Does Household Electrification Supercharge Economic Development?

Abstract

In recent years, electrification has reemerged as a key priority in low-income countries, with a particular focus on electrifying households. Yet the microeconomic literature examining the impacts of electrifying households on economic development has produced a set of conflicting results. Does household electrification lead to measurable gains in living standards or not? Focusing on grid electrification, we discuss how the divergent conclusions across the literature can be explained by differences in methods, interventions, potential for spillovers, and populations. We then use experimental data from Lee, Miguel, and Wolfram (2019) — a field experiment that connected randomly selected households to the grid in rural Kenya — to show that impacts can vary even across individuals in neighboring villages. Specifically, we show that households that were willing to pay more for a grid electrification may gain more from electrification compared to households that would only connect for free. We conclude that access to household electrification alone is not enough to drive meaningful gains in development outcomes. Instead, future initiatives may work better if paired with complementary inputs that allow people to do more with power.

Strengthening intergroup social cohesion in fragile situations

“…This is true for some communities that are in proximate locations to on-grid infrastructure (Lee et al 2014). Several studies find that willingness to pay for electricity is low in LMICs, with low consumer surplus, weak institutions, and poor community engagement exacerbating the issue (Blankenship 2019;Lee 2020). In some cases, household incomes are not always sufficient to cover the costs of gaining access to or consuming electricity.…”

Estimating Market Potential for Solar Photovoltaic Systems in Uganda

“…In Uganda, approximately 28% of the population have access to while the over 70% of the population continue to rely on biomass or fossil powered technologies, such as kerosene wick lamps locally known as "tadooba," used batteries, torches, and candles to meet household energy needs (Uganda Bureau of Statistics, 2018). Use of traditional biomass and associated technology causes health problems, climate change (World Health Organization, 2016) and threatens sustainable development (Terrapon-Pfaff et al, 2018;Lee et al, 2020).…”

Power Market Sophistication and Sector Outcomes: A Focus on Social Performance, Electricity Reliability, and Renewable Energy Penetration

“…For instance, Perez-Sebastian et al (2020) show that the growth of electricity infrastructure explains 32 percent of the observed increase in GDP per capita in Brazil, including through its effects on the reallocation of inputs toward more productive activities. Studies also show that electrification has a positive effect on industrial output, agricultural and manufacturing employment, and human development (Lee, Miguel, and Wolfram 2020;Rud 2012;Kline and Moretti 2014;Lipscomb, Mobarak, and Barham 2013).…”