The diffusion of off-grid solar photovoltaic technology in Rural Bangladesh

Type Working Paper - Energy, Climate, and Innovation Discussion Paper. The Fletcher School, Medford, MA
Title The diffusion of off-grid solar photovoltaic technology in Rural Bangladesh
Publication (Day/Month/Year) 2011
This paper analyzes the process through which more than 650,000 off-grid households in rural Bangladesh decided to purchase a solar home system (SHS) from 1996 to 2010. Our hypothesis was that positive word of mouth is the primary driver of these sales.  We tested the hypothesized diffusion process through a combination of semi-structured key informant interviews and an examination of 100 households in Panchua Village, including 60 with a SHS and 40 without a system.  The data from Panchua Village suggest that the hypothesis was correct, although they do not explain why owner’s influenced others to purchase a system. Our analysis of this process adds to the technology diffusion literature by highlighting the role of opinion leaders in SHS diffusion and quantitatively testing the role that word of mouth played in driving SHS sales. The second contribution of this paper is its analysis of non owner willingness to pay for a SHS. We use the data from Panchua Village to test an alternative hypothesis that the SHS cost reductions provided by the World Bank-financed Rural Electrification and Renewable Energy Development Program were the key driver of sales.  Our results build upon the Mondal (2009) and Kamatsu (2010) contention that further subsidies will be needed to encourage the widespread diffusion of SHS by demonstrating that the gap between non owner willingness to pay and overall system costs cannot be bridged by the current level of system subsides. Limitations of our findings and potential avenues of future research are discussed.

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