IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v139y2017icp433-446.html
   My bibliography  Save this article

Are the off-grid customers ready to pay for electricity from the decentralized renewable hybrid mini-grids? A study of willingness to pay in rural Bangladesh

Author

Listed:
  • Alam, Majbaul
  • Bhattacharyya, Subhes

Abstract

Off-grid rural and remote area electrification through decentralized renewable hybrid mini-grids (HMG) has been prioritized in the recent national renewable energy policy of Bangladesh. Research was carried out to explore the actual customer willingness to pay (WTP) for the electricity to be supplied by such HMGs, while considering a wide spectrum of socioeconomic factors. Door to door household survey was conducted using structured questionnaire to collect respondent data in December 2015 from six off-grid villages under three different administrative districts. Wide variations in current cost of kerosene based lighting and expected load demand were observed among different income groups. Average monthly cost of lighting ranged between USD 3.0 to USD 9.24 and expected electricity usages as 3.60 kWh and 33.76 kWh. Families with higher income showed least mean satisfaction with kerosene lighting. However, strong mean willingness to switch HMG has been identified regardless of income status. The dichotomous choice contingent valuation method (CVM) was applied for this purpose. The maximum WPT value (USD 0.432/kWh) identified here indicates that a sustainable tariff model can be applied for attracting private investment in this sector.

