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Rural Electrification with Solar Energy as a Climate Protection Strategy Executive Summary |
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Rural Electrification with Solar Energy as a Climate Protection Strategy by Steven Kaufman with contributions by Richard Duke, Richard Hansen, John Rogers, Richard Schwartz, and Mark Trexler2 Among the many technologies proposed to address climate change, one stands out for its ability to generate emission-free power while improving rural lives: small solar electric systems can cost-effectively supply energy to rural parts of the developing world while substituting for energy sources that emit carbon dioxide (CO2). These systems enable people in the countryside to fashion more comfortable lives amidst isolation and frequent poverty. Roughly 2 billion people still lack grid electricity. Most are in rural areas of developing countries. The World Bank estimates that in 1990, electric grids served only 33% of rural developing-country homes. Achieving the vast increases in electrification needed to satisfy basic demand without significantly increasing global greenhouse gas (GHG) emissions will be a substantial challenge. Photovoltaic (PV) solar home systems (SHSs) are often the least expensive electrification option in sparsely populated areas with low electric loads. Typically consisting of a 10- to 50-watt peak (Wp) PV module, a rechargeable lead-acid battery, and sometimes a charge controller, the systems generate modest amounts of electricity for lights, radio, television, and other small appliances. Early experience with the technology included operational failures caused by poor maintenance and unsustainable donation programs. However, market-oriented activities in a number of countries increasingly demonstrate the technology's technical and commercial viability. Based on consumers' ability to pay and experience with various system delivery and finance models, the SHS market could reach as many as 170 million off-grid rural homes. SHSs can make a small but important contribution to climate change mitigation. Typical SHSs of 10-50 Wp will directly displace roughly 0.15-0.30 tons of CO2 per year through fuel substitution (mostly of kerosene). While modest on a per-household basis, if SHSs served 10% of currently unelectrified rural homes, they would directly offset the equivalent of Zimbabwe's 1995 fossil fuel CO2 emissions; at 50% market penetration, they would offset the equivalent of Switzerland's emissions in 1995. There are also significant indirect carbon benefits. Widespread SHS use could help developing countries onto a low-carbon path for rural electrification while providing an important market niche to help make PVs more competitive for a range of applications worldwide. Solar home systems have social, economic, and non-GHG environmental benefits. Vastly superior to kerosene lamps, electric lights enable families to extend their days after sunset productively and enjoyably, by studying, working, or simply cooking and eating dinner in a well lit home. Reducing the need to store and burn kerosene improves air quality and safety. The systems also ease access to information and entertainment via radio and television, and help families carry on income-generating activities. While markets are starting to develop in many countries, SHS dissemination still faces substantial constraints. Barriers include lack of information about SHSs and grid extension plans, lack of capital for SHS businesses and consumer financing programs, and lack of trained technicians, managers, and other human infrastructure needed for system delivery and maintenance. Market distortions stemming from import duties on SHS equipment and subsidies for kerosene also constrain SHS dissemination in many countries. International initiatives and host-country policies can help to remove these constraints, accelerate SHS markets, and ensure that the potential GHG mitigation and development benefits are realized. The Clean Development Mechanism (CDM), established under the Kyoto Protocol to the United Nations Framework Convention on Climate Change, could become important for accelerating SHS dissemination. The CDM will allow industrial countries to meet part of their Kyoto emission commitments through GHG mitigation projects in developing countries that also contribute to sustainable development. If CO2 trades for about $20 per ton, CDM funding will generate about $3-6 per typical SHS per year, or about 10% of initial wholesale equipment costs when discounted at 10% over 20 years. If CDM transaction costs are kept sufficiently low, this funding could prove quite valuable in improving marginal project economics and making the systems more widely affordable. To encourage early action, categorical eligibility-or at least the rules by which SHS projects can participate in the CDM-should be declared as early as possible, even if work is still being done to determine how to treat other activities that are less obviously consistent with the CDM's goals. Developing-country government agencies should take advantage of the incremental funding available for climate protection to help them promote sustainable SHS markets. In addition to the CDM, other international funds may be available to countries though various climate-motivated market development initiatives supported by multilateral and bilateral aid institutions. To create an environment that will best enable growth in private SHS markets and maximize system use and the associated GHG benefits, developing-country governments should:
To help initiate and foster SHS markets, bilateral and multilateral agencies and philanthropies should:
Finally, businesses, private institutions, and citizens concerned about climate change should consider investing in SHS activities. To date, opportunities to invest in SHS businesses and consumer financing programs have been limited, but numerous private investments have been made and additional investment opportunities are emerging. The level of risk, rate of return, and amount of CO2 displaced per dollar invested will vary, but all such investments can simultaneously help to elevate rural living conditions and mitigate climate change. |
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Rural Electrification with Solar Energy |
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