Economic Analysis and Policy Reform Strategies for Decentralized Solar PV in Rural Electrification

Electrification is vital for economic growth, poverty reduction, and improved quality of life. Over 80% of Afghanistan’s rural population lacks electricity. Despite increasing interest in decentralized energy systems, there remains a lack of site-specific studies that jointly assess the technical, economic, and policy feasibility of decentralized solar PV for rural electrification in Afghanistan. This study addresses that gap through a mixed-method case study of Syahgel, Ghazni, combining a household survey of 30 households, PVsyst-based system sizing, economic evaluation, and policy analysis. The study compares multi-tier Solar Home Systems (SHSs) with a community microgrid under local demand and affordability conditions. The results show that SHSs, with entry-level costs starting from USD 95, are more suitable for small, dispersed settlements, while microgrids remain relevant for larger or more concentrated communities. Financing mechanisms, including subsidies and interest-free loans, can improve affordability by up to 75%, while electrification can reduce annual fuelwood expenditure by approximately USD 51.5 per household and generate broader health, educational, and livelihood benefits. The findings highlight the need for integrated policy reform, targeted financial support, and context-sensitive system design to support sustainable and inclusive rural electrification in Afghanistan.