The impact of supply structure on solar home system installations in rural off-grid areas

Abstract

Markets have an important role in the emergence and diffusion of renewable energy technologies. This paper investigates the impact of market concentration on solar home system installations in rural off-grid energy markets of Bangladesh. We use an extensive dataset that includes 4.11 million solar home systems installed in 503 markets over 15 years (2003–2017). We show that an increase in the degree of market concentration reduces both the number and the total capacity of installed solar home systems after controlling for relevant demand- and supply-side factors. The marginal effect is non-linear and is particularly strong at a higher degree of market concentration. Additionally, we find heterogeneous effects of market concentration depending on the size of the installed solar home system and customer group. Our study implies that policymakers and development authorities should take the supply structure of rural off-grid energy markets into account when designing universal electrification policies.