The Benefits of Solar Home Systems:An Analysis from Bangladesh

41 Pages Posted: 20 Apr 2016

See all articles by Hussain A. Samad

Hussain A. Samad

World Bank

Shahidur R. Khandker

World Bank - Development Research Group (DECRG)

M. Asaduzzaman

affiliation not provided to SSRN

Mohammad Yunusd

Bangladesh Institute of Development Studies (BIDS)

Date Written: December 1, 2013

Abstract

The Government of Bangladesh, with help from the World Bank and other donors, has provided aid to a local agency called Infrastructure Development Company Limited and its partner organizations to devise a credit scheme for marketing solar home system units and making these an affordable alternative to grid electricity for poor people in remote areas. This paper uses household survey data to examine the financing scheme behind the dissemination of these solar home systems, in particular the role of the subsidy; the factors that determine the adoption of the systems in rural Bangladesh; and the welfare impacts of such adoption. The paper finds that while the subsidy has been declining over time, the demand for solar home systems has seen phenomenal growth, mostly because of technological developments that have made the systems increasingly more affordable. Households with better physical and educational endowments are more likely to adopt solar home systems than poor households. The price of the system matters in household decision making -- a 10 percent decline in the price of the system increases the overall demand for a solar panel by 2 percent. As for the benefits, adoption of a solar home system improves children?s evening study time, lowers kerosene consumption, and provides health benefits for household members, in particular for women. It is also found to increase women's decision-making ability in certain household affairs. Finally, it is found to increase household consumption expenditure, although at a small scale.

Keywords: Energy Production and Transportation, Renewable Energy, Climate Change Mitigation and Green House Gases, Climate Change Economics, Economic Theory & Research

Suggested Citation

Samad, Hussain A. and Khandker, Shahidur R. and Asaduzzaman, M. and Yunusd, Mohammad, The Benefits of Solar Home Systems:An Analysis from Bangladesh (December 1, 2013). World Bank Policy Research Working Paper No. 6724. Available at SSRN: https://ssrn.com/abstract=2367084

Hussain A. Samad (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Shahidur R. Khandker

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

M. Asaduzzaman

affiliation not provided to SSRN

Mohammad Yunusd

Bangladesh Institute of Development Studies (BIDS)

E-17, Agargao, Shere Bangla Nagar
Dhaka, 1207
Bangladesh

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