Using a choice experiment to understand preferences in off-grid solar electricity attributes: The case of Nigerian households

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Abstract

One of the pressing challenges to economic development in sub-Saharan Africa (SSA) is access to electrical power. In Nigeria, there is a large gap in electricity access between rural and urban areas; only about 40% have access in rural areas as compared to almost 60% in urban areas. A potential solution is the use of off-grid solar electricity to meet their needs. This article seeks to assess the tradeoffs involved in using off-grid solar electricity from the perspective of Nigerian households. Given their generally low income levels, the research focuses on the lower end of the market for off-grid solar electricity: solar chargers. It uses choice experiments to measure households' preferences for solar electricity by exploring attributes rural households are looking for in solar chargers. The relationship between households' preferences and off-grid solar electricity was analyzed using a random parameter logit model. Findings indicate that confidence in the quality of the product was the most important variable, and that respondents associated higher priced solar chargers with higher quality. These findings suggest that energy companies making off-grid electricity technology could consider offering warrantees for high-quality products in order to build consumers' trust.

Introduction

Energy poverty is a major problem facing households in developing countries. Worldwide, only 13% of people globally lack access to electricity, but three quarters of them – about 580 million people – live in sub-Saharan Africa (International Energy Agency, 2020; International Energy Agency, I, 2017). These people depend on polluting fuels for heating and lighting that are hazardous to health and safety, and that contribute to global greenhouse gas emissions (Trotter, 2016; UNDP, 2015). Access to electricity is vital for economic and social development of households, bringing benefits such as improved health and healthcare services, education and productivity. With this in mind, the United Nations included access to affordable and clean energy for all by 2030 as one of its sustainable development goals (Emili, Ceschin, & Harrison, 2016; UNDP, 2015).

Nigeria is home to about 80.1 million people without access to electricity (International Energy Agency, 2020). There is unmet demand, inadequate supply, and underutilization of the electric grid. The existing infrastructure provides only about 14% of the estimated demand (Nigerian Electricity Regulatory Commission, 2018; Sambo, 2008). According to the Nigerian Electricity Regulatory Commission (NERC), only about 49.5% of the capacity of the country's power plants were utilized in 2018, due to problems with gas supply, distribution and transmission (Chidebell-Emordi, 2015). This underutilization of the national capacity for electrical power generation causes electricity to be rationed, inconsistent, and subject to partial and systematic collapse of the grid. For instance, in the third quarter of 2017, the country experienced one total system collapse and four partial system collapses (Ikeme & Ebohon, 2005; Nigerian Electricity Regulatory Commission (NERC), 2017).

Adeoti, Oyewole, and Adegboyega (2001) noted that the Nigerian government has sought to improve the problem of insufficient supply of electricity by updating the current infrastructure, extending grid lines to rural areas, and meeting electricity demand (Adeoti et al., 2001). The government invested over $16 billion from 1997 to 2007 to improve and expand power genertation; however due to corruption and mismanagement of funds, the problems still persist (Aliyu, Ramli, & Saleh, 2013). The NERC also generates revenue that can be used to address the power problems, but the revenue collected nationwide is only 55.3% of the total billed (Nigerian Electricity Regulatory Commission (NERC), 2017), and the majority of the revenue collected is used for administrative costs (Aliyu et al., 2013).

To fill the gap between supply and demand, households and businesses have resorted to the use of home generators, kerosene lanterns, candles, and battery-powered flashlights for lighting and other electrical needs. However, some households cannot meet their electricity needs, so they are left without alternatives. Furthermore, shortage in electricity supply leads to businesses operating at higher cost to meet their demands, and it limits the number of new businesses entering the market. Therefore, there is a loss in economic opportunities, and higher operating costs are passed on to household consumers (Oji J. et al., 2012).

Therefore, there is a need to explore alternative ways of meeting the electricity needs of the Nigerian population that are cost effective, economically viable, consistent and environmentally feasible. One option that can be used to address the energy deficit in Nigeria is the use of solar energy, because of its enormous potential (International Energy Agency, 2019). For instance, in Nigeria, if 5% of the available solar energy were converted, it could generate about 4.2 × 105 Gigawatt/hour (GW/h) of electricity, which would meet the country's demand and would be 26 times more than the electricity production from the grid (Ogunleye, 2011; Oyedepo, 2012). Off-grid options like photovoltaic (PV) systems and solar panel chargers are attractive options in addressing rural and urban energy needs because they can offer small amounts of electrical power that may potentially contribute to lighting, mobile phone and laptop charging (Adurodija, Asia, & Chendo, 1998). They also have low maintenance costs because they are durable and require no fuel. They can meet the basic energy needs of a household (Adeoti et al., 2001).

