Off-grid and self-generated electricity in Lagos State has surpassed Nigeria’s entire grid-connected capacity, a new report by the Africa Finance Corporation has revealed, raising concerns over the growing energy access crisis in the country.

It also stated that if current trends persist, the number of Africans without electricity access could stay unchanged between now and 2030.

The report, titled ‘State of Africa’s Infrastructure Report 2025’, and obtained by our correspondent on Monday, noted that the continent is trapped in an energy bottleneck, with more Africans at risk of remaining without electricity by the end of the decade unless urgent action is taken.

The latest development, however, contradicts plans by the World Bank, the African Development Bank, and other partners to connect 300 million people to electricity in sub-Saharan Africa by 2030. Both institutions have committed to spending $40bn to accelerate development and reduce poverty on the continent.

Nollywood Stars Lateef Adedimeji and Femi Branch Grace Ojude Oba 20250:00 / 0:00

Nollywood Stars Lateef Adedimeji and Femi Branch Grace Ojude Oba 20250:00 / 0:12

The programme aims to combine grid expansion, off-grid solutions, and policy reforms to bridge Africa’s growing energy divide.

But the AFC in its report said the goal may not be achieved, as a significant portion of power generation in Africa’s biggest economies, Nigeria and South Africa, now happens outside the national grids, through off-grid, embedded, and captive systems.

The report read, “A growing share of generation is now occurring outside the grid, through off-grid, embedded and captive power systems, particularly in Africa’s largest economies, Nigeria and South Africa.

“These developments reflect not only market innovation but also the continued inability of centralised systems to meet rising urban and industrial demand. In Nigeria, unreliable public supply has pushed millions of households and firms to rely on petrol and diesel generators.”

It asserted that in Lagos alone, off-grid capacity is estimated at more than 19 gigawatts, higher than the total national grid output, which struggles to deliver 4 to 5 gigawatts consistently.

“Recent spatial data studies by SEforALL suggest that off-grid generation capacity in Lagos State alone could exceed 19GW, surpassing Nigeria’s entire grid-connected generation capacity.

“Captive generation is especially widespread among industrial and commercial users, with large enterprises investing in dedicated diesel and gas-fired power plants. This reflects not only market innovation but also the continued inability of centralised systems to meet rising urban and industrial demand,” the report added.

Across Nigeria, erratic public supply has forced millions of homes and businesses to rely on small petrol and diesel generators. Among large industrial and commercial users, captive generation, where companies build their own diesel or gas power plants, has become widespread.

The AFC said the trend is not limited to Nigeria. In South Africa, a 2022 policy shift that removed licensing requirements for embedded power generation triggered a boom. By the end of 2023, registered capacity jumped from just 23 megawatts in 2019 to 4.5GW, driven mainly by private sector investment. In 2024 alone, over 1GW of private solar capacity was added.

Despite the scale of these developments, official statistics fail to capture the full extent. While solar rooftops attract global attention, thermal generation, which accounts for a large chunk of industrial self-generation, is often ignored.

Captive plants serving mines, cement factories, or industrial estates can range between 20MW and 200MW per site. The report warns that while the proliferation of off-grid power may appear like progress, it is a symptom of deeper systemic failure.

“Estimates from local industry groups suggest that more than 1GW of private solar capacity was added in 2024 alone. Despite their scale and significance, these trends remain poorly captured in official statistics. Global data often focuses on off-grid renewables, largely solar rooftops, while thermal generation, a large component of industrial self-generation, is rarely tracked.

“Yet thermal installations matter: captive plants serving mines, cement factories, or industrial parks can range from 20MW to 200MW or more per site, representing substantial capacity additions. Importantly, the rise of off-grid and captive power underscores a deeper systemic failure. Going off-grid is not always the low-cost solution, it is a last resort

“A 2019 study by the Energy for Growth Hub found that, once reliability is factored in, self-generated power costs roughly twice as much as grid electricity in Nigeria and South Africa, and up to four times more in Ethiopia. These high costs erode industrial competitiveness and highlight the economic penalty of inadequate grid investment,” it stated.

It noted that rather than an ideal outcome, the boom in self-generation should be viewed as a market signal, a clear indication of suppressed demand, investment potential, and the urgency of expanding reliable grid access.

“Going off-grid is not always a low-cost solution, it is often a last resort,” the report noted. These high costs erode industrial competitiveness and underscore the economic penalty of underinvesting in grid infrastructure.

“To correct course, Africa can tap into the world’s most underutilized energy resource base. The continent is home to the largest untapped hydropower potential, the largest conventional geothermal reserves, and receives some of the highest solar irradiation globally.

“The pipeline of planned generation projects reflect this potential and is evolving towards a greater mix of renewables and gas. But these resources remain largely stranded due to weak infrastructure and limited investment, turning abundance into constraint.”

The report also warned that Africa’s sluggish energy growth is fast becoming a threat to the continent’s development ambitions.

Between 2013 and 2023, electricity generation across the continent grew by less than 2 per cent annually, far below population growth (2.42 per cent) and economic growth (3 per cent).

For the first time in two decades, per capita electricity consumption is declining, a signal of crisis, not just in access but in the capacity to scale. Comparatively, other regions have made significant progress: the Middle East and Asia-Pacific posted annual electricity generation growth of 3.8 per cent and 4.5 per cent, respectively, during the same period.

In 2024, Africa added just 6.5GW of utility-scale power, a third of India’s 18GW renewable additions, and far behind the 48.6GW added by the United States.

“Africa’s electricity generation is expanding, but not at the pace required to meet the continent’s rising demand. The energy shortfall is the single biggest constraint on economic transformation and the continent’s most underappreciated investment opportunity,” the report stated.

Despite being home to the world’s most abundant untapped energy resources, from hydropower and geothermal to solar, these assets remain largely stranded due to weak infrastructure and underinvestment.

Without a dramatic scale-up, experts warn, the region risks becoming trapped in a “low-energy equilibrium”, a state where electricity access figures appear to improve, but the volume and reliability of supply remain too poor to support meaningful growth.

Yet, the Africa Finance Corporation report warns that without decisive investment in large-scale, affordable and reliable grid infrastructure, such efforts may only provide temporary relief.

“Taken together, these trends suggest that Africa is not merely experiencing a stagnation in electricity access but a deterioration in meaningful energy consumption. While connection figures have improved in some markets, the volume and reliability of supply remain insufficient to support a sustained structural transformation.

“Without a significant increase in investment, both in generation and in supporting infrastructure, the region risks entrenching a low-energy equilibrium

that could undermine future growth and development. If current trends persist, the number of Africans without electricity access could stay unchanged between now and 2030,” it stated.

As power demand continues to rise alongside urbanisation and industrialisation, the choice before African leaders is now stark: either scale up or fall behind