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Are we there yet? Improving solar PV economics and power planning in developing countries: The case of Kenya

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Abstract

Despite the rapid decline in the cost of solar photovoltaic (PV) systems in the past five years, even recent academic research suggests that the cost of generating PV electricity remains too high for PV to make a meaningful contribution to the generation of grid electricity in developing countries. This assessment is reflected in the views of policymakers throughout Africa, who often consider PV as a technology suited only to remote locations and small-scale applications. This paper therefore analyzes whether, in contrast to conventional wisdom, PV is already competitive with other generation technologies. Analytically, the paper is based on a levelized cost of electricity (LCOE) model to calculate the cost of PV electricity in Kenya, which serves as a case study. Based on actual technology costs and Kenya’s solar resource, the LCOE from PV is estimated at USD 0.21/kWh for the year 2011, with scenario results ranging from USD 0.17-0.30/kWh. This suggests that the LCOE of grid-connected PV systems may already be below that of the most expensive conventional power plants, i.e. medium-speed diesel generators and gas turbines, which account for a large share of Kenya’s current power mix. This finding implies that researchers and policymakers may be mistaken in perceiving solar PV as a costly niche technology, rather than a feasible option for the expansion of power generation in developing countries.

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  • Janosch Ondraczek, 2013. "Are we there yet? Improving solar PV economics and power planning in developing countries: The case of Kenya," Working Papers FNU-200, Research unit Sustainability and Global Change, Hamburg University.
  • Handle: RePEc:sgc:wpaper:200
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    Cited by:

    1. Kanyarusoke, Kant E. & Gryzagoridis, Jasson & Oliver, Graeme, 2016. "Re-mapping sub-Sahara Africa for equipment selection to photo electrify energy poor homes," Applied Energy, Elsevier, pages 240-250.
    2. Camilo, Henrique Fernandes & Udaeta, Miguel Edgar Morales & Veiga Gimenes, André Luiz & Grimoni, Jose Aquiles Baesso, 2017. "Assessment of photovoltaic distributed generation – Issues of grid connected systems through the consumer side applied to a case study of Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 712-719.
    3. Rose, Amy & Stoner, Robert J. & Perez-Arriaga, Ignacio, 2014. "Prospects for grid-connected solar photovoltaic in Kenya: A systems approach," WIDER Working Paper Series 095, World Institute for Development Economic Research (UNU-WIDER).
    4. Schäfer, Andrea I. & Hughes, Gordon & Richards, Bryce S., 2014. "Renewable energy powered membrane technology: A leapfrog approach to rural water treatment in developing countries?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 542-556.
    5. Ghosh, Santosh & Yadav, Vinod Kumar & Mukherjee, Vivekananda & Yadav, Pankaj, 2017. "Evaluation of relative impact of aerosols on photovoltaic cells through combined Shannon's entropy and Data Envelopment Analysis (DEA)," Renewable Energy, Elsevier, vol. 105(C), pages 344-353.
    6. Guta, Dawit Diriba & Börner, Jan, 2015. "Energy security, uncertainty, and energy resource use option in Ethiopia: A sector modelling approach," Discussion Papers 207697, University of Bonn, Center for Development Research (ZEF).
    7. Ramli, Makbul A.M. & Twaha, Ssennoga, 2015. "Analysis of renewable energy feed-in tariffs in selected regions of the globe: Lessons for Saudi Arabia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 649-661.
    8. Adam, Aminu Dankaka & Apaydin, Gokhan, 2016. "Grid connected solar photovoltaic system as a tool for green house gas emission reduction in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 1086-1091.
    9. Hansen, Ulrich Elmer & Pedersen, Mathilde Brix & Nygaard, Ivan, 2015. "Review of solar PV policies, interventions and diffusion in East Africa," Renewable and Sustainable Energy Reviews, Elsevier, vol. 46(C), pages 236-248.
    10. Ondraczek, Janosch & Komendantova, Nadejda & Patt, Anthony, 2015. "WACC the dog: The effect of financing costs on the levelized cost of solar PV power," Renewable Energy, Elsevier, vol. 75(C), pages 888-898.
    11. Rose, Amy & Stoner, Robert & Pérez-Arriaga, Ignacio, 2016. "Prospects for grid-connected solar PV in Kenya: A systems approach," Applied Energy, Elsevier, pages 583-590.
    12. Stephan Klasen & Tukae Mbegalo, 2016. "The Impact of Livestock Ownership on Solar Home System Adoption in the Northern and Western Regions of Rural Tanzania," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 218, Courant Research Centre PEG.
    13. Lai, Chun Sing & McCulloch, Malcolm D., 2017. "Levelized cost of electricity for solar photovoltaic and electrical energy storage," Applied Energy, Elsevier, pages 191-203.
    14. Anamika, & Peesapati, Rajagopal & Kumar, Niranjan, 2016. "Estimation of GSR to ascertain solar electricity cost in context of deregulated electricity markets," Renewable Energy, Elsevier, vol. 87(P1), pages 353-363.
    15. Bocca, Alberto & Bottaccioli, Lorenzo & Chiavazzo, Eliodoro & Fasano, Matteo & Macii, Alberto & Asinari, Pietro, 2016. "Estimating photovoltaic energy potential from a minimal set of randomly sampled data," Renewable Energy, Elsevier, vol. 97(C), pages 457-467.
    16. repec:eee:renene:v:113:y:2017:i:c:p:94-111 is not listed on IDEAS
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    19. repec:eee:rensus:v:80:y:2017:i:c:p:313-318 is not listed on IDEAS
    20. Bocca, Alberto & Chiavazzo, Eliodoro & Macii, Alberto & Asinari, Pietro, 2015. "Solar energy potential assessment: An overview and a fast modeling approach with application to Italy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 291-296.
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    22. Cartelle Barros, Juan José & Lara Coira, Manuel & de la Cruz López, María Pilar & del Caño Gochi, Alfredo, 2016. "Probabilistic life-cycle cost analysis for renewable and non-renewable power plants," Energy, Elsevier, vol. 112(C), pages 774-787.

    More about this item

    Keywords

    solar photovoltaic electricity; on-grid electricity supply; levelized cost of electricity; developing countries; Africa;

    JEL classification:

    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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