Link between household welfare and solar electricity demand in sub-Saharan Africa: A quantile approach

Abstract

This study investigates the link between household welfare and solar electricity demand in sub-Saharan Africa for the period between 2010 and 2019. Welfare was proxied by HDI, inequality in income, infant mortality, education, mobile phone subscriptions, internet users and unemployment rate. The study employed a Quantile regression with nonadditive fixed effects and the adaptive Markov Chain Monte Carlo optimisation method. The findings show that HDI has a negative and significant effect on solar electricity consumption at all quantiles except for the 30th quantile where the effect is positive. This implies that as welfare improves, consumers’ demand for solar electricity declines due to a shift to other fuels or stacking of multiple fuels. Moreover, the findings show varying effects of inequality in income, education, mobile phone subscriptions, internet connectivity and unemployment rate on solar electricity demand at different quantiles. Lastly, the findings reveal that infant mortality has a negative effect on solar electricity demand across all quantiles. In overall, the findings imply that policy makers should develop strategies that will promote and incentivise solar electricity consumption across all income groups.