Financial Viability and Environmental Benefits of Solar Photovoltaic System in Rural Bangladesh

Abstract

In Bangladesh major group of population (73% of total population) live in rural areas. Without changing their living status Millennium Development Goals (MDG) will not be achieved and to do so it is necessary to ensure the use of electricity in those areas. The concern of this paper is about the role of rural electrification with the help of Solar Photovoltaic (PV) System, in respect of its financial viability and environmental benefits. Relevant information has been collected from 4 households and 2 microenterprises that make use of Solar PV System in various purposes from a village and a rural market-place nearby the village of Sunamganj district in Bangladesh. Use of the Solar PV System, both in microenterprises and other income generating purposes, alongside regular household usage, indicate relatively higher level of financial viability in favor of this investment. However, substitution of the use of only little quantity of kerosene by a Solar PV System indicates relatively lower level of financial viability against the investment. In this paper the term ÃÆ'Æ'¢ÃÆ'¢Ã¢Ã¢â€š¬Ã...¡Ã‚¬-financial viability' has been used to mean high levels of Net Present Value (NPV) and Internal Rate of Return (IRR) and low level of Pay Back Period (PBP). At 6 percent discount rate all the cases reveal that the investment (to buy a solar panel) is financially viable. However two cases out of six cases (1st and 2nd cases) show negative NPV at 9 and 12 percent discount rate without considering the environmental benefit and the quality and safety of the solar lamps.