The impact of pecuniary and non-pecuniary policy instruments on the adoption of renewable energy sources in rural Ethiopia

Renewable energy sources such as solar are alternative clean lighting sources for many rural households in developing countries. However, transition to these lighting sources is slow and policymakers are faced with the need to design and implement cost-effective policy instruments to promote the uptake and usage of such renewable energy sources. Non-pecuniary (e.g. information and regulation) and pecuniary (e.g. prices, taxes and subsides) policy instruments may be used to promote households’ use of renewable energy sources.  Using randomized field experiment method, this study will investigate the impact of pecuniary (subsidy) and non-pecuniary (information on the private and public benefits of using renewables) policy instruments on the uptake of solar panel for residential lighting in rural Ethiopia. Studies that made comparisons of pecuniary (price) vs. non-pecuniary (non-price) policy instruments are lacking. Comparing these different approaches may shed light on the debate of what best motivates households’ uptake of renewable energy sources. There are also limited studies examining the role of information on health and environmental benefits of renewable energy on adoption and use. The proposed study will be conducted on a sample size of 800 households from 16 study sites (with 50 households in each site). The sites will be equally divided into four groups (two information treatments, one treatment group for pecuniary incentives and one control group).