*4.3. Financial Indicators for Cases 1–3*

For cases 1–3 mentioned above, the results for gross margin, farm profit, and B/C ratio are presented in Figures 4–6 respectively. *Agronomy* **2021**, *11*, x FOR PEER REVIEW 14 of 22

**Figure 4.** Gross margin for a reference farmer in a year (from 0.15 ha land). **Figure 4.** Gross margin for a reference farmer in a year (from 0.15 ha land).

**Figure 5.** Farm profit for a reference farmer in a year (from 0.15 ha land).

**Figure 6.** B/C ratio for a reference farmer in a year (from 0.15 ha land).

profit activity but is a lifeline for survival.

The economic indicator results are in line with the traditional farming practice in the village, i.e., farming is simply a subsistence agricultural economy. It is almost a net‐zero

In case 2, the results show that the gross margin and farm profit are both negative. The B/C ratio is less than one. All three indicators suggest that such a diesel pump‐based irrigation system for the reference farm is not economically viable. One of the main rea‐ sons is the high cost of diesel. Besides the economic indicators, additional environmental impacts of diesel use for irrigation are calculated in terms of CO2 emissions per year (for 0.15 ha). To irrigate 0.15 ha of land in a year, about 2700 m3 of water is considered for

**Figure 4.** Gross margin for a reference farmer in a year (from 0.15 ha land).

*Agronomy* **2021**, *11*, x FOR PEER REVIEW 14 of 22

**Figure 5.** Farm profit for a reference farmer in a year (from 0.15 ha land). **Figure 5.** Farm profit for a reference farmer in a year (from 0.15 ha land). **Figure 5.** Farm profit for a reference farmer in a year (from 0.15 ha land).

The economic indicator results are in line with the traditional farming practice in the **Figure 6.** B/C ratio for a reference farmer in a year (from 0.15 ha land). **Figure 6.** B/C ratio for a reference farmer in a year (from 0.15 ha land).

village, i.e., farming is simply a subsistence agricultural economy. It is almost a net‐zero profit activity but is a lifeline for survival. In case 2, the results show that the gross margin and farm profit are both negative. The economic indicator results are in line with the traditional farming practice in the village, i.e., farming is simply a subsistence agricultural economy. It is almost a net‐zero profit activity but is a lifeline for survival. The economic indicator results are in line with the traditional farming practice in the village, i.e., farming is simply a subsistence agricultural economy. It is almost a net-zero profit activity but is a lifeline for survival.

The B/C ratio is less than one. All three indicators suggest that such a diesel pump‐based irrigation system for the reference farm is not economically viable. One of the main rea‐ sons is the high cost of diesel. Besides the economic indicators, additional environmental impacts of diesel use for irrigation are calculated in terms of CO2 emissions per year (for 0.15 ha). To irrigate 0.15 ha of land in a year, about 2700 m3 of water is considered for In case 2, the results show that the gross margin and farm profit are both negative. The B/C ratio is less than one. All three indicators suggest that such a diesel pump‐based irrigation system for the reference farm is not economically viable. One of the main rea‐ sons is the high cost of diesel. Besides the economic indicators, additional environmental impacts of diesel use for irrigation are calculated in terms of CO2 emissions per year (for 0.15 ha). To irrigate 0.15 ha of land in a year, about 2700 m3 of water is considered for In case 2, the results show that the gross margin and farm profit are both negative. The B/C ratio is less than one. All three indicators suggest that such a diesel pump-based irrigation system for the reference farm is not economically viable. One of the main reasons is the high cost of diesel. Besides the economic indicators, additional environmental impacts of diesel use for irrigation are calculated in terms of CO2emissions per year (for 0.15 ha). To irrigate 0.15 ha of land in a year, about 2700 m<sup>3</sup> of water is considered for irrigation and this leads to about 1500 L diesel consumption. Considering the CO<sup>2</sup> emission factor as 2.67 kgCO2/L for diesel motors [44], the total annual CO<sup>2</sup> emission is calculated at about 4005 kg/year.

Among the discussed three cases, solar-powered irrigation systems perform the best. All indicators are positive. Due to relatively small PV system size and longer lifetime, the annual cost related to irrigation is much lower compared to case 2, with diesel.

The levelized cost of water (LCOW) has been also calculated by dividing the annuity value of total irrigation system cost divided by total annual irrigation water consumed. The obtained values are 0.11 €/m<sup>3</sup> vs. 0.50 €/m<sup>3</sup> for solar vs. diesel case respectively.

