When do firms generate? Evidence on in-house electricity supply in Africa

By J. Steinbuks, Vivien Foster. 2010

132 citations recorded by the source corpus.

This paper attempts to identify the underlying causes and costs of own generation of electric power in Africa. Rigorous empirical analysis of 8483 currently operating firms in 25 African countries shows that the prevalence of own generation would remain high (at around 20%) even if power supplies were perfectly reliable, suggesting that other factors such as firms' size, emergency back-up and export regulations play a critical role in the decision to own a generator. The costs of own-generation are about three times as high as the price of purchasing (subsidized) electricity from the public grid. However, because these generators only operate a small fraction of the time, they do not greatly affect the overall average cost of power to industry. The benefits of generator ownership are also substantial. Firms with their own generators report a value of lost load of less than US$50 per hour, compared with more than US$150 per hour for those without. Nevertheless, when costs and benefits are considered side by side, the balance is not found to be significantly positive.

Subfields: Economics and Econometrics, Information Systems, Pollution

View Paper: https://www.semanticscholar.org/paper/4d50e0aac87c5ab2b331e669779d83a7566e4c6c

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Citations in the corpus

How Do Electricity Shortages Affect Industry? Evidence from India† (2016, background): “This includes Banerjee, Duflo, and Qian (2012), Donaldson (forthcoming), and Donaldson and Hornbeck (2013) on the effects of railroads in China, India, and the United States; Duflo and Pande (2007) on irrigation dams in India; Jensen (2007) on information technology; Baisa et al.”
Does Household Electrification Supercharge Economic Development? (2019, unknown): “Generally, firms invest in backup generators as a substitute for grid electricity (Steinbuks and Foster 2010), which can limit their overall productivity losses (Allcott, Collard-Wexler, and O’Connell 2016); outsource, essentially substituting electricity inputs with other types of intermediate…”
Electricity Access in Sub-Saharan Africa: Uptake, Reliability, and Complementary Factors for Economic Impact (2019, background): “Estimation of the demand for electricity in Africa is quite challenging because it is highly constrained by supply, lack of accurate data, and idiosyncratic shocks that make predictions difficult (Steinbuks and Foster 2010). The International Energy Agency (IEA) estimates that electricity demand in ”