Costs and Tariff Setting - Examples

Example: EnDev Senegal

Costs

Hybrid mini-grids would be cost-efficient without subsidies if the poorest segment of the population could pay 4,700 to 5,000 FCFA (7-8 EUR).

If the payment capacity is lower than that of the ‘optimal’ villages, the supply should be limited to two or three, instead of four service levels which better correspond to the group needs of the middle income segment. Fulfilling energy needs of the richest segment results in a considerable reduction of the profitability index.

If no investors are motivated to participate in the projects after these last considerations, then management lead by communal associations, which focus more on the benefits electrification, will reduce the amount of profit required and consequently the subsidies needed.

EnDev provides a subsidy of 70% of the initial investment costs. The operator and the rural commune contribute 20% to the initial investment, whereby the operator usually contributes 15% by providing services and logistics. The remaining 5% is covered by the commune mainly through treasury bills and the provision of manpower for the construction sites. The end-users pay 10% consisting of a connection fee and the reimbursment of pre-financed indoor installations.

Tariff Setting

The end-users pay a connection fee in the beginning and a monthly fee for the electricity provided. A part of the costs for the indoor installations is pre-financed by the operator and has to be reimbursed by the end-user through a addition to the monthly payment during the first year or within two or three years depending on the service level considered.

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