Supply preferences and productive electricity use constraints among micro and small enterprises in Bihar, India

Abstract

Productive electricity use is one channel by which improvements in electricity supply contribute to economic development. Literature in this context focusses typically on larger more established firms. Here we describe electricity supply, use and preferences among micro- and small-enterprises (MSEs), which are important providers of livelihoods in emerging economies. We conduct our work using primary surveys of firm owners (N = 696) in Bihar, India. We find that reported grid electricity supply reliability is quite good, providing on average 18.7 h of electricity per day and less than one day with blackouts or voltage fluctuation per month. Nevertheless, 40% of the sampled firms have no grid connection and 75% of consume less than one kilowatt-hour per day to power basic appliances including lighting, phone charging, and fans. Using a conjoint experiment to explore firm preferences for their electricity supply, we find that supply-side improvements are unlikely to drive broad increases in grid take-up and electricity consumption. Moreover, for the majority of firms, decentralised power supply through renewable energy technologies is both adequate and acceptable to firm owners, providing a viable parallel solution to grid extension.