Overview

Unit: USD millions

Total Market Size

	2019	2020	2021	2022 estimates
Total Local Production	9.23	9.01	9.00	8.99
Total Exports	0.93	0.89	0.88	0.87
Total Imports	157.50	356.44	471.22	622.95
Imports from the U.S.	100.24	102.35	205.23	245.28
Total Market Size	162.38	165.79	479.35	631.07
Exchange Rate: 1 USD	362	360	416.00	417.00

Units: $ millions
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Data Sources:

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 Nigerian federal government 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 generates most of its power through 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 Economic Community of West African States (ECOWAS) that includes 14 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 significant 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 maintain 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 intends to 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 donor funded, The Nigerian government is currently sourcing funding for TREP II, to further increase transmission capacity. TCN has raised over $1.6 billion through TREP.

Other ongoing initiatives include the Meter Assets Provider regulations, which were implemented in 2018. The regulation aims to bring resources 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 inefficiencies by the DISCOs. 2021 saw the completion of the first phase (Phase Zero) of the National Mass Metering Program (NMMP). The Nigerian Electricity Regulatory Commission (NERC) said about 980,000 electricity customers were metered across the country under the Phase Zero. The power sector regulatory agency said the second phase (Phase One) of the initiative would begin in the first quarter of 2022, with about four million meters to be supplied by local manufacturers.

Under the differential power distribution policy, the Nigerian government introduced a “willing seller, willing buyer” electricity distribution policy aimed at allowing electricity to be transferred directly from the generating companies to willing consumers, including communities, commercial clusters, industrial areas, and hospitality sectors with capacity for full payment. Additionally, the government 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, 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 government’s Renewable Energy Master Plan was launched in 2011 and was aimed at increasing the share of renewable energy to at least 13% by 2015, 23% by 2025, and 36% by 2030. The energy target will be comprised of renewable and carbon-intensive sources:

• Coal (2,200 MW)
• The Nigerian National Integrated Power Project (NIPP) (1,896 MW)
• Independent power projects (IPPs) (296 MW)
• Legacy assets (thermal (5600 MW), hydro (1300 MW) and wind (10MW)) 

In addition, the Nigerian government is also investing to boost generation through hydrostatic power plants of varying size 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 growth, 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. 

Funding for the energy scaling and transition comes from several sources. In June 2020, the Nigerian government rolled out a $5.9 billion (2.3 trillion-naira) 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) invested 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 rapidly expand. The Nigerian government enacted the Power Sector Recovery Program (PSRP) in 2017 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, about $3.8 billion (1.15 trillion naira) contract with Germany’s Siemens AG for a three-phased electrification project aimed at increasing Nigeria’s power to 25,000 MW. In December 2021, under the Presidential Power Initiative (PPI), the government approved $1.9 million and euro 62.9 million for phase 1 of the Siemens deal aimed at modernizing, rehabilitation and expansion of the national grid. In September 2022, Nigeria began taking delivery of first batch of transformers following factory acceptance tests in Germany and Italy. 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. The project intends to significantly reduce aggregate technical, commercial, and collection costs while achieving improved grid stability and reliability. The scope of work for the first phase will entail transmission and distribution assets upgrades, grid automation, national metering infrastructure, power system simulation, and general technical training. However, due to the pandemic, the project has been off to a slow start and will likely take longer than expected to significantly increase electricity supply.

Since 1992, USTDA has supported over 80 activities in Nigeria, which have the potential to leverage more than $15 billion in financing. Overall, USTDA support in Nigeria since 1992 has resulted in over $375 million total exports. The Nigerian National Petroleum Corporation Limited’s (NNPC) Abuja 1,350-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 NNPCL. 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 NNPCL plans to build two more power plants in Kano and Kaduna, bringing the total capacity of the three projects to 4,600 MW of electricity production capacity.  Learn more about how the USTDA supports infrastructure projects across Nigeria at https://www.ustda.gov/ Joshua Egba, USTDA representative based in Lagos, Nigeria jegba@ustda.gov.

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 Independent Power Project (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, 11 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:

powerafrica@usaid.gov

Leading Sub-Sectors

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 imports, due to low production capacity and expertise in the country. Local production can be much more cost competitive than imports, so reviewing the local competitive landscape is important.

Renewable Energy

In 2006, the Nigerian government 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. 

With over $12 billion spent per year on electricity at a cost of $0.35/kWh (140 naira/kWh), there is a market for low-cost, off-grid power solutions for commercial and residential building 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. Due to the lack of production capacity for such equipment in the country, U.S. manufacturers have an opportunity to export equipment to the companies operating in this segment of the market. However, there is significant competition from manufacturers from countries with lower cost solutions.

