3.4 Availability and Cost of Alternative Fuels
The economic viability of SPIS within a region may be affected by the availability and cost of alternative fuels. In most cases for the same size of pump, SPIS normally require higher initial capital investment as compared to either diesel or grid-electricity powered pumps. However, the latter two have life-cycle fuel costs while SPIS does not hence the need to evaluate the life-cycle fuel savings and payback periods of SPIS within the target market.
An availability assessment should determine the quantity and quality of alternative fuels for water pumping. For instance, if a country or region is exploiting fossil fuels, it is likely that fossil fuel based power will compete favourably against solar. For electricity, the rural electrification rate can help to determine the availability of electricity for pumping. Holding other factors constant, the more electrified a rural area is (where most farming is carried out), the higher the likelihood that a notable proportion of the population will use electricity for pumping. The cost and quality of the electricity, however, are among the factors that affect actual use of electricity for irrigation. For instance, there might be high penetration rates but frequent outages, that make electricity unreliable, present an opportunity for SPIS.
In some regions, wind can also be seen as a competing resource for irrigation pumping. Some studies have shown that wind applicability and economic viability of wind competes with solar power at speeds greater than 8 m/s.
In addition to the financing considerations presented in the previous section, the cost of alternative fuels may have a significant effect on the potential of SPIS within a market. One way to conduct a cost assessment of available fuels is to standardize the unit of measure– determine the per unit market prices (cost / kWh) of the competing fuels in the market. This allows estimation of the amount of fuel needed for a specific pump size, and consequently the cost to power the pump. It is often observed that the lower the costs of alternative fuel compared to the capital investment of acquiring SPIS, the less the market potential of SPIS.
- Availability of alternative fuels in the region or country
- Cost analysis per unit of the alternatives
- Data on energy resources in the country
- Per unit market prices of diesel, petrol
- Market prices of electricity per kwh
- Electrification rate in rural areas
- Quality of electricity in the rural areas
- Government agencies in energy
- It is important to determine if there are any government subsidies offered to the alternative fuels presented. These may be a deterrent to uptake SPIS in the country or region.