Lagos State Targets 2027 Launch for First State-Licensed Power Plants
Pecohub Lagos State is set to record a major milestone in Nigeria’s power sector reform, with the first state-licensed independent power producers (IPPs) expected to commence commercial operations between 2026 and early 2027, signalling a shift from policy to execution under the country’s new decentralised electricity framework.
The Governor of Lagos disclosed this at the BusinessDay Energy Conference 2026, themed ‘Beyond the Grid: How States Can Rewrite Nigeria’s Power Story’, positioning the development as a proof point that subnational electricity markets are moving from concept to reality following the enactment of the Electricity Act 2023.
From law to live projects
Babajide Sanwo-Olu, who was represented by Biodun Ogunleye, the state commissioner for Energy and Mineral Resources, said the upcoming IPPs will operate under Lagos’ newly established electricity market structure, making it the first tangible outcome of reforms initiated through the Lagos State Electricity Law 2024.
“We expect the first state-licensed independent power producer to begin commercial operations between 2026 and early 2027,” he said, adding that the projects are strategically targeted at high-demand areas, including industrial clusters and critical infrastructure.
The development follows Lagos’ completion of its transition from federal to state-level electricity regulation in 2025, making it the first state to fully assume control of its power market.
On Sunday, Lagos signed Power Purchase Agreements (PPAs) and concession arrangements with three independent power producers (IPPs) as part of efforts to expand electricity generation capacity to between 200MW and 400MW within the next few years.
The agreements were formalised at Lagos House, Marina, and involved Mainland Power Limited, Fenchurch Power Limited, in partnership with Aggregate Utilities Limited, and Viathan Engineering Limited.
“This agreement is about the people and how quickly we can solve problems. We must keep our promises on both sides. When people benefit, life becomes easier. This marks the beginning of the reforms we are driving in the energy sector,” the governor said.
Power as an economic imperative
He emphasised that reliable electricity is central to economic transformation, describing energy as the “oxygen of development” and a prerequisite for industrialisation, healthcare delivery, and modern urban systems.
Lagos alone spends an estimated $2.7 billion annually on self-generation, a cost that could be redirected into productive investment if stable grid-alternative supply is achieved.
If fully realised, the state’s electricity market reforms could significantly expand economic output, with the governor suggesting that reliable power could potentially double the size of Lagos’ economy over time.
From reform to reality
While acknowledging ongoing challenges around coordination, regulation, and financing, the governor maintained that the focus must now shift from legislation to implementation.
“The question is no longer whether states have the authority,” he said. “It is whether they have the will to act.”
With the first state-licensed IPP now on the horizon, Lagos appears poised to test that resolve, potentially redefining the trajectory of Nigeria’s power sector in the process.
