A review of impacts of electricity tariff reform in Africa. (November 2022)

• Record Type: Journal Article
• Authors: Klug, Thomas W.; Beyene, Abebe D.; Meles, Tensay H.; Toman, Michael A.; Hassen, Sied; Hou, Michael; Klooss, Benjamin; Mekonnen, Alemu; Jeuland, Marc
• Is Part Of: Energy policy. Volume 170(2022)
• Publication Date: 2022-11
• Subjects: Electricity price -- Electricity subsidy -- Electricity demand -- Systematic review -- Africa; Numbers: O13 -- L94 -- Q41 -- Q48; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2022.113226
• Languages: English
• ISSNs: 0301-4215

Abstract

Abstract: African power sectors are plagued with financial unsustainability, low rates of grid connection, and high consumer prices relative to other regions in the Global South. Reforms to electricity tariffs are a tool for decision makers to reduce costly energy subsidies, expand grid access, improve service quality, and increase affordability. This review examines 82 papers in the academic literature on the impacts of electricity tariff reform in Africa. We organize our results according to three modalities of reform: bill payment method; tariff structure; and tariff rate. Evidence on the impacts of payment reform indicates that prepaid meters may encourage residential electricity conservation and limit arrears. Increasing block tariff structures are highly regressive and poorly target consumers, and there is limited evidence on the cost or grid access implications of volume differentiated tariffs or subsidies for connection costs. Lastly, we find that demand for electricity is price inelastic across all sectors, and that tariff increases should be accompanied by protections for low-income consumers. Our analysis facilitates comparison across countries and sectors, shedding light on the successes and shortcomings of various tariff reform efforts on the continent. The review concludes with recommendations for future research and lessons for policy makers. Highlights: This paper reviews the literature on impacts of electricity tariff reform in Africa. We examine impacts of bill payment, tariff structure, and tariff rate reforms. Reform outcomes are summarized for producers and end-users of electricity.