Off-grid lighting business models to serve the poor: Evidence from Rwanda

A significant proportion of the world’s population does not have access to grid-based electricity and so relies on off-grid lighting solutions. Rechargeable lamp technology is becoming prominent as an alternative off-grid lighting model in developing countries. In this paper, we explore the consumer behaviour and the operational inefficiencies that result under this model.

Specifically, we are interested in (i) measuring the impact of inconvenience (of travel to recharge the lamp) – which is a peculiar feature of this model – along with the impact of liquidity constraints (due to poverty of consumers) on lamp usage, and (ii) evaluating the efficacy of strategies that address these factors.

We build a structural model of consumers’ recharge decisions that incorporates several operational features of the impoverished regions. We conduct large-scale field experiments in Rwanda in collaboration with a company that operates a rechargeable lamp business and use the resultant data to estimate and test our model.