Assessing grid affordability for universal electricity access in Sub-Saharan Africa

Area of Science:

• Energy Economics
• Development Studies
• Public Policy

Background:

• Grid expansion is crucial for electricity access in Sub-Saharan Africa (SSA).
• Utility revenue generation for capital investment under current tariffs is uncertain.
• Understanding affordability is key to sustainable electrification.

Purpose of the Study:

• To assess the affordability of residential electricity tariffs across Sub-Saharan Africa.
• To evaluate the financial viability of grid expansion strategies.
• To identify barriers to achieving Sustainable Development Goal 7 (SDG7).

Main Methods:

• Compiled a dataset of residential electricity tariffs for 48 SSA countries.
• Developed a standardized model using the Multi-Tier Framework (MTF) to estimate electricity bills.
• Assessed affordability across income percentiles using simulated income distributions and sensitivity analyses.

Main Results:

• Approximately 50% of the population (608 million) cannot afford Tier 4 electricity, and 85% (1.05 billion) cannot afford Tier 5 at a 10% energy-poverty threshold.
• Electricity usage remains low even where higher-tier electricity is affordable.
• Grid expansion viability is limited by affordability constraints and utility financial deficits in many regions.

Conclusions:

• Current electricity tariffs in SSA pose significant affordability challenges, hindering progress towards universal access.
• Electrification traps, caused by affordability issues and utility deficits, necessitate careful planning.
• Off-grid solutions may be the most feasible pathway to achieving SDG7 in numerous SSA countries.