### *4.4. Case of Agrivoltaic (APV)*

APV specific assumptions used for calculation in the model are given in Table 5.


**Table 5.** PV specific parameters.

The amount of electricity generation in the year will be about 67.32 MWh. Due to the considered degradation rate, the yield will be smaller in each following year, with a value for the final year at only 59.69 MWh. The irrigation water demand (for the same reference farm size) will be constant at 2693 kWh/year throughout these years. This leads to huge surplus electricity that needs to be used e.g., connection to central grid or its use in village electrification.

As the solar system size that can be installed in such a large land area is bigger compared to the one needed to pump irrigation water as in case 3 above, different scenarios are considered in this case. Based on the total cost and total revenue of the whole APV system, the economic indicators are calculated and the results are presented in the following two scenarios.

### 4.4.1. Scenario 1, Benefits to Investor

In this scenario, the APV system is installed by an investor. Farmer has to pay the electricity tariff for water pumping electricity needs. Practically, the farmer could switch from traditional cereals farming to cash crops farming and enjoy the higher revenue similar to cases 2 and 3 before.

For an investor, the total costs include the APV system investment cost as well as annual repair and maintenance costs. The revenue includes electricity sales to the grid and farmers. This village is not connected to the grid yet. Therefore, at the moment it is a hypothetical scenario that the mentioned revenue would be collected. However, if the villagers are supplied with the electricity after building the required local supply infrastructures, this revenue can be easily collected. The electricity selling rate considered (i.e., 0.10 €/kWh) is slightly below the current grid electricity tariff in Niger (about 0.12 €/kWh for consumers with demand in the range of 150–300 kWh in a year).

The project lifetime is relatively long, i.e., 25 years. Nominal annual revenue from the electricity sale is almost similar over the years (only affected by a slight decrease in yield, due to degradation rate of solar PV electricity yield caused by solar glass scratches, etc.). As the economic indicator for the investor, NPV is calculated by discounting the annual net cash flows. The calculated NPV is about 7779 € for the investor. With irrigation, the farmer will have higher farm profit (due to higher revenue as reported in case 3 before). This will be a win-win scenario for both investors and farmers.

4.4.2. Scenario 2, Overall Benefits (Combined of Both Farmer and Investor)

This scenario is the same as scenario 1, except for revenue calculations. In this case, the farmer's income from cash crops farming as well as investor's income from electricity sales are considered in the revenue calculation (discounted annual farm profit plus the investor's NPV, for the same accounting period of 25 years).

One further aspect of the negative shading effect on agricultural yield has also been considered. Crop production in this shading case is assumed at about 80% of the normal production. This reduction has an impact on the farmer's revenue. As expected, the combined NPV values are higher than in the individual case, even after considering the mentioned shading effect. The combined NPV values are compared in Figure 7. investorʹs NPV, for the same accounting period of 25 years). One further aspect of the negative shading effect on agricultural yield has also been considered. Crop production in this shading case is assumed at about 80% of the normal production. This reduction has an impact on the farmerʹs revenue. As expected, the com‐ bined NPV values are higher than in the individual case, even after considering the men‐ tioned shading effect. The combined NPV values are compared in Figure 7.

lagers are supplied with the electricity after building the required local supply infrastruc‐ tures, this revenue can be easily collected. The electricity selling rate considered (i.e., 0.10 €/kWh) is slightly below the current grid electricity tariff in Niger (about 0.12 €/kWh for

The project lifetime is relatively long, i.e., 25 years. Nominal annual revenue from the electricity sale is almost similar over the years (only affected by a slight decrease in yield, due to degradation rate of solar PV electricity yield caused by solar glass scratches, etc.). As the economic indicator for the investor, NPV is calculated by discounting the annual net cash flows. The calculated NPV is about 7779 € for the investor. With irrigation, the farmer will have higher farm profit (due to higher revenue as reported in case 3 before).

This scenario is the same as scenario 1, except for revenue calculations. In this case, the farmer's income from cash crops farming as well as investor's income from electricity sales are considered in the revenue calculation (discounted annual farm profit plus the

*Agronomy* **2021**, *11*, x FOR PEER REVIEW 16 of 22

consumers with demand in the range of 150–300 kWh in a year).

This will be a win‐win scenario for both investors and farmers.

