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Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda

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  • Michael Grimm
  • Luciane Lenz
  • Jörg Peters
  • Maximiliane Sievert

Abstract

High hopes are pinned on market-based dissemination of off-grid technologies to complement expensive grid extension in providing electricity to the nearly 1 billion unconnected people in developing countries. In this paper, we elicit the revealed willingness to pay for different solar technologies in rural Rwanda. Households are willing to dedicate substantial parts of their budget to electricity, but not enough to reach cost-covering prices. Randomly extended payment periods do not alter this finding. We interpret the results from two perspectives. First, we examine whether the United Nations’ universal energy access goal can be reached via unsubsidized markets. Second, in a stylized welfare analysis, we compare a subsidization policy for off-grid solar electrification to a grid extension policy. Our findings suggest that off-grid solar is the preferable technology to reach mass electrification in rural areas and that grid infrastructure should concentrate on selected regions with promising business prospects.

Suggested Citation

  • Michael Grimm & Luciane Lenz & Jörg Peters & Maximiliane Sievert, 2020. "Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(3), pages 417-454.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/707384
    DOI: 10.1086/707384
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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