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

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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File URL: http://www.fnu.zmaw.de/fileadmin/fnu-files/publication/working-papers/Ondraczek_2013_Working-Paper-FNU_200.pdf
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Paper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number FNU-200.

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Length: 28 pages
Date of creation: 18 Apr 2013
Date of revision:
Handle: RePEc:sgc:wpaper:200
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  1. Paul Collier & Anthony J. Venables, 2012. "Greening Africa? Technologies, endowments and the latecomer effect," CSAE Working Paper Series 2012-06, Centre for the Study of African Economies, University of Oxford.
  2. Bazilian, Morgan & Onyeji, Ijeoma & Liebreich, Michael & MacGill, Ian & Chase, Jennifer & Shah, Jigar & Gielen, Dolf & Arent, Doug & Landfear, Doug & Zhengrong, Shi, 2013. "Re-considering the economics of photovoltaic power," Renewable Energy, Elsevier, vol. 53(C), pages 329-338.
  3. Ondraczek, Janosch, 2013. "The sun rises in the east (of Africa): A comparison of the development and status of solar energy markets in Kenya and Tanzania," Energy Policy, Elsevier, vol. 56(C), pages 407-417.
  4. Lay, Jann & Ondraczek, Janosch & Stoever, Jana, 2013. "Renewables in the energy transition: Evidence on solar home systems and lighting fuel choice in Kenya," Energy Economics, Elsevier, vol. 40(C), pages 350-359.
  5. Branker, K. & Pathak, M.J.M. & Pearce, J.M., 2011. "A review of solar photovoltaic levelized cost of electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4470-4482.
  6. Deichmann, Uwe & Meisner, Craig & Murray, Siobhan & Wheeler, David, 2010. "The economics of renewable energy expansion in rural Sub-Saharan Africa," Policy Research Working Paper Series 5193, The World Bank.
  7. Rosnes, Orvika & Vennemo, Haakon, 2012. "The cost of providing electricity to Africa," Energy Economics, Elsevier, vol. 34(5), pages 1318-1328.
  8. Peters, Michael & Schmidt, Tobias S. & Wiederkehr, David & Schneider, Malte, 2011. "Shedding light on solar technologies'A techno-economic assessment and its policy implications," Energy Policy, Elsevier, vol. 39(10), pages 6422-6439, October.
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