Gencos Lose N2.28tn in Capacity Payments Amid Massive Stranded Power

Emmanuel Addeh in Abuja

Nigeria’s electricity Generation Companies (Gencos) lost an estimated N2.28 trillion in capacity payments between 2015 and 2025 as a large share of installed power capacity remained stranded, highlighting deep and persistent inefficiencies across the power value chain in the country.

Essentially, capacity loss to Gencos refers to the portion of electricity capacity that is available or installed but cannot be utilised or monetised because the power system is unable to take it. Although many Gencos are technically capable of producing far more electricity, a significant share of this capacity is stranded due to constraints outside their control.

Data covering the period made public by the Association of Power Generation Companies (APGC) showed that at its peak, more than half of the country’s available generation capacity could not be utilised, with stranded power reaching 54.38 per cent at a point.

THISDAY analysis of the figures indicated that although Nigeria steadily expanded its installed and available generation capacity over the past decade, the ability of the system to evacuate and distribute the power failed to keep pace.

As a result, generation companies had plants that were available but could not generate at full potential, mostly due to transmission constraints, grid instability, and weak demand absorption downstream.

The data showed that in 2015, although available capacity jumped to 6,616.28 megawatts, the average generation rose only marginally to 3,606.05 megawatts. This left 3,010.24 megawatts unused, equivalent to 45.50 per cent stranded capacity.

Capacity payment losses for that year stood at N214.93 billion. The following year, 2016, saw stranded power increase further to 54.38 per cent, or 3,827.98 megawatts out of 7,039.96 megawatts available, translating into capacity payment losses of N273.32 billion.

The worst performance was recorded that year. In effect, more than one out of every two megawatts that could have been generated in that year 2016 remained idle.

Capacity payment losses in 2017 were N236.47 billion, underscoring the financial burden imposed by structural bottlenecks rather than lack of generation assets in the country. In that year,  In 2017, 48.20 per cent of available capacity was stranded out of 6,871.26 megawatts generated that year, while 3,311.92 megawatts were stranded.

The massive capacity losses by Gencos continued in 2018 when it was 49.27 per cent. In that year, 7,506.23 megawatts were generated; average generation capacity was 3,807.72 megawatts and stranded generation capacity was 3,698.51 megawatts. Total annual capacity loss for that year was N264.08 billion.

The story was the same in 2019 when average stranded power was 48.73 per cent;  annual capacity loss was N256.85 billion; availability generation was 7,381.67 megawatts; average generation capacity was pegged at 3,784.42 megawatts and stranded generation was 3,597.25 megawatts.

Even in 2020, despite a rise in average generation capacity to just over 4,050 megawatts, 48.03 per cent of available capacity still could not be utilised out of the 7,792.51 megawatts. Monetary loss for that year was N266.10 billion.

However, a noticeable decline in stranded capacity emerged from 2021, coinciding with modest improvements in grid management and slightly better utilisation of existing assets. In 2021, stranded capacity fell to 35.48 per cent, with average generation of 4,118.98 megawatts against available capacity of 6,337 megawatts.  In the same vein losses for that year were valued at N159.86 billion.

In 2022, stranded power declined further to 31.55 per cent, or 1,816 megawatts from a total of 5,757.03 megawatts, with capacity payment losses declining again to N132.19 billion.

Between 2023 and 2024, stranded capacity stabilised in the mid-30 per cent range. In 2023, 34.64 per cent of available generation was stranded, while 2024 recorded a similar 34.29 per cent. Monetary losses in these two years stood at N154.72 billion and N161.96 billion respectively.

Although these figures were significantly below the peak levels recorded earlier in the decade, they still pointed to a system where roughly one-third of available generation cannot be effectively dispatched.

Besides, data for 2025 suggested further marginal improvement in utilisation. Available generation capacity increased to 6,773 megawatts, while average generation rose sharply to 4,634 megawatts. Also, stranded capacity fell to 2,276 megawatts, equivalent to 33.60 per cent. However, the structural challenge remained evident. A substantial portion of Nigeria’s power generation potential continued to sit idle.

Taken together, the data showed that average stranded capacity over the period was about 41 per cent, meaning that, on average, two out of every five megawatts of available power could not be used. This persistent gap explained why capacity payments ballooned to N2.28 trillion without delivering commensurate improvements in electricity supply to consumers.

Aside from fiscal costs, high levels of stranded power undermine investor confidence, weaken the financial viability of generation companies, and perpetuate the cycle of illiquidity across the electricity market. For households and businesses, it translates into unreliable supply despite significant investment in generation assets.