Currently, the on-grid energy mix in Nigeria is dominated by thermal (80%) and hydro (20%) power generating sources. The Nigerian government 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. Through the Rural Electrification Agency, the federal government has actively been commissioning electrification projects since 2014, using solar energy as the main source of renewable 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 (IPPs) for solar power plants across the country. The initiative intended 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.

Given the unreliable grid energy, a thriving generator market exists in Nigeria. There is a growing uptake of off-grid solar power installations to replace 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. Also, the Nigerian government issued the Sustainable Energy for All Action Agenda (SEforAll) targets which aims to achieve a 20% and 19% contribution of solar energy to Nigeria’s electricity generation mix by 2020 and 2030 respectively.

The World Bank International Development Association financed the Nigeria Electrification Project (NEP) for $350 million to bring mini-grid and off-grid solutions to unelectrified areas in the country. The African Development Bank (AfDB) contributed $200 million to the initiative. The project is expected to leverage an additional $410 million in private sector investments and create a vibrant market for mini grid and off grid energy solutions. The government also adopted a solar strategy for the electrification of five million households, serving about 25 million Nigerians in the Economic Sustainability Plan (ESP).

The NEP has five components, including:

• Solar hybrid mini-grid
• Standalone solar home systems
• Energizing education program
• Energy efficient equipment and productive use appliances
• Technical assistance

The government also plans to build a 2.5 Megawatts hybrid solar power plant in the Nigerian Defence Academy (NDA), Kaduna. Ten state governments are enabling solar projects in their states that will deliver 100MW each, contributing 1000MW to the off-grid structure. Mainstream Energy, operator of two of Nigeria’s large hydro power plants – Kainji and Jebba – has announced that it will build a 500 megawatt (MW) solar facility. The Rural Electrification Agency, with the aforementioned $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 initiative 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. Overall, the Rural Electrification Agency has shifted its strategy from grid expansion to deployment of solar mini-grids, with a plan to have 10,000 mini-grids operational across the country by 2023.

Hydro

Nigeria is estimated to have a total exploitable large-scale hydro power potential of over 14,120 MW, capable of annually producing 50,832 GW of electricity. 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 current hydroelectric energy share is about 20% of installed capacity. The African Development Bank has invested about $100 million in hydropower plant maintenance, repairs, and infrastructure. As a result, in 2017 the proportion of hydropower on the grid went up to 26% from 15% in 2015. Under this program, the 760 MW Kainji and 578 MW Jebba projects were rehabilitated.

Wind

Nigeria has great potential for onshore wind power generation.  A 100 MW wind power project is already under development, while offshore wind resources are being evaluated.

Biomass

The Nigerian government, through the Nigerian National Petroleum Corporation Limited (NNPC), has a renewable energy division which is exploring biomass opportunities in the sector and has a mandate to expand the automotive biofuels industry. NNPCL intends for projects to be executed as a public-private partnership (PPP) model, with NNPCL as a minority shareholder. Plans include using sugarcane and cassava as key biomass raw materials. However, this has stalled due to a lack of appropriate legislative framework and appropriate equity financing.

Coal

Nigeria has an estimated two billion metric tons of coal power, and the Nigerian government continues to explore coal-fired electrical power. The government plans to expand generation by about 11,000 MW through the addition of six coal-fired and nine gas power plants by 2037. The coal plants expected in 2034:

• Ramos (1000 MW)
• 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 a memorandum of understanding with the Nigerian government for the exploration and mining of coal bricks. The MOU is expected to be followed by a power purchase agreement (PPA), which should boost investor 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.

Opportunities

Self-generation for power remains widespread, which significantly increases the 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, manufacturers, and individuals must generate their power and U.S. diesel-operated power equipment is preferred. Additionally, 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, European, 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.

Government Opportunities

According to the National Integrated Infrastructure Master Plan (NIIMP), 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 Nigerian 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
• Joint venture partnerships to build off-grid captive power plants (5–19 MW) for resale to manufacturing industries in strategic cities (government 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 systems including 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.

Support Services:

• 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; in-person and virtual on July 21, 2022, virtual on November 24, 2022
• Nigeria Energy Conference and Exhibition; September 20-22, 2022
• Nigeria Annual International Conference and Exhibition; August 1-3, 2022
• International Power Engineering Exhibition and Conference (IPECON); July 20-22, 2022 (Hybrid)
• Future Energy Nigeria; June 7-9, 2022

Key Agencies in the Nigerian power sector:

• Federal Ministry of Power – 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 Nkwoh, U.S. Commercial Service, U.S. Consulate General, Lagos, Nigeria at Benedicta.Nkwoh@trade.gov