🍞 Industrial Power?

Hi ya’ll, Demilade here.

I'm writing from sunny California, and I’m reminded that time is just an illusion. So good morning, afternoon, or evening, depending on where in the world you’re reading from.

Earlier this week, I watched a fun episode of the Afropolitan podcast and learned so much about the alternative energy sector. Although I focus on the Tech, Media and Entertainment sector professionally, I’ve always been fascinated with power generation and distribution and how that impacts Nigeria’s ability to develop. I often say that “if the government only needs to figure out energy and security, Nigerian citizens will do the rest”. But this is a big IF.

Recently, the Nigerian government has taken steps to further liberalise the generation of power beyond the national grid. It’s a step in the right direction, but is it enough?

Hope you enjoy this edition!

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Fun Fact: A factory owner in Ogun pays one of the cheapest grid electricity tariffs in West Africa, and somehow, the factory almost certainly spends far more to keep its machines running.

Compared to its neighbours, Nigeria has one of the cheapest tariffs in West Africa; however, this “cheap power” is only theoretical as the grid is often a non-factor for any serious manufacturer. In reality, the factory is likely burning diesel instead, at a price that has broken many a financial model, and unfortunately even more businesses. Power in Nigeria is cheap on paper, but absent in practice.

That gap between the advertised cost of power and the real cost of power is the central problem facing Nigeria’s industrial policy right now. It is why a country with Africa's “largest economy” keeps losing factories to smaller neighbours. And it’s posing a question more and more industrialists are asking: can Nigeria industrialise outside of its grid, routing power through solar, batteries and private infrastructure, rather than waiting for a stable national grid that may never arrive? Or are we fooling ourselves?

According to the International Energy Agency, the number of people worldwide without electricity has collapsed over fifteen years from roughly 1.4 billion in 2010 to around 700 million in 2025. Asia’s industrialisation did most of the heavy lifting, falling from 761 million people without power to about 90 million.

Sub-Saharan Africa…did not move. It sat at roughly 585 million the whole time. In 2010, the region was two-fifths of the world's electricity-poor. Today it is the overwhelming majority. The world electrified. Africa stood still.

But this is just the consumer gap. For a nation to industrialise, it needs way more power and, more critically, it needs uninterrupted power at a competitive price.

Most of us know the stats by now: Nigeria has an installed grid capacity of around 13,000 megawatts. The electricity actually available to consumers has rarely exceeded 5,000MW in recent years, undone by gas shortfalls, ageing transmission lines and distribution losses. The Manufacturers Association of Nigeria (MAN) says the grid meets roughly 5% of what an industrialised Nigeria will need (100 GW). In line with other comparative nations like Indonesia.

Nigerian manufacturers spent ₦1.35 trillion on alternative power in 2025, up 21.6% from the ₦1.11 trillion spent in 2024. Energy now accounts for about 40% of factory operating costs.

The driver of this cost is high diesel prices, with a pump price at ₦1,800 to ₦2,000 a litre; the cost per kWh starts to creep up. Nigeria's highest energy tariff (band A) from the grid is around ₦225/kWh, or about $0.15, which is below Senegal and Mali, and just above Ghana. But Band A power reaches only a sliver of industry. The moment a factory falls back on its diesel generator, the effective cost of a unit roughly doubles, making Nigeria one of the most expensive places to buy power in the region.

Nigerians buy pre-packaged instant pounded yam manufactured in China (a food the Chinese do not eat) because it’s less expensive to import from there than to manufacture at home. For half a century, until Aliko Dangote opened his $20 billion refinery in Lagos in 2024, the country exported crude only to reimport refined petrol and diesel. President Bola Tinubu has been clear about wanting to break the pattern. "We don't want extractors," he told an investor gathering in Kigali. "We want to add value to what we have."

Anyone can want anything; that’s the easy part.

However, it’s not all doom and gloom. Capital is not waiting for the grid to be fixed. It is betting on the workaround. The clearest indication is in mobility. In last week’s edition, we mentioned that Spiro, an electric-motorcycle company, raised $215 million this month, taking its total funding past $500 million. What is interesting is that investors aren't buying the best motorcycle company; they are buying the network. Spiro separates the battery from the bike, and riders swap depleted batteries for charged ones at stations dotted across cities. The company says it has built 2,500 swap stations and completed more than 30 million swaps. Its backers, including a Danish pension fund, are investing in infrastructure that doubles as distributed energy storage. This logic, owning the infrastructure, is the thread that could be the turning point for Nigeria’s industrial aspiration.

