On-Grid Solar PV versus Diesel Electricity Generation in Sub-Saharan Africa: Economics and GHG Emissions

Saule Baurzhan () and Glenn Jenkins ()

No 2017-18, Development Discussion Papers from JDI Executive Programs

Abstract: Many power utilities in sub-Saharan Africa (SSA) have inadequate generation capacity, unreliable services and high costs. They also face capital constraints that restrict them from making necessary investments needed for capacity expansion. Capacity shortages have compelled power utilities to use leased emergency power generating units, mainly oil-fired diesel generators, as a short-term solution. An economic analysis is carried that compares the economic net present value (ENPV) of fuel savings as well as greenhouse gas (GHG) savings, from investing capital in solar PV power generation plants as compared to investing the same amount of funds into diesel power plants. The results show that economic net present value is negative for solar PV plant, whereas it is a large positive value for the diesel plant. In addition, the diesel plant would be almost three times as effective in reducing GHG as the same value of investment in solar PV plant. Even with solar investment costs falling, it will take 12 to 24 years of continuous decline before solar PV will become cost-effective for SSA. The capital cost of solar PV would need to drop to US$ 1058.4 per KW to yield the same level of ENPV as the diesel plant.

Keywords: : Solar PV, Diesel Electricity Generation; Greenhouse Gas Mitigation; Cost–Benefit Analysis; sub-Saharan Africa. (search for similar items in EconPapers)
JEL-codes: O55 Q42 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2017
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: On-Grid Solar PV versus Diesel Electricity Generation in Sub-Saharan Africa: Economics and GHG Emissions (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:dpaper:315

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