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

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 the investments necessary 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 out to compare the economic net present value (ENPV) of fuel savings, as well as the greenhouse gas (GHG) savings, from investing capital in a solar PV power-generation plant with those from investing the same amount of funds into a diesel power plant. The results show that ENPV is negative for the solar PV plant, whereas it has a large positive value for the diesel plant. In addition, the diesel plant would be almost three times as effective in reducing GHG emissions as the same value of investment in the solar PV plant. Even with solar investment costs falling, it will take 12 to 24 years of continuous decline before solar PV becomes 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.