Multilevel Customer Segmentation for Off-Grid Solar in Developing Countries: Evidence from Solar Home Systems in Rwanda and Kenya

Forthcoming Energy

40 Pages Posted: 27 Aug 2019

See all articles by Ryan Kennedy

Ryan Kennedy

University of Houston - Department of Political Science

Sini Numminen

Aalto University - School of Science

Joseph Sutherland

Columbia University; Princeton University

Johannes Urpelainen

Johns Hopkins SAIS

Date Written: August 26, 2019

Abstract

Off-grid solar systems have a number of advantages in developing countries, but they rely on the capacity of private entrepreneurs to develop a reliable customer base and methods for recruiting these customers. This study uses data from 68,600 customers of BBOXX, a London-based off-grid solar power company, to classify customers and explore the demographic and recruitment factors associated with customer behavior. We compare a non-parametric clustering method for customer segmentation with linear models of customer behavior. The results show a number of important demographic and geographic factors that influence recruitment of the company's core customers, and demonstrates how linear models can be misleading. For example, women and those recruited by agent advertising or word-of-mouth are more likely in the company's core clientele, even though the linear models suggest that they may be less profitable customers.

Keywords: renewable energy, payment policies, economic development, solar home systems, Rwanda, Kenya

Suggested Citation

Kennedy, Ryan and Numminen, Sini and Sutherland, Joseph and Urpelainen, Johannes, Multilevel Customer Segmentation for Off-Grid Solar in Developing Countries: Evidence from Solar Home Systems in Rwanda and Kenya (August 26, 2019). Forthcoming Energy. Available at SSRN: https://ssrn.com/abstract=3443024 or http://dx.doi.org/10.2139/ssrn.3443024

Ryan Kennedy (Contact Author)

University of Houston - Department of Political Science ( email )

TX 77204-3011
United States
713-743-1663 (Phone)
713-743-3890 (Fax)

Sini Numminen

Aalto University - School of Science ( email )

Otakaari 1
Espoo, FI-00076
Finland

Joseph Sutherland

Columbia University ( email )

New York, NY
United States

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Johannes Urpelainen

Johns Hopkins SAIS ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

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