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close this bookPhotovoltaic Household Electrification Programs - Best Practices (WB)
close this folderThe economics of PV household electrification
View the document(introduction...)
View the documentSolar home systems vs. kerosene and automotive batteries
View the documentSolar home systems vs. grid-based power supply
View the documentLoad growth impact

Load growth impact

3.15 The analysis in Figure 3-1 does not take into account the potential for load growth or productive loads. Load growth will narrow the economic niche for PV systems, due to the relatively low marginal cost of adding adjacent households to a grid and of increasing the supply of electricity to a household already connected to a grid. Table 3-2 indicates that the levelized costs of providing an additional household with a solar home system at $8.25/month, compared with the $4.25/month required to add a household to a grid (if the household is located within 100 meters of an LV line). To double the energy service to a household already using a solar home system would add $5.50 in additional levelized monthly costs, compared with a levelized cost of $1.00/month to double the level of grid service from 15 to 30 kWh per month. Thus, the prospects for early and significant load growth need to be factored into the rural electrification analysis. Productive loads also need to be considered, since they also shift the break-even curve downward and reduce the economic niche for PV home systems. In situations where significant productive load growth is expected, a least-cost comparison should be done for an isolated grid versus a combination of solar home systems for domestic loads and dedicated diesels for productive loads. (See Annex 2 for an analysis of the impact of load growth and of productive loads.)

Table 3-2. Load Growth: Incremental Economic Costs for PV and Grid-Based Systems in Indonesia (in 1993 dollars)

Load Growth

Incremental Cost (per household)

PV System

Grid

Connecting new household within 100 meters of an LV line

First cost

500.00

335.00


Levelized monthly cost

8.25

4.25

Doubling service to an existing customer

First cost

275.00

13.00


Levelized monthly cost

5.50

1.00

3.16 The analyses summarized in Tables 3-1, 3-2, and Figure 3-1 yield some simple rules of thumb for determining the least-cost option for rural electrification programs.

· PV home systems are economically the least-cost option, compared with kerosene mantle and wick lamps for lighting and rechargeable batteries used for operating small appliances such as televisions and radios.

· PV home systems are economically the lower-cost option, compared with gridbased service, if the average incremental cost of grid service is greater than $8.25 per month per household. This rule applies at a service level equivalent to 8 hours of area and 6 hours of task lighting (plus 60 Wh of other services daily), assuming a cost of $500 per 50 Wp solar home system.

· If the level of service is doubled, PV systems are economically the least-cost option when the average incremental cost of grid service is greater than $13.75 per month per household.

3.17 This Chapter has compared PV household electrification to grid, kerosene and battery alternatives from the country's economic perspective, which is to provide least-cost electricity services to rural and isolated populations. Chapter 4 focuses on affordability and quality of service from the user's perspective.