Socioeconomic impacts of solar home systems in rural Ethiopia

Off grid solar electrification of remote, rural communities that are difficult to reach cost-effectively through grid extension is a core component of Ethiopia’s energy access strategy. One emerging business model in such locations, which aims to maintain affordability and access for customers with severe liquidity constraints, is the Pay-as-you-go (PAYGO) approach to solar home system (SHS) sales. This study focuses on the socioeconomic impacts of PAYGO SHS that are currently being marketed by a private supplier in the Amhara region of Ethiopia. The study employs descriptive and propensity score matching analysis to examine a range of impacts on those adopting this technology. The use of PAYGO SHS is shown to have no discernible impact on household income, but it does reduce monthly energy expenditure. Use of a PAYGO SHS also allows school-aged children to extend their study hours into the night, improves the self-reported health of family members, allows women to re-allocate their time across various activities, and enhances perceived safety and security. The role of SHS in financial inclusion and access to information is also discussed. Achieving wider dissemination of SHS to target populations will require more appropriate and effective intervention and marketing effort.