The True Cost of Solar Tariffs in East Africa

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2019-02-05

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Abstract

Over a billion people around the world continue to lack access to basic electricity, many of them unlikely to be connected to the grid for years or decades. Pay-as-you-go solar home systems (SHS)—kits that consumers can frequently purchase on credit that include a small solar panel, battery, light bulbs and wires, phone charging equipment, and sometimes televisions and other appliances—have quickly become a viable, private sector-driven solution that empowers consumers to take control of their energy future.

Many low- and middle-income governments look to import duties and value-added taxes (VAT) to fund critical government services and the bulk of SHS equipment is produced in China. As sales of systems have grown, the question of how these systems should be treated under border taxation regimes has become a prominent issue.

To better understand the trade-offs at stake, actual sales data for 700,000 units of solar home systems was collected from Uganda and Kenya, countries with vibrant SHS markets and where the border tariff debate looms large. The data was analyzed to measure the price sensitivity of consumers of two different SHS product lines in order to better understand the impact of tariffs on system sales as well as broader ramifications for households, electrification goals, and government revenue.

More about this project can be found on the Energy Access Project site.

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Fetter, Rob, and Jonathan Phillips (2019). The True Cost of Solar Tariffs in East Africa. Retrieved from https://hdl.handle.net/10161/26903.

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Phillips

Jonathan Phillips

Area Director, Nicholas Institute for En

Jonathan Phillips is the Director of the James E. Rogers Energy Access Project at Duke University, with an appointment at the Nicholas Institute for Energy, Environment & Sustainability. His work focuses on policy, regulatory, and economic issues related to rural electrification, grid de-carbonization, off-grid energy systems, and energy for productivity.

Phillips was the senior advisor to the president and CEO of the Overseas Private Investment Corporation during the Obama Administration, helping scale-up the agency’s climate finance capabilities and lead the implementation of strategic initiatives, including the agency’s $2.1 billion Power Africa portfolio.

Before that, Phillips led private sector engagement and programming with Power Africa at USAID, helping ramp-up the $300 million presidential initiative into one of the largest public-private development partnerships in the world.

From 2007-2014, he held a variety of roles in the U.S. Congress, most recently serving as the senior policy advisor to Senator Ed Markey of Massachusetts. He supported many notable legislative efforts, including serving as one of the lead authors of the Waxman-Markey cap-and-trade bill that passed the House in 2009. He also served on the House Select Committee on Energy Independence and Global Warming as well as the House Natural Resources Committee.

Phillips was a business and economic development volunteer with the Peace Corps in Mongolia. He received a bachelor’s degree from the Milwaukee School of Engineering and a master’s degree in public policy from the Harvard Kennedy School.


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