IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v90y2020ics0140988320301833.html
   My bibliography  Save this article

Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin

Author

Listed:
  • Barry, Mamadou Saliou
  • Creti, Anna

Abstract

We analyze pay-as-you-go (PAYG) contracts subscribed by 10,120 consumers living in Benin (Sub-Saharan Africa) to purchase solar kits or panels for lighting and charging services. PAYG are flexible loans that allow fees payment through mobile banking. Most of the PAYG consumers live in well electrified areas (Cotonou, Porto Novo, Abomey Calavi, in the coastal zone). By estimating a very simple multinomial logit model, we find that these customers have a high probability to enroll in PAYG contracts. Living in urban and peri-urban areas, they use solar devices to substitute expensive and often unreliable grid electricity services. Consumers located in more periferic and less electrified areas (Savalou) have a low probability to default, as the substitution effect is weaker. Overall, in our case study, PAYG targets credit worthy consumers, in order to decrease the investment risk of the company providing solar devices. These results cast some doubts as to whether PAYG bridges the “last mile” electrification gap.

Suggested Citation

  • Barry, Mamadou Saliou & Creti, Anna, 2020. "Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin," Energy Economics, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:eneeco:v:90:y:2020:i:c:s0140988320301833
    DOI: 10.1016/j.eneco.2020.104843
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988320301833
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2020.104843?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. B. Kelsey Jack & Grant Smith, 2015. "Pay as You Go: Prepaid Metering and Electricity Expenditures in South Africa," American Economic Review, American Economic Association, vol. 105(5), pages 237-241, May.
    2. Michael Grimm & Anicet Munyehirwe & Jörg Peters & Maximiliane Sievert, 2017. "A First Step up the Energy Ladder? Low Cost Solar Kits and Household’s Welfare in Rural Rwanda," The World Bank Economic Review, World Bank, vol. 31(3), pages 631-649.
    3. Alem, Yonas & Beyene, Abebe D. & Köhlin, Gunnar & Mekonnen, Alemu, 2016. "Modeling household cooking fuel choice: A panel multinomial logit approach," Energy Economics, Elsevier, vol. 59(C), pages 129-137.
    4. Tewari, D. D. & Shah, Tushaar, 2003. "An assessment of South African prepaid electricity experiment, lessons learned, and their policy implications for developing countries," Energy Policy, Elsevier, vol. 31(9), pages 911-927, July.
    5. Jenny C. Aker & Isaac M. Mbiti, 2010. "Mobile Phones and Economic Development in Africa," Journal of Economic Perspectives, American Economic Association, vol. 24(3), pages 207-232, Summer.
    6. Simplice A. Asongu, 2018. "Conditional Determinants of Mobile Phones Penetration and Mobile Banking in Sub-Saharan Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(1), pages 81-135, March.
    7. Yuya KUDO & Abu S. Shonchoy & Kazushi Takahashi, 2019. "Short-Term Impacts of Solar Lanterns on Child Health: Experimental Evidence from Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 55(11), pages 2329-2346, November.
    8. Mothobi, Onkokame & Grzybowski, Lukasz, 2017. "Infrastructure deficiencies and adoption of mobile money in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 40(C), pages 71-79.
    9. Kelsey Jack & Grant Smith, 2020. "Charging Ahead: Prepaid Metering, Electricity Use, and Utility Revenue," American Economic Journal: Applied Economics, American Economic Association, vol. 12(2), pages 134-168, April.
    10. Miguel, Edward & Wolfram, Catherine & Lee, Kenneth, 2016. "Experimental Evidence on the Demand for and Costs of Rural Electrification," Department of Economics, Working Paper Series qt1s55t761, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    11. Chishio Furukawa, 2014. "Do Solar Lamps Help Children Study? Contrary Evidence from a Pilot Study in Uganda," Journal of Development Studies, Taylor & Francis Journals, vol. 50(2), pages 319-341, February.
