Tariff Structures to Encourage Micro-Grid Deployment in Sub-Saharan Africa: Review and Recent Trends

Abstract

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. Recent Findings: 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. Summary: 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.