Demand for off-grid solar electricity – Experimental evidence from Rwanda

The United Nations Sustainable Energy for All (SE4All) initiative has the ambition to reach universal energy access until 2030 by providing sustainable energy access to all those 1.3 billion people in the developing world who still lack access. Since electricity networks are widely unavailable in rural Africa, off-grid solar technologies in most cases constitute the most obvious first step on the ladder towards modern energy usage. The technologies targeting single households with relatively low energy consumption are Pico-PV kits and Solar Home Systems. Pico-PV kits comprise a small panel and an LED-spotlight and sometimes also a mobile phone charger. Solar Home Systems are defined through comparably higher power dimensions. They allow for the usage of electric light bulbs and low-power appliances, such as radios or small TVs. SE4All strongly counts on the dissemination of the technologies via markets implying a cost covering contribution of the hitherto non-connected households. The main research question pursued in this project is whether households in remote areas can afford making this cost covering contribution. For this purpose, we conduct a field experiment in order to elicit the households’ willingness-to-pay (WTP). Moreover, we will administer a socio-economic questionnaire to probe into differences in WTP by age, education, and income. The questionnaire will also contain measures for risk aversion, consumer resistance, present bias, and liquidity constraints – further important impediments of adoption next to lack of experience and information. Results of this project will inform future policy in the energy access sector. The question whether the poor are able and willing to pay for different solar technologies is crucial for the decision on whether subsidies are needed in order to achieve the universal access goals.