*4.1.1 Scenario development*

The proposed scenario development, summarized in **Table 1**, evaluates the economic feasibility of a EWFS for sustainable project operation and as an attractive investment for its stakeholders. The base scenario (S1) analyzes these factors for a complete EWFS, as designed in **Figure 2**, with a cost of capital at the average market rate of 15%, the integration of all power generation technologies (diesel generators, solar photovoltaics, and biogas generators), and the coupling of the three sectors: energy, water, and food. Secondly, the system's sensitivity to changes in the cost of capital is tested through a parameter variation for discrete values between WACC 0% and WACC 30% (S2). The WACC variation serves as an appropriate starting point to evaluate the economic attractiveness of a decentralized EWFS in SSA. Indeed, there are highly investment-intensive installations related to an EWFS, and the WACC is therefore of great relevance. The third analysis tests the changes of power-generating technologies in the system design. It compares the fully fledged EWFS, in which electricity is generated from diesel, solar, and biogas, with a system without biogas and a system based exclusively on diesel.

costs—consisting of depreciation expenses (9%) and cost of capital (21%). Diesel

*Economic Development of Rural Communities in Sub-Saharan Africa through Decentralized…*

water is provided free of charge, the 2 USD loss must be allocated to the total domestic electricity consumption of 42.5 MWh/year equaling an electricity fee of 0.01 USD/kWh. The total annual costs for energy, water, and food equal 45.52 USD

Provided that the domestic community purchases its food from the system and

Total capital expenditure (CapEx) for long-term assets amount to 98.4 k USD, which is only 30% of the cumulative investment costs over the respective useful life of the assets. The remaining 70% of the cumulative investment costs originates from the WACC and is distributed to investors. Analyzing the annual investment costs on a technology level, as depicted in **Figure 6**, it is observed that the majority of the annual investment costs is invested in electricity-related technologies (53%), while 38% is spent on food-related assets and 10% on water-related assets. Within the costs for energy-related investments, the majority (55%) is invested in solar photovoltaics and only 5% in nonrenewable electricity generation technologies (diesel generator). However, the diesel generator accounts for a drastically greater share of total installed capacity (14%) then of total investment costs (5%) illustrating the low specific investment costs of this technology. In contrast, the relatively lower ratios of installed capacity to investment costs for photovoltaic and biogas systems reflect the high CapEx intensity of renewable energy technologies.

The unit costs of the respective commodities, as shown in **Table 2**, depict that the costs related to producing 1 ton of maize grain (164 USD) are below the sales price of 200 USD. The profit generated from this revenue-cost difference is used to provide water free of charge and subsidize electricity prices to the domestic community. The unit cost of electricity (LCOE) is at 0.22 USD/kWh. Due to the relatively high cost of capital as well as the CapEx-intensive photovoltaic and battery

system, LCOE from PV (0.18 USD/kWh) is still above values around

expenses (fuel costs) account for 12% of total costs.

*Investment costs and capacities of power generation technologies.*

per capita.

**107**

**Figure 6.**

**Figure 5.**

*Costs and revenues for EWFS with WACC = 15%.*

*DOI: http://dx.doi.org/10.5772/intechopen.90424*
