electricity. This is particularly relevant in the context of Bangladesh where the government has determined to use SHS as one of the alternatives to the grid option in its efforts to achieve the target of a universal access to electricity by 2020.

The grid electrification as an alternative baseline for quantifying the carbon benefit of SHS is also proposed in Kaufman et al (2000). Basically, the carbon benefits come from the comparison between two electrification options: grid connection using conventional fossil fuel and solar systems. It should be noted that the direct comparison can be problematic as there exists a substantial difference in the quality of electricity service received from the two options, with SHS providing much limited capacity.

In quantifying the carbon avoided using grid-electrification as an alternative baseline, the average level of electricity consumption of grid-connected household is proposed as the benchmark to estimate electrification generation (Kaufman et al, 2000). The underlying assumption is that non-electrified households would consume electricity at the same rate as the grid-connected households if they were connected to a grid. The availability of the Bangladesh household survey data allows us to predict the electricity consumption of non-electrified households based on the electricity consumption model estimated using the grid-connected households, controlling for household characteristics, such as incomes, family size and location.

The predicted average monthly electricity consumption among non-electrified households, based on this electricity model, is about 28 kwh per month when connected to a grid. The average consumption is about 26 kwh per month for the bottom two income groups and about 31kwh per month for the top two income groups. Using the grid-emission rate of 0.8 kg CO2/kwh, the carbon emissions avoided from SHS is equivalent to about 269 kg CO2 per SHS per year. This estimate is about 3.5 times that estimated using the kerosene displacement baseline (76 kg CO2 per SHS per year).

The scale of the carbon emissions avoided from SHS adoption can be better illustrated by putting these estimates in the national context of total number of households currently without electricity access in Bangladesh (about 23.6 million households in 2008). If all non-electrified households were provided with SHS, the carbon emissions avoided from kerosene displacement per SHS per year would be equivalent to about 4% of total annual carbon emissions in Bangladesh in 2007. This figure will go up to about 15% if using the grid-electricity generation as the energy baseline to estimate the annual carbon benefit from SHS<sup>7</sup> .

# **5.2 Assessing affordability**

The cost of SHS is significant relative to household incomes in rural Bangladesh. The price of the most commonly installed SHS with a 40-50 Wp capacity was about $556 in Bangladesh in 2002, which was more than three times the rural household annual expenditure. The major

> 7 The above estimated carbon benefit is not measured in terms of life cycle emissions. Using an input-output approach, Ganju and Mathur (2010) show that based on the comparative life cycle emissions, on an annual basis, solar powered LED lantern could results in a saving 93kg CO2, while CFL lantern 89 kg CO2 compared to a kerosene lantern.

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