Paying the Price for Unreliable Power Supplies: In-House Generation of Electricity by Firms in Africa

By Vivien Foster, J. Steinbuks. 2009

198 citations recorded by the source corpus.

This paper documents the prevalence of in-house generation of electric power by firms in Sub-Saharan Africa and attempts to identify the underlying causes. The analysis is based on two data sources. The UDI World Electric Power Plants Data Base (WEPP), a global inventory of electric power generating units, provides a detailed inventory of in-house generation at the country level. The World Bank's Enterprise Survey Database captures business perceptions of the obstacles to enterprise growth for 8,483 currently operating firms in 25 African countries. Overall, so-called own generation by firms-which has been on the rise in recent years-accounts for about 6 percent of installed generation capacity in Sub-Saharan Africa (equivalent to at least 4,000 MW of installed capacity). However, this share doubles to around 12 percent in the low-income countries, the post-conflict countries, and more generally on the Western side of the continent. In a handful of countries own generation represents more than 20 percent of capacity. Rigorous empirical analysis shows that unreliable public power supplies is far from being the only or even the largest factor driving generator ownership. Firm characteristics have a major influence-in particular, the probability of owning a generator doubles in large firms relative to small ones. Our model predicts that the prevalence of own generation would remain high (at around 20 percent) even if power supplies were perfectly reliable, suggesting that other factors, such as emergency back-up and export regulations, play a critical role in the decision to own a generator.

Subfields: Information Systems, Pollution, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/8aebe87e6856bce7889e920db530107ccbcca026

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Pollution

1. S. Baurzhan
2. Vivien Foster
3. J. Steinbuks
4. Glenn P. Jenkins
5. Baoping Shang
6. Ian W. H. Parry
7. L. Sears

In Strategy and Management

1. Vivien Foster
2. J. Steinbuks

Citations in the corpus

• Off-grid solar PV: Is it an affordable or appropriate solution for rural electrification in Sub-Saharan African countries? (2014, background): “This value is in the middle of the range of in-house electricity generation costs accrued by households and firms estimated by Foster and Steinbuks (2009) for countries in Africa.”
• Firms Operating under Electricity Constraints in Developing Countries (2013, unknown): “The assumption RG , r captures the fact that the unit electricity cost from a generator is higher than that from the grid (see Foster and Steinbuks, 2009).”
• Explaining Enterprise Performance in Developing Countries with Business Climate Survey Data (2008, unknown): “This has partly to do with the comparatively high incidence of generator ownership in Africa, which reduces the impact of power shortages from the public grid (Foster and Steinbuks 2009). However, another reason seems to be that a higher frequency of outages seems to have contributed to a disproport”
• When do firms generate? Evidence on in-house electricity supply in Africa (2010, background): “In a handful of countries (including Democratic Republic of Congo andNigeria) own generation representsmore than 20% of capacity (Foster and Steinbuks, 2009).”
• How Large Are Global Fossil Fuel Subsidies (2017, background): “See Clements, Jung, and Gupta (2007), Escribano, Guasch, and Pena (2008), Foster and Steinbuks (2008), Fofana, Chitiga, and Mabugu (2009), Gelb et al. (1988).”