Electrification of remote sites in developing countries is often realised trough diesel generator sets and an electric distribution network. This was also the technology used in the village Urambo, where the first rural electrification co-operative in Tanzania was started in 1994. Climate change however calls for decreased fossil fuel combustion worldwide and new technologies have been further developed since the erection of the diesel generator sets in Urambo. It is therefore not obvious that electrification of other rural areas shall follow the Urambo example. In this article, the situation for 250 electricity consumers in Urambo will be demonstrated and the implications for them of introducing new technologies will be evaluated. Technology options regarded in the study are individual photovoltaic (PV) power systems and either incandescent lamps, tube lights or compact fluorescent lights (CFLs) supplied by diesel generation. The different options have been evaluated with respect to consumer costs and environmental impact. The results of the comparison show that PV generation is able to compete with diesel generation if combined with incandescent lamps, but not when tube lights or CFLs are used in the conventional supply system. It should be noted, however, that while the diesel option offer financially more attractive solutions, individual PV systems do not result in any CO, emissions. Furthermore, PV systems normally have a higher reliability. However, since the diesel option is not only cheaper but also offers a wider range of energy services and facilitates, future connection to the national electric grid, the conclusion is that this is preferable before individual PV systems for communities similar to Urambo, if the consumers shall pay the full cost of the service. (c) 2003 Elsevier Ltd. All rights reserved.