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Demand for off-grid solar electricity – Experimental evidence from Rwanda

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Listed:
  • Grimm, Michael
  • Lenz, Luciane
  • Peters, Jörg
  • Sievert, Maximiliane

Abstract

Providing electricity to the unconnected 1.1 billion people in developing countries is one of the top political priorities of the international community, yet the costs of reaching this objective are very high. The present paper examines whether the objective and the associated costs are justified by the value that target beneficiaries assign to electricity. We provide experimental evidence on the revealed willingness-to-pay (WTP) for three types of off-grid solar electricity devices. Our findings show that households are willing to dedicate a substantial part of their expenditures to electricity. In absolute terms, though, the WTP does not suffice to reach cost-covering prices. Different payment schemes, which we randomized across our sample, do not alter the WTP significantly. If universal electricity access is to be achieved, direct subsidies might be necessary. We argue that from a public policy perspective it is more rationale to promote off-grid solar than grid-based electrification because of its better cost-benefit performance.

Suggested Citation

  • Grimm, Michael & Lenz, Luciane & Peters, Jörg & Sievert, Maximiliane, 2017. "Demand for off-grid solar electricity – Experimental evidence from Rwanda," Discussion Papers 253528, University of Bonn, Center for Development Research (ZEF).
  • Handle: RePEc:ags:ubzefd:253528
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    References listed on IDEAS

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    Cited by:

    1. Lenz, Luciane & Munyehirwe, Anicet & Peters, Jörg & Sievert, Maximiliane, 2017. "Does Large-Scale Infrastructure Investment Alleviate Poverty? Impacts of Rwanda’s Electricity Access Roll-Out Program," World Development, Elsevier, vol. 89(C), pages 88-110.
    2. World Bank Group, "undated". "Africa's Pulse, No. 17, April 2018," World Bank Other Operational Studies 29667, The World Bank.

    More about this item

    Keywords

    Technology adoption; electrification; willingness-to-pay; real-purchase offer game; energy access; Resource /Energy Economics and Policy; D12; O12; O13; Q28; Q41;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • 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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