Suggested Citation

  • Alam, Majbaul & Bhattacharyya, Subhes, 2017. "Are the off-grid customers ready to pay for electricity from the decentralized renewable hybrid mini-grids? A study of willingness to pay in rural Bangladesh," Energy, Elsevier, vol. 139(C), pages 433-446.
    • Handle: RePEc:eee:energy:v:139:y:2017:i:c:p:433-446
    DOI: 10.1016/j.energy.2017.07.125
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544217313099
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2017.07.125?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. Garces-Voisenat, Juan-Pedro & Mukherjee, Zinnia, 2016. "Paying for green energy: The case of the Chilean Patagonia," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 397-414.
    2. Bhattacharyya, Subhes C. & Palit, Debajit, 2016. "Mini-grid based off-grid electrification to enhance electricity access in developing countries: What policies may be required?," Energy Policy, Elsevier, vol. 94(C), pages 166-178.
    3. Elisa Muzzini & Gabriela Aparicio, 2013. "Bangladesh : The Path to Middle-Income Status from an Urban Perspective," World Bank Publications - Books, The World Bank Group, number 13113.
    4. Borchers, Allison M. & Duke, Joshua M. & Parsons, George R., 2007. "Does willingness to pay for green energy differ by source?," Energy Policy, Elsevier, vol. 35(6), pages 3327-3334, June.
    5. Urmee, Tania & Harries, David, 2011. "Determinants of the success and sustainability of Bangladesh’s SHS program," Renewable Energy, Elsevier, vol. 36(11), pages 2822-2830.
    6. Taniguchi, Mariko & Kaneko, Shinji, 2009. "Operational performance of the Bangladesh rural electrification program and its determinants with a focus on political interference," Energy Policy, Elsevier, vol. 37(6), pages 2433-2439, June.
    7. Longo, Alberto & Markandya, Anil & Petrucci, Marta, 2008. "The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy," Ecological Economics, Elsevier, vol. 67(1), pages 140-152, August.
    8. Rahman, Syed M. & Ahmad, Mokbul M., 2013. "Solar Home System (SHS) in rural Bangladesh: Ornamentation or fact of development?," Energy Policy, Elsevier, vol. 63(C), pages 348-354.
    9. Hazelton, James & Bruce, Anna & MacGill, Iain, 2014. "A review of the potential benefits and risks of photovoltaic hybrid mini-grid systems," Renewable Energy, Elsevier, vol. 67(C), pages 222-229.
    10. Rahman, Md. Mizanur & Paatero, Jukka V. & Poudyal, Aditya & Lahdelma, Risto, 2013. "Driving and hindering factors for rural electrification in developing countries: Lessons from Bangladesh," Energy Policy, Elsevier, vol. 61(C), pages 840-851.
    11. Pode, Ramchandra, 2013. "Financing LED solar home systems in developing countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 596-629.
    12. Narasimha Rao, M. & Reddy, B. Sudhakara, 2007. "Variations in energy use by Indian households: An analysis of micro level data," Energy, Elsevier, vol. 32(2), pages 143-153.
    13. Sundt, Swantje & Rehdanz, Katrin, 2015. "Consumers' willingness to pay for green electricity: A meta-analysis of the literature," Energy Economics, Elsevier, vol. 51(C), pages 1-8.
    14. Yadoo, Annabel & Cruickshank, Heather, 2012. "The role for low carbon electrification technologies in poverty reduction and climate change strategies: A focus on renewable energy mini-grids with case studies in Nepal, Peru and Kenya," Energy Policy, Elsevier, vol. 42(C), pages 591-602.
    15. Majbaul Alam & Subhes Bhattacharyya, 2016. "Decentralized Renewable Hybrid Mini-Grids for Sustainable Electrification of the Off-Grid Coastal Areas of Bangladesh," Energies, MDPI, vol. 9(4), pages 1-16, April.
    16. Adaman, Fikret & KaralI, Nihan & Kumbaroglu, Gürkan & Or, Ilhan & Özkaynak, Begüm & Zenginobuz, Ünal, 2011. "What determines urban households' willingness to pay for CO2 emission reductions in Turkey: A contingent valuation survey," Energy Policy, Elsevier, vol. 39(2), pages 689-698, February.
    17. Palit, Debajit & Bandyopadhyay, Kaushik Ranjan, 2016. "Rural electricity access in South Asia: Is grid extension the remedy? A critical review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 1505-1515.
    18. Li, Xuesong & Li, Hao & Wang, Xingwu, 2013. "Farmers' willingness to convert traditional houses to solar houses in rural areas: A survey of 465 households in Chongqing, China," Energy Policy, Elsevier, vol. 63(C), pages 882-886.
    19. Miah, Md. Danesh & Kabir, Rashel Rana Mohammad Sirajul & Koike, Masao & Akther, Shalina & Yong Shin, Man, 2010. "Rural household energy consumption pattern in the disregarded villages of Bangladesh," Energy Policy, Elsevier, vol. 38(2), pages 997-1003, February.
    20. Komatsu, Satoru & Kaneko, Shinji & Ghosh, Partha Pratim & Morinaga, Akane, 2013. "Determinants of user satisfaction with solar home systems in rural Bangladesh," Energy, Elsevier, vol. 61(C), pages 52-58.
