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On-Grid Solar PV versus Diesel Electricity Generation in Sub-Saharan Africa: Economics and GHG Emissions

Author

Listed:
  • Saule Baurzhan

    (Department of Economics, Eastern Mediterranean University, Famagusta, TRNC via Mersin 10, Turkey)

  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Kingston, Ontario K7L 3N6, Canada on)

Abstract

Many power utilities in sub-Saharan Africa (SSA) have inadequate generation capacity, unreliable services and high costs. They also face capital constraints that restrict them from making necessary investments needed for capacity expansion. Capacity shortages have compelled power utilities to use leased emergency power generating units, mainly oil-fired diesel generators, as a short-term solution. An economic analysis is carried that compares the economic net present value (ENPV) of fuel savings as well as greenhouse gas (GHG) savings, from investing capital in solar PV power generation plants as compared to investing the same amount of funds into diesel power plants. The results show that economic net present value is negative for solar PV plant, whereas it is a large positive value for the diesel plant. In addition, the diesel plant would be almost three times as effective in reducing GHG as the same value of investment in solar PV plant. Even with solar investment costs falling, it will take 12 to 24 years of continuous decline before solar PV will become cost-effective for SSA. The capital cost of solar PV would need to drop to US$ 1058.4 per KW to yield the same level of ENPV as the diesel plant.

Suggested Citation

  • Saule Baurzhan & Glenn P. Jenkins, 2017. "On-Grid Solar PV versus Diesel Electricity Generation in Sub-Saharan Africa: Economics and GHG Emissions," Development Discussion Papers 2017-18, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:315
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    References listed on IDEAS

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    Cited by:

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    5. Nock, Destenie & Levin, Todd & Baker, Erin, 2020. "Changing the policy paradigm: A benefit maximization approach to electricity planning in developing countries," Applied Energy, Elsevier, vol. 264(C).
    6. Azoumah, Yao K. & Tossa, Alain K. & Dake, Rock A., 2020. "Towards a labelling for green energy production units: Case study of off-grid solar PV systems," Energy, Elsevier, vol. 208(C).

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    More about this item

    Keywords

    : Solar PV; Diesel Electricity Generation; Greenhouse Gas Mitigation; Cost–Benefit Analysis; sub-Saharan Africa.;
    All these keywords.

    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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