Effective selection of countries in sub-Saharan Africa for new market entry by independent wind power producers

Abstract

When independent power producers (IPPs) assess new market entry opportunities, subjective decision making can result in an unfavourable outcome. Multi-criteria decision analyses (MCDA) objectify the decision process and help to achieve better results. The aim of this study is to determine and rank the most important criteria for market entry and then determine which selected countries in sub-Saharan Africa are most favourable for wind IPPs. A combination of MCDA methods was used to rank seven countries. Nineteen criteria, identified in the literature reviewed, were included in the analyses. In the first phase of the study an industry expert survey was conducted and the analytical hierarchy process (AHP) was used to rank the criteria in order of importance. In the second phase, a preference ranking organization method for enrichment evaluation (PROMETHEE) was employed to rank the countries from most to least favourable for IPP market entry. The expert survey and AHP showed that political and economic criteria are more important than technical and social criteria. The PROMETHEE model ranked South Africa followed by Ethiopia as the most favourable markets for wind IPPs to enter. These countries have strong natural wind resources but only South Africa offers incentives specifically for on-grid renewable energy. The methods used in this study are not restricted to the wind industry and can be expanded to different technologies and industries to assist with decision making.

Keywords

• Keywords – wind energy; market entry; multi criteria decision analyses (MCDA); analytical hierarchy process (AHP); preference ranking organization method for enrichment evaluation (PROMETHEE).