Abstract
Africa still has the lowest electrification rates in the world with over 600 million people
estimated to be living without access to electricity. What makes the challenge even greater for
Africa is that the continent is so sparsely populated that building grid infrastructure is not viable
in many cases. However, “pay-as-you-go” solar home systems have provided the continent with
the opportunity to correct its electrification deficit. These innovations are not new and many of
the costs of operating these systems have reached grid parity when one considers the Levelized
Cost of Energy Model. However, these projects still fail to meet institutional investors’
bankability criteria. The aim of this study is to try and understand whether solar home systems
provide the investor with an opportunity to make a larger risk-adjusted return versus existing
grid-based power station projects being considered on the continent. This study uses Ghana’s
recently built Kpone power station as a case study to complete this analysis. The study also
seeks to assess what viability criteria is employed by a broad base of investors if they were to
consider funding off-grid power. The study makes use of the Net Present Value model to
compare the returns for Kpone and Zola Electric’s Infinity solar home system. The study also
conducts inductive qualitative analysis to try and ascertain what criteria is assessed for project
viability and then builds a conceptual framework for assessing future projects. The study found
that Kpone provided a better risk-adjusted return to that of Zola Electric’s solar home system,
largely because of Kpone’s project finance structure reducing the risk of the investment. Our
findings also show that investment ticket size, company track record and management track
record are among the most highly considered criteria for investments into off-grid companies.
Mukuddem-Petersen, J (2021). Are solar home systems a more financially viable method of electrifying Ghana households?. Afribary. Retrieved from https://track.afribary.com/works/are-solar-home-systems-a-more-financially-viable-method-of-electrifying-ghana-households
Mukuddem-Petersen, Janine "Are solar home systems a more financially viable method of electrifying Ghana households?" Afribary. Afribary, 15 May. 2021, https://track.afribary.com/works/are-solar-home-systems-a-more-financially-viable-method-of-electrifying-ghana-households. Accessed 27 Nov. 2024.
Mukuddem-Petersen, Janine . "Are solar home systems a more financially viable method of electrifying Ghana households?". Afribary, Afribary, 15 May. 2021. Web. 27 Nov. 2024. < https://track.afribary.com/works/are-solar-home-systems-a-more-financially-viable-method-of-electrifying-ghana-households >.
Mukuddem-Petersen, Janine . "Are solar home systems a more financially viable method of electrifying Ghana households?" Afribary (2021). Accessed November 27, 2024. https://track.afribary.com/works/are-solar-home-systems-a-more-financially-viable-method-of-electrifying-ghana-households