Rural development by means of providing uninterruptible power supply has become a priority
among developing countries. Nigeria especially has on its top agenda the mandate to provide
clean and cost-effective means of energy to the rural communities, hardest hit by wave of
incessant outages of electricity supply. Renewable Energy (RE), a clean form of energy that can
be derived from natural sources is widely available throughout Nigeria but is not harnessed.
In this dissertation a Cost-Benefit Analysis (CBA) framework is proposed for renewable energy
towards rural community development in Nigeria as indicated in the 18-point recommendations
of Energy Commission of Nigeria (ECN). Moreover, a cost-benefit analysis tool is formulated
and developed from the CBA framework in order to analyze comparatively the costs and
intangible benefits of renewable energy projects for rural application. A case study
demonstrating the working methodology of the proposed framework is presented in order to
establish the cost-benefit components by assessing the comparative cost-benefit analysis of RE at
a rural site of Nigeria.
Erinjiyan Ekiti rural area is located for CBA assessment with three RE resources (solar, wind and
small hydro) selected for consideration. Through the application of Contingent Valuation
Method (CVM), the respondents’ willingness to pay for RE supply is obtained and RE benefits
in monetary terms computed. Using three economic decision criteria namely: Net Present Value
(NPV), Benefit-Cost Ratio (BCR) and Internal Rate of Return (IRR); the three RE resources are
ranked according to their economic viability.
The result of the analysis provides useful insight to investors and decision makers into how RE
projects in rural community should be conducted. Foremost, it is revealed that all three RE
options will be economically viable if implemented, though adequate caution must be taken
when making a decision. Based on the CBA assessment, the Small-Hydro Power (SHP) option
is ranked as the most viable option. However, this is swiftly negated if RE social impact, such as
the spiritual belief of the rural dwellers, who rely on the only potential river as a medium of
communication with their ancestors, are taken into consideration. Furthermore, a sensitivity
assessment of the three RE options revealed that only solar photovoltaic (PV) option is
marginally viable, thus turns negative upon an assumed increase in discount rate of only 17%.
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Herein, the proposed CBA framework provides a useful insight into an efficient method of
appraising RE projects in rural communities. A CBA simulation tool is formulated and adapted
from the CBA framework to enable quicker, reliable and automated means of assessing RE
projects with a view to making wise investment decision.