Consumer Preference for Green Electricity Service Connection for Rural Residential Households in Ethiopia

Abstract

This study investigates consumer preferences for green electricity service connection in rural residential households of East Shewa and Arsi zone of Ethiopia by considering solar photovoltaic and mini-hydroelectricity sources. The main objective of the study is to identify consumer preference for green electricity attributes by rural residents. The discrete choice experiment method was applied taking into consideration attributes such as no externality, reliability, level of electricity use and cost of connection. The results show that ‘no externality’ is a relatively more important attribute, followed by usage level in multinomial and conditional logit model whereas usage level and reliability in mixed logit model, for rural residential households of Ethiopia, implying a preference of solar photovoltaics to mini hydro-electricity. A preference of rural households towards solar photovoltaics attributes is in line with the country’s green energy policy for rural electrification programmes. The study also estimated marginal willingness to pay for each attributes in each model. For instance the mean WTP for no externality, reliability, and multiple services usage is USD 3.67, 28.06 and 25.10 per year, in mixed logit model, respectively. These findings are important for prívate investors, government and other stakeholders who are interested in investing in green electricity for rural households of East Showa and Arsi zone and other parts of Ethiopia with similar socioeconomic conditions.