Residential Rural Solar Electricity in Developing Countries

By Chapman, Duane; Erickson, Jon D. | Contemporary Economic Policy, April 1995 | Go to article overview

Residential Rural Solar Electricity in Developing Countries

Chapman, Duane, Erickson, Jon D., Contemporary Economic Policy


This paper analyzes the current market conditions that influence the adoption and maintenance of solar electricity systems in developing countries. Renewable solar power may offer a different route to higher living standards for developing countries than does the path followed by industrialized countries. If so, then accelerating use of energy in developing countries need not be accompanied by accelerating releases of carbon dioxide, the major greenhouse gas. Similarly, solar energy would reduce growth in regional ozone, carbon monoxide, acid deposition, and particulates, as well as reducing reliance on imported oil.

The analysis here focuses on household PV (photovoltaic) systems for several reasons. Of course, other solar technologies are in use today, including household hot water systems and central station thermal systems (see Johansson et al., 1993, for a summary). In addition, one may broadly define solar energy as renewable energy, in the sense that biomass energy and hydro and wind power originate with solar-driven atmospheric forces. However, household PV electricity is a leading renewable technology both in research and application (Caldwell, 1994; Huacuz and Martinez, 1993; Hankins, 1993). Currently and in the past, PVs have claimed the largest share of U.S. federal appropriations for renewable energy activities (Golub and Brus, 1993). In the United States as well as in developing countries, PVs are beginning to penetrate markets accessible to PV's major competing technology, portable generators (Caldwell, 1994). U.S. capacity for remote household PV installations now is about 20 MW (megawatts), equal to approximately 7 percent of the small generator capacity (U.S. EPA, 1991; U.S. GAO, 1993). For a comparative perspective, consider that utility generating capacity in the U.S. is 700,000 MW (Electric Power Monthly, August 1993).

Caldwell (1994) defines several market segments and emphasizes solar competitive grid-connected electricity. In contrast, the analysis here examines rural markets not served by central grids.


In terms of optimal public policy, economic logic implies that implementing solar PV technology should be promoted when the declining social cost of PV energy passes below the rising social cost of conventional energy generation. (Social cost here is the sum of market and externality costs.) Assuming that the externality cost of gasoline production and use is significantly greater than that for PV use, one should expect that private market outcomes would defer solar implementation to later periods than would be socially optimal.

With respect to producer costs for PV installation, analysts widely believe that significant scale economies reduce marginal and average cost as installations and capacity increase.

Figure 1 shows a highly simplified static representation of these assumptions. Demand for solar increases with a lower price; the arrow also shows solar demand shifting up as conventional energy prices and taxation rise over time. The marginal market cost curve for solar (MMCs) shows scale economy, with marginal cost declining as volume increases; the arrow represents two dynamic factors that shift the MMCs curve downward. These two factors are (i) the learning curve effect, over time, and (ii) the beneficial results of public investment in solar research.

Figure 1 represents the marginal social cost of solar (MSCs) as a constant distance below MMCs. This constant distance is a simplified assumption: the marginal non-market environmental cost of conventional electricity (MNCc) is constant, and each solar kilowatt hour displaces a conventional kilowatt hour. Therefore, under this representation, the social cost of solar electricity is less than the market cost by the value of the non-market environmental cost of the displaced conventional electricity.

The market outcome [Mathematical Expression Omitted] shows high price and cost and low sales for household PV. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Cite this article

Cited article

Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Residential Rural Solar Electricity in Developing Countries


Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25,

    New feature

    It is estimated that 1 in 10 people have dyslexia, and in an effort to make Questia easier to use for those people, we have added a new choice of font to the Reader. That font is called OpenDyslexic, and has been designed to help with some of the symptoms of dyslexia. For more information on this font, please visit

    To use OpenDyslexic, choose it from the Typeface list in Font settings.

    OK, got it!

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search


    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.