Building the supply of demand: Experiments in mini-grid demand stimulation

Abstract Solar mini-grids are a key element in strategies to achieve universal access modern energy by 2030. In many settings offer combination of affordability, reliability, and capacity for productive use power, moreso than most solar home systems some central grids. Yet the economic sustainability relies on achieving target usage levels, consumption data date suggest that they may be commercially unsustainable due consistently low demand power once installed—and newly-connected recipients cannot take full advantage access. Using uniquely fine-grained set spanning 29 villages East Africa, we test whether credit constraints cost electricity hinder growth among mini-grid-connected households. We find households purchased appliances under financing program increased up 66 percent compared matched controls, though sensitivity analysis suggests this estimate is rather sensitive bias from unobservable characteristics, increase not sustained. While customers do repay loans full, average, about 78 loan amount. When analyze developers’ return investment, profitability appliance programs at market capital, similar those evaluated study, depends substantially types offer. With limited sample size, tariff subsidy indicated lowering 75 consumption, albeit with mixed signals overall revenue could maintained lower tariff, therefore calling further research to optimal balance affordable tariffs profitable business models like Africa.