Post-connection electricity demand and pricing in newly electrified households: Insights from a large-scale dataset in Rwanda

Abstract

Recent electrification efforts in Africa have expanded household connections, but understanding of post-connection electricity consumption and affordability challenges remains limited. This study examines consumption patterns and price elasticity among newly connected households in Rwanda, utilizing consumption and billing data from the national utility. Using both descriptive and econometric analyses, we assess trends in electricity usage and estimate price elasticity specifically for low-consumption customers. Our findings show that newly connected households, particularly in rural areas, consume substantially less electricity than longer-standing, primarily urban customers. Furthermore, with each new year, the most recently connected use even less electricity than those connected in previous years. We observe that demand growth remains stagnant, with overall increases in demand driven by new connections rather than increased consumption among existing customers. Among low-consumption households, price is inelastic, suggesting limited capacity to stimulate demand growth solely through reduced tariffs. These results underscore the limitations of tariff policies in driving electricity consumption growth and emphasize the need for targeted interventions to enhance usage, especially for economically disadvantaged households. Our study offers insights applicable to other low-income countries undergoing similar electrification initiatives, providing valuable evidence for policymakers seeking to expand access to affordable electricity and promote sustainable demand growth.