    12. Peter Alstone & Dimitry Gershenson & Daniel M. Kammen, 2015. "Decentralized energy systems for clean electricity access," Nature Climate Change, Nature, vol. 5(4), pages 305-314, April.
    13. Isaac Mbiti & David N. Weil, 2013. "The Home Economics of E-Money: Velocity, Cash Management, and Discount Rates of M-Pesa Users," American Economic Review, American Economic Association, vol. 103(3), pages 369-374, May.
    14. Alejandro Moreno & Asta Bareisaite, 2015. "Scaling Up Access to Electricity : Pay-as-You-Go Plans in Off-Grid Energy Services," World Bank Publications - Reports 21360, The World Bank Group.
    15. Xavier Lemaire, 2018. "Solar home systems and solar lanterns in rural areas of the Global South: What impact?," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 7(5), September.
    16. Anton Eberhard & Orvika Rosnes & Maria Shkaratan & Haakon Vennemo, 2011. "Africa's Power Infrastructure : Investment, Integration, Efficiency," World Bank Publications - Books, The World Bank Group, number 2290.
    17. Amitendu Palit, 2019. "Solar Energy Financing in India," World Scientific Book Chapters, in: S Narayan & Christopher Len & Roshni Kapur (ed.), Sustainable Energy Transition in South Asia Challenges and Opportunities, chapter 10, pages 171-185, World Scientific Publishing Co. Pte. Ltd..
    18. Barrie, Jack & Cruickshank, Heather J., 2017. "Shedding light on the last mile: A study on the diffusion of Pay As You Go Solar Home Systems in Central East Africa," Energy Policy, Elsevier, vol. 107(C), pages 425-436.
    19. Bensch, Gunther & Grimm, Michael & Huppertz, Maximilian & Langbein, Jörg & Peters, Jörg, 2018. "Are promotion programs needed to establish off-grid solar energy markets? Evidence from rural Burkina Faso," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 1060-1068.
    20. Louw, Kate & Conradie, Beatrice & Howells, Mark & Dekenah, Marcus, 2008. "Determinants of electricity demand for newly electrified low-income African households," Energy Policy, Elsevier, vol. 36(8), pages 2814-2820, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zaman, Rafia & Das, Debasish Kumar & van Vliet, Oscar & Posch, Alfred, 2021. "Distributional inequality in market-based solar home system programs: Evidence from rural Bangladesh," Energy Economics, Elsevier, vol. 103(C).
    2. Aarakit, Sylvia Manjeri & Ntayi, Joseph M. & Wasswa, Francis & Buyinza, Faisal & Adaramola, Muyiwa S. & Ssennono, Vincent F., 2022. "The role of financial inclusion in adoption of solar photovoltaic systems: A case of Uganda," Renewable Energy, Elsevier, vol. 198(C), pages 984-998.
    3. Nduka, Eleanya, 2021. "How to get rural households out of energy poverty in Nigeria: A contingent valuation," Energy Policy, Elsevier, vol. 149(C).
    4. Weisser, Christoph & Lenel, Friederike & Lu, Yao & Kis-Katos, Krisztina & Kneib, Thomas, 2021. "Using solar panels for business purposes: Evidence based on high-frequency power usage data," University of Göttingen Working Papers in Economics 428, University of Goettingen, Department of Economics.
    5. Mukisa, Nicholas & Manitisa, Mele Sikimeti & Nduhuura, Paul & Tugume, Erick & Chalwe, Chanda Karen, 2022. "Solar home systems adoption in Sub-Saharan African countries: Household economic and environmental benefits assessment," Renewable Energy, Elsevier, vol. 189(C), pages 836-852.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mamadou Saliou Barry & Anna Creti, 2020. "Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin," Post-Print hal-03148505, HAL.
    2. Mamadou Saliou Barry & Anna Creti, 2020. "Pay-as-you-go contracts for electricity access: bridging the « last mile » gap? A case study in Benin," Working Papers 2006, Chaire Economie du climat.
    3. Michael Grimm & Luciane Lenz & Jörg Peters & Maximiliane Sievert, 2020. "Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(3), pages 417-454.
    4. Blimpo, Moussa P. & Postepska, Agnieszka & Xu, Yanbin, 2020. "Why is household electricity uptake low in Sub-Saharan Africa?," World Development, Elsevier, vol. 133(C).
