Household Effects of Electrification Through Mini-Grids: Evidence from Tanzania

Mini-grids are emerging as a key solution to electrify access-deficit communities, yet their effectiveness in improving energy access and household welfare remains underexplored. This paper provides novel evidence from Tanzania, where a policy reform doubled the number of mini-grids since 2008. Exploiting spatial and temporal variation created by the distance to mini-grids for households in proximity and the timing of their deployment, and using data from two different nationally representative surveys, we find that mini-grids increase local electrification rates by 10 to 23 percentage points—a result corroborated by a surge in nighttime light intensity near newly deployed projects. We also show that mini-grids reduce reliance on polluting fuel-based lighting and drive the uptake of electric-powered devices. Back-of-the-envelope calculations suggest the surplus generated by renewable-based mini-grids nearly offsets their costs.

JEL Classification: L94, Electric Utilities; O13, Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products; Q48, Energy: Government Policy; Q58, Environmental Economics: Government Policy