Nigeria's electricity sector faces mounting pressure as El Niño-driven drought conditions threaten hydropower generation across West Africa, according to a new report from BMI, a Fitch Solutions company.
The report warns that lower water levels could significantly curtail hydropower output, exposing Nigeria to higher electricity costs and increased supply risks. Previous El Niño events triggered a decline of nearly 25 percent in Nigeria's hydropower utilisation, and BMI cautioned that the stronger weather pattern currently developing could produce even greater losses.
Nigeria is expected to become a net electricity importer in 2026. The country's integration within the West African Power Pool (WAPP) makes it particularly susceptible to disruptions caused by reduced hydropower generation across the region, the report stated.
"The West African Power Pool will also see risks, but the impact on the pool will be lesser, as there is a lesser reliance on hydropower in the region. Of the WAPP, Nigeria will be the market at greatest risk, as it is the most reliant on imports in the region," BMI said.
The report estimated Nigeria's electricity import dependency at 6.6 percent but noted that the country's position within a hydropower-reliant regional network still leaves it exposed to climate-driven volatility.
BMI identified Nigeria alongside Ethiopia and Sudan as particularly vulnerable markets. To address potential power shortfalls, the report expects several African countries to increase reliance on thermal generation and independent power producers in the short term. For Nigeria, this could reinforce the country's existing dependence on gas-fired power plants, which already account for the majority of electricity generation.
Beyond the immediate challenges, BMI believes climate-related disruptions could accelerate investment in renewable energy infrastructure across Africa. The report highlighted solar energy, wind power, distributed generation systems, and hybrid battery storage projects as areas likely to attract increased investment as countries seek to diversify their power mix and reduce dependence on rainfall-dependent generation.
Total electricity generation across Sub-Saharan Africa is forecast to rise from **518.7 terawatt-hours (TWh)** in 2026 to **570.8 TWh** by 2030, according to BMI. However, the report cautioned that weak transmission networks, inadequate grid infrastructure, and high financing costs could limit how much new generation capacity translates into reliable supply.
The report's findings align with earlier concerns raised by industry stakeholders. Earlier this year, Sunday Oduntan, Chief Executive Officer of the Association of Nigerian Electricity Distributors (ANED), said the country's major hydropower plants were generating below capacity, contributing to recurring power outages. Oduntan noted that electricity distribution companies have increasingly relied on gas-fired power plants to compensate for shortfalls in hydropower generation.
BMI concluded that while drought-affected countries such as Nigeria will continue to depend on thermal generation in the near term, climate risks are increasingly influencing long-term energy planning across the continent. The speed of the transition toward renewable energy will depend on governments' ability to address structural barriers, attract investment, and improve energy infrastructure.
