Transmission inefficiencies cost Nigeria’s power sector N2.61bn in Q1 – NERC

Nigeria’s power sector lost an estimated N2.61 billion in the first quarter of 2026 due to transmission inefficiencies, as the Transmission Company of Nigeria (TCN) failed to meet performance targets set by the Nigerian Electricity Regulatory Commission (NERC).

The disclosure was contained in NERC’s first-quarter 2026 report, which showed that transmission losses on the national grid exceeded the benchmark established under the Multi-Year Tariff Order (MYTO), resulting in financial losses and additional obligations to electricity generation companies.

According to the regulator, the average Transmission Loss Factor (TLF) during the quarter stood at 7.96 per cent, higher than the 7.00 per cent target approved for the year.

The TLF measures the proportion of electricity generated by power plants that is lost during transmission or consumed within transmission facilities before it reaches electricity distribution companies (DisCos) and other off-takers.

NERC explained that a lower TLF reflects a more efficient transmission network, while a higher figure indicates greater energy losses and weaker operational performance.

“The average TLF in 2026/Q1 was 7.96 per cent,” the commission stated. “A TLF of 7.96 per cent indicates that for every 100 megawatt-hours of energy injected into the grid, 7.96MWh of energy is undelivered to DisCos and international customers due to losses in the transmission network or consumption at transmission substations.”

The report showed that transmission performance deteriorated compared to the previous quarter, when the TLF stood at 7.27 per cent.

“The TLF recorded in 2026/Q1 represents a 0.69 percentage point increase relative to the 7.27 per cent recorded in 2025/Q4,” NERC noted.

The regulator further observed that the quarter’s performance represented an underachievement of 0.96 percentage points relative to the MYTO benchmark.

Financially, the underperformance translated into significant costs for the sector. NERC estimated that N257.91 million of the losses resulted directly from excess transmission losses, while N2.35 billion represented penalties payable to electricity generation companies for energy that was generated but not delivered to customers.

The commission noted that the figure does not include additional penalties that may arise from service-level agreements between TCN and electricity distribution companies.

“Exceeding the TLF target means the TSP will not be able to meet its full revenue requirement, as there is no provision to recover the revenue needed to cover the excess losses from customers,” the regulator said.

It added that the transmission company remains responsible for paying generation companies for electricity that never reaches end-users.

“TLF underperformance has additional costs for the TSP because it has to pay GenCos for the energy that is not billable to DisCos and other off-takers. The estimated cost of the 0.96 percentage point TLF underperformance during the quarter is N2.61bn,” NERC stated.

Despite the losses, the latest figure represents an improvement from the N3.13 billion recorded in the fourth quarter of 2025.

Beyond transmission losses, the report highlighted concerns over the stability of the national grid during the period.

According to NERC, frequency fluctuations increased during the quarter, suggesting a decline in the quality and stability of electricity supply.

The regulator explained that frequency is a critical measure of power quality because many industrial facilities and heavy-duty equipment are designed to operate within specific frequency limits.

Under the national grid code, the standard operating frequency is 50Hz, with an acceptable range of between 49.75Hz and 50.25Hz.

However, data from the quarter showed that the average lower daily frequency dropped to 49.11Hz, while the average upper frequency rose to 50.72Hz. This resulted in a frequency range of 1.61Hz, compared with 1.27Hz in the previous quarter.

“The 0.34Hz increase in the average quarterly frequency range recorded in 2026/Q1 relative to 2025/Q4 indicates a slight decline in the stability of the national grid’s frequency profile,” the commission said.

The report also identified persistent voltage instability across the transmission network.

NERC noted that while the grid code prescribes a nominal transmission voltage of 330kV and an acceptable operating range of 313.50kV to 346.50kV, actual operating conditions frequently exceeded those limits.

During the review period, the average lower operating voltage fell to 304.21kV, while the average upper voltage climbed to 349.88kV.

The regulator warned that such fluctuations could have serious consequences for consumers, particularly industrial and commercial users whose equipment is sensitive to voltage variations.

“Fluctuations in grid voltage, including spikes, dips, flickers and brownouts, can cause significant harm to consumers and result in substantial commercial losses,” NERC said.

“Extreme cases of voltage fluctuations, particularly at the distribution network level, can cause severe damage to industrial machines, thereby compelling industrial customers to seek alternative sources of power outside the national grid.”

The report underscores the continuing operational challenges facing Nigeria’s electricity transmission network despite ongoing investments and reforms aimed at improving grid performance.

Industry stakeholders have repeatedly argued that addressing transmission bottlenecks remains critical to improving electricity supply, reducing energy losses and enhancing the overall efficiency of the power sector.