System-dynamics modelling of the electricity-development nexus in rural electrification based on a Tanzanian case study

Abstract

The rural electrification-based literature reports a limited knowledge of the long-term socio-economic changes that electricity access can bring in remote contexts and the consequent feedback on electricity demand. Such lack of understanding causes an inefficient allocation of economic resources for rural energy projects and inappropriate sizing processes. We model the multifaceted dimensions of the rural electricity-development nexus by formulating a system-dynamics model based on a Tanzanian case-study and using 13-years of data for calibrating it. The modelled structure provides the first quantitative step in the research committed to develop an appropriate modelling framework for deriving policy insights regarding the electricity-development nexus and the evolution of electricity demand for rural areas of developing countries. The simulation results show and highlight the dynamics behind the structural behaviour of some socio-economic system variables (e.g. income and IGAs growth), the exogenous determinants (e.g. accessibility of the rural village), and the complementary activities (e.g. micro-credit at electricity access) that allow electricity access to foster local socio-economic changes, which in turn supports the growth of electricity demand. Our findings allow increasing the understanding on the complex electricity-development nexus and providing a novel modelling framework for projecting the electricity demand for rural settings.