How to get rural households out of energy poverty in Nigeria: A contingent valuation

Although Nigeria is endowed with plenty of sustainable energy resources, most rural households still rely heavily on conventional energy. Nigerians want to transition to clean energy but cannot afford the upfront costs. Households have long waited for the government to solve energy problems, to no avail. Rural households’ welfare can be improved if investors adopt an installment plan. However, businesses are concerned about economic gains. Thus, it is vital to investigate how much money rural households can afford every month, how long it would take them to complete the payment, and whether it is feasible for investors. In light of this, this study employs the contingent valuation method (CVM) to elicit responses and estimate the willingness to pay (WTP) for a pico-photovoltaic (pico-PV) system and improved cookstove (ICS). The results show that rural households have strong preferences for sustainable energy. Energy transition would save each household $60 annually. Furthermore, the cost-benefit analysis shows that it is viable to invest in the business. Thus, policymakers need to focus on attracting investors to rural areas, providing a conducive environment, and helping businesses keep track of people who sign up for the program.