Residents and businesses in Lagos State spend additional N5.3 trillion every year as a result of energy deficit in the city.
This was revealed in the Lagos Economic Development Update (LEDU) 2025, published by the Lagos State Government.
According to the report, while the state requires approximately 9,000 megawatts (MW) of electricity, it receives a meagre 1,000 MW from the national grid—just 11 per cent of demand.
Consequently, more than 80 per cent of Lagos’ population and businesses rely on off-grid power solutions, predominantly petrol, diesel, or fuel oil generators.
The report pointed out that this dependency contributes to high energy costs, inefficiencies, and severe environmental pollution.
It further noted that off-grid generators in Lagos produce around 15,000 MW daily but at a significantly higher price.
Power generated from these sources costs approximately N130 per kilowatt-hour (kWh) compared to N50/kWh from the national grid. This cost disparity translates to an additional financial burden of N5.3 trillion per year on Lagosians, further reducing disposable incomes, limiting business investments, and slowing overall economic productivity.
“Off-grid generators in Lagos produce about 15,000 MW daily but at exorbitant costs, with power generated at N130 per kilowatt-hour (kWh) compared to the national grid’s N50/kWh. This disparity imposes an additional financial burden of approximately N5.3 trillion annually on residents and businesses, reducing disposable incomes, limiting investments, and weakening economic productivity,” the report stated.
It said the excessive reliance on fuel-powered generators also exacerbates Lagos’ environmental concerns, contributing to high levels of carbon emissions, noise pollution, and health hazards associated with fossil fuel consumption.
According to projections in the LEDU 2025 report, Lagos’ electricity demand is expected to surge to 29,212 MW by 2030, driven by rapid urbanization and economic expansion.
The report further highlighted the state’s overburdened infrastructure as a huge challenge, saying “Energy infrastructure in Lagos is outdated and highly susceptible to climate impacts, including floods and extreme weather events.”
Energy analysts argue that addressing Lagos’ power crisis requires massive investment in renewable energy, expansion of independent power projects (IPPs), and improved grid infrastructure to enhance reliability and affordability. Additionally, regulatory reforms and incentives to attract private sector participation in the power sector are seen as critical to bridging the widening electricity gap.
To mitigate this crisis, the Lagos State Government has emphasised the need for strategic partnerships with private investors and international organizations to scale up alternative energy solutions, particularly in solar, wind, and gas-powered electricity generation.
