Demand for Off-Grid Solar Electricity – Experimental Evidence from Rwanda
36 Pages Posted: 6 Jun 2019 Last revised: 13 Nov 2019
Date Written: May 1, 2019
High hopes are pinned on market-based dissemination of off-grid technologies to complement expensive grid extension in providing electricity to the unconnected 1.1 billion people in developing countries. In this paper, we elicit the revealed Willingness-to-Pay for different solar technologies in rural Rwanda. Households are willing to dedicate substantial parts of their budget to electricity, but not enough to reach cost-covering prices. Randomly extended payment periods do not alter this finding. We interpret the results from two perspectives. First, we examine whether the United Nations’ universal energy access goal can be reached via unsubsidized markets. Second, in a stylized welfare analysis, we compare a subsidization policy for off-grid solar electrification to a grid extension policy. Our findings suggest that offgrid solar is the preferable technology to reach mass electrification in rural areas, and that grid infrastructure should concentrate on selected regions with promising business prospects.
Keywords: Public Infrastructure, Technology Adoption, Electrification, Willingness-To-Pay
JEL Classification: D12, H54, O13, Q28, Q41
Suggested Citation: Suggested Citation