IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v130y2019icp700-713.html
   My bibliography  Save this article

A risk-adjusted techno-economic analysis for renewable-based milk cooling in remote dairy farming communities in East Africa

Author

Listed:
  • Lukuyu, June M.
  • Blanchard, Richard E.
  • Rowley, Paul N.

Abstract

The dairy industry accounts for 9–14% of East Africa's agricultural gross development product. Due to lack of milk cooling facilities, dairy farmers in areas without access to reliable grid electricity face problems of high milk spoilage and limited access to formal markets, which limits their income and standard of living. This article examines the economic viability for a number of configurations of off-grid solar, wind, biomass and biogas based milk-cooling systems serving a community in Tanzania. Key risk factors having the greatest impact on system viability are identified and a stochastic approach, by means of a Monte Carlo simulation is employed to determine the risk-adjusted economic performance of the project. The results indicate that biogas based systems offer the most viable option, with an internal rate of return of around 25%, a net present value of around $9000 and a projected increase in farmers' monthly income of at least 78%. Despite specific risk factors, the 300-L cooling system had an 82% probability of a positive net present value. However, larger system cooling capacities have a significant likelihood of a financial loss. Consequently, risk mitigation strategies designed to increase the probability of economic success are proposed.

Suggested Citation

  • Lukuyu, June M. & Blanchard, Richard E. & Rowley, Paul N., 2019. "A risk-adjusted techno-economic analysis for renewable-based milk cooling in remote dairy farming communities in East Africa," Renewable Energy, Elsevier, vol. 130(C), pages 700-713.
    • Handle: RePEc:eee:renene:v:130:y:2019:i:c:p:700-713
    DOI: 10.1016/j.renene.2018.06.101
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0960148118307535
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2018.06.101?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wambugu, Stella & Kirimi, Lilian & Opiyo, Joseph, 2011. "Productivity Trends and Performance of Dairy Farming in Kenya," Working Papers 202598, Egerton University, Tegemeo Institute of Agricultural Policy and Development.
    2. Edwin, M. & Sekhar, S. Joseph, 2015. "Thermal performance of milk chilling units in remote villages working with the combination of biomass, biogas and solar energies," Energy, Elsevier, vol. 91(C), pages 842-851.
    3. Nwokolo, Nwabunwanne & Mamphweli, Sampson & Meyer, Edson & Tangwe, Stephen, 2014. "Electrical performance evaluation of Johansson biomass gasifier system coupled to a 150 KVA generator," Renewable Energy, Elsevier, vol. 71(C), pages 695-700.
    4. Cherif, Adnene & Dhouib, Ahmed, 2002. "Dynamic modelling and simulation of a photovoltaic refrigeration plant," Renewable Energy, Elsevier, vol. 26(1), pages 143-153.
    5. Cetinay, Hale & Kuipers, Fernando A. & Guven, A. Nezih, 2017. "Optimal siting and sizing of wind farms," Renewable Energy, Elsevier, vol. 101(C), pages 51-58.
    6. Tomosk, Steve & Haysom, Joan E. & Wright, David, 2017. "Quantifying economic risk in photovoltaic power projects," Renewable Energy, Elsevier, vol. 109(C), pages 422-433.
    7. Pereira, Edinaldo José da Silva & Pinho, João Tavares & Galhardo, Marcos André Barros & Macêdo, Wilson Negrão, 2014. "Methodology of risk analysis by Monte Carlo Method applied to power generation with renewable energy," Renewable Energy, Elsevier, vol. 69(C), pages 347-355.
    8. Chauhan, Anurag & Saini, R.P., 2016. "Techno-economic feasibility study on Integrated Renewable Energy System for an isolated community of India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 388-405.
    9. Kangondo, Angelique, 2015. "Economics of Manure Disposal and Utilization in Morogoro Municipality, Tanzania," Research Theses 243440, Collaborative Masters Program in Agricultural and Applied Economics.
    10. Chaves, Luiz Inácio & da Silva, Marcelo José & de Souza, Samuel Nelson Melegari & Secco, Deonir & Rosa, Helton Aparecido & Nogueira, Carlos Eduardo Camargo & Frigo, Elisandro Pires, 2016. "Small-scale power generation analysis: Downdraft gasifier coupled to engine generator set," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 491-498.
    11. Modi, Anish & Chaudhuri, Anirban & Vijay, Bhavesh & Mathur, Jyotirmay, 2009. "Performance analysis of a solar photovoltaic operated domestic refrigerator," Applied Energy, Elsevier, vol. 86(12), pages 2583-2591, December.
    12. Julia C. Terrapon-Pfaff, 2012. "Linking Energy- and Land-Use Systems: Energy Potentials and Environmental Risks of Using Agricultural Residues in Tanzania," Sustainability, MDPI, vol. 4(3), pages 1-16, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Breen, M. & Upton, J. & Murphy, M.D., 2020. "Photovoltaic systems on dairy farms: Financial and renewable multi-objective optimization (FARMOO) analysis," Applied Energy, Elsevier, vol. 278(C).
    2. Marco Cossu & Luigi Ledda & Stefania Solinas & Andrea Cossu & Antonio Pazzona, 2020. "Evaluation of the Energy Utilization Index in Sheep Milk Cooling Systems," Energies, MDPI, vol. 13(9), pages 1-16, April.
