Accounting for finance in electrification models for sub-Saharan Africa

Churchill Agutu (), Florian Egli (), Nathaniel J. Williams, Tobias S. Schmidt () and Bjarne Steffen ()
Additional contact information
Churchill Agutu: Energy and Technology Policy Group, ETH
Florian Egli: Energy and Technology Policy Group, ETH
Nathaniel J. Williams: Kigali Collaborative Research Centre (KCRC)
Tobias S. Schmidt: Energy and Technology Policy Group, ETH
Bjarne Steffen: Institute of Science, Technology and Policy, ETH

Nature Energy, 2022, vol. 7, issue 7, 631-641

Abstract: Abstract Electrifying 600 million people in sub-Saharan Africa will require substantial investments. Integrated electrification models inform key policy decisions and electricity access investments in many countries. While current electrification models apply sophisticated geospatial methods, they often make simplistic assumptions about financing conditions. Here we establish cost of capital values, reflecting country and electrification mode (that is, grid extension, minigrids and stand-alone systems), and specific risks faced by investors and integrate them into an open source electrification model. We find that the cost of capital for off-grid electrification is much higher than currently assumed, up to 32.2%. Accounting for finance shifts approximately 240 million people from minigrids to stand-alone systems in our main scenario, suggesting a more cost-effective electrification mode mix than previously suggested. In turn, electrification models based on uniform cost of capital assumptions increase the per kWh cost of electricity by 20%, on average. Upscaling and mainstreaming off-grid finance can lower electrification cost substantially.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www.nature.com/articles/s41560-022-01041-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nat:natene:v:7:y:2022:i:7:d:10.1038_s41560-022-01041-6

Ordering information: This journal article can be ordered from
https://www.nature.com/nenergy/

DOI: 10.1038/s41560-022-01041-6

Access Statistics for this article

Nature Energy is currently edited by Fouad Khan

More articles in Nature Energy from Nature
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().