Tariff Structures to Encourage Micro-Grid Deployment in Sub-Saharan Africa: Review and Recent Trends
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Purpose of Review
This article reviews trends for micro-grid tariffs in Sub-Saharan Africa from two perspectives: guidelines for setting tariffs and methods for structuring tariffs. Different approaches are briefly described, and general benefits and drawbacks presented based on recent experiences and available literature.
The pace of micro-grid deployment has suffered from a lack of private sector investment, which is often inhibited by unfavorable policies and uncertainty around tariffs. Traditional utility tariffs are too low to allow micro-grid investors to recover their full costs, but a variety of new approaches can be applied to address these challenges.
Broad consensus suggests that cost-reflective tariffs are a critical enabler for micro-grid scale-up. Such tariffs can be coupled with subsidies or with hybridized approaches as well as unique new methods of tapping alternative revenue streams to maintain affordability for low-income customers and financial sustainability for micro-grids. There is no one-size-fits-all approach so long as lifetime costs can be recouped.
KeywordsMini-grid Micro-grid Tariff Rural electrification Energy access
Power Africa has provided NREL funding for work on policy issues, including tariffs for micro-grids in Africa. This article is based on that work. This work was supported by the US Department of Energy under Contract No. DE-AC36-08GO28308 with Alliance for Sustainable Energy, LLC, the Operator of the National Renewable Energy Laboratory, and the United States Agency for International Development.
Compliance with Ethical Standards
Conflict of Interest
The authors declare that they have no conflict of interest.
Human and Animal Rights and Informed Consent
This article does not contain any studies with human or animal subjects performed by any of the authors.
Papers of particular interest, published recently, have been highlighted as: • Of importance
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