Lagos is seeking to turn its electricity demand into a bankable market, targeting about 3.5 gigawatts (GW) of supply to close a shortfall that has left the state’s fast-growing data centre an
Lagos is seeking to turn its electricity demand into a bankable market, targeting about 3.5 gigawatts (GW) of supply to close a shortfall that has left the state’s fast-growing data centre and telecom sector leaning heavily on diesel generators to stay running.
The state currently draws less than 1GW from a national grid capable of transmitting considerably more, a gap officials examined at Thursday’s Lagos State High-Level Strategic Power Town Hall.
The plan was discussed among government officials, regulators, electricity operators and investors, who explored why Lagos continues to underdraw from a grid with far greater transmission capacity.
The shortfall extends beyond households. Lagos hosts the bulk of Nigeria’s data centre and telecom infrastructure, an industry that depends on uninterrupted power, and has increasingly relied on diesel generators to make up for grid unreliability, with energy accounting for a significant share of operating costs across the sector. A functioning, contracted electricity market would directly affect what it costs digital infrastructure operators to keep servers running.
The Special Adviser to the President on Power and Chairman of the Presidential Taskforce on Power Sector Reset and Restoration, Rilwan Babalola, said Lagos now had an opportunity to demonstrate what a commercially viable electricity market could look like under Nigeria’s emerging decentralised power regime.
He said the proposed Clean Lagos Electricity Market would initially test a 500 megawatts (MW) model built around aggregating demand, contracting directly with power suppliers, guaranteeing payment and allowing electricity to move through an open-access network.
“We are no longer just talking about generating more electricity. We are talking about creating a market that works,” Babalola said.
Image credit: Emmanuel Ikwuegbu via Unsplash He added that the first phase should not be scaled prematurely, arguing that Lagos must first establish that customers could be identified, electricity delivered and metered, and generators and other participants paid transparently.
Also read: Lagos State Opens Registration for Lagos Cleaner Energy Schools Innovation Challenge (LCESIC) 2026
The scale of the deficit was highlighted by the Commissioner for Energy and Mineral Resources, Biodun Ogunleye, who said Lagos currently receives less than 1GW from the grid despite the Transmission Company of Nigeria having the capacity to transmit about 3.5GW. He said the state was seeking an additional 2GW as an immediate step toward its target, which would enable more distribution feeders to operate.
Chief Executive Officer of the Lagos State Electricity Regulatory Commission, Temitope George, said the state was also examining embedded generation and restructuring existing Independent Power Projects to make them financially viable, citing weak generation, vandalism, electricity theft and unpaid bills as ongoing problems.
Ogunleye said consumers should not be expected to shoulder higher tariffs without corresponding improvements in metering and infrastructure. “Consumers must not be made to pay for darkness,” he said.
Stakeholders at the town hall agreed to develop measurable action points and establish baselines to track progress in the sector.
