Avoiding unanticipated power outages: households’ willingness to pay in India

Reliable electricity is a key factor in improving the living conditions of households and sustainable development of the country. Power outages restrict economic and social welfare of developing countries. This study used contingent valuation survey to elicit the factors affecting Indian household’s willingness to pay to avoid unanticipated power outages. The survey was outlined to ensure that a household gives preferences considering multiple aspects of the outages. The households were asked to state their willingness to pay for five different types of outages. Empirical data from 1043 Indian households were analyzed using double hurdle approach. The econometric results indicate that the households’ willingness to pay to avoid power outage strictly depend on the length of outages ranging, on average, from 30.2 INR (2 hours) to INR. 245.6 (12 hours). Further income and environmental attitude of respondents positively influence higher WTP to avoid power outages. Our findings provide useful insights for policy makers and utility companies to design more reliable and customer centric energy generation and distribution models.