Date of Award
Doctor of Philosophy (PhD)
Unreliable access to electricity is the norm rather than the exception in many developing countries. This dissertation analyzes the causes and consequences of outages and evaluates the economic benefits of addressing them. The first chapter investigates how the demand for electricity reliability can be estimated in the absence of markets for it. Employing two complementary pieces of information from a nationally representative sample of grid-connected consumers in Nepal - coping behavior and stated willingness to pay (WTP) - demand electricity reliability is estimated. The results indicate substantial heterogeneity in ex-ante demand for reliability and ex-post increase in electricity consumption levels, even within the same tariff categories. For policy-making purposes, the findings highlight the importance of conducting a detailed analysis of information on households’ preferences and firms’ opportunity costs when evaluating the benefits from reliability investments.Chapter two focuses on evaluating the economic benefits of mitigating the risk of unplanned outages in overloaded electric networks. Although electric utilities meter the amount of electricity consumed by individual customers, the physical structure of electricity distribution networks creates a shared level of reliability. The question that arises here is whether the shared nature of electric networks makes them susceptible to the common-pool resource (CPR) problem. Using firm- and substation-level data from a nationally representative sample of Nepalese firms, the findings indicate that the CPR problem would be largely solved if private firms were allowed to own and operate iii substations. The cost-benefit analysis presented in this chapter demonstrates that the annual gain from eliminating this restriction would be on the order of 0.32 USD million. The third chapter estimates the extent to which electricity consumers of different income levels would increase their use of high-load appliances in response to improvements in grid reliability. The results indicate that although grid-connected households are counted in the electrification statistics, unreliable electricity service significantly constrains their electric appliance ownership and, consequently, electricity consumption. Putting this paper’s findings into Sustainable Development Goal 7’s perspective, a connection to the grid by itself does not necessarily translate to realized benefits from electricity consumption. The availability and reliability of the service play a critical role for households at all income levels.
Hashemi, Seyedmajid, "The Economic Value of Electricity Reliability" (2021). All Dissertations. 2830.