Subsidies for off-grid solar power mostly help people who already use a lot of electricity

A new study finds that subsidies for pay-as-you-go solar electricity in Kenya and Rwanda mostly benefit customers who already have high electricity demand. These incentives do not increase overall demand, but they do make high-demand users buy 6-7% more power. This means the public money spent on these subsidies provides limited value for most users.

Development agencies have long assumed that providing access to solar power would automatically improve welfare in rural areas. This paper shows that simply lowering prices does not create new demand among low-income users. Instead, it mostly makes existing heavy users buy more, which means the benefits are not spread widely. This suggests that the current approach to solar subsidies may not be the most effective way to help the poorest households.