Photovoltaics Versus Fossil Fuel: Financial Feasibility Model for Expansion of Access to Electricity in Off-Grid Regions

Access to clean and affordable electricity is crucial to reduce global poverty. Yet, for many in developing countries, electricity continues to be costly and out of reach; moreover, consumption levels are often lower than required for subsistence. Stimulating electricity consumption in poor regions is clearly necessary, but electricity must become more affordable, accessible and clean. The present situation compels the consideration of alternative renewable energy sources. The comparative viability of diesel, gasoline and photovoltaic home systems technologies is examined here with respect to ease of access, cost and technical features in the face of the harsh socio-economic conditions found in off-grid regions. A novel off-grid electricity access feasibility model (OffG-El) has been developed to assess the extent to which photovoltaic solar home systems, diesel and gasoline may be more financially viable for increasing energy consumption among the poor in the mid- to long term. The OffG-El model is based on the levelised cost of energy (LCOE) approach to obtain the lowest cost option. This model compares the LCOE for solar, diesel and gasoline micro-generation, draws on three different levels of solar irradiance (climatic conditions), and factors in the cost of transporting the fossil fuels to their destination. The model compares both the potential opportunities and the limitations of adopting solar PV, diesel or gasoline in poor off-grid communities. Three scenarios – favourable, unfavourable and standard – have been selected to represent local conditions. The investment needed to implement photovoltaics electricity systems (for which a 20-year lifetime is assumed) under these selected scenarios is calculated using the prices for 2019 and price forecasts for 2026 and 2033. It is anticipated that PV module costs will fall by approximately 50% and 75% in 2026 and 2033 respectively. Future price cuts result from anticipated improvements to the technology and the length of time taken for these economies to be reflected in the cost of photovoltaics to the end consumers. The approach was tested in the Department of Chocó, Colombia. Results indicate that diesel and gasoline power are not only polluting the air but, importantly, these fuels can be very expensive and often difficult to obtain. Although solar technology requires comparatively high capital outlay, with some initial incentives, it emerges as the cheapest and a largely affordable, present and future solution to supply electricity, thus contributing to poverty reduction.