Assessing Time-of-use Tariff Deployment For Mini-grids in Sierra Leone

The declining price of solar energy and the development of reliable off-grid solutions presents an opportunity to embrace the use of community-scale mini-grids to improve energy access. However, solar hybrid mini-grid providers electrifying rural communities in Sierra Leone and across developing economies face difficulties securing energy demand and developing a tariff structure that customers can afford to pay and covers costs. Solar hybrid mini-grids only generate power during the day, and there is a cost disparity between supplying power during the day vs. the evening. Time-of-use tariffs can be a more efficient price structure and could be a means to lower the average cost of electricity for customers. A time-of-use tariff in which the daytime price for energy is less than the evening price of electricity could incentivize consumers to shift some of their energy demand from the evening to the day – when the system generates electricity. This study conducts a financial analysis to quantify the effect of time-of-use tariffs on energy demand, incurred costs, and revenue.