sector
- Federal Ministry of Power, Nigeria – Policy formulation and consistency
- Nigeria Electricity Regulatory Commission – Issuance of licenses and regulation
- Nigeria Bulk Electricity Trading Company Plc – Power purchase agreements
- Nigeria Electricity Liability Management Company – Mandated to take over management and settlement of power purchase agreement obligations and other legacy debts.
- Bureau of Public Enterprise -Support privatization of Nigerian legacy assets
- Gas Aggregation Company of Nigeria – Allocation of gas for domestic use
- Transmission Company of Nigeria – Management of the national grid
- Nigeria National Petroleum Company – Gas infrastructure and transportation
- Rural Electrification Agency – Remote and off grid projects
- Nigerian Electricity Management Services Agency– Testing and certification of electrical components for quality and suitability
- Advisory Power Team (Vice President’s Office) – Facilitating cross-sector solutions
- Federal Government of Nigeria Power Company - power project supervision and monitoring
For more sector information, e-mail: Benedicta N. Nkwoh, U.S. Commercial Service, U.S. Consulate General, Lagos, Nigeria at Benedicta.Nkwoh@trade.gov