The Effect of Reliability Improvements on Household Electricity Consumption and Coping Behavior: A Multi-dimensional Approach

This study analyzes the extent to which electricity consumers of different income levels would increase electricity consumption and change their coping behavior to deal with power outages in response to electricity reliability improvements. The empirical analysis is conducted in two steps: (1) using an unsupervised machine learning technique, a nationally representative sample of Nepalese households is segmented into similar clusters based on the reliability constraints they face; and, (2) using regression models, the impact of reliability improvements on consumption and coping decisions is estimated. The findings point out that improved reliability is positively correlated with the probability of electric appliance ownership. The interaction of income and reliability-constraint indicators suggests that the unreliable electricity supply constrains households equally at all income levels. Moreover, the results from an ordered probit model with three off-grid backup decision alternatives indicate no association between coping decisions and income in the first two income quintiles. In contrast, higher-income quintiles are associated with significant changes in coping behavior when reliable electricity is available from the grid. Putting this paper’s findings into an energy-policy perspective, a connection to the grid by itself does not necessarily translate to realized benefits from electricity consumption. The reliability of the service plays a critical role for households at all income levels.