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

Janosch Ondraczek ()

No FNU-200, Working Papers from Research unit Sustainability and Global Change, Hamburg University

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.

Keywords: solar photovoltaic electricity; on-grid electricity supply; levelized cost of electricity; developing countries; Africa (search for similar items in EconPapers)
JEL-codes: C29 O12 Q42 Q48 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2013-04-18
New Economics Papers: this item is included in nep-afr, nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Are we there yet? Improving solar PV economics and power planning in developing countries: The case of Kenya (2014)
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