The drivers of energy access: Evidence from solar energy applications in Guinea-Bissau Maria Evgenia Apergi A thesis submitted to the Department of Geography and Environment of the London School of Economics and Political Science for the degree of Doctor of Philosophy, in Environmental Policy and Development, London, January 2018 1 Declaration I certify that the thesis I have presented for examination for the PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without the prior written consent of the author. I warrant that this authorisation does not, to the best of my belief, infringe the rights of any third party. I declare that my thesis consists of 54,533 words. Statement of conjoint work I confirm that Chapters 2 and 4 were jointly co-authored with Professor Susana Mourato and I contributed 75% of this work. 2 Abstract This thesis aims to explore how some of the findings from behavioural economics and the social capital literature can apply in the case of electricity access in developing countries with a focus on solar off-grid electrification. And specifically on solar home systems and solar hybrid mini-grid electrification in rural Guinea-Bissau. Specifically, I am drawing from studies looking at the role of discounting anomalies on technology adoption and recurring payments, the role of trust on technology adoption and the role of computational limitations and the use of simplification strategies on the accuracy of frequency and expenditure reporting in surveys. This exercise aims to inform electrification policy in developing countries, demonstrate instances where insights from behavioural economics and social capital can enrich our understanding of the underlying barriers and drivers of electrification access, but also demonstrate how some selected case studies can help to strengthen empirical findings from other contexts. Chapter 1 provides an introduction on the issues surrounding electrification access in developing countries and introduces the research motivation and the research objectives of this thesis. This chapter also discusses the relevant gaps in the literature, how this thesis attempts to address them and the contribution to knowledge. Finally, the research location is introduced. Chapter 2 presents the results of a stated preference study that uses a choice experiment to estimate willingness to pay for a solar home system, and the trade-off between different repayment schemes and maintenance responsibilities, in the region of Bafatá in Guinea-Bissau. Results suggest that preferences are driven both by income constraints as well as self-control problems, excessive discounting and self-reported trust for a number of actors. Chapter 3 explores the main determinants in the decision to connect to a solar hybrid mini-grid, in the semi-urban community of Bambadinca in Guinea-Bissau, with a focus on social capital as expressed in trust. Connections are driven largely by the socio-economic background of the households and prior energy use patterns. However, there is evidence that social capital as expressed in self-reported trust for one’s neighbours, also has a positive effect on connections through facilitating the informal expansion of the grid, whereby households use their neighbours’ infrastructure to connect to the service. Chapter 4 explores how the technology of prepaid meters can help researchers acquire more insight regarding the accuracy of survey responses and the response strategies used. More specifically, this chapter tests the accuracy of reported energy expenditure in surveys, when 3 using differently defined recall periods, namely a ‘usual’ week versus a ‘specific’ (i.e. last) week. We compare real expenditure data for prepaid meters for electricity, from a solar hybrid mini-grid operating in the semi-urban community of Bambadinca in Guinea-Bissau, with answers from a survey where respondents are asked to state their expenditures, randomly, in different recall periods. Overall, our results show that respondents tend to over-report the level and frequency of their energy expenditures, but reporting is more accurate when the ‘specific’ period rather than when the ‘usual’ period is used. Chapter 5 investigates the role of self-control problems on prepayment patterns for electricity provided by a solar hybrid mini-grid installed in the semi-urban community of Bambadinca in Guinea-Bissau. Prepayment patterns are found to be mostly driven by income constraints and equipment in use however there is evidence that individuals with self-control problems as well as individuals being charged with an additional time-varying tariff (a higher tariff between 7pm to 12am) resort to smaller refill levels possibly as a strategy to consume less electricity at home. Chapter 6 provides concluding remarks. 4 ACKNOWLEDGMENTS I want to take this opportunity to thank the numerous people that have contributed to this thesis. Starting with my supervisor Professor Susana Mourato and my review supervisor Professor Ben Groom who have provided me with invaluable feedback and support throughout this journey. I am also grateful to the Economic and Social Research Council for funding my PhD including my fieldwork in Guinea-Bissau. I thank all the people in the Grantham Research Institute on Climate Change and the Environment and the Department of Geography and Environment of LSE, for creating an ideal intellectual environment to pursuit my PhD, and for making this time so memorable. Special thanks go to all the people who have provided me with feedback on my work. I also want to thank my viva examiners Professor Salvatore Di Falco and Professor Alessandro Tavoni for their useful comments. This thesis would not exist, at least not in any resemblance of its current form, if it were not for my colleague Piedade Coruche who introduced me to the projects of TESE. For this, as well as for her support and friendship throughout my PhD, I want to express my gratitude. I want to extend a big thank you to the NGO TESE- Development Association (TESE) for trusting me and for facilitating my fieldwork in Guinea-Bissau. I thank all the people of the TESE team in Guinea-Bissau who provided me with all the logistical support required for my research, but also made my stays there unforgettable. In particular Sara Dourado and David Afonso for directly facilitating my fieldwork there. Filippa Farinha, for sharing a house and many adventures with me in Bafatá and beyond. Amadu Baldé for providing me with support and help whenever I needed it. And finally, I wish to express my gratitude to Sambel Baldé, whose memory lives on through the lasting impact of his work for Guinea-Bissau. He will remain a source of inspiration for those that had the privilege to meet him and to work with him. I also thank the SCEB and ACDB team and particularly Djae Seide for all the support during my research in Bambadinca and for always being happy to answer all my ‘brief’ questions even at times of stress and high workload. Great thanks are due to my fieldwork team in Guinea-Bissau: Mutaro Djaló, Natalia Djatá, Mamadu saliu Biai and Queba Malam Sama, who despite all the difficulties worked hard during the data collection stage. Finally, I extend my appreciation to all the people in Bambadinca and in the other 5 communities of Bafatá that were always trusting and happy to participate in this research. This research would not have been possible without their enthusiasm. I am also grateful to Christos Zafeiriadis for putting a lot of hard work into designing the images for the surveys. Finally, I am eternally thankful to my family and friends. This journey would not have been possible without their love and constant encouragement. 6 Table of contents Chapter 1 Introduction ................................................................................................................................ 10 1. Introduction ............................................................................................................................... 10 2.1 Research motivation .................................................................................................................. 13 2.2 Research objectives ................................................................................................................... 16 3. Relevant gaps in the literature ...................................................................................................... 18 3.1 Hyperbolic discounting ..................................................................................................................... 19 3.2 Bounded rationality .......................................................................................................................... 22 3.3 The role of social capital and trust on technology adoption ............................................................ 25 4. Thesis structure .......................................................................................................................... 27 5. Methods and limitations .............................................................................................................. 31 6. Case study - Research