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close this bookRural Energy and Development: Improving Energy Supply for Two Billion People (WB, 1996, 132 p.)
close this folderChapter five - Innovations in renewable energy
View the document(introduction...)
View the documentTechnical progress in using the solar resource
View the documentPolicies toward new renewable energy sources in rural areas
View the documentProgram development
View the documentPrices
View the documentCredit
View the documentTaxes and subsidies


As discussed in chapter 4. for rural areas both peak and average costs are sometimes twice the marginal costs of electricity supplies in a typical urban situation. If new renewable energy technologies are to succeed as an economic alternative to conventional power plants and to grid electrification in rural areas, then as chapter 4 emphasized. the electricity industry must adopt cost-reflecting price policies. Such pricing policies include time-of-day and seasonal, as well as regional, variations in prices.

Given the high costs of meeting peak demand and the declining cost of PVs, several European countries, Japan, and the United States are now conducting trials on the use of PVs to supplement peak loads These trials include " net metering" arrangements such that small users can sell surplus power to the grid Aside from the cost advantages. the relevance for rural areas and towns is that decentralized generation reduces line losses and voltage drops and provides a backup source of supplies in the event of line failures.