When price isn’t the whole story: Why rural consumers in Rwanda have low demand for electricity

Policy brief Energy

  • Electrification is considered critical for economic growth, as reflected by Rwanda’s goal to hit 100% electrification by 2024, but providing poor consumers with access to electricity presents major challenges.
  • This study examines consumer responses to a price incentive to pay for solar electricity among existing Pay as You Go (PAYGo) solar customers.
  • Very few consumers responded to the incentive, and those who did were consumers who were already purchasing enough solar to have access to electricity on most days.
  • Administrative and survey data highlight three possible explanations for non-responsiveness: consumers are uncertain about their future demand for solar, consumers are liquidity constrained, and/or consumers are not sensitive to the price of electricity.
  • This study highlights the importance of non-price factors in designing policies that promote rural electrification.