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Can product demonstrations create markets for sustainable energy technology? A randomized controlled trial in rural India

Johannes Urpelainen and Semee Yoon

Energy Policy, 2017, vol. 109, issue C, 666-675

Abstract: The literature on sustainable energy technology sees informational barriers as a major obstacle to technology adoption. In the case of solar home systems, recent studies report positive socio-economic effects on households, but technology adoption remains underwhelming. In collaboration with a local solar technology provider, we conduct a randomized controlled trial in 75 large villages in the state of Uttar Pradesh, India to examine the ability of village solar demonstrations to create markets for solar home systems. We find no effect of such demonstrations on technology sales, awareness, or perceptions of solar technology. Technology adopters report high levels of satisfaction with product quality and service, suggesting that the null finding cannot be attributed to poor technology. These findings suggest that lack of awareness is not a binding constraint on the growth of solar technology markets in the study area. Based on additional surveys, we find evidence suggesting that access to credit from rural banks is an important explanation for variation in sales across villages. These results do not prove that information and awareness are irrelevant in general, but they show that even carefully designed marketing campaigns cannot increase demand for new products in the presence of a binding credit constraint.

Keywords: Solar home systems; Rural electrification; Energy access; Randomized controlled trials; Marketing, awareness, and information (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:enepol:v:109:y:2017:i:c:p:666-675