Powering productivity: Why Nigeria’s business future depends on captive power

There’s a quiet emergency unfolding in Nigeria’s economy, one so familiar that goes unnoticed. Yet its consequences are profound.

Every day, unreliable electricity disrupts production lines, erodes revenue, and makes productivity unpredictable for businesses across the country.

The World Bank estimates that Nigeria loses approximately $29 billion annually to unreliable electricity, more than the Federal Government’s entire 2024 capital budget.

On paper, the national grid has an installed capacity of roughly 13,500 MW. Businesses and households often receive only a third of that. Frequent system collapses, aging transmission lines, and theft further widen the gap.

States like Lagos are responding with independent power markets, while the Federal Government, with World Bank support, is rolling out solar mini grids for rural communities.

Reform is happening, but progress remains slow for an economy that urgently needs stable power.

For most businesses, the biggest concern is no longer rising tariffs but whether the lights will stay on.

The risks are structural: fuel supply bottlenecks, aging generation assets, and outdated transmission and distribution networks. Together, they make the grid less reliable by the day.

Faced with mounting uncertainty, industries have increasingly been forced to become their own power providers. Diesel generators have long served as a stopgap solution but rising fuel costs and sustainability concerns are pushing businesses toward more reliable alternatives.

To fill this gap, captive power has emerged not merely as another option, but as a critical piece of economic infrastructure.

Captive power flips the script. Decentralised and resilient, it allows companies to generate electricity on-site, sidestepping national bottlenecks altogether.

Data centers, industrial parks, logistics hubs, and agro-processors are leading the shift. For them, continuity matters more than excuses.

As one of the most visible players in the captive power generation and energy infrastructure space, Axxela is redefining access to reliable power through gas-to-power and hybrid systems.

The company designs and develops bespoke energy ecosystems, from captive installations to embedded plants and gas-fired stations built for uptime, cost efficiency, and long-term sustainability.

Among the companies helping to expand captive power infrastructure is Axxela, which has developed several gas-to-power projects, including the 12.15 MW Akute Plant, the 10.4 MW Alausa Plant (both now divested), and a 5.8 MW facility currently supplying power to Cadbury Nigeria.

Historically, captive power solutions were largely associated with multinational corporations that could afford significant upfront investments however, that perception is changing.

New financing structures and modular approaches are lowering barriers to entry and making reliable power more accessible to smaller businesses.

Axxela and other providers now offer Power Purchase Agreements (Energy Service Agreements) and lease-to-own models that significantly cut upfront costs.

For small manufacturers and retailers, these arrangements can mean swapping diesel dependence on scalable, cleaner systems. Independent studies indicate potential savings of 40-60 percent depending on the model, fuel mix, and location.

More importantly, businesses report steadier cash flow and greater control, advantages that determine whether a small enterprise grows or folds.

As adoption accelerates, regulatory frameworks and financing mechanisms must evolve alongside the market. The Electricity Act 2023 granted states the authority to regulate power within their borders, paving the way for decentralisation. However, implementation has been slow.

Commercial banks and development finance institutions remain cautious, citing regulatory uncertainty and weak off-taker guarantees. It’s a cycle of hesitation: financiers demand clarity before funding projects, while projects stall without financing.

Breaking that cycle requires intervention: fast-track licensing for off-grid developers, stable tariffs for private-to-private agreements, and targeted financing for SMEs. In short, less bureaucracy!

Nigeria’s energy transition is also part of a broader continental effort to address Africa’s electricity deficit. The African Development Bank’s Mission 300 aims to connect 300 million Africans to electricity by 2030, half through renewables.

The ambition is bold, but delivery will hinge on capital, policy clarity, and investor trust.

At home, Nigeria is pursuing parallel reforms. The National Integrated Electricity Policy and the implementation of the Electricity Act 2023 are laying the groundwork for greater state autonomy and increased private-sector participation in electricity generation and distribution.

Together, these reforms signal a shift toward a more decentralised and investment-driven market. Yet, for businesses grappling with daily power disruptions, the need for faster execution and clearer regulatory frameworks remains pressing.

Companies like Axxela are helping to bridge a critical infrastructure gap, demonstrating that resilient, privately developed energy systems can complement national efforts to expand electricity access.

While the grid will remain central to Nigeria’s long-term energy future, decentralised solutions are increasingly becoming indispensable to economic growth. By treating electricity not as a monopoly but as an enabler of enterprise, Nigeria can unlock innovation, attract investment, and accelerate sustainable development.

The choice is clear: build the power infrastructure that businesses need, or risk surrendering the country’s productivity and competitiveness.