Transforming electricity access by replacing back-up generators with solar systems: Recent trends and evidence from Nigeria

This paper provides a review of economic, technical and health issues in the process of replacing fossil fuel-based generators with stand-alone solar electricity systems; in addition, we provide case study evidence from a particularly important country in this respect, where solar-based systems are becoming an alternative - Nigeria. There is a large literature of technical-economic analyses of back-up fossil-fuel generators that has become increasingly critical over the last years. On the one hand, diesel- and gasoline-based electricity generators are expensive in the long-run (accounting for fuel, operation, and maintenance) and have severe negative health impacts, in addition to contributing to greenhouse gas emissions. On the other hand, until recently they represented the only option for access to electricity in off-grid and weak-on-grid regions. We show that the changing economics of stand-alone solar home systems, in combination with new payment and business model concepts, are rapidly becoming an alternative to back-up generators. In addition, the paper reviews literature on the negative health effects of generators, and provides own estimates, utilizing the Multi-Tier Framework for measuring energy access, on the socioeconomic cost of replacing generators with solar solutions in Nigeria. We then question if their replacement by solar-based systems is the way forward for Nigeria's energy transformation, by comparing end-user finance models, such as pay-as-you-go and energy-as-a-service. The paper derives some policy conclusions and finishes with an outlook of open research questions.