Resource information
The Government of Bangladesh, with help
from the World Bank and other donors, has provided aid to a
local agency called Infrastructure Development Company
Limited and its partner organizations to devise a credit
scheme for marketing solar home system units and making
these an affordable alternative to grid electricity for poor
people in remote areas. This paper uses household survey
data to examine the financing scheme behind the
dissemination of these solar home systems, in particular the
role of the subsidy; the factors that determine the adoption
of the systems in rural Bangladesh; and the welfare impacts
of such adoption. The paper finds that while the subsidy has
been declining over time, the demand for solar home systems
has seen phenomenal growth, mostly because of technological
developments that have made the systems increasingly more
affordable. Households with better physical and educational
endowments are more likely to adopt solar home systems than
poor households. The price of the system matters in
household decision making -- a 10 percent decline in the
price of the system increases the overall demand for a solar
panel by 2 percent. As for the benefits, adoption of a solar
home system improves children s evening study time, lowers
kerosene consumption, and provides health benefits for
household members, in particular for women. It is also found
to increase women's decision-making ability in certain
household affairs. Finally, it is found to increase
household consumption expenditure, although at a small scale.
