Nigeria’s power problem is gutting co-working margins

Nigeria’s co-working spaces promise reliable power, but rising tariffs and diesel costs are squeezing margins, forcing operators to rethink pricing and diversify revenue.

Edward Esene runs a co-working space and incubation hub in Alausa, the administrative heart of Lagos State, and is planning to relocate in the coming weeks. However, he’s not doing it because he wants a larger space or proximity to customers. His decision to relocate is driven by electricity costs.

“My light bill in Alausa is over ₦200,000 a month, and that’s modest,” he says. “If all the air conditioners are on, it can exceed ₦400,000. That’s too high.”

Nigeria’s power problem is not new. What has changed, though, is how it is priced. In 2020, the Nigeria Electricity Regulatory Commission introduced a service-based tariff system, sorting consumers into bands A to E. Those in Band A receive the most hours of electricity — up to 20 hours a day — and pay the highest tariffs. Lower bands get less power but also pay less for it.

On paper, Esene is among the fortunate. His co-working space sits in a Band A zone, theoretically guaranteeing near-continuous supply. In practice, that reliability comes at a premium. For ₦20,000, he receives roughly 88 units of electricity at his office; at home, in a Band B area, the same amount buys him about 148 units.

The math is unforgiving, especially for a small business. Reliable grid power reduces the need for diesel generators, but not enough to offset the higher tariff. After months of calculation, Esene is preparing to move his business to a Band B area, where he expects to cut his energy bill by as much as half.

“My bill could fall to ₦250,000 monthly,” he says. “In a year, that’s more than ₦2.5 million saved.”

His predicament reflects a broader trend in Nigeria’s co-working sector. As remote work has spread and the country’s technology industry has expanded, shared workspaces have proliferated in major cities such as Lagos, Abuja, and Port Harcourt. They promise stable electricity, fast internet, and professional environments — amenities that are far from guaranteed in a country that generates less than 6,000 megawatts of elect...