Utilizing demand-side management as tool for promoting solar water heaters in countries where electricity is highly subsidized

Abstract

In many countries, especially those that produce petrol, electricity consumption is often subsidized. This policy leads to very low electricity costs and precludes the widespread use of solar water heaters, which have proven to be economically viable and are extensively utilized in other countries. Herein, we propose a new demand-side planning methodology to deal with such cases and perform an experimental finding-based economic assessment to study the feasibility of reducing subsidies in return for providing brand new solar water heaters to consumers. Specifically, solar water heaters are proposed to be supplied and installed free of charge as part of a demand-side management program in the Erbil province (Kurdistan region, Iraq). Assuming a duration of ten years, we show that the proposed project has a net present value of approximately US$776.6 million and requires an investment of US$90 million, further demonstrating that the successful launch of this project should dramatically reduce the winter peak load of 54 MW.