Cost Competitiveness of Rural Electrification Solutions

Overview

In developing economies, large areas lack access to the electricity grid. Low density, low electricity tariffs and long distances also hinder utilities from investing in grid extension to remote areas. The use of diesel generators in these areas depends on the increasing costs of fuel. Furthermore, usage of kerosene lamps in theses rural areas also causes negative externalities like greenhouse gas emissions and fumes.

When the costs and benefits of various solutions to rural electrification are compared, studies indicate that distributed renewable energy (RE) solutions are increasingly more attractive than grid-based solutions. The more swiftly that policy-makers, regulators, financiers, developers and donors can fully accept and act upon this new energy reality, then rural areas in sub-saharan Africa can benefit from improved energy services.

Benefits of Rural Electrification

• Lighting; education and communication (e.g. radio/TV/Internet);
• Health and hygiene (e.g. avoided fumes from kerosene lamps and improved medical storage);
• Environmental benefits (e.g. avoided fumes and less greenhouse gas emissions);
• Time use; and productive uses (e.g. local industry and micro enterprise).
• The willingness to pay for electrification is currently US $ 0.10-0.40 per kilowatt hour (kWh) for lighting and TV only, and US $ 1.0-1.5 per kWh for complete electrification.