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2018-02-09 | EfD Discussion Paper

Determinants of Enterprises’ Use of Energy Efficient Technologies

Hassen, Sied, Tagel Gebreheiwot and Tiruwork Arega. 2018. “Determinants of Enterprises’ Use of Energy Efficient Technologies.” EfD Discussion Paper Series 18-01.
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This study conducted a cross-sectional survey of 8174 micro, small and medium enterprises from ten major urban areas in Ethiopia to study the determinants of the enterprises’ adoption of energy efficiency practices and technologies. For identification, we rely on a generalized ordered probit model. The findings reveal that, as the size of the enterprise becomes larger, it is more likely the enterprise will undertake energy efficient practices and technologies. This may be because larger enterprises are less likely to face constraints related to capital or knowhow to adopt these technologies. Further, enterprises which are clustered in an industrial zone are also more likely to use energy efficient technologies, revealing a spillover effect of being located in the same place. Enterprises with highly educated entrepreneurs are in favor of the adoption of the technologies. By contrast, entrepreneurs who perceive pro-environmental activities as unnecessary and costly are less likely to use energy efficient technologies. The results imply that expansion of industrial zones and educational (informational) campaigns are important for enhancing micro and small enterprises’ adoption of energy efficient technologies.