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Rethinking electricity rate design: Fostering the energy transition in North Africa

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  • Hendam, Mohamed
  • Schittekatte, Tim
  • Abdel-Rahman, Mohamed
  • Kamh, Mohamed Zakaria

Abstract

The need for the redesign of electricity end user rates when faced with the increasing adoption of behind-the-meter (BTM) technologies, such as solar PV and batteries, has been well documented in the context of liberalised power sectors. This paper focusses on rate design for North African utilities. Applying a game-theoretical model, we illustrate that differences in regulation, infrastructure, and the socio-economic context justify a tailored analysis. We show that with more uptake of BTM technologies, the popular volumetric increasing block tariff result in a regulatory trilemma between equity, cost recovery for distribution and supply companies (DISCO), and cost recovery for the single buyer entity (SBE). We also find that an investor-owned DISCO is more exposed to cost recovery issues than its counterpart in geographies with retail competition. We recommend transitioning to an end user rate with increased differentiated fixed charges and warn that merely revising rates might not be enough; wider reforms are needed to ensure an equitable and efficient energy transition.

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  • Hendam, Mohamed & Schittekatte, Tim & Abdel-Rahman, Mohamed & Kamh, Mohamed Zakaria, 2022. "Rethinking electricity rate design: Fostering the energy transition in North Africa," Energy Policy, Elsevier, vol. 169(C).
    • Handle: RePEc:eee:enepol:v:169:y:2022:i:c:s0301421522003949
    DOI: 10.1016/j.enpol.2022.113172
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