Research on Getting Electricity

Addressing the electricity access gap
Author(s) : World Bank 2012 Abstract : Achieving universal access to electricity is one of the most important goals set for the energy sector by governments in the developing world. Electricity alone is not sufficient to spur economic growth, but it is certainly necessary. Access to electricity is particularly crucial to human development, as certain basic activities-such as lighting, refrigeration, running household appliances, and operating equipment-cannot easily be carried out by other forms of energy. Sustainable provision of electricity can free large amounts of time and labor and promote better health and education. Electrification can make an important contribution toward achieving economic and social objectives. This paper, prepared as a background paper to inform the forthcoming World Bank Group energy strategy, discusses the challenge of scaling up electricity access in developing countries, the efforts involved in achieving universal access, obstacles associated with access extension in rural and urban areas, technology and institutional options, the role of tariffs and subsidies, and elements of success in electrification programs. To that end, the paper draws from the experiences of more than twenty countries in addressing the electricity access gap under different country circumstances, distills lessons on good practices, and makes recommendations for a way forward.

Connecting businesses to the electrical grid in 183 economies*
Author(s) : Geginat, Carolin, and Rita Ramalho Journal : Energy Economics 76 (2018): 344-366 Abstract : This paper presents new data on the procedures, time and costs associated with first time electricity connections for small, energy-intensive businesses in 183 economies. The study finds significant variation in the time and cost to obtain an electricity connection across countries. In low-income countries, for instance, the cost of an electricity connection is 70 times higher than in high income countries. The study finds that income levels and a newly constructed “Getting Electricity” index that combines data for the three measures (procedures, cost and time) are strongly correlated and that the new index cannot predict electrification rates and losses in the electricity system once differences in income level are considered. However, the new index presented has explanatory power for economic losses that firms report due to the poor quality of electricity supply and the likelihood of bribe payments asked from firms by electric utilities. The paper also finds that procedures for connection processes tend to be more cumbersome in countries where other regulatory processes are also complex, suggesting a persistence of bureaucracy across public sector entities in countries. Finally, the study finds that simpler and less costly electricity connection processes are associated with better firm performance in industries with high electricity needs, such as manufacturing motor vehicles.

Connection charges and electricity access in Sub-Saharan Africa
Author(s) : Golumbeanu, Raluca;Barnes, Douglas Journal : World Bank Policy Research working paper ; no. WPS 6511. Washington, DC: World Bank. Abstract : Sub-Saharan Africa trails other regions in providing access to electricity for poor urban and rural residents. This poor performance can be linked to various factors, including political interference in utility policy, higher investment costs and lower profitability of extending service to rural areas. But a major obstacle to wider access is the high charges consumers must pay to connect to the electricity network. The connection charges in Sub-Saharan Africa are among the highest in the world, which has resulted in low rates of electrification in many countries. This paper reviews ways to improve electrification rates by addressing the issue of high connection charges. Essential to the success of such efforts is concurrent political commitment to identify, examine, and implement various low-cost electrification approaches and financing solutions as part of a broad plan to improve access. Electricity companies can lower their connection-related costs, and thus consumer charges, by using a variety of low-cost technologies and materials in distribution networks and household connections; making bulk purchases of materials; and adjusting technical standards to reflect the lower loads of households that use a minimum amount of electricity. Strategies for lowering connection charges may also include spreading charges over a reasonable period, rolling them into monthly service payments, subsidizing connections, or amortizing them through loans. Lowering connection charges is not the only step, but it is an essential part of any strategy for addressing the electricity access gap between rich and poor households in Sub-Saharan Africa, a gap that denies millions of poor Africans the benefits of electricity.

Electricity cost and firm performance: evidence from India
Author(s) : Ama Baafra Abeberese Journal : Academic Commons, Columbia University Abstract : Although electrification rates in developing countries have increased, the price of electricity remains high especially for firms. This paper studies the extent to which high electricity prices affect firms’ performance using data on Indian manufacturing firms and an instrumental variables strategy. Making use of India’s reliance on coal for thermal generation of electricity, I construct an instrument for electricity price as the interaction between coal price and the share of thermal generation in a state’s total electricity generation capacity. I find that firms reduce their electricity consumption and switch to less electricity-intensive production processes in response to an increase in electricity price. I argue that less electricity-intensive processes tend to be those that are less technologically advanced and show that switching to such processes has negative implications for firms’ productivity growth.

Managing an electricity shortfall: a guide for policy makers
Author(s) : Audinet, Perre: Rodriguez Pardina, Martin Journal : World Bank Central America Regional Programmatic Study for the Energy Sector Abstract : This paper studies energy challenges facing six Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) to identify actions to promote the sound development of the sector. It discusses the integration of energy markets within the SIPEAC Electrical Interconnection System, which links the six countries. The Managing an Electricity Shortfall paper evaluates the effectiveness of supply- and demand-side actions to address actual or looming shortages. It provides a framework for action and a broad menu of options available to policy makers to bridge a supply-demand gap in the short- to medium-term.

