A large proportion of the population of Nigeria reside in the rural communities. In this work, the financial costs of providing centralized (photovoltaic) PV generating system of various capacities-to satisfy different load requirements-in a remote village in Nigeria is compared with the cost of grid extension over a distance of 1.8 km. Comparison is also made with the centralised diesel generator power supply option. In addition, the costs of decentralised PV home systems are compared with those of decentralised gasoline generator systems. For all the systems, the initial capital costs and the life cycle costs over a 20-year life cycle are reported. Sensitivity analysis was performed using variations in module costs, diesel fuel prices and grid extension distance. The results suggest that PV has a remarkable potential as a cost-effective option for low-power electrical energy supply to the rural communities in the country. (C) 2003 Published by Elsevier Science Ltd.