Determinants of willingness-to-pay for attributes of power outage - An empirical discrete choice experiment addressing implications for fuel switching in developing countries

Abstract

In many developing countries, there is a desire to switch from traditional fuel to renewable energy. However, the supply of renewable energy is often characterized by a severe lack of reliability. This paper seeks to answer if, and to what extent, power outages inhibit switching from fuelwood to hydropower based electricity supply, and factors that determine households' willingness to pay to reduce power outages using a unique combination of mixed logit and seemingly unrelated regression models. We find that frequency, duration, timing of power outages and advance notice are important characteristics determining whether households switch to electricity. The less reliable the electricity supply is the less likely households are to switch to it. Therefore, unreliability in electricity supply maintains the current use of fuelwood, resulting in continued environmental and health problems. Hence, policymakers should work to improve reliability to speed up the desired fuel switching process.