Evaluation of feed-in tariff-schemes in African countries

Abstract

Almost all African countries are planning to increase their power supply capacities and to diversify the resource base of the electricity sector. In sharp contrast to the ambitious objectives, grid connected power plants, based on renewable energies, are very rare except large scale hydropower in African countries. The small number of renewable energy (RE)-plants in Africa shows that a quick diffusion of these technologies cannot be expected from the dynamic of market forces alone. Political support is necessary. By now, feed-in tariffs (FIT) is the most prominent economic instrument promoting renewable energy technologies in the power sector. They are applied in more than 50 countries, among them several African countries like Algeria, Kenya, Uganda, Ghana and Tanzania. The objective of the paper is to investigate the outcome and effectiveness of African FIT-schemes. It is assumed that most of the FIT-schemes in Africa are poorly working because of unfavourable institutional design, insufficient level of FIT rates or obstacles in the process of implementation. Deficiencies in the design of FIT-schemes and the implementation process can be explained by conflicting policy targets like affordable power prices and grid stability but also with an unclear allocation of property rights that can lead to time-consuming negotiations of Power Purchase Agreements.