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Falling off-grid solar prices and grid expansion now give many households in developing countries a choice between electricity sources. We experimentally estimate demand over all sources in Bihar, India and find that: (i) no one source of electricity dominates, as households substitute freely between sources; (ii) both solar and the grid boost electrification rates, but households value the grid more; (iii) as households get wealthier the grid dominates. We apply the demand model to eight African countries to show that the lower surplus from electrification and higher solar take-up in Africa are due to policy induced differences in supply, not demand.
Robin Burgess, Michael Greenstone, Nicholas Ryan and Anant Sudarshan
3 November 2023 Paper Number POIDWP083
Download PDF - Electricity demand and supply on the global electrification frontier