Context Experiment Findings

Does Basic Energy Access GenerateSocio-Economic Benefits?

A Field Experiment with Distributed SolarPower in India

Michaël Aklin Patrick Bayer S.P. Harish Johannes Urpelainen

IGC Energy and GrowthNovember 13, 2015

Context Experiment Findings

Motivation

300-400 million people without basic householdelectricity in India2001-2011: household electrification increased from55% to 67%Kerosene still used by 31% the population in 2011 asprimary lighting fuelSolar remains below 1%

Context Experiment Findings

Rural Electrification: Literature

Rural electrification as a force of socio-economicdevelopment (World Bank 2008; Bernard 2010;Dinkelman 2011; Lipscomb et al. 2013)Impact evaluation of off-grid solar power missingFeasibility and effects of off-grid power (Brass et al.2012; Palit et al. 2014; Urpelainen 2014)

⇒ No reason to believe comparable to grid connection

⇒ Existing randomized controlled trials focus on lanterns,exclude commercial consideration

Context Experiment Findings

Roadmap

Mera Gao Power’s business modelResearch designProgress reportPreliminary results

Context Experiment Findings

Mera Gao Power: Village by Village

Context Experiment Findings

Mera Gao Power: A Home Run?

Context Experiment Findings

Mera Gao Power: Business Model

2× LED with mobile charging, price INR 100 / month(USD 1.5)Simple, robust, inexpensive DC system without bells orwhistlesInstallation cost of $800-1,000, covers ∼20 households(10 required for installation)More expensive but more reliable than grid electricityin Uttar PradeshMost households in a typical rural village can affordthe payment2,000 systems in 1,500 habitations

Context Experiment Findings

Benefits of Solar Household Lighting

Improvement over kerosene: quality, cost of lighting,health/safetyEnables small household business: roadside vendors,saree decoration, livestock handlingNo financing needed, subsidies unnecessary, easy toscale

Context Experiment Findings

Limitations

Productive loads unavailable: cost can be 10-20times higherNot useful for irrigation, industry, et cetera

Poor villagers pay more than wealthy urbanites

Context Experiment Findings

Experimental Design

Sample of 101 unelectrified habitationsSuratganj block in Barabanki district of Uttar Pradesh1,597 householdsDeployment of microgrids at habitation level

50 treatment villages31 control villages nearby20 control villages outside Suratganj

Baseline (0), customer (3), midline (6), endline surveys(12)

Context Experiment Findings

Study Setting

35% literacy rateMedian monthly household expenditure: INR 4,000Median monthly kerosene expenditure: INR 100

Context Experiment Findings

Measurement for Impact Evaluation

1st Order: kerosene expenditures (PDS, privatemarket)1st Order: availability of electricity (connection,hours)

2nd Order: income, savings, home business2nd Order: children’s study habits and educationalattainment

3rd Order: social capital, female empowerment,public opinion

Context Experiment Findings

Treatment Assignment

Treatment AssignmentRemote Control: 20/101Local Control: 31/101Assigned to Treatment: 50/101

RealizationInstalled as per Treatment: 21/101Installation by Error: 4/101Flooding: 5/101

CustomersBaseline: 0Midline: 132Endline: 93

Context Experiment Findings

Geographical Representation

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Context Experiment Findings

Estimation and Diagnostics

ITTYi,h,t = αi + ωt + τ ITT Treatmenth,t + εi,h,t

LATE

Installedh,t = βi + θt + δTreatmenth,t + µi,h,t

Yi,h,t = αi + ωt + τ LATE ̂Installedh,t + εi,h,t

Baseline balance: XPower analysis: X

Context Experiment Findings

Results: PDS Kerosene Expenditures

Intent to Treat Local Average Treatment Effect

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)OLS FE FE FE FE IV IV IV IV IV

Treat 0.42 -0.20 4.72 1.33 2.91 0.91 -0.44 2.51 2.88 6.26(1.66) (1.58) (2.78) (2.16) (2.65) (3.57) (3.41) (4.87) (4.64) (5.71)

HH FE X X X X X XWave FE X X X X X XRemote X X X

N 4761Standard errors in parentheses (clustered by habitations).∗ p < 0.05, ∗∗ p < 0.01

Context Experiment Findings

Results: Private Kerosene Expenditures

Intent to Treat Local Average Treatment Effect

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)OLS FE FE FE FE IV IV IV IV IV

Treat -22.2∗∗ -33.2∗∗ -18.6∗∗ -6.6 -17.5∗ -47.9∗∗ -71.6∗∗ -19.5∗ -14.2 -37.6∗

(3.2) (3.3) (5.3) (5.7) (7.3) (8.7) (10.3) (9.5) (12.0) (15.8)HH FE X X X X X XWave FE X X X X X XRemote X X X

N 4761Standard errors in parentheses (clustered by habitations).∗ p < 0.05, ∗∗ p < 0.01

Context Experiment Findings

Private Kerosene Spending among Compliers0

.005

.01

.015

.02

.025

Den

sity

0 100 200 300Rupees per Month (Private Market)

Pre-Treatment Midline Endline

Context Experiment Findings

Results: 1st Order Effects

LATE

Electricity access (%): 23-78 percentage points

Hours of electricity (0-24): 1-4 hours

Context Experiment Findings

Results: 2nd Order Effects

Null Results

Savings (INR / month)Expenses (INR / month)Home Business (Yes/No)Work Time (hours)Lighting for Study (Yes/No)Phone Charging (INR / month)

Context Experiment Findings

Conclusion

Adoption of MGP service: strong and robust 1st-ordereffects

No socio-economic transformation

No subsidies are needed

Modest cost reductions could significantly improveimpact

Maximizing impact: larger systems, grid extension,complementary interventions