Power tariffs: caught between cost recovery and affordibility
Author(s) : Briceño-Garmendia, Cecilia; Shkaratan, Maria, Journal : Policy Working Research Paper 5904, World Bank Abstract : This is the first paper to build a comprehensive empirical picture of power pricing practices across Sub-Saharan Africa, based on a new database of tariff structures in 27 countries for the years 2004?2008. Using a variety of quantitative indicators, the paper evaluates the performance of electricity tariffs against four key policy objectives: recovery of historic power production costs, efficient signaling of future power production costs, affordability to low income households, and distributional equity. As regards cost recovery, 80 percent of the countries in the sample fully recover operating costs, while only around 30 percent of the countries are practicing full recovery of capital costs. However, due to the fact that future power development may be based on a shift toward more economic technologies than those available in the past, existing tariffs look as though they would be consistent with Long Run Marginal Costs in nearly 40 percent of countries and hence provide efficient pricing signals. As regards affordability, today’s average ffective tariffs are affordable for 90 percent of today’s customers. However, they would only be affordable for 25 percent of households that remain unconnected to the grid. Tariffs consistent with full recovery of economic costs would be affordable for 70 percent of the population. As regards equity, the highly regressive patterns of access to power services, ensure that subsidies delivered through electricity tariffs are without exception also highly regressive in distributional incidence. The conclusion is that achieving all four of these policy objectives simultaneously is almost impossible in the context of the high-cost low-income environment that characterizes much of SSA today. Hence most countries and themselves caught between cost recovery and affordability.

Moving beyond LCOE: impact of various financing methods on PV profitability for SIDS
Author(s) : Yujia Tao, Jacqueline; Finenko, Anton Journal : Energy Policy 98: 749-58 Abstract : Small island developing states (SIDS) have some of the highest electricity tariffs globally. Renewable energy (RE) technologies could thus have reached grid parity in various SIDS. Furthermore, the abundance of resources such as solar and wind provides ample potential for SIDS to switch from high cost diesel generators to renewables. Despite favourable conditions, RE remains a largely underinvested sector in these regions. This paper aims to undercover the reasons why grid parity does not necessary translate into private sector investments in RE. With a focus on SIDS, this paper presents an evidence that achieving grid parity based on LCOE estimates is an incomplete benchmark for decision making in the power generation industry. In particular, LCOE and grid parity do not take into account financing constraints of RE projects which are often more pronounced compared to conventional forms of power generation. This paper thus presents the business perspective of RE projects, by employing a discounted cashflow model that includes various profitability metrics and effects of taxation and depreciation. The study shows that financing conditions exert strong influence on the economic feasibility of solar projects, both in LCOE terms and profitability terms. Thus, key policies should be targeted at improving financing conditions to ensure mobilization of private sector finances in solar PV.

Implementing Structural Reforms in Abenomics: How to Reduce the Cost of Doing Business in Japan
Author(s) : JI Haidar, T Hoshi Journal : NBER Working Paper 21507, National Bureau of Economic Research Abstract : Improving the environment for business is an important part of the growth strategy of Abenomics. As the goal for this effort, the Abe Administration aims to improve Japan’s rank in the World Bank Doing Business Ranking to one of the top three among OECD. This paper clarifies what it takes for Japan to achieve the goal. By looking at details of the World Bank Doing Business ranking, we identify various reforms that Japan could implement to improve the ranking. Then, we classify the reforms into six groups depending on whether the reform requires legal changes and on political resistance that the reform is likely to face. By just doing the reforms that do not require legal changes and are not likely to face strong political opposition, Japan can improve the ranking to 13th. To be in the top 3, Japan would need to implement all the reforms that are not likely to face strong political resistance. The conclusions, however, are based on the assumption that the conditions in the other countries do not change, which is unrealistic. Thus, Japan would need to carry out all the reforms including those with high political resistance to be among the top three.

"Getting to Gender Equality in Energy Infrastructure. Lessons from Electricity Generation, Transmission, and Distribution Projects "
Author(s) : "Maria Beatriz Orlando, Vanessa Lopes Janik, Pranav Vaidya, Nicolina Angelou, and Ieva Zumbyte" Journal : World Bank Group Abstract : At a moment when accelerating access to modern and clean forms of energy is considered critical todevelopment, gender equality—beyond its intrinsic value as a core development objective—isincreasingly recognized as smart economics (World Bank 2011). Under the United Nations 2030sustainable development agenda, gender and energy figure among the 17 Sustainable Development Goals (SDGs) for eradicating extreme poverty and boosting shared prosperity. This means that governments and development agencies have a renewed institutional mandate to achieve gender equality (SDG 5). Ensuring universal access to affordable, reliable, sustainable, and modern energy (SDG 7) is recognized as central to making progress on SDG 5. Thus, gaining a deeper understanding of the energy‐gender linkages is fundamental to achieving these overlapping objectives.

