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− | = Private Delivery Model = | + | = Individual Price/Tariff = |
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| '''<span style="color:#FFFFFF;"><span style="font-size: 13.6px;">Definition:</span></span>'''<br/> | | '''<span style="color:#FFFFFF;"><span style="font-size: 13.6px;">Definition:</span></span>'''<br/> |
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| | style="width: 117px; background-color: rgb(0, 103, 0);" | | | | style="width: 117px; background-color: rgb(0, 103, 0);" | |
| <span style="color:#FFFFFF;">Technology</span><br/> | | <span style="color:#FFFFFF;">Technology</span><br/> |
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| It is in principle possible to set individual prices/tariffs for different areas within a grid system. This could have the advantage of incentivizing the grid company to extend into more remote areas where costs are higher, but is often politically unacceptable and a uniform price/tariff structure is therefore most often used. Grid connected mini-grids and distribution systems rely on the sale of electricity to the grid, and import of electricity from the grid and its sale to users, as well as sale of own-generated electricity to users. Clarity on how each of these tariffs is set and regulated is vital. Tariffs for import of electricity from and export to the grid will usually be on a uniform price/tariff basis. Tariffs for users of grid- connected mini-grids as well as isolated mini-grids are usually set individually for each mini-grid or distribution area (or mini-grid company) to reflect their specific costs and any subsidies or grants they may have received. For larger, particularly grid-connected, systems, these factors may be overcome by political considerations and attempts to achieve equal treatment of users considerations (but cost-reflective grants or subsidies, or cross-subsidies, will then be needed to maintain economic sustainability). At the other end of the scale it may be concluded that the costs and bureaucracy of agreeing individual tariff levels for single small mini-grids may be unjustified. It is most usual to leave tariffs for mini-grids below a certain size unregulated (on the basis that they do not create an effective monopoly and so purchase decisions can be left to users), though use of a<br/>uniform price/tariff is also an option. | | It is in principle possible to set individual prices/tariffs for different areas within a grid system. This could have the advantage of incentivizing the grid company to extend into more remote areas where costs are higher, but is often politically unacceptable and a uniform price/tariff structure is therefore most often used. Grid connected mini-grids and distribution systems rely on the sale of electricity to the grid, and import of electricity from the grid and its sale to users, as well as sale of own-generated electricity to users. Clarity on how each of these tariffs is set and regulated is vital. Tariffs for import of electricity from and export to the grid will usually be on a uniform price/tariff basis. Tariffs for users of grid- connected mini-grids as well as isolated mini-grids are usually set individually for each mini-grid or distribution area (or mini-grid company) to reflect their specific costs and any subsidies or grants they may have received. For larger, particularly grid-connected, systems, these factors may be overcome by political considerations and attempts to achieve equal treatment of users considerations (but cost-reflective grants or subsidies, or cross-subsidies, will then be needed to maintain economic sustainability). At the other end of the scale it may be concluded that the costs and bureaucracy of agreeing individual tariff levels for single small mini-grids may be unjustified. It is most usual to leave tariffs for mini-grids below a certain size unregulated (on the basis that they do not create an effective monopoly and so purchase decisions can be left to users), though use of a<br/>uniform price/tariff is also an option. |
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− | Prices for standalone systems are also generally unregulated, though where public funding is used to support provision of standalone systems, it may (as with the [[NAE_Case_Study:_Bangladesh,_IDCOL_Solar_Home_Systems|NAE Case Study of the Bangladesh IDCOL programme]]) be regarded as appropriate to regulate prices. If the move towards pay-as-you-go, with users paying for electricity as they do from grid or mini-grids, while suppliers retain ownership of the capital equipment, continues or accelerates, regulation of electricity prices may become more relevant. If they are regulated it’s more likely to be on a uniform than an individual basis (since standalone system businesses are not usually tied to a location and so differences in costs are likely to be linked to their technology offer, efficiency of operation, or financing structure rather than any fundamental factors outside the businesses control). | + | Prices for standalone systems are also generally unregulated, though where public funding is used to support provision of standalone systems, it may (as with the [[NAE Case Study: Bangladesh, IDCOL Solar Home Systems|NAE Case Study of the Bangladesh IDCOL programme]]) be regarded as appropriate to regulate prices. If the move towards pay-as-you-go, with users paying for electricity as they do from grid or mini-grids, while suppliers retain ownership of the capital equipment, continues or accelerates, regulation of electricity prices may become more relevant. If they are regulated it’s more likely to be on a uniform than an individual basis (since standalone system businesses are not usually tied to a location and so differences in costs are likely to be linked to their technology offer, efficiency of operation, or financing structure rather than any fundamental factors outside the businesses control). |
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− | | style="width: 10px; background-color: rgb(0, 204, 248);" | <br/> | + | | style="width: 10px; background-color: rgb(243, 178, 131);" | <br/> |
− | | style="width: 117px; background-color: rgb(154, 103, 0);" | <br/> | + | | style="width: 117px; background-color: rgb(48, 103, 152);" | |
| + | <span style="color:#FFFFFF;"><span style="font-size: 13.6px;">Delivery Model</span></span><br/> |
