Lagos Residents Spend N5.3tn Annually To Power Generators – Report

A new report has revealed that over 80 per cent of Lagos population and businesses spend N5.3tn every year to power their generators to generate electricity for households and businesses due to the state’s severe energy deficit.

Lagos, Nigeria’s economic hub, faces significant power supply challenges, with demand far exceeding supply, forcing residents and businesses to rely on costly and inefficient off-grid solutions.

With a population exceeding 23 million, Lagos requires approximately 9,000 megawatts (MW) of electricity to meet its needs.

However, the national grid supplies only 1,000 MW—just 11 percent of the state’s demand—leaving a massive shortfall.

This deficit has led to widespread dependence on generators powered by petrol, diesel, and fuel oil, which collectively produce about 15,000 MW daily.

However, this comes at a high cost, as power generated from off-grid sources is significantly more expensive, costing N130 per kilowatt-hour (kWh) compared to the national grid’s N50/kWh.

However, the latest figure shows Nigerians pay differently depending on the band they have been placed by electricity providers. Those in band A pay N227/kWh, far above off-grid sources.

Those on band B pay N210/kWh, less than those in band C and D in the new tariff policy which has been described as discriminatory.

The development has pushed some consumers to contemplate using off-grid sources to power their businesses or households.

The report, the Lagos Economic Development Update (2025) themed ‘Lagos Economic Outlook: Charting a Resilient Path Towards a Sustainable Future’, released recently by the Ministry of Economic Planning and Budget, estimates that Lagos residents and businesses spend an additional N5.3tn annually on alternative energy sources, straining disposable incomes, limiting investments, and weakening economic productivity.

“Lagos State’s electricity demand far exceeds supply, with a current need of approximately 9,000 megawatts (MW) compared to a meagre supply of 1,000 MW from the national grid, just 11 percent of demand.

“This shortfall forces over 80 percent of the state’s population and businesses to rely on off-grid generators powered by petrol, diesel, or fuel oil, contributing to significant inefficiencies and environmental degradation,” the report stated.

“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 N5.3tn annually on residents and businesses, reducing disposable incomes, limiting investments, and weakening economic productivity.”

As of 2020, only 31 per cent of Lagos households had access to the national grid, leaving 69 percent to rely on generators and other alternative energy sources.

Businesses, particularly in the industrial and commercial sectors, suffer frequent power outages, which reduce manufacturing output and competitiveness.

The city’s ageing electricity infrastructure, highly vulnerable to climate impacts such as floods and extreme weather conditions, further exacerbates the problem.

These challenges disproportionately affect low-income and informal settlements that lack resilient energy infrastructure.

The state’s energy demand is expected to reach 29,212 MW by 2030 due to rapid urbanization and economic growth, yet the current supply trajectory from the national grid falls significantly short.

This growing demand, coupled with an unreliable power supply, continues to disrupt economic activities across various sectors, particularly for small and medium enterprises (SMEs) that struggle with high operational costs.

The environmental consequences of Lagos’ generator dependence are alarming, with the state accounting for approximately 39 million tonnes of CO2 emissions annually.

The report highlights the public health risks associated with poor air quality, including respiratory diseases, which disproportionately affect vulnerable communities.

The heavy reliance on fossil fuels also contradicts Nigeria’s commitment to global climate goals. Lagos alone has over 4.5 million household generators and micro, small, and medium enterprises (MSMEs) consuming 15.6 billion litres of fuel annually.

The high cost of energy continues to burden SMEs and low-income households, limiting job creation and perpetuating cycles of poverty and inequality.

“Lagos remains heavily dependent on fossil fuels for electricity generation, with over 4.5 million household generators and micro, small, and medium enterprises (MSMEs) consuming a combined 15.6 billion litres of fuel annually.

This dependence not only increases costs but also undermines Nigeria’s commitments to global climate goals, making a transition to renewable energy imperative,” the report highlighted.

“The high cost of energy in Lagos significantly impacts economic activity, particularly for SMEs and low-income households.

“SMEs reportedly spend billions annually on diesel and petrol to power their operations, limiting their competitiveness and stifling job creation.

“These costs disproportionately burden marginalised groups, perpetuating cycles of poverty and inequality.”

The report underscores the need for a transition to renewable energy to address Lagos’ energy crisis.

Investments in solar, wind, and biomass energy could provide cleaner, more affordable electricity while creating jobs in green energy technology.

Expanding decentralized solar photovoltaic (PV) systems and mini-grids in underserved areas would significantly improve access to reliable electricity.

However, the state faces a significant shortage of skilled labour required to support the renewable energy sector.

Many young people and marginalized groups lack access to training in green energy technologies, limiting their participation in the growing sector.

To address these challenges, the Lagos Electricity Market Bill proposes creating a local electricity market independent of the national grid.

This initiative would enable Lagos to generate, transmit, and distribute electricity within its borders, improving energy access for urban and rural communities.

The bill also aims to promote renewable energy adoption through incentives, aligning with global sustainability goals while reducing emissions and lowering energy costs.

Furthermore, it advocates for vocational training programs to develop a skilled workforce for the renewable energy sector, ensuring that Lagos’ youth and marginalized groups can benefit from the green economy.

Lagos’ economic growth trajectory remains strong, with projections indicating an expansion from N43.06tn in 2023 to N66.47tn in 2025, driven primarily by the services sector.

Investments in modern infrastructure, including completed road projects and the commissioning of the Red Rail Line, are expected to boost productivity in the manufacturing sector.

However, for Lagos to achieve sustainable economic growth, tackling its energy crisis remains a top priority.

Lagos Residents Spend N5.3tn Annually To Power Generators – Report is first published on The Whistler Newspaper