Essays on the Economics of Rural Electrification in Western Kenya

In Sub-Saharan Africa, 600 million people live without electricity. Despite the ambitions of governments and donors to invest in rural electrification, decisions about how to extend electricity access are being made in the absence of rigorous evidence. This dissertation combines four papers that address various aspects of the economics of rural electrification in Western Kenya.Chapter 1, which is based on joint work with Eric Brewer, Carson Christiano, Francis Meyo, Edward Miguel, Matthew Podolsky, Javier Rosa, and Catherine Wolfram, presents high-resolution spatial data on electrification rates in rural Kenya in order to quantify and visualize energy poverty in a novel way. Using a dataset of 20,000 geo-tagged structures in Western Kenya, the chapter provides descriptive evidence that electrification rates remain very low despite significant investments in nearby grid infrastructure. The implication is that a substantial portion of the 600 million people without electricity may be “under grid” (as opposed to “off grid”), meaning that they are close enough to connect to a low-voltage line at a relatively low cost. This distinction is important because the policy implications for off grid and under grid communities are different. In under grid communities, it may be preferable to support policies that leverage existing infrastructure with the goal of increasing “last-mile” grid connectivity.There are active debates about whether increases in energy access should be driven by investments in electric grid infrastructure or small-scale “home solar” systems (e.g., solar lanterns and solar home systems). Chapter 2, which is based on joint work with Edward Miguel and Catherine Wolfram, summarizes the results of a household electrical appliance survey and describes how households in rural Kenya differ in terms of appliance ownership and aspirations. The data suggest that home solar is not a substitute for grid power. Furthermore, the environmental advantages of home solar are likely to be relatively small in countries like Kenya, where grid power is primarily derived from non-fossil fuel sources.Chapter 3, which is based on joint work with Edward Miguel and Catherine Wolfram, presents results from a field experiment that randomized the expansion of electric grid infrastructure to under grid households in rural Kenya. Electricity distribution is the canonical example of a natural monopoly. Randomized price offers show that demand for electricity connections falls sharply with price. Experimental variation in the number of connections combined with administrative cost data reveals considerable scale economies, as hypothesized. However, consumer surplus is far less than total costs at all price levels, suggesting that residential electrification may reduce social welfare. The chapter discusses how leakage, reduced demand (due to red tape, low reliability, and credit constraints), and spillovers may impact this conclusion.Based on the findings presented in Chapter 3, a question that follows is whether the gains from extending the grid to rural public facilities, such as secondary schools, are large enough to offset the costs of rural electrification. Chapter 4 presents an analysis on the impact of the rapid rollout of secondary school electricity connections in Western Kenya on the number of students writing the Kenya Certificate of Secondary Education examination (“KCSE”), an important indicator for school completion in Kenya. The chapter presents some evidence that school electrification increases the number of KCSE examinees at boarding schools. In contrast, the effect at day schools is much smaller and is not statistically significant. The result suggests that school electrification may have a larger impact at schools where students are more likely to use electric lighting at night.