Microgrid innovation has the potential to support African manufacturing hubs and mitigate the risks of infrastructural instability, writes Louis Botha, country manager: southern Africa at Aggreko.
Manufacturers across Africa suffer heavy financial losses due to unreliable electricity supply. In Nigeria, for example, the sector is reliant on diesel generators because of consistent unreliability at an estimated loss of $27-billion a year.
In South Africa, unreliability and theft have caused major declines in factory output, which fell by 6,3% in 2025. Some sectors have reported that they are running at less than 50% capacity thanks to 3 000 megawatts (MW) of power cuts.
A study by Clean Air Task Force (CATF) found that 51,4% of companies in Africa continue to operate under the burden of long and unexpected outages, which is the highest in the world, and the cost impact extends beyond just downtime.
These companies are reliant on expensive energy solutions that make up 44% of their energy costs.
A World Bank study across 39 countries in sub-Saharan Africa found that utilities continue to remain unprofitable in many regions and that the high cost of electricity for non-residential consumers is one of the primary obstacles for business.
Nigeria, Ghana, Angola – in these regions, more than 25% of companies are reporting the loss of double-digit percentages of their annual sales due to power outages. Some are as high as 31%.
Lost sales, dropped production, and paying for emergency fuel sources alongside having to manage uncertainty are now a standard part of doing business. For manufacturing hubs that want to scale, the cost of power has become a considerable barrier to growth.
In South Africa, Glencore has experienced 51% less ferrochrome production year to date and is shutting down its smelters thanks to the high costs of energy supply from Eskom.
This is having a serious impact on production, threatening thousands of jobs and there is a risk that stainless steel supply will move overseas which have a direct impact on the local economy.
The solution? For many companies, it comes down to investing in solutions that offer them more control and that they can manage more effectively. Behind-the-meter microgrids, a growing trend in the sector, are one solution that’s gaining ground for industrial operations in fractured power environments.
Built on-site at the manufacturing facility, they use local generation, often solar, alongside battery storage and thermal generation, such as diesel or gas, to supply power to the facility directly.
The result is reduced dependence on the national grid and better control over power quality and availability at lower costs over time.
That said, power systems on African manufacturing sites need to address several recurring challenges.
First, because grid supply is often irregular, voltage fluctuations can damage equipment, while outages force emergency generator use, which increases costs. A microgrid solution has to be structured in such a way to ensure it offers the company immediate backup without compromising its reliability.
In some cases, these solutions can operate independently of the grid, which eases pressure on the company and ensures consistent, always-on energy.
Another benefit of the behind-the-meter microgrid is that it allows the manufacturer to match generation to demand more efficiently, which reduces fuel waste and unplanned diesel consumption.
Plus, when the solution is wedded to solar or other renewable sources, it can further reduce fuel costs and emissions over time. Reduced generator runtime via solar and batteries also means fewer failures and more predictable operating costs, which has the knock-on benefit of helping companies to predict their energy costs and plan investments.
These microgrids do require an upfront investment, but the financial risks of staying with an unreliable grid are increasing. Manufacturers pay for downtime, accelerated wear on machinery, higher transport or storage costs when processes are disrupted, and fuel and maintenance costs for backup generators.
They also support sustainability goals. Solar plus storage systems reduce greenhouse gas emissions, especially when fossil fuel backup is reduced, and help manufacturers comply with regulatory requirements or buyer expectations around carbon footprints.
In parallel, microgrid systems are resilient, built with strong battery storage, reliable solar components, local maintenance capacity, monitoring systems and flexibility so they can adjust as demand grows or changes.
For manufacturing hubs in Africa, the energy reliability offered by these behind-the-meter microgrids is a practical path forward. They aren’t perfect, but they do offer control over one of the most unpredictable elements of industrial cost and risk. Investing in the solution allows manufacturers to benefit from consistency, cost control and the ability to scale.