    3. Elisangela Domingues Vaz & Regio Marcio Toesca Gimenes & Joao Augusto Rossi Borges & Rafael Todescato Cavalheiro & Andreia Maria Kremer, 2020. "Own Grain Storage Structures: Is It Worth Investing?," Journal of Agricultural Studies, Macrothink Institute, vol. 8(2), pages 42-67, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gao, Yuhe & Ji, Jie & Han, Kedong & Zhang, Feng, 2021. "Experimental and numerical study of a PV/T direct-driven refrigeration/heating system," Energy, Elsevier, vol. 230(C).
    2. Meriem Zlaoui & Mohamed Zied Dhraief & Muhi El-Dine Hilali & Boubaker Dhehibi & Mondher Ben Salem & Oussama Jebali & Mourad Rekik, 2023. "Can Small-Scale Dairy Farm Profitability Increase with the Use of Solar Energy Technology? An Experimental Study in Central Tunisia," Energies, MDPI, vol. 16(13), pages 1-21, June.
    3. Bhoi, Prakashbhai R. & Huhnke, Raymond L. & Kumar, Ajay & Thapa, Sunil & Indrawan, Natarianto, 2018. "Scale-up of a downdraft gasifier system for commercial scale mobile power generation," Renewable Energy, Elsevier, vol. 118(C), pages 25-33.
    4. Jiaxin Lu & Weijun Wang & Yingchao Zhang & Song Cheng, 2017. "Multi-Objective Optimal Design of Stand-Alone Hybrid Energy System Using Entropy Weight Method Based on HOMER," Energies, MDPI, vol. 10(10), pages 1-17, October.
    5. Percy, A. Jemila & Edwin, M., 2023. "Studies on the performance and emission characteristics of a dual fuel VCR engine using producer gas as secondary fuel: An optimization approach using response surface methodology," Energy, Elsevier, vol. 263(PA).
    6. Ephraim Bonah Agyekum & Usman Mehmood & Salah Kamel & Mokhtar Shouran & Elmazeg Elgamli & Tomiwa Sunday Adebayo, 2022. "Technical Performance Prediction and Employment Potential of Solar PV Systems in Cold Countries," Sustainability, MDPI, vol. 14(6), pages 1-21, March.
    7. Han, Kedong & Ji, Jie & Cai, Jingyong & Gao, Yuhe & Zhang, Feng & Uddin, Md Muin & Song, Zhiying, 2021. "Experimental and numerical investigation on a novel photovoltaic direct-driven ice storage air-conditioning system," Renewable Energy, Elsevier, vol. 172(C), pages 514-528.
    8. Balibrea-Iniesta, José & Rodríguez-Monroy, Carlos & Núñez-Guerrero, Yilsy María, 2021. "Economic analysis of the German regulation for electrical generation projects from biogas applying the theory of real options," Energy, Elsevier, vol. 231(C).
    9. Muuz Hadush, 2021. "Does it pay to switch from free grazing to stall feeding? Impact of stall feeding practice on household welfare in Tigrai Ethiopia," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-29, December.
    10. Valer, L. Roberto & Manito, Alex. R.A. & Ribeiro, Tina B. Selles & Zilles, Roberto & Pinho, João T., 2017. "Issues in PV systems applied to rural electrification in Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 1033-1043.
    11. Lee, Jechan & Kim, Soosan & You, Siming & Park, Young-Kwon, 2023. "Bioenergy generation from thermochemical conversion of lignocellulosic biomass-based integrated renewable energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 178(C).
    12. Xu Lei & Tang Shiyun & Deng Yanfei & Yuan Yuan, 2020. "Sustainable operation-oriented investment risk evaluation and optimization for renewable energy project: a case study of wind power in China," Annals of Operations Research, Springer, vol. 290(1), pages 223-241, July.
    13. Ajlan, Abdullah & Tan, Chee Wei & Abdilahi, Abdirahman Mohamed, 2017. "Assessment of environmental and economic perspectives for renewable-based hybrid power system in Yemen," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 559-570.
    14. Vishnupriyan, J. & Manoharan, P.S., 2018. "Multi-criteria decision analysis for renewable energy integration: A southern India focus," Renewable Energy, Elsevier, vol. 121(C), pages 474-488.
    15. William López-Castrillón & Héctor H. Sepúlveda & Cristian Mattar, 2021. "Off-Grid Hybrid Electrical Generation Systems in Remote Communities: Trends and Characteristics in Sustainability Solutions," Sustainability, MDPI, vol. 13(11), pages 1-29, May.
    16. Marco Puglia & Nicolò Morselli & Simone Pedrazzi & Paolo Tartarini & Giulio Allesina & Alberto Muscio, 2021. "Specific and Cumulative Exhaust Gas Emissions in Micro-Scale Generators Fueled by Syngas from Biomass Gasification," Sustainability, MDPI, vol. 13(6), pages 1-13, March.
    17. Halder, P.K., 2016. "Potential and economic feasibility of solar home systems implementation in Bangladesh," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 568-576.
    18. Vishnupriyan, J. & Manoharan, P.S., 2017. "Demand side management approach to rural electrification of different climate zones in Indian state of Tamil Nadu," Energy, Elsevier, vol. 138(C), pages 799-815.
    19. Li, Chen & Mogollón, José M. & Tukker, Arnold & Dong, Jianning & von Terzi, Dominic & Zhang, Chunbo & Steubing, Bernhard, 2022. "Future material requirements for global sustainable offshore wind energy development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 164(C).
    20. Subhes C. Bhattacharyya, 2018. "Mini-Grids for the Base of the Pyramid Market: A Critical Review," Energies, MDPI, vol. 11(4), pages 1-21, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:130:y:2019:i:c:p:700-713. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.