The rest of the paper is structured as follows. Section II provides more background on the evaluated project and country context. Section III describes the data. Section IV explains the empirical strategy and different DiD regression models that we estimate. Section V presents the results. Section VI concludes.

# **II. Background on the Project and Country Context**<sup>**6**</sup>

Malawi’s electricity access rate was below 10 percent of the population prior to the project (in 2011), and mostly concentrated in urban centers. For the 80 percent of the people living in rural areas, access to electricity was less than 1 percent. Almost all (98 percent) of Malawi’s grid-supplied electrical power is generated by six run-of-the-river hydropower projects on the Shire River. The Electricity Supply Corporation of Malawi (ESCOM), a government-owned electric utility, is the main electricity service provider. ESCOM owns and operates all the formal generation capacity in the country and operates the national electricity grid. In 2011, the transmission network comprised 1,250 km of wood pole lines and 815 km of steel tower lines as well as 70 transformers located at 39 substations across the country. ESCOM’s transmission network had suffered from many years of under-investment. Malawi’s power grid was characterized by heavily loaded transmission lines and transformers, resulting in frequent failures especially during the rainy season, and generally poor quality and unreliable supply. Demand for electricity had risen over the years without corresponding investments in systems, causing the system to be greatly strained with overloading, bottlenecks and load shedding. Overall, the existing system was greatly strained and the frequency of both scheduled and unscheduled blackouts or brownouts was increasing, constraining both industrial production and reliable provision of electricity to households.

The _Malawi Energy Sector Support Project_ , on which our study focuses, aimed at improving EE in Malawi through a combination of interventions targeted at the supply side and the demand side of electricity. The project encompassed several components, including (i) electricity network strengthening and expansion, (ii) demand-side management and EE measures, and (iii) capacity building and technical assistance. The first component included the construction of new substations and transmission lines, uprating of existing substations, rehabilitation of underground cables, extension of peri-urban networks, and purchase of spare parts for generation (the disbursed amount for this component was USD 49 million). Component (ii) included time-of-use meters and sensitization campaigns, derating of hot water geyser (HWG) element ratings, HWG management system with insulation, installation of solar water heaters, radio control to switch off water heaters to reduce demand at peak times, SMS messages to manage peak load demand, and media campaigns (USD 2 million). Component (iii) provided institutional strengthening and technical assistance to ESCOM and the Ministry of Natural Resources, Energy, and Mining (USD 8 million). Another project component supported feasibility studies for the development of additional generation capacity and transmission lines (USD 10 million).

The project was implemented in the period 2015-2018 and comprised 26 project sites located in 20 subdistricts (mainly cities) across 12 of Malawi’s 28 districts.<sup>**7**</sup> Figure 1 illustrates the geographic coverage of the project. Many of the project components focused on urban areas with existing (but deteriorating) power grid infrastructure and were designed to both improve the quality of electricity supply and support higher EE on the demand side. The project’s total amount of USD 69 million was disbursed between the years 2015 and 2018. Since some first effects of the project were expected to take place already during this period, we consider the year 2014 as the last year of the pre-program period (and the years starting with 2015 as the post-program period).

> 6 The information and numbers in this section are mostly based on the Project Appraisal Document (PAD) and Implementation Completion and Results Report (ICR) (see World Bank 2011; 2019), which are publicly available from the World Bank’s website.

> 7 The districts with project sites are: Balaka, Blantyre, Karonga, Kasungu, Lilongwe, Mwanza, Mzimba, Neno, Nkhata Bay, Nkhotakota, Ntcheu, and Zomba.

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