The effect of investment and financing optimization policies for developing photovoltaic power generation in Cameroon; a dynamic CGE model assessment

Abstract

With less than a decade remaining until 2030, global investment in clean energy access falls short of the anticipated levels required to achieve the sustainable development goals. Notably, nations with the greatest gaps in electricity access, particularly those in Sub-Saharan Africa, have been largely excluded from energy access funding. Interestingly, the energy sector policy documents of these countries have neglected to incorporate financing strategies or plans for photovoltaic (PV) power generation. This discrepancy in the literature underscores the need to assess the economic impact of finance and investment policies that align with long-term PV power generation targets. To address this gap, our study employs a dynamic Computable General Equilibrium model to evaluate the macroeconomic consequences of achieving Cameroon’s Nationally Determined Contributions for PV power generation through optimized PV investment and finance. The model examines three policy scenarios: the Business-as-Usual, SC1 scenario involving a stable 100% increase in PV investment, and SC2 scenario featuring a stepwise 5%–100% increase in PV investment. By simulating these scenarios, we aim to shed light on their effects. The results reveal that SC1 and SC2 exhibit a 50% higher final demand for PV investment compared to the BAU scenario. Optimizing PV finance and investment in both scenarios leads to a slowdown in Cameroon’s economic growth, with SC1 showing a more pronounced impact. Additionally, SC2 encourages rapid decarbonization in energy-intensive sectors such as crude oil production and electricity generation industries. However, the SC1 policy scenario results in a rapid reduction in total investment expenditure for PV power generation. By 2035, PV power generation is projected to be three times higher in both SC1 and SC2 compared to the BAU scenario. The SC2 policy scenario also predicts relatively high levels of consumption among rural affluent and urban impoverished households. In conclusion, our study highlights the pressing need for enhanced investment and finance strategies to propel PV power generation, particularly in underserved regions. By leveraging the findings of this research, policymakers can make informed decisions and implement policies that promote sustainable and inclusive energy access, driving progress towards the fulfillment of SDGs.

A Dynamic CGE Model for Optimization in Business Analytics: Simulating the Impact of Investment Shocks

“…Dynamic AGEMs have proven to be valuable in optimizing strategic decision-making, especially in modeling the long-term economic implications of various policies within dynamic economic environments. For instance, a dynamic AGE model was utilized to assess the economic implications of photovoltaic (PV) energy generation investment and financing in Cameroon [22]. The model facilitated the simulation of different policy scenarios and their economic impacts, demonstrating how staggered increases in PV investment could accelerate industry development while minimizing economic growth impact.…”

The Role of the Energy Sector in Contributing to Sustainability Development Goals: A Text Mining Analysis of Literature

“…The literature review presents a focused examination of sustainable energy initiatives in Africa, particularly with regard to Chinese-funded projects for creating new electricity generation models [28]. The paper investigating investment and financing optimization policies for developing photovoltaic power generation in Cameroon employs a dynamic model assessment, shedding light on effective strategies for advancing renewable energy infrastructure [29].…”