Rural areas electrification strategies through shadow costs analysis - Bolivian Highlands case study

Abstract In the context of last-mile electrification of rural communities, stand-alone solutions like Solar Home Systems are often considered an equivalent option for access to electricity as other technologies, such as minigrids and connection to the main grid. In this work, the authors question this paradigm and propose an alternative approach that takes into account the limited service, and in turn, limited development possibilities, that Solar Home Systems grant to their users. A monetary penalty is applied to this technology based on the missed services. The conceived approach is applied to a case study in the district of Cochabamba, Bolivia, thanks to the cooperation with a local NGO. Results show how the inclusion of shadow costs influences the optimal electrification strategy in terms of users connected to the main grid by up to 33%, highlighting how standard approaches tend to overlook key aspects of access to electricity linked to the possibility of development.