Lack of access to electricity is one of the major impediments to economic development and the provision of public services in rural/off-grid areas of developing countries. This study examines the drivers and impacts of rural electrification with Solar Photovoltaic (PV) systems in Ethiopia from a cross-sectional study of 605 rural households and direct field examination of 137 solar PVs/lanterns. Multiple linear regression and econometric analyses were used to analyse the data. Findings showed that the use of solar PV systems in rural Ethiopia is growing and its impact appears significant. A solar-electrified rural household could save the consumption of 43.68 L of kerosene and emission of 107 kg CO₂ per year compared with a non-electrified one. This reduction in kerosene use and the access to electricity from solar PVs could enable a rural household to save between US$ 65 and $75 per year from avoided energy costs and mobile charging expenses. The study finds that Solar PVs could provide rural households with access to electricity for 3 to 5 h a day, reduce health damage from kerosene lamps; and allow micro-businesses to generate more income. Empirical results from a binomial logit, and multivariate probit analyses revealed that solar PV adoption is strongly influenced by several economic and non-economic factors. However, it was also found that the use and effectiveness of solar PV systems in rural/off-grid Ethiopia is faced with critical challenges from poor quality and counterfeit products in the market, high cost of quality-verified solar products, lack of after-sales maintenance services, and limited access to credit financing sources.