Powering Lagos SMEs: New Evidence Highlights Pathways to Cleaner, More Productive Energy Use in Urban Nigeria

Small and medium-sized enterprises (SMEs) remain central to Lagos’ economy, yet many continue to rely heavily on diesel and petrol generators to sustain daily operations. Rising fuel costs, inconsistent grid supply, and growing climate pressures have intensified interest in alternative energy solutions that are reliable, affordable, and scalable.

Powering Lagos SMEs, an ongoing clean energy initiative, is examining how distributed renewable energy — particularly solar — can improve productivity, reduce operating costs, and strengthen the resilience of urban businesses in Nigeria’s commercial capital.

The project is implemented by the Youth Sustainable Development Network (YSDN) with support from the ZE-Gen Programme, a global initiative backed by the Carbon Trust and the IKEA Foundation, and is currently progressing through its research, awareness, and market-readiness phase.

Understanding Energy Use Among Urban SMEs

As part of its first phase, Powering Lagos SMEs has engaged hundreds of businesses across major commercial districts, including Ikeja and Idumota, to analyse energy consumption patterns, operating costs, and perceptions around renewable energy adoption.

Preliminary findings indicate that while awareness of solar energy is relatively high, adoption remains constrained by trust-related concerns and limited access to appropriate financing. Many SME operators report uncertainty around system reliability, maintenance requirements, and long-term value — even as generator fuel and servicing costs continue to rise.

According to Damilola Hamid Balogun, Project Lead for Powering Lagos SMEs, the research suggests that the primary challenge is not resistance to clean energy, but confidence. “What we are seeing is a demand for practical evidence — demonstrations, peer learning, and clear financing options — before business owners feel comfortable transitioning away from generators,” Balogun said.

From Awareness to Trust-Building

In response to these findings, the project combines market research with targeted awareness activities and live demonstrations designed to address misconceptions around solar energy performance in urban, high-demand environments.

Through stakeholder dialogues, SME engagement sessions, and technology demonstrations, the initiative aims to shift discussions from abstract climate narratives to tangible business outcomes, such as reduced fuel expenditure, improved reliability, and greater cost predictability.

Rather than focusing on immediate mass deployment, the project places emphasis on market readiness, aligning SMEs, financiers, technology providers, and public institutions before larger-scale investment is pursued.

Generating Evidence for Policy and Investment

Beyond individual enterprises, Powering Lagos SMEs is contributing to a growing evidence base relevant to Nigeria’s energy transition and productive-use energy strategies. Data emerging from the project supports discussions on urban clean energy adoption, demand-side readiness, and risk reduction — areas increasingly recognised as critical to the success of national electrification and energy transition programmes.

The initiative is also developing a Monitoring, Evaluation, and Learning (MEL) framework to track adoption pathways, behavioural change, and investment readiness over time. According to Balogun, this approach is intended to support more informed decision-making by policymakers, investors, and implementing agencies.

“Clean energy scale-up depends on credible market evidence,” Balogun noted. “This phase of the project is about building that evidence systematically, so future deployment is both effective and bankable.”

Positioning for Scale

As research and engagement activities continue, Powering Lagos SMEs is laying the groundwork for a potential pilot and scale phase aligned with Nigeria’s broader energy access and transition priorities. Lessons emerging from Lagos’ dense commercial clusters could help inform similar approaches in other urban and peri-urban markets.

At a time when Nigeria is mobilising significant capital for renewable energy, the project underscores the importance of pairing infrastructure expansion with demand-side engagement and adoption-focused evidence.

The experience from Powering Lagos SMEs suggests that clean energy transitions in urban markets are shaped as much by trust, financing, and user confidence as by technology availability.