Innovation Lab
22.09.2022
Report
22.09.2022
Report

Mini-Grid Tariff Reduction Innovation Insight – CrossBoundary Innovation Lab

Key Insights
Lower tariffs significantly increase consumption, and these high consumption levels are sustained over time
The lowest consuming users (the poorest) benefit the most from reduced tariffs
Based on this strong evidence base, the Lab is working with AMDA and GEAPP to launch a tariff reduction pilot in Sierra Leone in Q4 2022

CrossBoundary’s Innovation Lab recently completed an analysis of the Tariff Reduction prototype, which the Lab ran from 2018 to 2022 in Tanzania. The findings prove that mini-grids can deliver lower tariffs to rural customers with significantly fewer subsidies than the main grid.

Why? Lower tariffs significantly increase consumption, and these high consumption levels are sustained over time. 

We are seeing that mini-grids customers have maintained ~1.5-3x their baseline consumption 3+ years after tariff reduction. This is good news for developers and donors: it means tariff reduction programs can sustainably be launched at scale; since customers will maintain the high consumption levels required to justify such programs. 

Read the latest Innovation Insight from CrossBoundary’s Innovation Lab

CrossBoundary’s Mini-Grid Innovation Lab, part of CrossBoundary Group, is Africa’s first R&D fund exclusively focused on testing new business model innovations for mini-grids, designed to close the gap on the 618 million Africans who do not have power. The Mini-Grid Innovation Lab works with developers across the continent to test innovations to make mini-grids a more reliable and commercially viable solution.