No evidence of socioeconomic benefits in India's rural communities

Social scientists from the US and the UK have found that providing electricity to rural communities in India has not brought about the socioeconomic benefits that were predicted.

A team of four academics from the University of Pittsburgh, New York University, and Columbia University in the US and the University of Glasgow in Scotland conducted a randomised field experiment in India to estimate the causal effect of off-grid solar power on electricity access and broader socioeconomic development of 1,281 rural households.

Within a year, electrification rates in the treatment group increased by 29 to 36 percentage points. Daily hours of access to electricity increased only by 0.99 to 1.42 hours, and the confidence intervals are wide. Kerosene expenditure on the black market decreased by 47 to 49 rupees per month.
 

Despite these strong electrification and expenditure effects, they found no systematic evidence for changes in savings, spending, business creation, time spent working or studying, or other broader indicators of socioeconomic development.

Almost a quarter billion people in India alone and about another 600 million in sub-Saharan Africa are without access to electricity because of the high cost of extending the electricity grid to remote, rural places.

However, with a rapid decrease in the cost of solar panels, interest has grown in the use of off-grid solar power as an alternative, especially since solar power is cleaner than fossil fuels.

The academics worked in partnership with Indian solar service provider 'Mera Gao Power' (MGP) to conduct the first randomised controlled trial designed to measure the causal effects of installing solar microgrids in 81 non-electrified villages in Uttar Pradesh's Barabanki district.

Households in these villages had no electricity and used simple kerosene lamps to light their homes.

"When we visited the villages, we found that most households had no modern lighting at all. These villages were in the dark after sunset because India's rural electrification program had not reached them," Dr Johannes Urpelainen from Columbia University said.

The team found that the villagers spent considerably less money on buying kerosene for lighting their homes after subscribing to the MGP service.

However, they also found no evidence of broader socio- economic impacts.

"MGP's customers replaced kerosene lamps with solar lighting, but they didn't save money or find new ways to earn it. Basic energy access, which essentially provides bright lights and mobile charging, was not enough to unlock economic opportunity," Dr Patrick Bayer from the University of Glasgow said.

According to Dr Michael Aklin from the University of Pittsburgh, "the findings underscore both the potential and limitations of providing minimal electricity access through off-grid solar power".

"It is notable that an inexpensive, business-driven intervention without any state subsidies can have such a positive effect on the quality of lighting in previously non- electrified villages. Because MGP offers electricity at night, the service serves households at hours when demand peaks and electricity access is generally the weakest," Aklin said.

Bayer said, "At the same time, the lack of broader effects, aside from better lighting and lower kerosene expenditures, underscores the limits of minimal solar microgrids. Electrification programmes that rely on off-grid technologies must consider the trade-offs between the complexity, the costs and the benefits of these systems.

"Our findings do not imply that larger systems cannot produce broader socio-economic benefits, but generating such benefits may require more expensive solutions".

The team randomly assigned 81 small rural habitations into treatment and control groups.

In the treatment groups, MGP approached villagers and offered to set up a solar microgrid if at least 10 households within the village subscribed at the monthly per-household cost of 100 rupees (1.21 pound or $1.67).

MGP made no intervention in the control group.

The solar microgrid offered a basic level of electricity access comprising high-quality domestic lighting (through two LED lights) and mobile charging.

Information on fuel expenditures, lighting hours, quality of lighting and broader socio-economic effects was collected from 1,281 households surveyed on three occasions over a period of more than a year: prior to treatment, half a year after treatment, and one year after treatment.

The paper is published with Science Advances yesterday.