Determinants of electricity consumption from decentralized solar PV mini-grids in rural East Africa: An econometric analysis

Journal article, 2023

The use of decentralized solar photovoltaic (PV) mini-grids for rural electrification is increasing in developing countries, but little is known about the determinants of electricity consumption of communities electrified through these technologies. This paper examines the factors influencing the electricity consumption of rural households and small businesses electrified by off-grid PV mini-grids based on actual metered load data and a survey of 218 customers in two isolated small towns (Omorate and Tum) in Ethiopia. Empirical analyses were performed using Censored Tobit models. Results showed that the load curves of the two towns have different characteristics and patterns. While the load curve at Omorate is regularly interrupted for 13 h a day due to load-shedding, the mini-grid at Tum generates enough electricity to meet demand. Empirical results showed that electricity consumption of households is significantly associated with household size, income, dwelling type, number of rooms, cooling fans, cooking with electricity and load-shedding. In contrast, the electricity consumption of businesses is strongly linked with income, electricity price, number of rooms, number of cooling fans, refrigerators, number of other (productive use) appliances, and load-shedding/location. The findings suggest three key points. First, electricity demand of rural households and businesses is influenced by separate but interconnected sets of factors. Second, supply-side factors, appliance factors, type of end-use of electricity and location -specific factors influence demand more than income and price factors. Third, mini-grid policy making and dimensioning in rural East Africa must take into account the differing electricity demands and determinants across customer groups and locations.