Despite this potential for solar systems to meet the demand for electricity, Nigerian households have been slow to adopt such technologies. One reason is the cost of PV systems; 80% of households live below the poverty line and the average cost of PV system exceeds the amount of money that they earn in a year. There are also other challenges and barriers like installation and access that households face in adopting PV systems (Hancock, 2015; Karakaya & Sriwannawit, 2015). Because of these constraints, we focus on the lower end of the market for off-grid solar electricity: solar chargers.

A solar charger is a portable panel that can produce small amounts of electricity to households, enough to power and charge mobile phones during the day, and small electronics like radios and rechargeable lamps that can be used in the evening. Even though solar chargers supply only a small quantity of electricity, they can greatly improve the quality of life by, for example, making it easier and safer to light the home at night. In particular, a solar charger can recharge a rechargeable electric lamp, which provides ongoing reliable light for several hours, as opposed to using kerosene, which provides only dim light and pollutes the indoor air. A rechargeable lamp is also far more convenient than a flashlight or the light on a mobile phone.

Solar chargers also provide convenience; for example, they save households time and money because they do not have to go out to charge their mobile phones with street vendors. In addition, if households have solar chargers, they do not have to depend on their neighbors who own generators for electricity or constantly buy batteries for their small electronics. The price of solar chargers ranges from $28 to $54 (in US dollars), with varying levels of charging capacity (Jumia Nigeria, 2018).

Consequently, we estimate the household demand for electricity in the context of off-grid solar electricity in Nigeria, specifically for relatively inexpensive solar chargers. Given the relatively low average level of income, we wanted to understand tradeoffs households are willing to make for the solar charger. This study uses discrete choice experiments to understand households' preferences for solar electricity by exploring attributes rural households value in solar chargers. We quantify the various attributes of interest and estimate demand from individual characteristics of solar electricity. The study also examines the effects of information on households' willingness to purchase solar electricity.

Section snippets

Study area

The data used in this study are derived from a household survey conducted with adult respondents in four different communities in Ayetoro, Yewa north local government, Ogun State, southwest Nigeria. These communities are Idagba-Olorunsogo, Oke Oyinbo, Oke Joga, and Saala. The communities were chosen because of their blend of rural and urban households (they are peri-urban). They are also close to a state university and a federal government clinic, so the households interviewed had a blend of

Modeling preferences for off-grid solar electricity using choice experiments

The theoretical foundation of the study is based on Lancaster consumer theory, which provides the basis for discrete choice experiments (Lancaster, 1966). This approach assumes that utility is derived from the properties and characteristics of a good, and it assumes the consumption of a good as an activity that produces an output that is a collection of characteristics (Lancaster, 1966). The good in this instance is off-grid solar electricity. The good possesses energy characteristics, and

Results

This section first presents summary statistics from the survey and then the choice experiment results.

Discussion

There is a shortage of electricity in Nigeria along with inconsistent supply from the electrical grid. Households are heavily dependent on generators and other means to meet their electricity demand. From the survey, close to 50% of the households sampled own generators. However, there is still demand for more and cheaper sources of electricity, which off-grid solar electricity can help to meet (UNDP, 2015). Nevertheless, there are challenges that households face. The obvious challenge is the

Conclusions

Nigeria's electrical grid reaches about half the population, and the electricity supplied is inconsistent and inadequate. The alternative source of electricity is petrol-powered generators, which are not affordable to most households, and require daily refeuling. With off-grid solar electricity households can have direct access to electricity and can transition into cleaner and renewable energy source. However, it still faces significant barriers to adoption by households. In some instances, it

Ethics approval and consent to participate

This study received approval by Michigan State University's Human Research Protection Program. IRB# x17-878e.

Consent for publication

Not applicable.

Availability of data and material

The datasets used and/or analyzed during the current study are available from OE on reasonable request.

Funding

Department of Community Sustainability, College of Agriculture and Natural Resources, Associate Dean Fellowship from Michigan State University, Alliance for Graduate education and the professoriate at Michigan State university for partial funding.

CRediT authorship contribution statement

OE conceived of the study, collected the data, and did all the initial analysis, and wrote the first draft of the paper. JK provided guidance in the data collection and helped to streamline the analysis and the text, and wrote original sections of the text in the final draft. AS helped with the analysis. RR contributed to design of the survey and guidance of study. All authors read and approved the final manuscript.

Declaration of competing interest

The authors declare that they have no competing interests.

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