Understanding current energy needs and spending to optimise renewable energy policy and uptake in Sierra Leone
This project examines the impact of unreliable grid electricity on SMEs in Freetown, Sierra Leone, highlighting the potential benefits of renewable decentralised solar solutions. A census of 1,500 SMEs assesses demand, estimates returns, and evaluates adoption determinants, revealing significant costs due to electricity unreliability and the profitability of off-grid solutions despite credit constraints.
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Meriggi-and-Mével-Policy-Brief-March-2025.pdf
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- Unreliable grid-provided electricity, widespread in sub-Saharan Africa, creates substantial costs for SMEs and the environment. Renewable, decentralised solutions represent a key opportunity to increase the reliability and sustainability of energy supply.
- We carry out a census of 1,500 SMEs in Freetown and its outskirts to (i) characterise the demand side of decentralised solar and estimate ex-ante rates of return and (ii) create a pool of SMEs for an experimental evaluation of the determinants of adoption of renewable off-grid solutions.
- Results from the census indicate that (i) electricity reliability seems to impose substantial costs on SMEs in Freetown, (ii) current backup solutions do not allow SMEs to mitigate these costs fully, (iii) off-grid renewable energy solutions may be profitable investments for firms, and (iv) credit constraints may be binding, given the high capital intensity of such solutions.