An economic appraisal of solar versus combined cycle electricity generation for African countries that are capital constrained

Abstract

Many public electric utilities in Africa are capital constrained. In this paper, an economic analysis is carried out to investigate the efficiency of investing in solar photovoltaic power plants, as an option for on-grid power generation. A comparison is made in terms of the economic net present value as well as greenhouse gases savings if the same amount were invested in a combined cycle thermal power generation. The results show that economic net present value is negative for solar photovoltaic plant, whereas it is a large positive value for the combined cycle plant. In addition, the combined cycle plant would be two times as effective in reducing greenhouse gases as the same value of investment in solar photovoltaic plant. Even with solar investment costs falling, it will take 9-18 years of continuous decline before solar generation technology will become cost-effective for most of Africa.