Determinants of off-grid electrification choice and expenditure: Evidence from Bangladesh

Abstract

Mini-grids providing higher tier electricity services are often introduced in areas with existing solar home systems (SHS). This raises the questions of competition among different options, commercial viability of the mini-grids, or a duplication of highly subsidized resources. A survey of 477 households in off-grid areas of Bangladesh was conducted to find out factors affecting the households’ choice of domestic electricity. The study utilizes a multinomial logit model to investigate how household demographic, educational, income, wealth and infrastructure factors affect electricity choice in off-grid areas, and a Heckman two stage model to explore how these factors affect energy stacking. Finally, a Tobit model and a Heckman model are used to find out how household characteristics affect the expenditure on electricity from solar mini-grids (SMG). It was found that the level of female education in the family leads to the choice of higher tier clean electricity services, whereas male education influences the total expenditure on electricity. Property ownership predicts choice of higher tier electricity access. Households with more income and higher education of males stack solar home systems with mini-grid connection. Stacking households actually spend more on mini-grid electricity. The findings of the study has implications on energy policy and investment for off-grid rural electrification and energy poverty alleviation.