The Influence of Diesel Fuel Subsidies and Taxes on the Potential for Solar-Powered Hybrid Systems in Africa

Paul Bertheau, Catherina Cader, Hendrik Huyskens and Philipp Blechinger
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Paul Bertheau: Reiner Lemoine Institute, Ostendstraße 25, Berlin 12459, Germany
Catherina Cader: Reiner Lemoine Institute, Ostendstraße 25, Berlin 12459, Germany
Hendrik Huyskens: Reiner Lemoine Institute, Ostendstraße 25, Berlin 12459, Germany
Philipp Blechinger: Reiner Lemoine Institute, Ostendstraße 25, Berlin 12459, Germany

Resources, 2015, vol. 4, issue 3, 1-19

Abstract: Many people in African countries lack access to sufficient electricity supply due to missing infrastructure of the centralized conventional power generation system. In order to provide electricity to a wider part of the population, it is necessary to exploit the vast renewable resources in African countries. Therefore, this paper scrutinizes the economic advantages of photovoltaic-based hybrid systems over fossil fuel-based power generation. A simulation model is applied in order to calculate the cost advantage of hybrid systems compared to diesel-only systems for the entire continent on a long term basis by applying two scenarios: one based on world market diesel prices and the other one based on national diesel prices. The results indicate that average power generation costs per country can be reduced by up to 0.11 €/kWh considering world market diesel prices and by up to 0.48 €/kWh considering national diesel prices. Furthermore, the effect of diesel fuel subsidies and taxes on the renewable energy potential and the respective savings are examined. These findings may ameliorate the policy development according to fossil fuel subsidies and taxes and demonstrate the advantages of decentralized renewable hybrid systems especially in rural areas of Africa.

Keywords: alternative energy sources; developing regions; hybrid energy system; economic analysis; energy systems; modelling; rural electrification; developing countries (search for similar items in EconPapers)
JEL-codes: Q1 Q2 Q3 Q4 Q5 (search for similar items in EconPapers)
Date: 2015
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