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A review of impacts of electricity tariff reform in Africa

Thomas W. Klug, Abebe D. Beyene, Tensay H. Meles, Michael Toman (), Sied Hassen, Michael Hou, Benjamin Klooss, Alemu Mekonnen and Marc Jeuland

Energy Policy, 2022, vol. 170, issue C

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.

Keywords: Electricity price; Electricity subsidy; Electricity demand; Systematic review; Africa (search for similar items in EconPapers)
JEL-codes: L94 O13 Q41 Q48 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.enpol.2022.113226

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