4.4.2. Scenario 2, Overall Benefits (Combined of both Farmer and Investor)

**Figure 7.** NPVs under different scenarios. **Figure 7.** NPVs under different scenarios.

Overall, this can be interpreted that the APV system is economically profitable under the assumptions made in this study, both for farmers and PV investors. Overall, this can be interpreted that the APV system is economically profitable under the assumptions made in this study, both for farmers and PV investors.

For scenario 2 above, the LER can be calculated by using Equation (1). The obtained LER values are 1.33 and 1.13 for the case without and with yield reduction due to APV shading, respectively. The LER results show that the double use of land is more effective. Furthermore, when the APV system is installed, people will benefit from access to elec‐ tricity, even if they will need to pay for the electricity. For the villageʹs about 400 house‐ holds, assuming annual electricity demand of up to 323 kWh/year (typical value in rural areas of developing countries lies about 300 kWh), only about 2 such APV systems would be able to supply the electricity needs of the village. For scenario 2 above, the LER can be calculated by using Equation (1). The obtained LER values are 1.33 and 1.13 for the case without and with yield reduction due to APV shading, respectively. The LER results show that the double use of land is more effective. Furthermore, when the APV system is installed, people will benefit from access to electricity, even if they will need to pay for the electricity. For the village's about 400 households, assuming annual electricity demand of up to 323 kWh/year (typical value in rural areas of developing countries lies about 300 kWh), only about 2 such APV systems would be able to supply the electricity needs of the village.

### *4.5. Sensitivity Analysis 4.5. Sensitivity Analysis*

As the study has many assumptions, it is necessary to analyze the sensitivity of some crucial parameters with regard to the financial indicators. For the following selected parameters, such analysis has been made.

### 4.5.1. Diesel Based Irrigation System, Case for Farmers

The price fluctuation of the cash crop can be much higher than currently expected. Therefore, a sensitivity analysis is carried out to observe the influence of selling price changes on the B/C ratio in (Figure 8). The results show that to reach the farming system B/C ratio to 1, the average selling price for all crops shall increase at least by 30%, which is currently not realistic.

**Figure 8.** Effect of crop selling price changes to B/C ratio, case diesel. **Figure 8.** Effect of crop selling price changes to B/C ratio, case diesel. **Figure 8.** Effect of crop selling price changes to B/C ratio, case diesel.

rameters, such analysis has been made.

rameters, such analysis has been made.

is currently not realistic.

is currently not realistic.

4.5.1. Diesel Based Irrigation System, Case for Farmers

4.5.1. Diesel Based Irrigation System, Case for Farmers

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The diesel price might vary in the market from the currently taken price of 0.76 €/L. Cost for diesel has a significant share in total cost, therefore the sensitivity analysis is car‐ ried out to observe the impact of diesel price variations on the B/C ratio. Results are pre‐ sented in Figure 9. It can be interpreted that the diesel price shall drop below 40% from its current level to be the farming system at cost breakeven point. This scenario is also not realistic looking at the overall trends of rising petroleum prices in recent years. The diesel price might vary in the market from the currently taken price of 0.76 €/L. Cost for diesel has a significant share in total cost, therefore the sensitivity analysis is carried out to observe the impact of diesel price variations on the B/C ratio. Results are presented in Figure 9. It can be interpreted that the diesel price shall drop below 40% from its current level to be the farming system at cost breakeven point. This scenario is also not realistic looking at the overall trends of rising petroleum prices in recent years. The diesel price might vary in the market from the currently taken price of 0.76 €/L. Cost for diesel has a significant share in total cost, therefore the sensitivity analysis is car‐ ried out to observe the impact of diesel price variations on the B/C ratio. Results are pre‐ sented in Figure 9. It can be interpreted that the diesel price shall drop below 40% from its current level to be the farming system at cost breakeven point. This scenario is also not realistic looking at the overall trends of rising petroleum prices in recent years.

As the study has many assumptions, it is necessary to analyze the sensitivity of some crucial parameters with regard to the financial indicators. For the following selected pa‐

As the study has many assumptions, it is necessary to analyze the sensitivity of some crucial parameters with regard to the financial indicators. For the following selected pa‐

The price fluctuation of the cash crop can be much higher than currently expected. Therefore, a sensitivity analysis is carried out to observe the influence of selling price changes on the B/C ratio in (Figure 8). The results show that to reach the farming system B/C ratio to 1, the average selling price for all crops shall increase at least by 30%, which

The price fluctuation of the cash crop can be much higher than currently expected. Therefore, a sensitivity analysis is carried out to observe the influence of selling price changes on the B/C ratio in (Figure 8). The results show that to reach the farming system B/C ratio to 1, the average selling price for all crops shall increase at least by 30%, which

**Figure 9.** Effect of crop selling price changes to B/C ratio, case diesel. **Figure 9.** Effect of crop selling price changes to B/C ratio, case diesel. **Figure 9.** Effect of crop selling price changes to B/C ratio, case diesel.

