Are Mini-Grid Projects in Tanzania Financially Sustainable?

E. Zigah, M. Barry and Anna Creti
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M. Barry: Service de dermatologie [Bordeaux] - Université Bordeaux Segalen - Bordeaux 2 - CHU Bordeaux - Centre Hospitalier Universitaire de Bordeaux - Hôpital Haut-Lévêque [CHU Bordeaux] - CHU Bordeaux - Centre Hospitalier Universitaire de Bordeaux, Histologie et Pathologie Moléculaire - Université Bordeaux Segalen - Bordeaux 2, Department of Mathematics and Statistics [Boston] - BU - Boston University [Boston], Service de dermatologie Hôpital Saint-André Bordeaux - CHU Bordeaux - Centre Hospitalier Universitaire de Bordeaux, Inserm U1312 - BRIC - BoRdeaux Institute in onCology - UB - Université de Bordeaux - INSERM - Institut National de la Santé et de la Recherche Médicale
Anna Creti: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

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Abstract: While it is commonly acknowledged that mini-grids are the new pathway to bridging the high electricity access deficit in Sub-Saharan Africa (SSA), comparably few studies have assessed how existing regulations and tariff policies in SSA affect their potentials to attract the number of private investments required to scale-up deployments. Private investors' participation is particularly crucial to meet the annual electrification investment needs of $120 billons in SSA. We study the regulatory framework, the tariff structure, and the subsidy schemes for mini-grids in Tanzania. Additionally, using an optimization technique, we assess the profitability of a mini-grid electrification project in Tanzania from a private investment perspective. We find that the approved standardized small power producers' tariffs and subsidy scheme in Tanzania still do not allow mini-grid for rural electrification projects to be profitable. A further study is required to identify successful business models and strategies to improve mini-grids profitability.

Keywords: Electricity access; Mini-grids; Africa; Clean energy policy; Energy regulation; Pricing (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-afr, nep-ene, nep-env, nep-ppm and nep-reg
Note: View the original document on HAL open archive server: https://hal.science/hal-04439989v1
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Citations: View citations in EconPapers (1)

Published in Electricity Access, Decarbonization, and Integration of Renewables, pp.233-261, 2023, ⟨10.1007/978-3-658-38215-5_10⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04439989

DOI: 10.1007/978-3-658-38215-5_10

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