Solar versus Combined Cycle Electricity Generation in Capital Constrained African Economies: Which is Greener?
AbstractMany public electric utilities and countries in Africa are capital constrained while the growth in demand for electricity is increasing. In this paper an economic analysis is carried out that investigate the efficiency of investing in solar photovoltaic (PV) power plants for grid generation in such a capital constrained countries. The major benefits of the solar power generation are reductions in operating costs (mainly fuel), greenhouse gas (GHG) emissions, and other pollutants of displaced fossil fuel generation. These same benefits could be realised if efficient thermal power plants were used to displace fuel inefficient thermal plants. The amount of fuel savings, GHG emission mitigation, levelized cost of electricity generation are calculated for both solar PV and combined cycle power plants to determine the economic feasibility of introducing solar generation facilities. Investing in combined cycle power plants powered by heavy fuel oil (HFO) is three times as effective in reducing greenhouse gases as the same investment made in solar PV plants. Even If solar investment costs fall as anticipated, it will take at least 16 years of continuous decline before solar generation technology will become cost-effective.
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Bibliographic InfoPaper provided by JDI Executive Programs in its series Development Discussion Papers with number 2014-02.
Length: 38 pages
Date of creation: Jan 2014
Date of revision:
Electricity Generation; Cost–Benefit Analysis; Africa;
Find related papers by JEL classification:
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-ENE-2014-02-02 (Energy Economics)
- NEP-ENV-2014-02-02 (Environmental Economics)
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