4.5.2. APV System, Case for Investors 4.5.2. APV System, Case for Investors 4.5.2. APV System, Case for Investors

The calculated value of LCOE is at 9.11 €ct/kWh (with the energy yield discounted to its present value at a baseline discount rate of 6%). When the lesser discount rates e.g., 2% The calculated value of LCOE is at 9.11 €ct/kWh (with the energy yield discounted to its present value at a baseline discount rate of 6%). When the lesser discount rates e.g., 2% The calculated value of LCOE is at 9.11 €ct/kWh (with the energy yield discounted to its present value at a baseline discount rate of 6%). When the lesser discount rates e.g., 2% or 4%, and higher performance ratio (e.g., 70% or 80%), are considered, corresponding LCOE values will be lower, as shown in Figure 10.

On the revenue side, the most important parameter is the electricity selling tariff. Therefore, its influence on the NPV is calculated and the results are presented in Figure 11. If the selling tariff goes below 0.0911 €/kWh, the NPV will start to get negative. Therefore, this is the breakeven selling tariff.

or 4%, and higher performance ratio (e.g., 70% or 80%), are considered, corresponding

or 4%, and higher performance ratio (e.g., 70% or 80%), are considered, corresponding

LCOE values will be lower, as shown in Figure 10.

fore, this is the breakeven selling tariff.

LCOE values will be lower, as shown in Figure 10.

*Agronomy* **2021**, *11*, x FOR PEER REVIEW 18 of 22

**Figure 10.** LCOE values under different discount rates and performance ratios. **Figure 10.** LCOE values under different discount rates and performance ratios. 11. If the selling tariff goes below 0.0911 €/kWh, the NPV will start to get negative. There‐

On the revenue side, the most important parameter is the electricity selling tariff.

Therefore, its influence on the NPV is calculated and the results are presented in Figure

**Figure 11.** Effect of the electricity selling price to NPV, a case for investors. **Figure 11.** Effect of the electricity selling price to NPV, a case for investors.

**Figure 11.** Effect of the electricity selling price to NPV, a case for investors. On the cost side, the PV system cost is the most important parameter that determines the total system cost. The influence of change in PV system costs on the NPV is shown in Figure 12. It is expected that the solar systems will be cheaper in the coming years (if they follow the trend of the recent past). In that case, the APV system seems further promising. On the cost side, the PV system cost is the most important parameter that determines the total system cost. The influence of change in PV system costs on the NPV is shown in Figure 12. It is expected that the solar systems will be cheaper in the coming years (if they follow the trend of the recent past). In that case, the APV system seems further promising.

On the cost side, the PV system cost is the most important parameter that determines the total system cost. The influence of change in PV system costs on the NPV is shown in Figure 12. It is expected that the solar systems will be cheaper in the coming years (if they follow the trend of the recent past). In that case, the APV system seems further promising. In this case, the benefits to the farmer will not change much in comparison to the results presented above in Section 4.4 because this does not lead to significant extra cost for irrigation electricity (only a very small fraction of the APV electricity goes for irrigation of 0.15 ha land considered).

### 4.5.3. APV System, Both Cases (Combined Benefits and Shading Effect)

The results presented above in Figure 8 are based on the assumed value of a discount rate of 6% [45]. For APV projects with a long lifetime, the selection of the correct discount rate is important. A high discount rate leads to a smaller value of NPV as well as a higher value of LCOE. Figure 13 shows the calculated values of NPVs under the different scenarios for discount rates.

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*Agronomy* **2021**, *11*, x FOR PEER REVIEW 19 of 22

**Figure 12.** Effect of PV system cost to NPV, a case for investors. **Figure 12.** Effect of PV system cost to NPV, a case for investors. value of LCOE. Figure 13 shows the calculated values of NPVs under the different scenar‐

ios for discount rates.

In this case, the benefits to the farmer will not change much in comparison to the

**Figure 13.** NPVs under different scenarios with varying discount rates. **Figure 13.** NPVs under different scenarios with varying discount rates.

