Researchers at a Swiss science and technology university testing out which is the most cost-effective renewable energy source in developing countries have made a surprising discovery.
The team calculated the cost of generating a tenth of the electricity demand for each of six countries using either wind turbines or photovoltaic cells. The countries were: Brazil, Egypt, India, Kenya, Nicaragua and Thailand.
Although the six countries selected in the research by ETH Zurich were all in hot climates, researchers found that wind rather than solar power represented the best value for money.
In Kenya and Nicaragua, the results were even more counterintuitive. In both those countries they found that because of the current high oil price, producing electricity with wind power was cheaper in real terms than the present energy model, which relies mainly on electricity generated from fossil fuels.
“It is the case that wind is cheaper than the present electricity mix in these countries if you base the calculations on the global market price for fossil fuels,” Tobias Schmidt, who led the team from the ETH Zurich’s Department of Management, Technology and Economics, said in a statement.
In reality, however, natural gas and crude oil are subsidized in many countries. Kenya’s government, for example, keeps electricity prices affordable by using taxpayer money to cover the deficits in the production of power caused by the rising oil prices.
Schmidt called for a reduction to such subsidies because, he said, they flew directly in the face of recent commitments by industrial nations to fund the development of renewables in poorer countries. Measures agreed at the 2010 United Nations climate conference in Cancun will lead to billions of dollars heading south to cover the cost of changing to renewables. As a result of the conference half a billion has already been allocated to new renewable investment funds in Southeast Asia and Africa.
Where the rest of the funding ought to be invested remains a contentious subject among scientists and politicians, however.
Schmidt said that if the subsidies for fossil fuels were left in place industrialized nations would be cross-subsidising crude oil and natural gas with the climate protection funding.
“Therefore, it is important to attach certain conditions to the funding, such as the southern countries disclosing their subsidies, and for these to be taken into consideration in determining the funding,” Schmidt added.
Renewable energy is starting to take off in many developing countries, in large part because of the growth of China.
In 2010, investment in renewables in developing countries overtook the amount spent in developed countries – $72 billion compared to $70 billion. Despite massive Chinese investments, a significant driver of the renewable energy investment in developing countries has been a push for energy access in rural areas where centralized grid extension has failed. This is especially true in India where 97 percent of its solar installations in 2010 were in rural areas and off-grid.