The renewables build-out is real money too. The Rural Electrification Agency secured over $430 million in local renewable-manufacturing commitments in 2025 and planned 28 new mini-grids as of the first quarter of 2026. And the macro picture has, tentatively, turned: manufacturing capital importation rose 17.2% year-on-year in the first quarter of 2026, to $152.3 million, according to National Bureau of Statistics data. The sector grew 3.29% its strongest quarter in four years, and Nigeria's S&P Global PMI hit 54.1 in May, the best reading since April 2025 and the strongest activity growth among eight major African economies. Even the auto industry, long a graveyard of Nigerian ambition, has a pulse. Stellantis and Dangote have announced production of the new Peugeot 3008 and 5008 through Dangote Peugeot Automobiles Nigeria. Nigeria is also showing up more in the EV space. Hybrid Motors Nigeria has secured approximately $95 million in investment commitments to establish electric vehicle (EV) manufacturing plants in Lagos and Abuja as well as a nationwide charging infrastructure network.

But there are also headwinds. When Hyundai chose where to put its West African assembly plant, it picked Ghana, an economy of roughly $113.5 billion and a third the size of Nigeria. A Hyundai Nigeria source, speaking anonymously, admitted the decision was surprising given that the company sells more cars in Nigeria than in Ghana, and pointed to the things that actually decide these deals: government policy, host-country support, infrastructure, security.

Which brings us to what the state is actually doing, and the most consequential reform in years. In June 2026, the Nigerian Electricity Regulatory Commission (NERC) commenced its Net Billing Regulations 2026.

For the first time, there is a structured legal pathway for "prosumers", businesses that both consume and produce electricity. Companies that install solar systems between 50 kilowatt-peak and 1.5 megawatt-peak can now sell surplus power back to the distribution companies. It is, on paper, a genuine shift: from treating rooftop solar as an off-grid escape hatch to integrating it into the grid itself. There are issues with the prices at which power is sold back to the grid vs bought. and the 1.5Mw seems like a pilot, but this is a step in the right direction.

It rests on foundations laid earlier, the Electricity Act 2023, which let states and private investors generate and distribute power within their borders, in some cases to incredible success. And the National Industrial Policy 2025, which put energy reform at the centre of a plan to lift manufacturing from about 9% of GDP to 25% by 2030. NERC has separately approved dedicated "captive" supply arrangements letting large industrials contract their own power, and the government has proposed a Grid Asset Management Company, GAMCO, to overhaul transmission, starting, sensibly, with the Benin–Lagos corridor that feeds the country's industrial heartland.

The private model the law is trying to formalise already exists. Daystar Power, now part of the Shell Group, powering the likes of Coca-Cola, Heineken and Nestlé, has spent years installing hybrid solar-and-grid systems for industrial clients, partnering directly with DisCos. Its country head for Nigeria and Ghana, Victor Ezenwoko, has argued the commercial-and-industrial solar opportunity is vast: the company estimates the model could eventually reach 170,000 Nigerian businesses, unlock 3.3 gigawatts of solar capacity and represent a $6.5 billion investment opportunity, trimming customers' energy costs by up to 30%.

Bloomberg New Energy Finance has called Nigeria the largest commercial and industrial solar market in Africa, precisely because there is so much diesel to replace. The Federal Government's own Power Sector Recovery Programme once estimated the country loses around $29 billion a year to unreliable electricity.

Lay the two cases side by side honestly.

The leapfrog case: Nigeria may never fix its grid the conventional way, too much debt, too little maintenance, too many decades of trying. So don't. Route around it. Distributed solar, battery storage, prosumer billing and privately owned infrastructure could do for power what mobile phones did for landlines: skip the broken legacy system entirely. The money flowing to Spiro, to Daystar, to the mini-grid build-out suggests serious investors believe the workaround is the destination, not a stopgap. On this view, the Net Billing Regulations are the moment the workaround became official policy.

No Industrialisation without a Grid: Heavy industry does not run on rooftops. Smelting aluminium, rolling steel, running a cement kiln at scale demands cheap, dense, around-the-clock baseload power, like coal in India, and solar panels and battery swaps don't provide it. As one analyst told Vanguard, when it comes to large-scale industrialisation, grid power remains the most cost-efficient option, and its importance "cannot be diminished." A 1.5MW prosumer cap will not move a 5,000MW national shortfall, and definitely not a 99.5 GW shortfall.

Under the African Continental Free Trade Area, Nigerian goods have to beat regional rivals on price. If power costs four times what a competitor pays, the maths doesn't work, which is roughly the calculation Hyundai already made when it drove past Lagos to Accra.

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