Electricity sector constraints for firms across economies : a comparative analysis
Author(s) : Jean Arlet Journal : Doing Business Research Notes Abstract : Using recent Doing Business data, this note provides an analysis of electricity sector constraints across economies. The findings provide some interesting insights. Not surprisingly, service unreliability is a significant factor in low-income economies, where power outages fluctuate significantly from year to year. Furthermore, electricity tariffs are associated with an economy’s natural resource endowment, while burdensome electricity connections are associated with utility corruption. Consistent with the existing research, the data reveals that electricity sectorconstraints impact firm behavior in terms of demand for energy inputs. One major question, however, remains to be explored: how is the performance of firms impacted by specific electricity sector constraints, namely (i) power outages, (ii) electricity tariffs and (iii) the connection process? This is will be explored in an upcoming policy note.

"When do Firms Generate? Evidence on In-House Electricity Supply in Africa"
Author(s) : Foster, V., and J. Steinbuk Journal : Energy Economics 32(3): 505-14 Abstract : This paper attempts to identify the underlying causes and costs of own generation of electric power in Africa. Rigorous empirical analysis of 8483 currently operating firms in 25 African countries shows that the prevalence of own generation would remain high (at around 20%) even if power supplies were perfectly reliable, suggesting that other factors such as firms' size, emergency back-up and export regulations play a critical role in the decision to own a generator. The costs of own-generation are about three times as high as the price of purchasing (subsidized) electricity from the public grid. However, because these generators only operate a small fraction of the time, they do not greatly affect the overall average cost of power to industry. The benefits of generator ownership are also substantial. Firms with their own generators report a value of lost load of less than US$50 per hour, compared with more than US$150 per hour for those without. Nevertheless, when costs and benefits are considered side by side, the balance is not found to be significantly positive.

"How do Electricity Shortages Affect Productivity? Evidence from India."
Author(s) : Alcott, H., A. Collard-Wexler, and S. O’Connell. Journal : NBER Working Paper Abstract : Endemic blackouts are a particularly salient example of how poor infrastructure might reduce growth in developing economies. As a case study, we analyze how Indian textile plants respond to weekly “power holidays.” We then study how electricity shortages aect all Indian manufacturers, using an instrument based on hydroelectricity production and a hybrid Leontief/Cobb-Douglas production function model. Shortages reduce average output by about five percent, but because most inputs can be stored during outages, productivity losses are much smaller. Plants without generators have much larger losses, and because of economies of scale in generator capacity, shortages more severely aect small plants

Power outages and firm performance in Sub-Saharan Africa
Author(s) : Cole, Matthew A., Robert J.R. Elliott, Giovanni Occhiali and Eric Strobl Journal : Journal of Development Economics 134 (C): 150-159 Abstract : In this paper we assess the extent to which power outages affect the sales of firms across different African economies. We address the potential endogeneity concerns endemic in much of the existing literature by constructing an instrument for power outages based on the varying share of electricity produced by hydro-power as a result of variation in the local climate conditions. Using firm-level data for 14 countries from the World Bank Enterprise Surveys, we find evidence of a negative relationship between an unreliable electricity supply and firms’ sales, with a stronger effect for firms that do not own a generator. We find that reducing average outage levels to those of South Africa would increase overall sales of firms in Sub-Saharan Africa by 85.1%, rising to 117.4% for firms without a generator.

Power Outages and Economic Growth in Africa
Author(s) : Andersen, Thomas Barnebeck and Carl-Johan Dalgaard Journal : Energy Economics 38 (C): 19-23 Abstract : This paper estimates the total effect of power outages on economic growth in Sub-Saharan Africa over the period 1995–2007. We pay close attention both to potential errors of measurement of African economic growth and to the endogeneity of outages. As suggested by Henderson et al. (American Economic Review 102(2): 994–1028, 2012), we combine Penn World Tables GDP data with satellite-based data on nightlights to arrive at a more accurate measure of economic growth. Following Andersen et al. (Review of Economics and Statistics 94(4): 903–924, 2012), we also employ lightning density as an instrument for power outages. Our results suggest a substantial growth drag of a weak power infrastructure in Sub-Saharan Africa.

Power infrastructure quality and manufacturing productivity in Africa: A firm level analysis
Author(s) : Moyo, Busani Journal : Energy Policy 61: 1063-70 Abstract : This study sought to examine the impact of the quality of power infrastructure on productivity in African manufacturing firms using data from the World Bank enterprise surveys. We measured power infrastructure quality using the number of hours per day without electricity and the percentage of output lost due to outages and found these indicators to be negative and significant determinants of productivity. These variables seem to be significant determinants in Uganda, Tanzania and Zambia as well as in the food and agriculture sector. To improve economic growth and encourage employment creation, governments in Africa have to come up with measures to improve the reliability of electricity infrastructure.

Research on Getting Electricity

Papers on Doing Business topics

BLOGS

Download