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==Introduction==
 
==Introduction==

Revision as of 07:02, 12 September 2022

Introduction

This article provides relevant consumer insights for nano/mini-grid development in Mozambique and is targeted at private sector, donor organisations, NGOs, Government bodies and other stakeholders who are interested in getting a deeper understanding of the nano/mini-grid market in Mozambique.

For an overview of the stakeholders involved in the market, click here.

For an overview of the market size and potential growth, click here.

For an overview of the policy and regulatory framework, click here.

Willingness to Pay (WTP) for Electricity

WTP is often used as a proxy indicator to calculate the potential tariff for nano/mini-grids so that it falls within the affordability range of the target consumers. It is based on the current energy expenditure and there are different ways to calculate it.

According to the world bank definition, “affordability is a household’s monthly expenditure on electricity not exceeding 5 percent of total household expenditures in order to purchase 30kWh per month, which is a subsistence level electricity consumption­­­­[1]”.  

Using this definition, the consumer affordability (WTP) at EDM tariffs would be around 32.1 Mt or 0.45 USD (1.07x30 kWh) for 30 kWh of electricity. The EDM social tariff for consumption up to 100 kWh is 1.07 Mt.

For our WTP calculation, we use the REFIT Tariff (lowest rate for each technology) for the mini-grids. The table below shows the affordability based on subsistence level of electricity consumption (30 kWh) for mini-grids using the REFIT tariff and is compared against the national grid tariff.[1]

For solar mini-grids, the cost of subsistence electricity exceeds the 5% of the monthly household expenditure in all provinces except Maputo city and Maputo province.

Table: Affordability based on subsistence level of electricity consumption[1]
Monthly Household Expenditure Cost of Subsistence Electricity as % of Household Monthly

Expenditure

Poverty rate (%) EDM social tariff Solar mini-grids Small hydro mini-grids Wind mini-grids Biomass mini-grids
Cabo delgado 4413.4 50.03 0.73 5,38 1,56 2,8 2,76
Gaza 3926.4 43.62 0.82 6,04 1.75 3.15 3.1
Inhambane 4078.6 34.52 0.79 5.82 1.68 3.03 2.99
Manica 4185.2 37.15 0.77 5.67 1.64 2.95 2.91
Maputo Cidade 11611.9 3.83 0.27 2.04 0.59 1.06 1.05
Maputo Province 9877 11.8 0.32 2.4 0.69 1.25 1.23
Nampula 2708 64.84 1.18 8.76 2.54 4.56 4.5
Niassa 3622 66.7 0.89 6.55 1.9 3.41 3.36
Sofala 3332.9 49.56 0.96 7.12 2.06 3.71 3.65
Tete 4428.7 41.93 0.72 5.36 1.55 2.79 2.75
Zambezia 2541.5 61.76 1.26 9.34 2.7 4.86 4.79

Currently, mini-grids are forced to apply a uniform tariff corresponding to the national tariff. When this is applied, the affordability is within the 5% rate for all provinces but however might not be financially feasible for the mini-grid operator.

The new Mozambican Regulation for Energy Access in Off-Grid Areas from 2021 specifies the guidelines for tariff calculations. It states the tariffs must be calculated on the bases of accepted costs and allowed revenues, including the ability to pay of consumers and existing incentives for economic efficiency. The tariff structure will be fixed for each consumer category. Tariffs will be revised and authorised by the Energy Regulation Authority (ARENE).[2]

Further Information

References

  1. 1.0 1.1 1.2 ‘Mozambique Energy for All ProEnergia Project.Pdf’. Accessed 14 June 2021. https://documents1.worldbank.org/curated/pt/594061554084119829/pdf/Mozambique-Energy-for-All-ProEnergia-Project.pdf.
  2. Decreto-NÂo-93-2021-de-10-de-Dezembro-de-2021-Aprova-o-Regulamento-de-Acesso-Ã-Energia-Nas-Zonas-Fora-Da-Rede.Pdf’. Accessed 19 January 2022. https://amer.org.mz/wp-content/uploads/2021/12/Decreto-nA%CC%82o-93-2021-de-10-de-Dezembro-de-2021-Aprova-o-Regulamento-de-Acesso-A%CC%83-Energia-nas-Zonas-Fora-da-Rede.pdf.