Electricity is used by firms in virtually every major industry and can be produced cleanly using renewable sources. The potential benefits of electrification, together with historical evidence of large-scale economic change, motivates billions of dollars annually in investment in electrification. Yet, little experimental and quasi-experimental evaluations of expanding electricity access has found significant impacts on outcomes associated with economic growth. A leading explanation is that poor reliability of services prevents users from using electricity during outages and disincentivizes investment in equipment for future use.
In this project, the researchers will produce some of the first estimates of medium-term economic impacts of improved electricity reliability – accounting for key channels including firm entry and exit and investment in electrical equipment. They propose to study a natural experiment in Kenya, leveraging persistent discontinuities in electricity reliability across nearby areas that are serviced by different feeder lines. The findings will help inform policies that aim to improve firm productivity and promote transitions to clean energy.
