The Value of Informal Electricity Access

Urban sub-Saharan Africa will drive most of the near-term growth in household energy demand, yet the electricity landscape in these cities differs sharply from the rural settings where most existing evidence was generated. In Abomey-Calavi, Benin, informal re-selling—in which utility connected households resell power to their neighbors— accounts for 46.6% of all electricity connections despite prices nearly double the formal tariff. This project quantifies the surplus generated by informal electricity access and how it is divided between re-sellers and consumers. Partnering with the national utility, we conduct three field experiments that separately identify the pass-through rate of cost shocks in the informal market and the extensive- and intensive-margin price elasticities of informal electricity. We combine these experimental estimates with a model of household electricity choice and informal electricity supply to evaluate the value of informal electricity access.

“This project investigates the welfare consequences of informal electricity re-selling in urban Benin, where nearly half of all electrified households are electrified via connection with a neighbor. Understanding the value this market creates for households is key to designing policies that seek to expand access to electricity in urban areas across sub-Saharan Africa.”

Jun Wong, PhD Candidate, Economics