Demand for Off-Grid Solar Electricity – Experimental Evidence from Rwanda

36 Pages Posted: 6 Jun 2019 Last revised: 13 Nov 2019

See all articles by Michael Grimm

Michael Grimm

Erasmus University Rotterdam; University of Passau; IZA; DIW Berlin

Luciane Lenz

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Jörg Peters

RWI - Leibniz Institute for Economic Research; University of Passau - Business Administration and Economics

Maximiliane Sievert

RWI - Leibniz Institute for Economic Research

Date Written: May 1, 2019

Abstract

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

Grimm, Michael and Lenz, Luciane and Peters, Jörg and Sievert, Maximiliane, Demand for Off-Grid Solar Electricity – Experimental Evidence from Rwanda (May 1, 2019). USAEE Working Paper No. 19-411. Available at SSRN: https://ssrn.com/abstract=3399004 or http://dx.doi.org/10.2139/ssrn.3399004

Michael Grimm

Erasmus University Rotterdam ( email )

Kortenaerkade 12
P.O. Box 29776
The Hague, 2502LT
Netherlands

HOME PAGE: http://www.iss.nl

University of Passau ( email )

Innstrasse 29
Passau, 94032
Germany

HOME PAGE: http://www.wiwi.uni-passau.de/grimm.html

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

DIW Berlin ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Luciane Lenz

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Jörg Peters (Contact Author)

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany
0049-201-8149-247 (Phone)

HOME PAGE: http://www.rwi-essen.de

University of Passau - Business Administration and Economics ( email )

Wirtschaftswissenschaftliche Fakultaet
Passau, D-94030
Germany

Maximiliane Sievert

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
124
Abstract Views
1,084
rank
236,373
PlumX Metrics