The effects of solar home system on welfare in off-grid areas: Evidence from Côte d’Ivoire

Abstract In Cote d’Ivoire, the electricity grid covers only 54 percent of the localities in 2017 while the country has a high solar potential due to a regular solar radiation. This paper analyses the welfare benefits of using solar home system as a source of electricity in remote areas in Cote d’Ivoire. We use household-level data gleaned from 2015 Living Standards Measurement Surveys (LSMS). The household welfare is measured using three indicators that are income, education and health. To account for the endogeneity bias due to this simultaneity between welfare and energy use, we use a regression model with an endogenous treatment. The results confirm the positive effects of SHS use on welfare outcomes. Specifically, we find that the use of solar home system increases the household consumption per capita and the household average years of schooling by 41.96 percent and 1.79 years respectively and reduces the number of household members that report an illness by 2.35. The highly significant magnitude of SHS impact on the welfare in remote areas makes a powerful argument for implementing a policy for spreading its use.