    21. Arega, Tiruwork & Tadesse, Tewodros, 2017. "Household willingness to pay for green electricity in urban and peri-urban Tigray, northern Ethiopia: Determinants and welfare effects," Energy Policy, Elsevier, vol. 100(C), pages 292-300.
    22. Alam Hossain Mondal, Md. & Kamp, Linda M. & Pachova, Nevelina I., 2010. "Drivers, barriers, and strategies for implementation of renewable energy technologies in rural areas in Bangladesh--An innovation system analysis," Energy Policy, Elsevier, vol. 38(8), pages 4626-4634, August.
    23. Raheel Anjum, 2013. "Willingness to Pay for Solid Waste Management Services: A Case Study of Islamabad," CEECC Working Paper 2013:03, Pakistan Institute of Development Economics.
    24. Hensher, David A. & Shore, Nina & Train, Kenneth, 2014. "Willingness to pay for residential electricity supply quality and reliability," Applied Energy, Elsevier, vol. 115(C), pages 280-292.
    25. Barnes, Douglas F. & Khandker, Shahidur R. & Samad, Hussain A., 2011. "Energy poverty in rural Bangladesh," Energy Policy, Elsevier, vol. 39(2), pages 894-904, February.
    26. Abdullah, Sabah & Jeanty, P. Wilner, 2011. "Willingness to pay for renewable energy: Evidence from a contingent valuation survey in Kenya," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(6), pages 2974-2983, August.
    27. Guo, Xiurui & Liu, Haifeng & Mao, Xianqiang & Jin, Jianjun & Chen, Dongsheng & Cheng, Shuiyuan, 2014. "Willingness to pay for renewable electricity: A contingent valuation study in Beijing, China," Energy Policy, Elsevier, vol. 68(C), pages 340-347.
    28. Bhattacharyya, Subhes C., 2015. "Mini-grid based electrification in Bangladesh: Technical configuration and business analysis," Renewable Energy, Elsevier, vol. 75(C), pages 745-761.
    29. Miah, Md.Danesh & Foysal, Muhammad Abul & Koike, Masao & Kobayashi, Hajime, 2011. "Domestic energy-use pattern by the households: A comparison between rural and semi-urban areas of Noakhali in Bangladesh," Energy Policy, Elsevier, vol. 39(6), pages 3757-3765, June.
    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. Balezentis, Tomas & Streimikiene, Dalia & Mikalauskas, Ignas & Shen, Zhiyang, 2021. "Towards carbon free economy and electricity: The puzzle of energy costs, sustainability and security based on willingness to pay," Energy, Elsevier, vol. 214(C).
    2. Aziz, Shakila & Chowdhury, Shahriar Ahmed, 2021. "Determinants of off-grid electrification choice and expenditure: Evidence from Bangladesh," Energy, Elsevier, vol. 219(C).
    3. Islam, Md Shahinur & Akhter, Ruma & Rahman, Mohammad Ashifur, 2018. "A thorough investigation on hybrid application of biomass gasifier and PV resources to meet energy needs for a northern rural off-grid region of Bangladesh: A potential solution to replicate in rural ," Energy, Elsevier, vol. 145(C), pages 338-355.
    4. Ladenburg, Jacob & Skotte, Maria, 2022. "Heterogeneity in willingness to pay for the location of offshore wind power development: An application of the willingness to pay space model," Energy, Elsevier, vol. 241(C).
    5. Venkata Bandi & Tiia Sahrakorpi & Jukka V. Paatero & Risto Lahdelma, 2023. "Unveiling the Decision-Making Dilemmas in Mini-Grids: The Intricate Case of Smart Meters," Energies, MDPI, vol. 16(17), pages 1-22, August.
    6. Riva, Fabio & Gardumi, Francesco & Tognollo, Annalisa & Colombo, Emanuela, 2019. "Soft-linking energy demand and optimisation models for local long-term electricity planning: An application to rural India," Energy, Elsevier, vol. 166(C), pages 32-46.
    7. Subhes C. Bhattacharyya, 2018. "Mini-Grids for the Base of the Pyramid Market: A Critical Review," Energies, MDPI, vol. 11(4), pages 1-21, April.
    8. Iyabo Adeola Olanrele, 2020. "Assessing the Effects of Rural Electrification on Household Welfare in Nigeria," Journal of Infrastructure Development, India Development Foundation, vol. 12(1), pages 7-24, June.
    9. Olumide Hassan & Stephen Morse & Matthew Leach, 2020. "The Energy Lock-In Effect of Solar Home Systems: A Case Study in Rural Nigeria," Energies, MDPI, vol. 13(24), pages 1-24, December.
    10. Azlina, A. A. & Abu Bakar, Shahida & Kamaludin, Mahirah & Ghani, Awang Noor, 2022. "Willingness to Pay for Renewable Energy: Evidence From High Wind and Wave Energy Potential Areas," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 59-70.
    11. Artem Korzhenevych & Charles Kofi Owusu, 2021. "Renewable Minigrid Electrification in Off-Grid Rural Ghana: Exploring Households Willingness to Pay," Sustainability, MDPI, vol. 13(21), pages 1-17, October.
    12. Masako Numata & Masahiro Sugiyama & Wunna Swe & Daniel del Barrio Alvarez, 2021. "Willingness to Pay for Renewable Energy in Myanmar: Energy Source Preference," Energies, MDPI, vol. 14(5), pages 1-17, March.
    13. Gómez-Hernández, D.F. & Domenech, B. & Moreira, J. & Farrera, N. & López-González, A. & Ferrer-Martí, L., 2019. "Comparative evaluation of rural electrification project plans: A case study in Mexico," Energy Policy, Elsevier, vol. 129(C), pages 23-33.