Besides these direct monetary benefits to the investor, there are many indirect bene‐ fits of the APV. It could contribute to the GHG emission reduction year by year by avoid‐ ing the use of possible diesel‐powered irrigation. In many regions of the world, diesel‐ powered irrigation is a common practice today. On top of that, when the electricity from APV is used to gradually replace the existing grid electricity in Niger, which is dominated by non‐renewable energy, a significant contribution to the GHG emission reduction can be considered. Besides these direct monetary benefits to the investor, there are many indirect benefits of the APV. It could contribute to the GHG emission reduction year by year by avoiding the use of possible diesel-powered irrigation. In many regions of the world, diesel-powered irrigation is a common practice today. On top of that, when the electricity from APV is used to gradually replace the existing grid electricity in Niger, which is dominated by non-renewable energy, a significant contribution to the GHG emission reduction can be considered.

**Figure 13.** NPVs under different scenarios with varying discount rates. Besides these direct monetary benefits to the investor, there are many indirect bene‐ fits of the APV. It could contribute to the GHG emission reduction year by year by avoid‐ ing the use of possible diesel‐powered irrigation. In many regions of the world, diesel‐ As expected, the LER results showed that the double use of land is more effective. Furthermore, when the APV system is installed, people will benefit from access to elec‐ tricity, even if they will need to pay for the electricity (considered in the above analysis 0.10 €/kWh). Considering the village's household at about 400, and annual electricity de‐ mand of 323 kWh/year (typical value in rural areas of developing countries lies about 300 As expected, the LER results showed that the double use of land is more effective. Furthermore, when the APV system is installed, people will benefit from access to electricity, even if they will need to pay for the electricity (considered in the above analysis 0.10 €/kWh). Considering the village's household at about 400, and annual electricity demand of 323 kWh/year (typical value in rural areas of developing countries lies about 300 kWh, including Nepal), only about 2 such APV plants would be able to supply the lighting electricity needs of the village.

powered irrigation is a common practice today. On top of that, when the electricity from APV is used to gradually replace the existing grid electricity in Niger, which is dominated by non‐renewable energy, a significant contribution to the GHG emission reduction can be considered. Another positive aspect of such APV would be the access to clean and sufficient drinking water to the villagers, which is currently a big problem as described in the previous chapter. Therefore, such an APV system's surplus electricity (after irrigation) could be used for additional water pumping for such water use purposes.

### As expected, the LER results showed that the double use of land is more effective. Furthermore, when the APV system is installed, people will benefit from access to elec‐ **5. Conclusions**

tricity, even if they will need to pay for the electricity (considered in the above analysis 0.10 €/kWh). Considering the village's household at about 400, and annual electricity de‐ Based on the results described above, it can be concluded that the APV is a promising option in the village of Dar Es Salam. Implementation of APV could significantly increase

the economic activities in the village, mainly in the field of small agricultural enterprises. In all four scenarios considered under APV, the results are positive and such a system seems to be an appropriate option to supply food and energy in the village. In a broad estimate, only two such APV systems would be able to supply the village's 400 households with electricity (about 323 kWh/year). APV systems are win-win options for both farmers and investors.

The analysis above is based on several stated assumptions. Therefore, the presented results are only valid, if these assumptions come true during the implementation of the real project. To validate the results presented in this study, it is necessary to install an APV system and perform the experimental analysis on-site. Based on these results, different business cases can be developed and practical business models can be developed for different interest groups: farmers, investors, and traders (in agri-value-chain). This experimental work shall be the next step in this field.

**Author Contributions:** Conceptualization, S.N.B., R.B., and R.A.; methodology, S.N.B., W.K., and H.S.; investigation, S.N.B.; writing—original draft preparation, S.N.B.; writing—review and editing, S.N.B., W.K., H.S., and R.B.; supervision, S.S. and R.A.; revision, S.N.B. and R.B.; project administration, R.B.; funding acquisition, R.B. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research was funded by the Federal Ministry of Education and Research (BMBF) in Germany through its Project Management Agency Jülich (PtJ) under the framework of the RETO-DOSSO project, grant number 03SF0598A. The APC was funded by the same.

**Institutional Review Board Statement:** Not applicable.

**Informed Consent Statement:** Not applicable.

**Data Availability Statement:** Not applicable.

**Acknowledgments:** Thanks are also due to Adamou Hassane and his team at the University of Niamey who coordinated the field interview at the reference farm by using the questionnaire developed by the first author of this paper.

**Conflicts of Interest:** The authors declare no conflict of interest.

### **References**

