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Electricity Demand in Kenya

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Kenyan government uses emerging insights to tailor energy policy.

Access to electricity is considered an important driver of economic growth. Yet roughly 600 million people in Sub-Saharan Africa – over two-thirds of the population – are without electricity. Policymakers often assume that rural, unelectrified households are too dispersed to cost-effectively connect to a low-voltage network. Yet there is also a widespread belief that grid connectivity can fuel economic activity and accelerate poverty reduction. Emerging evidence has challenged both these assumptions.

A 2016 study in Western Kenya, led by CEGA researchers Catherine Wolfram and Ted Miguel, surveyed 13,000 unelectrified rural households and found that half were located within a short distance of the national electricity grid. This finding suggests that households can conceivably access the grid, but are unable to afford the high costs of grid connections.

A subsequent phase of the research, implemented in partnership with the government’s Rural Electrification Authority (REA), offered households subsidies of varying amounts to connect to the grid. The offers were randomly assigned to households across a large number of villages, generating a demand curve for access to electricity. The research team examined both take-up of the subsidy and the impacts of the resulting grid connection. While take-up predictably declined as prices increased — with most households accepting a fully-subsidized grid connection — there was very little willingness to pay for electricity access.

Even more surprising, the socio-economic impacts of electrification were nearly non-existent. Researchers found zero impact of electricity access on school outcomes, household incomes, business activity, or xxx. They did find a small but statistically significant impact on women’s xxx. Possible explanations include the unreliability of grid power (which makes it difficult for any business to operate without back-up), and an inability to pay for labor-saving appliances.

These null results have proven highly influential. The Kenyan government has used the study’s data on household demand to adjust its subsidy for grid connections.

They also demonstrate that lifting people out of poverty may require a more comprehensive approach to ensure that electricity is not only affordable, but is also reliable, useable, and available to the whole community, and paired with other important investments, including running water, basic sanitation, quality education, healthcare and more.

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