    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. Khan, Imran, 2020. "Impacts of energy decentralization viewed through the lens of the energy cultures framework: Solar home systems in the developing economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    2. Oerlemans, Leon A.G. & Chan, Kai-Ying & Volschenk, Jako, 2016. "Willingness to pay for green electricity: A review of the contingent valuation literature and its sources of error," Renewable and Sustainable Energy Reviews, Elsevier, vol. 66(C), pages 875-885.
    3. Mandelli, Stefano & Barbieri, Jacopo & Mereu, Riccardo & Colombo, Emanuela, 2016. "Off-grid systems for rural electrification in developing countries: Definitions, classification and a comprehensive literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1621-1646.
    4. Xie, Bai-Chen & Zhao, Wei, 2018. "Willingness to pay for green electricity in Tianjin, China: Based on the contingent valuation method," Energy Policy, Elsevier, vol. 114(C), pages 98-107.
    5. Paravantis, John A. & Stigka, Eleni & Mihalakakou, Giouli & Michalena, Evanthie & Hills, Jeremy M. & Dourmas, Vasilis, 2018. "Social acceptance of renewable energy projects: A contingent valuation investigation in Western Greece," Renewable Energy, Elsevier, vol. 123(C), pages 639-651.
    6. Wang, Yushi & Wu, Libo & Zhou, Yang, 2024. "Household's willingness to pay for renewable electricity: A meta-analysis," Energy Economics, Elsevier, vol. 131(C).
    7. Rahman, Md. Mizanur & Hasan, Mohammad Mahmodul & Paatero, Jukka V. & Lahdelma, Risto, 2014. "Hybrid application of biogas and solar resources to fulfill household energy needs: A potentially viable option in rural areas of developing countries," Renewable Energy, Elsevier, vol. 68(C), pages 35-45.
    8. Lin, Boqiang & Tan, Ruipeng, 2017. "Estimation of the environmental values of electric vehicles in Chinese cities," Energy Policy, Elsevier, vol. 104(C), pages 221-229.
    9. Soon, Jan-Jan & Ahmad, Siti-Aznor, 2015. "Willingly or grudgingly? A meta-analysis on the willingness-to-pay for renewable energy use," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 877-887.
    10. Rahman, Syed M. & Ahmad, Mokbul M., 2013. "Solar Home System (SHS) in rural Bangladesh: Ornamentation or fact of development?," Energy Policy, Elsevier, vol. 63(C), pages 348-354.
    11. Ayodele, T.R. & Ogunjuyigbe, A.S.O. & Ajayi, O.D. & Yusuff, A.A. & Mosetlhe, T.C., 2021. "Willingness to pay for green electricity derived from renewable energy sources in Nigeria," Renewable and Sustainable Energy Reviews, Elsevier, vol. 148(C).
    12. Md Asaduzzaman Shoeb & GM. Shafiullah, 2018. "Renewable Energy Integrated Islanded Microgrid for Sustainable Irrigation—A Bangladesh Perspective," Energies, MDPI, vol. 11(5), pages 1-19, May.
    13. Miguel H. Fernandez-Fuentes & Andrea A. Eras-Almeida & Miguel A. Egido-Aguilera, 2021. "Characterization of Technological Innovations in Photovoltaic Rural Electrification, Based on the Experiences of Bolivia, Peru, and Argentina: Third Generation Solar Home Systems," Sustainability, MDPI, vol. 13(6), pages 1-23, March.
    14. Dalia Streimikiene & Tomas Balezentis & Ilona Alisauskaite-Seskiene & Gintare Stankuniene & Zaneta Simanaviciene, 2019. "A Review of Willingness to Pay Studies for Climate Change Mitigation in the Energy Sector," Energies, MDPI, vol. 12(8), pages 1-38, April.
    15. Zhao, Xiaoli & Cai, Qiong & Li, Shujie & Ma, Chunbo, 2018. "Public preferences for biomass electricity in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 95(C), pages 242-253.
    16. Baul, T.K. & Datta, D. & Alam, A., 2018. "A comparative study on household level energy consumption and related emissions from renewable (biomass) and non-renewable energy sources in Bangladesh," Energy Policy, Elsevier, vol. 114(C), pages 598-608.
    17. Gianluca Grilli, 2017. "Renewable energy and willingness to pay: Evidences from a meta-analysis," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2017(1-2), pages 253-271.
    18. Bakkensen, Laura & Schuler, Paul, 2020. "A preference for power: Willingness to pay for energy reliability versus fuel type in Vietnam," Energy Policy, Elsevier, vol. 144(C).
    19. Masako Numata & Masahiro Sugiyama & Wunna Swe & Daniel del Barrio Alvarez, 2021. "Willingness to Pay for Renewable Energy in Myanmar: Energy Source Preference," Energies, MDPI, vol. 14(5), pages 1-17, March.
    20. Bae, Jeong Hwan & Rishi, Meenakshi & Li, Dmitriy, 2021. "Consumer preferences for a green certificate program in South Korea," Energy, Elsevier, vol. 230(C).

    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:energy:v:139:y:2017:i:c:p:433-446. 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.journals.elsevier.com/energy .

    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.