The Influence of Fuel Subsidies and Taxes on the Potential for Decentralised PV Power on the African Continent

Abstract

Many people in African countries lack access to sufficient electricity supply mostly due to high power generation costs. In order to provide electricity access to a wider part of the population, it is necessary to exploit the vast renewable resources in African countries. Therefore, this paper scrutinises the economic advantages of photovoltaic-based hybrid systems over fossil-fuel based generation. The assessment calculates the cost advantage of hybrid systems compared to diesel-only systems for the entire continent on a long term basis and by applying two scenarios: One based on world market diesel prices and the other one based on national diesel prices. The results indicate that average power generation costs per country can be reduced by up to 0.11 €/kWh considering world market diesel prices and by up to 0.48 €/kWh considering national diesel prices. Furthermore, the effect of fuel-price subsidies on the renewable energy potential and the respective savings are examined. The findings may ameliorate the policy development and demonstrate the advantages of decentralized renewable hybrid systems especially in rural areas of Africa.