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| An individual regulated price/tariff structure may be used with a public delivery model where multiple public entities are involved in electricity provision. It is in the context of a private or a public-private delivery model, particularly, that individual regulated prices or tariffs are most likely to be needed, since this offers the private sector element both clarity and the opportunity to recover costs. | | An individual regulated price/tariff structure may be used with a public delivery model where multiple public entities are involved in electricity provision. It is in the context of a private or a public-private delivery model, particularly, that individual regulated prices or tariffs are most likely to be needed, since this offers the private sector element both clarity and the opportunity to recover costs. |
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− | | style="width: 10px; background-color: rgb(0, 204, 248);" | <span style="color:#FFFFFF;"></span><br/> | + | | style="width: 10px; background-color: rgb(243, 178, 131);" | <span style="color:#FFFFFF;"></span><br/> |
| | style="width: 117px; background-color: rgb(154, 103, 0);" | | | | style="width: 117px; background-color: rgb(154, 103, 0);" | |
| <span style="color:#FFFFFF;">Legual Basis</span><br/> | | <span style="color:#FFFFFF;">Legual Basis</span><br/> |
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| | style="width: 117px; background-color: rgb(32, 56, 100);" | | | | style="width: 117px; background-color: rgb(32, 56, 100);" | |
| <span style="color:#FFFFFF;">Finance</span><br/> | | <span style="color:#FFFFFF;">Finance</span><br/> |
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| | style="width: 117px; background-color: rgb(0, 100, 100);" | | | | style="width: 117px; background-color: rgb(0, 100, 100);" | |
| <span style="color:#FFFFFF;">Non-Financial Interventions</span><br/> | | <span style="color:#FFFFFF;">Non-Financial Interventions</span><br/> |
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| The main advantage of an individual price/tariff regulation system is that it can reflect genuine underlying differences in the costs of provision under different circumstances and so enable economically sustainable electricity provision and attract private finance and businesses, while also protecting users from over-charging, particularly in a monopoly or quasi-monopoly situation, and ensuring that public financial support is properly used and benefits users by increasing affordability (rather than boosting private profits beyond those needed to attract capital). | | The main advantage of an individual price/tariff regulation system is that it can reflect genuine underlying differences in the costs of provision under different circumstances and so enable economically sustainable electricity provision and attract private finance and businesses, while also protecting users from over-charging, particularly in a monopoly or quasi-monopoly situation, and ensuring that public financial support is properly used and benefits users by increasing affordability (rather than boosting private profits beyond those needed to attract capital). |
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− | *IRENA (2016), Policies and regulations to support renewable energy mini-grid development through private sector involvement <u>[https://policy.practicalaction.org/policy-themes/energy/poor-peoples-energy-outlook/poor-people-s-energy-outlook-2016 https://policy.practicalaction.org/policy-themes/energy/poor-peoples-energy-outlook/poor-people-s-energy-outlook-2016]</u>
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− | *Practical Action, ODI, Solar Aid, GOGLA. (2016). Accelerating Access to Electricity in Africa with Off-grid Solar <u>[https://policy.practicalaction.org/policy-themes/energy/off-grid-solar https://policy.practicalaction.org/policy-themes/energy/off-grid-solar]</u><br/>
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− | *UNEP & GOGLA, (2015), Developing Effective Off-Grid Lighting Policy <u>[https://www.gogla.org/sites/www.gogla.org/files/recource_docs/developing-effective-off-grid-lighting-policy.pdf https://www.gogla.org/sites/www.gogla.org/files/recource_docs/developing-effective-off-grid-lighting-policy.pdf]</u><br/>
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− | *WBCSD, Business Case for Low-Carbon Microgrids (2016) <u>[http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/ifc+sustainability/learning+and+adapting/knowledge+products/publications/publications_report_gap-opportunity http://www.ifc.org/wps/wcm/connect/topics_ext_content/ifc_external_corporate_site/ifc+sustainability/learning+ and+adapting/knowledge+products/publications/publications_report_gap-opportunity]</u><br/>
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− | *World Resources Institute (2015),Clean Energy Access in Developing Countries: Perspectives on Policy and Regulation, Issue Brief 2 <u>[https://www.irena.org/DocumentDownloads/Publications/Evaluating_policies_in_support_of_the_deployment_of_renewable_power.pdf https://www.irena.org/DocumentDownloads/Publications/Evaluating_policies_in_support_of_the_ deployment_of_renewable_power.pdf]</u>
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− | None of the examples examined have had a purely private sector delivery models (ie no public involvement in either ownership or funding).
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| |} | | |} |
The Review was prepared by Mary Willcox and Dean Cooper of Practical Action Consulting working with Hadley Taylor, Silvia Cabriolu-Poddu and Christina Stuart of the EU Energy Initiative Partnership Dialogue Facility (EUEIPDF) and Michael Koeberlein and Caspar Priesemann of the Energising Development Programme (EnDev). It is based on a literature review, stakeholder consultations. The categorization framework in the review tool is based on the EUEI/PDF / Practical Action publication "Building Energy Access Markets - A Value Chain Analysis of Key Energy Market Systems".
A wider range of stakeholders were consulted during its preparation and we would particularly like to thank the following for their valuable contributions and insights:
- Jeff Felten, AfDB - Marcus Wiemann and other members, ARE - Guilherme Collares Pereira, EdP - David Otieno Ochieng, EUEI-PDF - Silvia Luisa Escudero Santos Ascarza, EUEI-PDF - Nico Peterschmidt, Inensus - John Tkacik, REEEP - Khorommbi Bongwe, South Africa: Department of Energy - Rashid Ali Abdallah, African Union Commission - Nicola Bugatti, ECREEE - Getahun Moges Kifle, Ethiopian Energy Authority - Mario Merchan Andres, EUEI-PDF - Tatjana Walter-Breidenstein, EUEI-PDF - Rebecca Symington, Mlinda Foundation - Marcel Raats, RVO.NL - Nico Tyabji, Sunfunder -