    5. Wong, Jason Chun Yu & Blankenship, Brian & Harish, S.P. & Urpelainen, Johannes, 2022. "Increasing microsolar technology adoption: Efficacy of vouchers, cash transfers, and microfinance schemes," Energy Economics, Elsevier, vol. 110(C).
    6. d'Adda, Giovanna & Mahmud, Mahreen & Said, Farah & Bonan, Jacopo, 2020. "The Role of Flexibility and Planning in Repayment Discipline: Evidence from a Field Experiment on Pay-as-You-Go Off-Grid Electricity," RFF Working Paper Series 20-14, Resources for the Future.
    7. Robin Burgess & Michael Greenstone & Nicholas Ryan & Anant Sudarshan, 2020. "The Consequences of Treating Electricity as a Right," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 145-169, Winter.
    8. Bensch, Gunther & Kluve, Jochen & Stöterau, Jonathan, 2021. "The market-based dissemination of energy-access technologies as a business model for rural entrepreneurs: Evidence from Kenya," Resource and Energy Economics, Elsevier, vol. 66(C).
    9. Choumert-Nkolo, Johanna & Combes Motel, Pascale & Le Roux, Leonard, 2019. "Stacking up the ladder: A panel data analysis of Tanzanian household energy choices," World Development, Elsevier, vol. 115(C), pages 222-235.
    10. Cardona, M & Gallego, J & Garcia, J & Franco, J, 2020. "Prepaid electricity and in-home displays: an alternative for the most vulnerable households in Colombia," Documentos de trabajo - Alianza EFI 18990, Alianza EFI.
    11. Alem, Yonas & Dugoua, Eugenie, 2021. "Learning from unincentivized and incentivized communication: A randomized controlled trial in India," Ruhr Economic Papers 895, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    12. Klug, Thomas W. & Beyene, Abebe D. & Meles, Tensay H. & Toman, Michael A. & Hassen, Sied & Hou, Michael & Klooss, Benjamin & Mekonnen, Alemu & Jeuland, Marc, 2022. "A review of impacts of electricity tariff reform in Africa," Energy Policy, Elsevier, vol. 170(C).
    13. , Diego, 2017. "The Natural and Infrastructural Capital Elements of Potential Post-Electrification Wealth Creation in Kenya," SocArXiv ddnhz, Center for Open Science.
    14. Cariolle, Joël, 2021. "International connectivity and the digital divide in Sub-Saharan Africa," Information Economics and Policy, Elsevier, vol. 55(C).
    15. Jeuland, Marc & Fetter, T. Robert & Li, Yating & Pattanayak, Subhrendu K. & Usmani, Faraz & Bluffstone, Randall A. & Chávez, Carlos & Girardeau, Hannah & Hassen, Sied & Jagger, Pamela & Jaime, Mónica , 2021. "Is energy the golden thread? A systematic review of the impacts of modern and traditional energy use in low- and middle-income countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    16. Bensch, Gunther & Grimm, Michael & Huppertz, Maximilian & Langbein, Jörg & Peters, Jörg, 2018. "Are promotion programs needed to establish off-grid solar energy markets? Evidence from rural Burkina Faso," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 1060-1068.
    17. Mekonnen, Alemu & Hassen, Sied & Jaime, Marcela & Toman, Michael & Zhang, Xiao-Bing, 2023. "The effect of information and subsidy on adoption of solar lanterns: An application of the BDM bidding mechanism in rural Ethiopia," Energy Economics, Elsevier, vol. 124(C).
    18. Harrington, Elise & Athavankar, Ameya & Hsu, David, 2020. "Variation in rural household energy transitions for basic lighting in India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    19. Simplice A. Asongu, 2021. "The Effects of Mobile Phone Technology, Knowledge Creation and Diffusion on Inclusive Human Development in Sub-Saharan Africa," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(3), pages 1367-1398, September.
    20. Alem, Yonas & Dugoua, Eugenie, 2022. "Learning from unincentivized and incentivized communication: a randomized controlled trial in India," LSE Research Online Documents on Economics 110858, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Electricity access; Africa; Household saving;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • N47 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Africa; Oceania
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:90:y:2020:i:c:s0140988320301833. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.