Electricity access and electricity reliability are often cited as key limiting factors for firms' productivity in Sub-Saharan Africa. The ability of electricity providers to deal with access and reliability issues is hindered by high non-technical losses. These providers are increasingly adopting new metering technologies such as prepaid meters and smart meters to improve their financial viability and spur their capital investment. Understanding how these new technologies interact with firm outcomes is key for the long-term growth of firms, since electricity can be an important input for firms. The impact of these new meter types will depend on how they impact firm behaviour, firm cost structure and firm productivity. This project studies the impact of prepaid meter adoption on firm electricity use, revenues and profits, both at the extensive margin (no meter to prepaid meter) and the intensive margin (postpaid to prepaid meter).
To answer these questions, the researcher leverages the universe of disaggregated electricity consumption and expenditures data for the period 2012-2021 to carry out an event study using an intervention in which randomly selected clients from certain districts were switched to prepaid meters. This allows to compare selected firms to non-selected firms in the same districts to estimate the impact of the technology on energy consumption and firm productivity.
Prepaid meters affect the way in which energy-consuming firms use and pay for a key input. Evaluating the impact on firms of this new technology, which is increasingly being adopted in developing countries, will allow policymakers to understand which types of firms stand to gain from this electricity transition, and whether microenterprises will be positively or negatively affected. This study will extend the growing literature on prepaid meters, which has so far mostly focused on the impact of prepayment on households.
