The social and economic impacts of electrification: Evidence from Kenya

Universal access to modern energy has become a top priority for policy makers, non-governmental organisations, and international donors across Sub-Saharan Africa. In Kenya, nearly $600 million has been invested in extending the grid to rural areas since 2008. While there is now widespread grid coverage in Kenya, the national electrification rate remains low at roughly 32% in June 2014. Kenya’s Ministry of Energy and Petroleum has identified last-mile connections for “under grid” households as the most promising strategy to reach universal access to electricity by 2020. However, given the high cost of subsidising mass connections, there is a need for rigorous estimates of the social and economic impacts associated with rural electrification.

The Impact Evaluation builds on a substantial amount of work that has already been completed by University of California, Berkeley researchers in partnership with Kenya’s Rural Electrification Authority. As a result of this work, a foundation for a randomised evaluation of rural electrification is now in place. A follow-up survey of treatment and control households will allow us to experimentally measure the social and economic impacts of power. Given the high level of public subsidies required for “last-mile” electrification, the proposed IE will emphasise accurately measuring the spillovers associated with these investments.

By quantifying the impacts of subsidised grid connections, as well as documenting how household energy use evolves over time, policymakers will be able to better plan energy investments in the future. The primary deliverable is a research report on the social and economic impacts of rural electrification in Kenya.

Data collection will take place in 2016 and will include quantitative and qualitative survey data for up to 4,000 households in total. Our proposed impact evaluation seeks to answer the primary question: What is the impact of electrification on the social and economic living standards of rural households in Kenya? Our research agenda was derived after numerous conversations with Kenyan policymakers, as well as representatives of the IGC in Tanzania (a country with similar levels of energy poverty), with the overarching goal of understanding how to increase energy access in East Africa.

We will focus on impacts across five “families” of outcomes—including energy consumption, individuals and human capital, household wealth and income, empowerment, and gender—with a special emphasis on spillovers to neighbouring households. In addition, we will pilot surveys to explore new questions of interest which will guide future work at the intersection of energy and development economics.