Understanding segmentation in rural electricity markets: Evidence from India

Daniel Robert Thomas, Shalu Agrawal, S.P. Harish, Aseem Mahajan and Johannes Urpelainen

Energy Economics, 2020, vol. 87, issue C

Abstract: How can demand for electricity be estimated without fine-grained usage data? Employing an original and large dataset, we develop a novel method for determining drivers of demand without electricity meter data. We first segment Indian consumers by their willingness to pay for electricity service, their level of usage, and their satisfaction with lighting, and then use cluster membership as a dependent variable in order to determine which household-level factors predict electricity usage. Our approach employs machine-learning and more traditional regression techniques to determine the optimal number of segments, generate the segments, and determine the predictors of segment membership. The dataset consists of more than 10,000 households in more than 200 villages in the states of Bihar, Odisha, Rajasthan, and Uttar Pradesh. We find that the rural Indian electricity market can be segmented into three clusters based on households' willingness to pay, satisfaction with lighting, and appliance wattage. The clusters consist of potential customers, low-demand customers, and high-use customers. We then determine the predictors of membership in these clusters. We show that different types of consumers can be identified along easily observable measures. Moreover, we show that there are clear groups of consumers that vary along their satisfaction, willingness to pay, and existing appliance usage.

Keywords: Electricity; Energy; Demand; India; Clustering; Segmentation; Rural development (search for similar items in EconPapers)
JEL-codes: C38 L94 O13 Q40 Q41 Q47 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140988320300360
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:87:y:2020:i:c:s0140988320300360

DOI: 10.1016/j.eneco.2020.104697

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().